SQL Time literal values consist of the keyword TIME followed by a time enclosed in single quotes with the format HH:MM:SS. Time zones and fractional seconds are not supported. When dragging a literal Time into a variable, the following tree element is created.
Variable Creation > Input > Variables: SQL Elements pane - Literals > Time
A default time midnight is provided, but can be changed via the Properties panel. Double-click on Time (00:00:00) or highlight and click Properties.
Variable Creation > Input > Variables: SQL Elements pane - Literals > Time Properties
You can highlight the hours, minutes and seconds individually and type in the desired values, or use the up and down arrows on the selector to access valid values for each.