COMMNR. OF CUSTOMS EXCISE, NEW DELHI versus MIS. LIVING MEDIA (INDIA) LTD.

Citation: [2011] 13 S.C.R. 772 · Decided: 17-08-2011 · Supreme Court of India · Bench: MUKUNDAKAM SHARMA · Disposal: Disposed off

Judgment (excerpt)

A 
B 
[2011] 13 (ADDL.) S.C.R. 772 
COMMNR. OF CUSTOMS EXCISE, NEW DELHI 
v. 
MIS. LIVIN(3 MEDIA (INDIA) LTD. 
(Civil Appeal Nos.· 8627-8628 of 2002) 
AUGUST 17, 2011 
[DR. MUKUNDAKAM SHARMA AND 
ANIL R. DAVE, JJ.] 
Customs Valuation (Determination of Value of Imported 
C Goods) Rules, 2007 - rr. 2(f),3,4 and 9(1)(c) - Determination 
of value of imported goods - Method of valuation - Valuation 
of recorded audio cassettes/CDs imported by respondents-
assessees - Whether the value of the royalty required to be 
paid by the respondents-assessees for the imported goods 
D was to be included in the transaction value of the imported 
goods for the purpose of customs duty assessment - Held: 
In determining the transaction value there has to be added 
to the price actually paid or payable for the imported goods, 
royalties and the license fees related to the imported goods 
E that the buyer is required to pay, directly or indirectly, as a 
condition of sale of goods - In all the cases in consideration, 
there is no dispute that the cassettes under question were 
brought to India as pre-recorded cassettes which carried the 
music or song of an artist - There was an agreement existing 
F in all the matters that royalty payment was towards money to 
be paid to artists and producers who had produced such 
cassettes - Such royalty became due and payable as soon 
as cassettes were distributed and sold and therefore, such 
royalty became payable on the entire records shipped less 
G records returned - It could therefore, be concluded that the 
payment of royalty was a condition of sale - When pre-
recorded music cassette is imported as against the blank 
cassette, definitely its value goes up in the market which is 
in addition to its value and therefore duty shall have to be 
charged on the value of the final product - Therefore, value 
H 
772 
COMMNR. OF CUSTOMS EXCISE, NEW DELHI v. LIVING 
773 
MEDIA(INDIA) LTD. 
of the royalty paid is to be included in the transaction value -
A 
Customs Act, 1962 - s.14. 
The valuation of the recorded audio cassettes/CDs 
imported by respondents-assessees was the subject 
matter of the instant appeals. The question which arose 
6 
for consideration was whether the value of the royalty 
required to be paid by the respondents-assessees for the 
imported goods was to be included in the transaction 
value of the imported goods for the purpose of customs 
duty assessment. 
Disposing of the appeals, the Court 
HELD: 1. Section 14 of the Customs Act, 1962 deals 
with valuation of goods for the purpose of assessment. 
c 
In exercise of the power vested under the Customs Act, o 
the Central Government made Customs Valuation 
(Determination of Value of Imported Goods) Rules, 2007. 
Rule 2(f) of the Rules defines "transaction value" where 
it says that it means the value determined in accordance 
with rule 4 of the Rules whereas Rule 3 of the Rules deals 
with the determination of the method of valuation. [Paras 
24, 25 and 26] [781-B; 782-F-H] 
E 
2. The issue for consideration herein appears to be 
answered by the decision in Associated Cements 
Companies Ltd.* In the said decision the Supreme Court 
F 
had stated clearly that if a pre-recorded music cassette 
or a popular film or musical score is imported into India, 
duty will necessarily have to be charged on the value of 
· the final product. As per Rule 9, in determining the 
transaction value there has to be added to the price G 
actually paid or payable for the imported goods, royalties 
and the license fees related to the imported goods that 
the buyer is required to pay, directly or indirectly, as a 
condition of sale of goods. Therefore, when pre-recorded 
music cassette is imported as against the blank cassette, 
H 
774 
SUPREME COURT REPORTS [2011] 13 (ADDL.) S.C.R. 
A definitely its value goes up in the market which is in 
addition to its value and therefore duty shall have to be 
charged on the value of the final product. Therefore, there 
can be no dispute with regard to the fact that value of the 
royalty paid is to be included in the transaction value. In 
B all the cases in consideration, there is no dispute that the 
cassettes under question were brought to India as pre-
recorded cassettes which carried the music or song of 
an artist. There was an agreement existing in all the 
matters that royalty payment was towards money to be 
c paid to artists and producers who had produced such 
cassettes. Such royalty became due and payable a

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