2015 (10) TMI 1992

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....MG), royalty is paid at agreed rate, per RCD sold by the music companies. These amounts becomes major part of th valuation of the RCDs. After entering into the agreement with the producers, music companies procure DAT (Digital Audio Tape) or master tape from them. The appellant sends, these DAT or Master tape to M/s.Sony DADC, Austria, for manufacture of stampers. These stampers are imported on payment of Customs duty by courier engaged by the assessee. The stampers are used for manufacture of prerecorded CDs by fixing in the moulds of machine. Generally a stamper can manufacture thirty thousand to forty thousand prerecorded CDs. The DAT/Master copy is supplied to the assessee by the music company or buyer, free of cost, for utilization in the manufacture process. In view of the above, it was alleged that the assessee is in no position to manufacture RCDs without the DAT/master supplied by the music companies/merchant manufactures and that they are in no position to sell such RCDs to any other person/company, since all copy rights are vested with the particular music company/merchant manufacturer. On these grounds the cost of such copy rights were sought to be added to assessable v....

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....:- (i) value of materials, components, parts and similar items relatable to such goods;  (ii) value of tools, dies, moulds, drawings, blue prints, technical maps and charts and similar items used in production of such goods; (iii) value of material consumed, including packaging materials, in the production of such goods; (iv) value of engineering, development, art work, design work and plans and sketches undertaken elsewhere than in the factory of production and necessary for the production of such goods." A reading of Rule 6 shows that the value of the goods referred to in the Rule shall be deemed to be the aggregate of the transaction value and the amount of money value of any additional consideration that may flow directly or indirectly from the buyer to the assessee. Both parties relied upon the explanation to further their case. Since the explanation is determinative of the present case, it is important to note that where the master tape is supplied by the distributor who is the copyright holder to the appellant, whether free of charge or at a reduced cost such master tape must be used in connection with the production and sale....

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....or the appellant in the job work done by the appellant. 9. Shri Lakshmikumaran relied upon two judgments of this Court. The first is Joint Secretary to Government of India v. Food Specialties Ltd. - 1985 (22) E.L.T. 324 (S.C.). The facts in this case were that the respondent entered into a number of agreements with M/s. Nestle Products (India) Limited and M/s. Nestle Holdings Limited, to manufacture for and on behalf of M/s. Nestle Products (India) Limited sweetened condensed milk and other food products for sale in India by Nestle under certain trademarks in respect of which Nestle was registered as the sole registered user in India. The entire production of the respondent was purchased by Nestle and Nestle alone. Since the respondent enjoyed no interest in the trademarks and labels, this Court held that such trademarks and labels cannot form a component of the value of the goods for the purpose of assessment of excisable duty. 10. Similarly, in Sidhosons & Anr. v. Union of India & Others - 1986 (26) E.L.T. 881 (S.C.), the appellants were manufacturing electrical goods which were labeled with the brand name 'Bajaj' and sold by the appellant only to Bajaj Electric....

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....dictionary or a magazine is not only the value of the paper. The value of the paper is in fact negligible as compared to the value or price of an encyclopaedia. Therefore, the intellectual input in such items greatly enhances the value of the paper and ink in the aforesaid examples. This means that the charge of duty is on the final product, whether it be the encyclopaedia or the engineering or architectural drawings or any manual. 40. Similar would be the position in the case of a programme of any kind loaded on a disc or a floppy. For example in the case of music the value of a popular music cassette is several times more than the value of a blank cassette. However, if a pre-recorded music cassette or a popular film or a musical score is imported into India duty will necessarily have to be charged on the value of the final product. In this behalf we may note that in State Bank of India v. Collector of Customs [(2000) 1 SCC 727 : (2000) 1 Scale 72] the Bank had, under an agreement with the foreign company, imported a computer software and manuals, the total value of which was US $ 4,084,475. The Bank filed an application for refund of Customs duty on the ground that the b....