Tribunal rules licence fee inclusion in assessable value; duty demand time-barred.

The Tribunal held that the inclusion of the licence fee in the assessable value under Customs Valuation Rules was contentious. The appellant's duty demand was confirmed, and goods confiscated with a penalty imposed. However, as there was a difference of opinion at the Tribunal level necessitating a reference to a 3rd Member regarding the inclusion of the licence fee, the extended period for duty demand was deemed inapplicable, making the demand time-barred. The impugned order was set aside, and the appeals were allowed.

---

---

Issues:
1. Inclusion of licence fee in the assessable value under Customs Valuation Rules.
2. Applicability of extended period for duty demand.
3. Time-barred demand.

Analysis:
1. The appellant imported recorded media containing foreign feature films and paid a licence fee to the suppliers before importation. The issue revolved around whether the licence fee should be included in the assessable value under Rule 9(1)(c) of Customs Valuation Rules, 1988. The order-in-appeal upheld the rejection of the declared value by the appellant, leading to duty demand confirmation and confiscation of goods with a penalty imposed.

2. The appellant argued that a similar issue was decided against the assessee in the case of M/s Star Entertainment by a Larger Bench of CESTAT. The department contended that the extended period for duty demand was not invocable in the present case due to the appellant's failure to include the licence fee in the assessable value or inform the department about it. The Tribunal noted that the issue was covered against the appellant by a CESTAT judgment in the case of Star Entertainment.

3. The Tribunal observed that the CESTAT judgment in the case of Star Entertainment was a 2:1 majority decision, with a difference of opinion between the Member (Technical) and Member (Judicial) leading to a reference to a 3rd Member. It was established that when there is a difference of opinion at the Tribunal level regarding the inclusion of the licence fee in the assessable value, necessitating a reference to a 3rd Member, the extended period for duty demand is not applicable. As the demand in this case pertained to a period beyond the normal one-year limit, it was considered time-barred. Consequently, the impugned order was set aside, and the appeals were allowed.

---