The Hindu Business Line : <I>Dekh Bhai Dekh</I>

A NOT-SO-DULL case reported in a recent issue of Excise Law Times is that of Globe Entertainments. The issue that it brought up before the Mumbai CESTAT (Customs, Excise and Service Tax Appellate Tribunal) was against the Customs Department's confiscation of videocassettes.

Now that CDs and videos are notoriously newsy, it would be logical that you would've hastily guessed that the seized product had something sizzling. But no, the cassettes contained a popular Hindi serial called `Dekh Bhai Dekh' produced by Amitabh Bachchan Corporation Ltd. The Big B's company had sold telecast rights to Globe for Rs 50 lakh. Globe wanted to give the serial to Sony TV.

The company had earlier entered into a contract with Set Satellite (Singapore) P Ltd for Rs 1.32 crore as consideration for giving telecast rights of Dekh Bhai Dekh. Customs people saw the shipping bills filed by Globe for export, and decided not to clear it. Was it because they wanted to see the serial first? No, they felt that the cassettes were overvalued.

It should have been an astute accountant in the Department who calculated that the cost involved in recording the videocassettes, including the value of the cassettes, was Rs 21,000 only. Accordingly, a show-cause notice was issued to Globe, and in due course there was an order from the Customs Commissioner for `absolute confiscation of pre-recorded cassettes' and a penalty of Rs 10 lakh on Globe; also, a penalty of Rs 1 lakh was imposed on Orson Video P Ltd that had recorded the cassettes.

Globe submitted that there was no misdeclaration because the entire remittance of Rs 1.32 crore was through local banking channel, and that value was shown in the shipping bill. "The Commissioner has only taken the physical value of the cassettes and the cost of recording without appreciating that it is contents recorded in the said cassettes which were the subject matter of the agreement between the two parties and it is the value of the serial which is the core issue," reasoned the company.

What did the Commissioner have to say? His order alludes to statement of Hirachand Dand, Globe's proprietor, that the overseas buyer already had the original master cassettes exported earlier. If so, why was Globe sending copies afresh? "To claim benefit under Sec 80HHC of the Income-Tax Act," was the answer from Dand that the order cites.

Other observations of interest are that the cassettes under dispute were not required for telecast, and they "don't have any value other than the material cost and processing charges."

The Commissioner's order refers to the agreement between Globe and Set Satellite that export would be of "high first class quality Betacam SP tapes" but the consignment under contention was of "ordinary VHS cassettes." He also records that Sony had started telecast "prior to the present export."

After listening to both the sides, Ms Archana Wadhwa, Judicial Member of the Tribunal had this to say: "The Commissioner's finding that these exports were being effected at a high value with the sole purpose of claiming income-tax benefits is better left to be taken care of by the IT authorities." Thus, confiscation and penalty were not justified, she said. On the value of Rs 21,000 too, Ms Wadhwa expressed disagreement since it was "without appreciating that it is not the materialistic value of the goods but the value of the intellectual property, i.e., the serial which is recorded in the said cassette."

A sitcom of sorts?

Tailpiece

"I want my son to take up an MNC job but he wants to do social service!"

"Try to frighten him with the service tax bogey."

Detaxification@TheHindu.co.in

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