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of <h1>Tribunal Remands Case for Fresh Decision on Valuation and Royalty Issues</h1> <h3>M/s. Encyclopaedia Britannica India Pvt. Ltd. Versus C.C. New Delhi</h3> M/s. Encyclopaedia Britannica India Pvt. Ltd. Versus C.C. New Delhi - 2017 (355) E.L.T. 462 (Tri. - Del.) Issues:1. Valuation of imported CDs/DVDs under Customs.2. Levy of customs duty on royalty paid for online download of education content for replication of CDs/DVDs in India.Analysis:Issue 1: Valuation of imported CDs/DVDs under CustomsThe case involves an appeal by Encyclopaedia Britannica India Pvt. Ltd. against the order passed by the Deputy Commissioner and Commissioner of Customs (Appeals) regarding the valuation of imported goods. The Deputy Commissioner determined the landed cost of CD/DVDs by deducting 73% from the retail sale price, considering the relationship between the importer and foreign suppliers. The appellant argued that the conditions under Rule 3(3) of Customs Valuation Rules were satisfied and that the resale price in India should not influence the valuation. The Tribunal found that the Revenue did not strictly follow Rule 7 of Customs Valuation Rules, which requires considering the unit price at which goods are sold to unrelated persons in India. The matter was remanded for fresh decision based on Rule 7 and other relevant provisions.Issue 2: Levy of customs duty on royalty paid for online downloadThe second issue pertains to the inclusion of royalty paid for online downloads in the assessable value for customs duty. The Deputy Commissioner held that royalty of 5% of net sales revenue should be included in the assessable value. The Tribunal noted that the royalty agreement specified payment on net sales revenue and concluded that the royalty should be considered for duty calculation. However, it clarified that goods imported through internet downloads were not subject to customs duty, as there was no mechanism for customs to collect duty on such electronic downloads. The matter was remanded for a fresh decision within four months.In conclusion, the Tribunal allowed the appeal by remanding the case to the original adjudication authority for a fresh decision on both valuation and royalty issues, emphasizing adherence to Customs Valuation Rules and relevant provisions.
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