TaxTMI 
TaxTMI 
2014 (2) TMI 65
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....he stay applications are taken up for consideration at present. 3. The facts arising for consideration in this case are as follows :- 3.1 The appellant M/s. Star Entertainment Pvt. Ltd. (SEPL in short) imported recorded media such as beta tapes, digi beta tapes etc. falling under Tariff Heading No. 8523 of Customs Tariff. These recorded media contained feature films/programmes and they were imported through courier agency. The duty liability was discharged by the appellant only on the cost of media as declared by the courier agency based on the invoice submitted by the foreign supplier. The department conducted an investigation in the matter and found that SEPL has purchased and imported the media containing feature films/serials and paid to the overseas suppliers licence fee for exploiting the intrinsic content of the said media. However, for the purpose of Customs Valuation, they had declared only the cost of material/media and suppressed the amount of licence fee paid/payable to the overseas suppliers. It was further noticed that the recorded media were imported against either fixed amount of licence fee or against minimum guarantee amount. All these amounts were....
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....The learned Counsel for the appellants submit that while royalties and licence fees referred to in Rule 9(1)(c) of Customs Valuation Rules, 1988, are liable to be included in transaction value, the charges for the right to reproduce the imported goods in the country of importation shall not be added to the price actually paid or payable for the imported goods in determining the customs value. The learned Counsel contended that in the instant case they have imported the recorded media with a purpose to reproduce the same for sale and distribution in India and the royalties and licence fee have been paid for acquiring of such reproduction rights; therefore, the consideration paid for reproduction rights is not liable to be included in determining the customs value. The learned Counsel relied on the judgment of the Apex Court in the case of Commissioner of Customs v. Ferodo India Pvt. Ltd. - 2008 (224) E.L.T. 23 (S.C.) wherein the Apex Court held that technical know-how cost and payment of royalty is includible in price of imported goods if said payment constitutes a condition pre-requisite for supply of imported goods by foreign supplier; if such payment has no nexus with working of ....
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....c rights/T.V. rights/video rights and ancillary rights as per the agreement with the foreign suppliers. The importer was required to manufacture VHS tape/VCDs/DVDs masters with translation of scripts of the movies/dialogues into Indian languages and superimposition of such scripts in the said languages in the form of sub-titles to the movie VCD/DVD and further do dubbing on VCD/DVD in the local language. Thus, the Indian product is not an exact reproduction of imported goods either in content or in format/media. What can be excluded under Rule 9(1)(c) or 10(1)(c) are only the amount paid for right to reproduce the imported goods and not the rights acquired for undertaking the activities detailed above. In the instant case the licence rights include right to manufacture, vend and sell or rent out the new goods and there is no provision for excluding the consideration paid for such rights under Rule 9 or Rule 10 of the Valuation Rules. He further submitted that all the payments for the various transactions in the instant case have been made in advance and such payments were a pre-requisite condition for the supply/sale of the goods and, therefore, they are required to be added to the....
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.... rights also include the right to exhibit and right to broadcast. Rules 9(1)(c) and 10(1)(c) exclude only the charges paid for reproduction of the imported goods. It does not exclude the consideration paid for broadcasting the films or exhibiting or displaying the films. It is further noticed that the royalty/licence fee is charged either on a flat lump sum basis or on a minimum guarantee basis. It does not give any break up of amount payable towards each of the rights granted to the appellant and in all the cases the amounts have to be/been paid to the foreign supplier prior to the delivery of the goods in India. Therefore, prima facie the payment of royalty/licence fee is a condition or a pre-requisite for the sale/supply of the goods and hence they form part of the transaction value in terms of the provisions of the aforesaid Rules. 7.1 This Tribunal, in the case of Indo Overseas Films v. Commissioner of Customs, Chennai - 2002 (139) E.L.T. 729 (Tri.-Chennai) held that in the absence of breakup of amount payable towards each of rights/licences granted, no exclusion can be granted in respect of royalty charges from the total amount while determining assessable value under....
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....ontract entered into by the appellant with the foreign supplier the payment made as royalty/licence fee are for the rights conferred by the supplier for exploitation of the material contained in the imported goods and the payment have to be made in advance and only thereafter, the supply of the goods was made. Therefore the payment of royalty and licence fee was a condition pre-requisite for the supply of the imported goods and, therefore, even as per the Apex Court's judgment in the case of Ferodo India P. Ltd. (supra), applying the ratio to the facts of the present case, the licence fee paid has to be necessarily included in the transaction value. Similarly, the ratio of the Hoerbiger India Pvt. Ltd. (supra) relied upon by the appellant will not help their cause because in that case the licence fee or royalty was not a condition precedent for the sale of the goods and, therefore it was held that royalty and licence fee need not be included. In the present case, the payment of royalty/licence fee is relatable to the imported goods as condition precedent to its supply/sale and, therefore, the ratio of the above judgment does not support the appellant's case in any way. 7.2 ....