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1. Inclusion of technical know-how fee in the transaction value of imported components under Customs Valuation Rules. Analysis: Issue 1: Inclusion of technical know-how fee in the transaction value of imported components under Customs Valuation Rules The case involved the appellants importing components of explosion-proof systems for manufacturing licensed products under a License Agreement with a German company. The License Agreement included provisions for technical information transfer, training, and technology transfer. The Deputy Commissioner of Customs held that the technical know-how fee paid by the appellants to the German company should be included in the transaction value of the imported components under Rule 9(1)(c) of the Customs Valuation Rules, a decision upheld by the first appellate authority. The appellants argued that the technical know-how fee was for the transfer of technology related to the licensed products and not the imported components. They cited relevant case laws to support their position, emphasizing that the fee was not a condition of sale of the components. The Tribunal analyzed the License Agreement and concluded that the fee was paid for obtaining technology to manufacture and operate the licensed products, not the components themselves. The fee was found to be unrelated to the imported components and not payable as a condition of sale of the goods. The Tribunal highlighted that the License Agreement did not establish a direct or indirect relationship between the technical know-how fee and the imported components. They emphasized that the fee was for technology transfer enabling the manufacture and operation of the licensed products, not specific components. The Tribunal referenced previous case laws to support their decision, where similar fees were not included in the assessable value of imported goods under Rule 9(1)(c) due to their connection with the manufacturing process rather than the imported goods themselves. Ultimately, the Tribunal ruled in favor of the appellants, holding that the technical know-how fee was not includible in the assessable value of the imported components. The impugned order was set aside, and the appeal was allowed based on the lack of a direct relationship between the fee and the imported components as required by Rule 9(1)(c) of the Customs Valuation Rules. This comprehensive analysis of the judgment delves into the interpretation of the License Agreement, the relevance of the technical know-how fee, and the application of Customs Valuation Rules in determining the assessable value of imported components.
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