2006 (12) TMI 327 - AT - Customs

Summary

Issues Involved:
1. Applicability of Rule 6 of the Customs Valuation Rules for determining transaction value.
2. Adjustments for alcoholic strength, quantity differences, and retail price differences.
3. Non-disclosure of brand name and age of imported scotch whisky.
4. Allegations of conspiracy to evade customs duty.
5. Requirement of pre-deposit for hearing the appeal.

Detailed Analysis:

1. Applicability of Rule 6 of the Customs Valuation Rules:
The appellant contested the applicability of Rule 6 for valuing the imported goods, arguing that the correct method should have been the deductive value method under Rule 7. The Tribunal had previously left it open for the adjudicating authority to decide the applicability of Rule 6. The Commissioner, following the Tribunal's remand order, determined that Rule 6 was applicable and used it to reassess the value of the goods. The Tribunal had earlier directed the Commissioner to use the lowest transaction value of Findlaters for determining the price of 100 Pipers and to make necessary adjustments. The Commissioner adhered to these directions and concluded that Rule 6 was applicable, and this decision was not challenged by the appellant.

2. Adjustments for Alcoholic Strength, Quantity Differences, and Retail Price Differences:
The Commissioner addressed three main issues: adjustments for alcoholic strength, whether the lowest price should be determined on a year-to-year basis or for the entire period, and adjustments for quantity differences. The Commissioner found that the price of CAB in the international market was based on alcoholic strength and that the comparison should be made on a year-to-year basis. For quantity adjustments, the Commissioner held that the appellant did not provide sufficient evidence to justify such adjustments. The Commissioner also made specific adjustments for different products like 100 Pipers, Passport, Something Special, and International Malt, based on the lowest transaction value of similar goods and the necessary adjustments for alcoholic strength and retail price differences.

3. Non-disclosure of Brand Name and Age of Imported Scotch Whisky:
The appellant had imported scotch whisky concentrates without disclosing the brand name or age of the whisky, declaring the goods only as CAB. This non-disclosure led to the goods being assessed under incorrect headings, and a show cause notice was issued alleging a conspiracy to evade customs duty. The High Court of Delhi directed that the notice should be treated as a show cause notice for finalizing the assessment under Section 18 of the Customs Act, 1962.

4. Allegations of Conspiracy to Evade Customs Duty:
The show cause notice alleged that the appellant had engaged in a conspiracy to evade customs duty by misdeclaring the imported goods. The Commissioner, in the adjudication, confirmed the demand for differential duty based on the reassessed value of the goods. The Tribunal, in its remand order, directed the Commissioner to reassess the value using the lowest transaction value of similar goods and to make the necessary adjustments. The Commissioner followed these directions and confirmed the demand for Rs. 40.37 crores.

5. Requirement of Pre-deposit for Hearing the Appeal:
The Tribunal considered the requirement of pre-deposit under Section 129E of the Customs Act. The appellant argued that the earlier deposit of Rs. 9.74 crores should be considered sufficient for hearing the appeal. However, the Tribunal noted that the remand was for a limited purpose and that the Commissioner had followed the directions given by the Tribunal. The Tribunal held that there was no undue hardship for the appellant and directed the appellant to deposit the duty amount of Rs. 40.37 crores within eight weeks for the interim stay of the impugned order. The amount already deposited would be adjusted towards this deposit.

Conclusion:
The Tribunal upheld the Commissioner's application of Rule 6 for valuing the imported goods and confirmed the demand for differential duty. The Tribunal directed the appellant to deposit the duty amount within eight weeks for the interim stay of the order, noting that there was no undue hardship for the appellant. The Tribunal emphasized the importance of following the directions given in the remand order and the necessity of providing sufficient evidence for any adjustments claimed.