Duty valuation must include royalty components, with reassessment ordered after the Supreme Court ruling on assessable value.

Duty valuation for pre-recorded audio cassettes and CDs had to be reworked because the earlier assessment relied on a Tribunal view later reversed by the Supreme Court on inclusion of royalty and related components in assessable value. As the binding ruling had not been applied, the existing demand could not be sustained on the record. The proper course was to reassess duty liability afresh by applying the Supreme Court principle, and the impugned order was set aside with remand for fresh quantification and decision.

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Issues: Whether the impugned demand, penalty and confiscation required interference and whether the matter had to be remanded for fresh quantification of duty in the light of the Supreme Court decision governing inclusion of royalty and other components in the assessable value of pre-recorded audio cassettes and CDs.

Analysis: The earlier adjudication and appellate orders had proceeded on the basis of a Tribunal decision that was subsequently reversed by the Supreme Court. Since the adjudicating authority had not considered the later binding ruling, the valuation adopted for the clearances could not be sustained on the existing record. The correct course was to rework the demand by applying the principle laid down by the Supreme Court and to reassess the duty liability afresh.

Conclusion: The impugned order was set aside and the matter was remanded to the adjudicating authority for fresh decision and quantification of demand in accordance with the Supreme Court ruling.

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