Brief of the case:
The Hon’ble Supreme court in the case of K.R.C.D Pvt. Ltd. held that the royalty paid by the principal manufacturer to some other person for use of any copyright is not includible in the assessable value of the final goods cleared from the factory of job worker as the royalty paid by the principal manufacturer do not flow any additional consideration to the job worker.
Facts of the case:
- The assessee was engaged in manufacturing of duplicate CDs from a master tape/CD issued to them by a distributor under a job work. The distributor was engaged by the producer who has the copyright of the contents of the master CD.
- The assessee had to sale entire stock of duplicate CDs only to the distributor/copyright holder and to anybody else. The distributor/copyright holder upon receipt of the duplicate copies from the assessee used to sale the ultimate customer in the market.
- Central Excise demanding duty inter alia on royalty charges incurred by the distributor/copyright holder. (i.e. payable to producer).The Assistant Commissioner issued a show cause notice proposing to demand differential duty of Rs.5, 91, 45,700/- for royalty payable to the distributor/copyright holder which royalty was calculated at 54.81 rupees per CD (which were not included in arriving at the assessable value of duplicated CDS). The royalty amount includible in assessable value was worked upon as per the formula stated in circular dated 19.02.2002.
- CESTAT confirmed the order of CCE (Appeals). Aggrieved by the same assessee is in appeal before the Supreme Court.
Contention of the Assessee:
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