TaxTMI 
TaxTMI 
2017 (7) TMI 112
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....is the obligation to add the royalty which appears to be a transaction independent of the one between the exporter and the appellant-importer. 2. The original authority, Joint Commissioner of Customs, held that the importer and the supplier, M/s Cinram GmbH, UK, to be related and rejected the invoice value to direct the levy of duty thereon 'Intrinsic value of imported films as determined under rule 7 (A) of the Customs Valuation Rules, 1988 by the assessing groups with additions under Rule 9 (2), if any, subject to usual check, scrutiny and verification of the declared value.' 'I ordered inclusion of payments by the importer and Royalty/License Free/deposits in the Assessable Value under rule 9 of the Customs Valuation Rules, 1988.' The....
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....How Fee to the Distributor and submits the payment for the Reporting Period with the report required under clause 10 to Distributor. Such payments by importer and Royalty/license fee/Technical Know-how fee are related to the imported goods and payment of such payments is a condition related to import of this film.' 3. Commissioner of Customs (Appeals), Mumbai - I, vide order no.215/2006 MCH/JC/GVC/05-06 dated 8th June 2006, rejected the appeal of the importer against the enhancement of assessable value. The importer had claimed that there was no relationship with the supplier and placed reliance on the decision of the Tribunal in M/s Sony Music Entertainment Pvt Ltd v. Commissioner of Customs, Mumbai [2005 (189) ELT 227 (Trib-Mumbai)]. Rej....
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....ny provision for payment of royalty to the licensor. It is also claimed that in their own case in Final Order A/89334-89340/16/CB dated 23rd August 2016, the Tribunal held that royalty is hinged upon post-importation manufacture and is not liable to be fastened on the imported goods per se. It is also contended that the royalty, as provided for in the 'Video Distribution License Agreement', was not amenable to computation at the time of import and hence not includable in the assessable value. Drawing attention to the Interpretative Notes in the schedule to the Rules it was pointed out that the notes to Rule 9(1)(c) make it abundantly clear that charges for the right to reproduce the imported goods in the country of importation shall n....
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....dance with licence granted by copyright-holders. It also appears that the appellant has entered into an agreement for distribution of these copyrighted feature films for which royalty is paid or payable to the copyright holders. There is no dispute that these are two separate agreements but, being related to the same product that is imported, the original authority has considered fit to link the import transaction with the licensing agreement. However, such a linking is fraught with the difficulty of computation of assessable value of imports. We are not able to appreciate the argument advanced by Learned Authorized Representative that valuation under section 14 requiring the inclusion of payable amounts as per the impugned agreement with M....
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....upplier'; therefore, in applying rule 9, the assessing authority should have reiterated itself to the foreign supplier concerned with the imported goods. The lower authorities have not given adequate consideration to scrutiny of the link of the foreign supplier with the royalties that are to be paid. 8. The Hon'ble Supreme Court in re Bayer Corp Science Ltd has held that '5. As per the Revenue the arrangement between M/s. R&H and assessee gets covered by sub-clause (v) of Rule 2(2) as according to the Revenue M/s. R&H directly or indirectly control the assessee. This control is brought into operation on the premise that the assessee is a sole distributor of M/s. R&H on the facts of this case. We do not find it to be so. 6. Explanation-II....