Technical Expertise & Know How Fee cannot be included in assessable value by Customs-CESTAT Chennai


Dated: 01.04.23

Technical Expertise & knowhow Fees cannot be included in the assessable value of imported goods: CESTAT Chennai

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that Technical expertise & know-how fees need not be included in the assessable value of imported goods.

Counsel Shri R. Rajaraman appeared and argued for the Department. He submitted that as per the periodical review, the earlier Order was taken up by the Special Valuation Branch. In the said order, it was directed to include the fee of EURO 40,000 for the transfer of technical expertise/know-how in the assessable value on import of new capital goods.

After due verification of the documents, the Special Valuation Branch (SVB) passed Order directing to accept the invoice value for assessment purposes and to add a technology transfer fee of EURO 40,000 to the invoice value on importation of the new capital goods by the importer and thus maintaining the earlier order.

The importer thereafter filed an appeal before the Commissioner (Appeals),  who after verifying the collaboration agreement, has held that the technical expertise & knowhow fee is not related to the import of capital goods and there is no stipulation and it is a condition for sale of the import of capital goods. The order was thus modified by the Commissioner (Appeals) directing not to include the technical know-how fee to the assessable value.

The counsel for the respondent submitted that when the case was taken up for periodical review it is correct that the respondent had submitted that there is no change in the pricing pattern or the collaboration agreements. However, from the collaboration agreement itself, it is clear that the transfer of technical expertise & know-how is not a condition for the sale of the goods. This being so, the said amount cannot be included in the invoice value. The respondent in the present matter is M/s Diabu Diamond Tools (I) Pvt Ltd.

The Bench comprising Sulekha Beevi C.S, Judicial Member and M Ajit Kumar, Technical Member observed that “After appreciation of facts and the evidence placed before us, we are of the considered opinion that the view of the Commissioner (Appeals) that technical knowhow fee need not be included in the assessable value of imported goods is legal and proper.”

Download CESTAT Order below:

Diabu Diamond Tools (I) Pvt. Ltd-CESTAT Chennai


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The views expressed in the update are strictly personal, based on our understanding of the underlying law. We are not responsible for any injury, loss or cost arising to any person who refers this update and acts or refrains from any act accordingly. We would suggest that a detailed legal advice must be sought before relying on this update.

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