Royalty and licence fee inclusion in customs value led to refusal of complete pre-deposit waiver

Royalty and licence fees payable directly or indirectly as a condition of sale were treated as includible in the customs transaction value of imported recorded media. Applying the Supreme Court principle in Living Media India Ltd. and an earlier stay order in a similar matter, the Tribunal held that the appellant had not made out a case for complete waiver of pre-deposit. Complete waiver was declined, and partial deposit was directed with balance protection granted on compliance.

---

---

Issues: Whether the appellant was entitled to complete waiver of pre-deposit in a customs duty dispute concerning inclusion of royalty/licence fees in the assessable value of imported recorded media.

Analysis: The imported master Digi beta tapes were supplied under an agreement under which the Indian importer was required to pay royalty for video rights. The value declared at import reflected only the media cost and not the value of the recorded films. The Tribunal applied the principle that royalty and licence fees payable directly or indirectly as a condition of sale of imported goods are includible in the transaction value, relying on the Supreme Court's ruling in Living Media India Ltd. On that prima facie view, and following an earlier stay order in a similar matter, the Tribunal found that no case for complete waiver was made out.

Conclusion: Complete waiver of pre-deposit was declined and the appellant was directed to deposit Rs. 80 lakhs, with waiver of the balance and stay of recovery to operate upon compliance.

Ratio Decidendi: Royalty and licence fees payable as a condition of sale of imported goods are includible in the transaction value for customs valuation, and such inclusion can justify refusal of complete waiver of pre-deposit.

---