2026-VIL-850-CESTAT-DEL-CU
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CUSTOMS CESTAT Cases

Customs - Valuation of imported plant and machinery with bundled technical services - The importer imported key components of lime kiln machinery valued at a separate consideration under a contract that also included engineering package, license fee and technical assistance valued at a separate consideration - Department sought to include the value of technical services, license fees and engineering charges in the assessable value of imported goods, contending that the supply of such services was a condition of sale of the plant and machinery and that the importer had split a single invoice into two invoices merely to evade customs duty - Whether the separately contracted and invoiced technical services, engineering package and license fees could be included in the assessable value of imported plant and machinery under section 14 of the Customs Act, 1962 read with rule 10(1)(c) of the Customs Valuation Rules, 2007 – HELD - Where a single contract involves importation of dutiable equipment and services for post-importation activities, and these two sets of items are segregable with separate invoices and separate contractual obligations, the consideration for services cannot be added to the assessable value of imported goods. The contract clearly bifurcated the obligations into two parts: technical assistance and licensing for one part, and supply of key components for the other part. The buyer was separately responsible for procuring additional machinery and undertaking local construction. There was no binding obligation in the contract to purchase services as a prerequisite for purchasing equipment - Royalties and license fees are includible in transaction value only when they are required to be paid as a condition of sale of the imported goods itself, which was not the case here as the services were relatable to post-importation activities of setting up and operating the plant. The intention to split invoices could not be inferred from the contract terms, which expressly provided for separate considerations - payment under the technical services agreement is not a payment as a condition of sale of the imported plant and therefore, is not includible in the transaction value under Rule 10 (1)(e) of CVR - The decision of the authorities below requiring inclusion of technical services charges in the assessable value is set aside and the appeal is allowed
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GSTAT Appeal filed wrongly...
By CA Vivek Jalan

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