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Issues: Whether the licence fee and other amounts remitted to the foreign supplier under the distribution agreement for imported cineprints were includible in the assessable value of the imported goods under the Customs Valuation Rules, 1988, and whether the declared value could be rejected and value determined by the residuary method.
Analysis: The agreement showed that the imports were made subject to substantial restrictions on use, disposal, assignment and duration of exploitation, while legal title remained with the foreign entity. The amount paid at import did not represent a sale price, and the earlier departmental valuation orders were made during the currency of a special exemption notification that had later been withdrawn. For the post-withdrawal period, valuation had to be determined under Section 14 of the Customs Act, 1962 and the Customs Valuation Rules, 1988. On the facts, the amounts payable as licence fee or share of gross proceeds were conditions attached to the import and the use of the imported goods, and the declared value was therefore not acceptable as the assessable value. The residuary method under Rule 8 could be applied with guidance from the valuation principles in Rule 4 and the additions contemplated by Rule 9(1)(c).
Conclusion: The licence fee and related amounts were correctly included in the assessable value, and the rejection of the declared value was justified.
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