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TMI Blog2015 (2) TMI 179X X X X Extracts X X X X X X X X Extracts X X X X ..... to form a part of the taxable value of the goods imported. From the Service Tax Returns filed by the appellant with the Service Tax Authorities, it is seen that the appellant is registered under the taxable category of "Broadcasting Services" and the distribution fees collected has been declared to the department for the purposes of payment of service tax thereon. This also makes the position clear that the distribution fees pertained to services rendered in India, part of which was remitted to the foreign television channel. Therefore, the question of including consideration for the service rendered in the value of the goods imported does not arise at all. Thus it appears that the adjudicating authority mis-directed himself in including the value of a taxable service rendered in India in the value of the goods imported. The television programmes have been aired from Singapore and the tapes were not required for broadcasting the programmes. The requirement of the tapes was for the limited purpose of obtaining certification from CBFC and technical quality checks and has nothing to do with the distribution activity. Therefore, from whatever angle one may look at the transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er contents acquired by them to MSM for the purpose of distribution of channels. For the said services rendered, MSM remitted to the Singapore entity a sum of ₹ 19,76,02,857/- towards their share of distribution fees collected. The department was of the view that the said distribution fee remitted is a condition of sale of the digibeta/beta masters and formed the intrinsic value of the tapes and therefore, the same is includible in the assessable value of the goods supplied under Rule 10 (1) (c) of the CVR as royalties/ licence fees for the goods supplied. Accordingly a show cause notice dated 26-6-2012 was issued to the appellant proposing to include the said amount remitted to the foreign entity in the value of the goods imported and demanding differential duty and also proposing penal action. The said notice was adjudicated by the impugned order confirming the proposals in the show cause notice and imposing penalties. Hence the appeal before us. When the case was listed for hearing on 3-6-2014, it was directed by this Tribunal that the stay and appeal be heard together. 3. The ld. Counsel for the appellant made the following submissions:- (a) There are two clearly di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e foreign broadcasters once again as the same is already included in the value of taxable service or broadcasting service. (e) The ld. Counsel also refers to letter dated 28-12-2007 written by the appellant to the Standard Chartered Bank for remittance of Distribution fee to the foreign broadcaster in terms of the Distribution agreement as per which the gross distribution fee collected by the appellant for the period January to March 2007 was ₹ 27,90,29,141/- and the appellant was required to remit 75% of the distribution fee to the foreign entity based in Singapore a sum of ₹ 19,76,02,857/- which is also the amount in dispute in the present case. The distribution fee so collected are reflected in their service tax returns for the relevant period on which service tax has been paid. (f) As per the Distribution Agreement for the period from 1 st April, 2003 and ending on 1 st April, 2012, the Singapore entity has granted to the appellant non-exclusive rights throughout India to distribute by means of cable and satellite television the television service known as SET MAX of the programmes broadcast by the foreign service provider and in consideration thereof, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (the Service). The said service was to be offered as a package of channels which is the most widely distributed tier and which may be purchased by any subscriber without additional obligation or to subscribe to any other television service or package of television services. As per clause 2.2 of the agreement, in consideration for the said service, MSM were required to pay to SET Singapore 70% of the gross distribution revenues during the period 1-4-2003 to 31-3-2004 and 75% of the gross revenue collected for the remainder of the agreement period which extended upto March, 2012. Thus the payment of distribution fees was for acquiring non-exclusive rights for satellite delivered, advertiser supported, television service. Thus the payment was made for the rights to distribute a service and has nothing to do with the goods imported by the appellant from the foreign entity. The letter dated 28-12-2007 addressed to the Standard Chartered Bank also make it clear that the amount of ₹ 19,76,02,857/- remitted was towards the distribution fees required to be remitted in terms of the Distribution Agreement. The Chartered Accountant's certificate dated 28-12-2007 for remittance under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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