The valuation of imported goods must include royalties as essential conditions of sale when determining the transaction value.

1. The Civil Appeal Nos. 8627-8628 of 2002 are filed against the judgment and order passed by the Customs, Excise & Gold (Control) Appellate Tribunal (hereinafter for short referred to as "CEGAT") on 23.1.2002, however, Civil Appeal No. 2959 of 2008, Civil Appeal No. 4751 of 2006, Civil Appeal No. 2832 of 2006 and Civil Appeal No. 1 of 2009 are filed against the judgment and order passed by the Customs Excise and Service Tax Appellate Tribunal (hereinafter for short referred to as "CESTAT") on 21.9.2007, 2.2.2006, 2.9.2005 and 16.10.2008 respectively.

2. The facts leading to the filing of the present appeals are that the Respondent - company undertakes various music projects in India and under these projects it enters into agreements with reputed artists for composing and recording musical works. The music thus recorded is converted into DAT [Digital Audio Tape] Master which is then sent to Singapore for replicating the musical work on compact discs. Apart from this, the Respondent also renders service for quality production / duplication of various music titles on compact discs.

3. The Respondent has entered into an agreement for rendering services with M/s. World Media India Ltd., New Delhi, which provides masters to the Respondent and Respondent in turn sends these masters to Australia for replicating the musical work on compact discs (CDs).

4. The Respondent imported a consignment of Audio Compact Discs from Singapore vide Bill of Entry No. 659308 dated 27.05.1998 for home consumption. Customs duty was paid on the invoice value of the replicator in Singapore and the declared value of each CD was USD 0.6. The Respondent had similar import of Audio Compact Discs from Australia under Bill of Entry No. 659289 dated 27.05.1998 for home consumption and the declared value of each CD was @ 1.62 Australian Dollar. The dispute regarding the valuation of these consignments imported by the Respondent herein is the subject matter of these appeals.

5. The Assistant Commissioner vide order dated 23.06.1998, while assessing the value of CDs imported from Singapore allowed all deductions except expenses incurred under advertisement and publicity and fixed the assessable value at Rs.100 per CD. For the CDs imported from Australia, the assessing authority granted deductions except to the extent of those claimed towards expenses on royalty and advertisement and publicity and the assessable value was determined as Rs.199 per CD.

6. Aggrieved by the aforesaid order of the Assistant Commissioner, the Respondent - assessee filed appeals before the Commissioner (Appeals). The Commissioner (Appeals), vide order dated 12.06.2001, confirmed the order of the assessing authority. Aggrieved thereby, the Respondent - assessee appealed to the CEGAT. The CEGAT, vide order dated 23.01.2002, allowed the appeals and set aside the order of the Commissioner (Appeals) dated 12.06.2001.

7. The present appeal is filed against the judgment and order of CESTAT passed on 21.09.2007 whereby the appeal filed by the Revenue was rejected and the order of the Commissioner of Customs (Appeals) dated 18.09.2006, was upheld.

8. The facts leading to the filing of the present appeal are that the case of import of goods by respondent M/s Sony BMG Music Entertainment (I) Pvt. Ltd. from supplier M/s Sony Music Entertainment (Hong Kong) Ltd. was examined by GATT Valuation Cell, Mumbai. The Deputy Commissioner of Customs vide order dated 10.02.2006 held that the Respondent and the supplier were related under R.2(2) of Customs Valuation Rules, 1988 and rejected the transacti