Royalty to be included in excise on imported CDs

The Supreme Court has declared that royalty shown in the invoice of a music or film recording imported for sale in India should be included while computing customs duty. In this batch of cases, the recording was of Indian artists and they were converted into digital audio tapes master and then sent abroad for replicating. The CDs were made abroad and brought in for sale. In such cases, duty will have to be charged on the value of the final product. When pre-recorded CDs are imported against blank cassettes, the value went up in the market and therefore royalty will have to be included in the transaction value. The court passed the order in the case of several music firms led by Sony and Living Media. The court set aside the rulings of the customs appellate tribunal which had taken the opposite view and on the appeals of the Commissioner of Customs.

 

Insulated cables for windmills to pay excise duty
Specially insulated electrical cables designed for wind mills are not exempted from central excise, the Supreme Court ruled last week in the case of Uniflex Cables Ltd vs Commissioner of Central Excise. It upheld the ruling of the CESTAT against the manufacturer, but quashed the penalty imposed on it. The 1988 Notification 57/95 granted exemption from duty in respect of manufacture of wind mills, parts of wind mills and any specially designed devices which run on wind mills. The company’s claim of exemption was rejected by the authorities. The court upheld that decision but since there was no intention to evade the duty, the penalty was not justified. 

Purchase of Ayurvedic herbs in bulk requires licence
The Supreme Court has ruled that a firm which buys Ayurvedic herbs for production of medicines is liable to seek licence. In the case, Krishi Utpadan Mandi Samiti vs M/s Baidyanath Ayurved Bhawan (Pvt.) Ltd, it said that sale of the specified bulk buying of agricultural produce from any place in the market area is prohibited by the market committee rules unless the person concerned has a licence. The law provides for an exception of having a licence or from paying the market fee if the sale of an agricultural produce is made to a person for his “domestic consumption” in “retail sale”. However, in the case of this firm, it was not for domestic consumption like for the personal use or for the family members. Therefore, the firm was bound to pay market fee. 

Guidelines on speeding up SARFAESI procedure
A division bench of the Bombay high court has issued 11-point guidelines to speed up proceedings under the Securitization & Reconstruction of Financial Assets & Enforcement of Security Interest Act ( “the SARFAESI Act”). Under this law, a creditor can take possession of secured assets without intervention of a civil court. In a batch of petitions by banks and FIs and led by International Asset Reconstruction Company, it was pleaded that a number of their applications were pending before the courts across Maharashtra, especially in Mumbai, Pune and Thane, and appropriate directions need to be issued to magistrates asking them to dispose of the applications without delay. The judgment agreed with this and stated that “it is in the interest of general public to see that they take possession of the secured assets and recover money advanced by them where the borrower is under liability and his account has become non-performing.” According to the guidelines, the borrower has no right to be heard at any stage of the proceeding including the execution of the magistrate’s order. The applications shall be decided within two months. The magistrate’s order shall (i) authorize the taking of physical possession of the secured asset with reasonable force which includes the breaking open of locks, wherever necessary; (ii) direct the police station concerned to provide assistance in taking possession.