2016 (3) TMI 935 - AT - Customs

Invokation of extended period of limitation - Import of recorded media such as beta tapes, digibeta tapes etc. containing feature films/programmes - Discharged duty liability on the value declared by courier, based on the invoice submitted by the foreign supplier - Includibility of licence fee in the assessable value - Rule 9(1)(c) of Customs Valuation Rules, 1988 - Held that - the issue involved is squarely covered against the appellant vide CESTAT judgement in the case of Star Entertainment 2014(5) TMI 713-CESTAT-Mumbai (LB) . Thus, the appellant has no case on merit. It is however seen that the said judgement of CESTAT is a 2 1 majority judgement. Initially there was difference of opinion between the ld. Member (Technical) and ld. Member (Judicial) and the issue was then referred to the 3rd Member. It is well settled that when at the level of Tribunal there was difference of opinion regarding includibility of the licence fee in the assessable value necessitating the reference to a 3rd Member, the extended period is not invocable. Indeed in the case of Star Entertainment it was held that in these facts and circumstances (which are similar to the facts and circumstances in the present appeal) extended period cannot be invoked. As the entire demand pertains to period beyond the normal period of one year, (the bill of entry was filed on 30.4.2007 and show cause notice was issued on 1.12.2009), it is hit by time-bar. - Decided in favour of appellant with consequential relief

Summary

Issues:
1. Inclusion of licence fee in the assessable value under Customs Valuation Rules.
2. Applicability of extended period for duty demand.
3. Time-barred demand.

Analysis:
1. The appellant imported recorded media containing foreign feature films and paid a licence fee to the suppliers before importation. The issue revolved around whether the licence fee should be included in the assessable value under Rule 9(1)(c) of Customs Valuation Rules, 1988. The order-in-appeal upheld the rejection of the declared value by the appellant, leading to duty demand confirmation and confiscation of goods with a penalty imposed.

2. The appellant argued that a similar issue was decided against the assessee in the case of M/s Star Entertainment by a Larger Bench of CESTAT. The department contended that the extended period for duty demand was not invocable in the present case due to the appellant's failure to include the licence fee in the assessable value or inform the department about it. The Tribunal noted that the issue was covered against the appellant by a CESTAT judgment in the case of Star Entertainment.

3. The Tribunal observed that the CESTAT judgment in the case of Star Entertainment was a 2:1 majority decision, with a difference of opinion between the Member (Technical) and Member (Judicial) leading to a reference to a 3rd Member. It was established that when there is a difference of opinion at the Tribunal level regarding the inclusion of the licence fee in the assessable value, necessitating a reference to a 3rd Member, the extended period for duty demand is not applicable. As the demand in this case pertained to a period beyond the normal one-year limit, it was considered time-barred. Consequently, the impugned order was set aside, and the appeals were allowed.