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2013 (5) TMI 603 - AT - CustomsValuation - Rule 2(2) of Customs Valuation Rules, 1988 - inclusion of license/royalty in the invoice value - Whether licence fee and royalty paid by the respondent to the licensor is includable in the value of the goods purchased from the replicator(s) – Respondent is importing replicators as designated by the licensor from time to time pursuant to their agreement. Respondent was also locally purchasing DVDs from replicators/vendors in India. Thus there were two sets of transactions, first with the licensor under the license agreement and second with the vendors by means of purchase orders. Held that:- The ratio of decision in CCE, New Delhi vs. M/S. Living Media (India) Ltd. [2011 (8) TMI 41 - SUPREME COURT OF INDIA] squarely applicable to the facts of the present case. In the said case it was held that Customs duty is liable to be paid not only on the cost of the media but also on the value including the contents of the media. It is for the contents of the VCD/DVDs that the respondent is paying licensee fee/royalty to the licensor. Thus, it may be seen that the value for the purpose of levy of Customs duty is not only the cost of the media but also the cost of matter contained in the media, that is, the content of the media. Since a replicated CD contains the artistic intellectual inputs, the cost of the same has to be considered while charging Customs duty. It is not the case of respondent herein that the cost of the contents has already been included in the value charged by the replicator. If that was so, there was no need for payment of licence fee/royalty to the Licensor separately. Thus, the licence fee and royalty paid by the respondent to the licensor is includable in the value of the goods purchased from the replicator(s). Therefore, the impugned order is set aside and the appeal is allowed.
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