2013 (7) TMI 1035 - AT - Customs

Summary

Issues Involved:
1. Inclusion of royalties/licence fees in the assessable value of imported beta/digibeta tapes.
2. Invocation of the extended period of time for confirmation of customs duty.
3. Imposition of penalties on the appellant and its Managing Director.

Summary:

1. Inclusion of Royalties/Licence Fees in Assessable Value:
The appellant, M/s. Star Entertainment Pvt. Ltd. (SEPL), imported recorded media containing feature films/programs and declared only the cost of the media, excluding royalties/licence fees paid to overseas suppliers. The department argued that royalties and licence fees should be included in the customs value u/s 9(1)(c) of Customs Valuation Rules, 1988, and Rule 10(1)(c) of Customs Valuation Rules, 2007, as these fees were paid as a condition of sale. The Tribunal upheld this view, stating that the payments were a condition precedent for the supply of goods and thus includable in the transaction value. The Tribunal relied on precedents such as *State Bank of India vs. CC, Bombay* and *Living Media India Ltd.* to support its decision.

2. Invocation of Extended Period for Confirmation of Customs Duty:
The appellant claimed that there was no suppression of facts as the value declared was based on the courier agency's declaration. However, the Tribunal found that the appellant knowingly declared only the media cost, excluding the royalties/licence fees, which constituted suppression of facts. The Tribunal held that the extended period for confirmation of duty demand was rightly invoked, referencing the *Associated Cement Companies Ltd.* case, which emphasized the necessity of declaring the full transaction value.

3. Imposition of Penalties:
The Tribunal upheld the penalty on SEPL u/s 114A of the Customs Act, 1962, for suppressing the value of goods with intent to evade customs duty. However, it set aside the penalty on the Managing Director, Mr. Jiten Hemdev, due to the penalty already imposed on the firm. The Tribunal also upheld the confiscation of the digibeta tape containing the film "Bluebird" with an option for redemption on payment of a fine.

Difference of Opinion:
There was a difference of opinion between the Members on whether the royalties/licence fees should be included in the assessable value and whether the extended period for confirmation of customs duty was applicable. The matter was referred to the President for a decision.

Conclusion:
The Tribunal concluded that the royalties and licence fees paid were includable in the assessable value of the imported tapes, and the extended period for confirmation of duty demand was applicable due to suppression of facts by the appellant. The penalties on SEPL were upheld, while the penalty on the Managing Director was set aside.