Ahh. Ya the K&N, and USP, don't have any lip. The inner edge of the filter is flush with the pipe inlet.
Without a Bell Mouth transition, effectively that makes it a straight cut pipe. IMO It's all about how air molecules that you can get into my intake, the more the better, a bell mouth enables you to get a larger percentage of air from the side of the pipe, compared to a straight pipe, and the larger the bell mouth the more air molecules you can capture.
If you study the pictures on the left side of the eBay
Skunk2 Velocity Stack/Fliter with the tapered 3.5 to 3.0 inch adapter you will see how good the design is. Effectively, it is a 4.5 inch bell mouth tapering down to the intake diameter of 3 inches, remember you capture more air molecules.
With our choked off Stock VW Intake Manifold we struggle to see much gains but with the IE SRI you should see a good difference at the top end.
The Filter is a Double cone design which flows huge and designed to work with the bell mouth; it may not help us NA guys as we don't flow enough air but would help the guys with the K04s.