2017 (7) TMI 121 - AT - Customs

Tribunal upholds inclusion of expenses in assessable value under Customs Valuation Rules for M/s Shringar Films Pvt Ltd

M/s Shringar Films Pvt Ltd Versus Commissioner of Customs (Import), Mumbai

M/s Shringar Films Pvt Ltd Versus Commissioner of Customs (Import), Mumbai - TMI Issues:- Determination of assessable value based on Customs Valuation Rules- Inclusion of expenses in the assessable value- Relationship between licensor and licensee- Application of rule 8 of Customs Valuation Rules- Lack of quantification for duty liability- Principles for valuation of imports- Lack of computation of duty liability- Grounds for intervention- Dismissal of appealsAnalysis:The judgment pertains to seven appeals filed by M/s Shringar Films Pvt Ltd challenging the order-in-appeal of the Commissioner of Customs (Appeals) regarding agreements with licensors for film distribution. The impugned order upheld the inclusion of expenses in the assessable value as per rule 7A of Customs Valuation Rules, 1988. The appellant argued no relationship with licensors and no investigation by the Department to substantiate payments to licensors.The appellant contended that the impugned order lacked reasoning and merely reiterated the original decision. They argued against including royalty and license fee without evidence of payment to licensors. They emphasized the absence of a sale between licensor and licensee, questioning the logic of including production costs in the assessable value. Reference was made to the decision in Warner Bros (FE) Inc v. Commissioner of Customs.The Authorized Representative relied on the Warner Bros case, where the absence of a transaction between licensor and licensee led to the application of rule 8 of Customs Valuation Rules. The judgment noted that the declared value was for assessment purposes and not reflective of transaction value, making comparisons challenging due to the nature of imported films.The impugned order directed the enhancement of value to include production costs and royalty/license fees. However, no quantification for duty liability was done by lower authorities, leading to a lack of computation of appellant's duty liability. The principles for valuation laid down in the original order were endorsed in the impugned order, but the absence of assessed duty liability raised doubts on appellant's detriment.Ultimately, the Tribunal found no merit in the appellant's grounds for intervention, deeming it an academic exercise with no immediate revenue implications. Without an assessment under challenge, the Tribunal saw no reason to intervene and dismissed the appeals, emphasizing the need for effecting the impugned order in an assessment for any intervention to be considered.