INDO OVERSEAS FILMS Vs. UNION OF INDIA

JUDGEMENT

(1.) THE relief sought for in this writ petition is to quash the order of the second respondent, Customs, Excise and Gold (Control) Appellate Tribunal dated 03.09.2001 made in order No.1504/2001 by which, the second respondent confirmed the order of the lower authorities including the royalty, in determining the transaction value of the imported goods.

(2.) THE facts are: THE petitioner, a firm engaged in import and distribution of feature films, in the course of its business, had entered into an agreement with London distributors for the import and distribution of the film "Web of Silence-AIDS". THE goods were cleared by filing bill of entry dated 21.04.2000 on payment of customs duty as determined by the respondent, which included a sum of 12,500 US$ towards royalty. THE inclusion of 12500 US $ in the value of the imported goods was disputed by the petitioner to the Commissioner and thereupon to the second respondent, who confirmed the order determining the assessable value by the lower authority. THE correctness of the said order is canvassed in this writ petition.

(3.) THE value of the imported goods for the purposes of determination of the duty has to be arrived at in terms of section 4 of the Customs Act, which in turn provides for determination of value in terms of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988. Rule 3 of the 1988 Rules provides for (i) the value of the imported goods shall be the transaction value (ii) if the value cannot be determined under the provisions of clause (i) above, the value shall be determined by proceeding sequentially through Rules 5 to 8 of these Rules. Rule 4 provides that the transaction value of imported goods shall be the price actually paid or payable for the goods when sold for export to India, adjusted in accordance with the provisions of Rule 9 of these Rules. Rule 9 refers to the charges incurred for various types of services and stipulates addition in respect of the same whether actually paid or not. Rule 9(1)(c) provides that in determining the transaction value, there shall be added to the price actually paid or payable for the imported goods, - royalties and licence fees related to the imported goods that the buyer is required to pay, directly or indirectly, as a condition of the sale of the goods being valued, to the extent that such royalties and fees are not included in the price actually paid or payable. Rules have interpretative note and the interpretative note to Rule 9(1) is to the effect that royalties and licence fees referred to in rule 9(1)(c) may include among other things, payments in respect to patents, trademarks and copyrights. However, the charges for the right to reproduce the imported goods in the country of importation shall not be added to the price actually paid or payable for the imported goods in determining the customs value. It further provides that payments made by the buyer for the right to distribute or resell the imported goods shall not be added to the price actually paid or payable for the imported goods if such payments are not a condition of the sale for export to the country of importation of the imported goods.