Valuation (Customs) — Films — Royalty and licence fee
payable on imported films includible in assessable value
Circular No. 86/2002-Cus., dated 12-12-2002
F. No. 467/113/2001-Cus.V
Government of India
Ministry of Finance (Department of Revenue)
Central Board of Excise & Customs, New Delhi
Subject : Valuation treatment of royalty/licence fees
payable on imported films - Regarding
Representations have been received from the importers of
foreign films, namely, Foreign Film Chamber of India, Motion picture Association
of America, stating that Customs duty on imported cinematographic film is
leviable only on the cost of the print, plus freight and insurance charges as
per Customs Notification No. 205/77-Cus, dated 24-9-1977 and therefore, the
remittance to foreign producers/suppliers of royalty, licence fee, profit
sharing, etc., in connection with the import of cinematographic film is exempt
from duty.
The matter has been 2. examined. The subject notification
No. 205/77-Cus., dated 24-9-1977, as amended by Notification No. 103/86-Cus.,
dated 17-2-1986, has since been rescinded vide Notification No. 47/96-Cus.,
dated 23-7-1996. Further, as per Rule 9(1)(c) of the Customs Valuation Rules,
1988, royalties and licence fee related to the imported goods that the buyer is
required to pay, directly or indirectly, as a condition of sale of the goods being valued,
shall be added to the price actually paid or payable for the imported goods to
the extent that such royalties and fees are not included in the price actually
paid or payable. This would mean that Customs duty should be based on the
intrinsic value of the product, which shall include the payment on account of
royalty/licence fee directly related to the imported goods. As the Customs duty
exemption Notification 205/77-Cus., dated 24-9-1977, is no more in force, the
imported Cinematographic Films shall be leviable to the appropriate rate of
Customs duty on the value determined as above.
You are accordingly 3. requested to issue necessary
instructions to the assessing officers in your jurisdiction to strictly follow
the above said instructions, and difficulties, if any, faced in this regard may
be brought to the notice of the Board.