Declare the correct value on the Customs form?

Totally agree with the logic carlsbad2 is stating. There is a "return for repair" box right on the customs form one fills out with the couriers, I would fill that out. But here is the issue- the album ends up snapped in half at the consignee, it is only insured for $50 (you can't insure for a higher amount then the declared value). Now the fight goes on for who is on the hook for the 1200 paid. This assumes the carrier will even entertain paying for damaged items. Last I enquired they only would cover loss, not damage, unless it was original packaging from the manufacturer, which seems odd when you are talking about an album. I would still do it (mark it at $50) with the understanding that the original shipper is on the hook. 

Wait, did you say $1200 for one album?! 

Now, or ever, is no time to engage in fraud.

I do not profess to know the intricacies of US customs costs, but if the shipper charged you $1,200 for something that was "not as described", I would not trust him to do what's right for you.

Of course if it is "not as described", then perhaps $50 is an accurate value.

I don't know anything about customs but the above comments are spot on, fraud is bad on any level and if you got something that wasn't nearly as described, and you put a $50.00 value on it, your refund will be $50.00