2017 (9) TMI 901 - AT - Customs

Valuation - related party transaction - comparable prices - import of foreign scotch - Though the principal company was registered in USA but the goods were imported from Scotland by making the payment in foreign currency i.e. British pound. The invoices produced by the assessee-Appellants were rejected by the Customs Department and had taken the value from their own resources which were on higher side - Held that - an identical issue has come up before the Hon ble Supreme Court in the case of Pernod Ricard India (P) Ltd. 2010 (7) TMI 467 - SUPREME COURT OF INDIA where it was held that the Tribunal erred in re-opening and examining afresh the question as to whether or not the value of CAB could be determined by applying Rule 6 and therefore the objection of the revenue in that regard deserves to be accepted. Principles of Natural Justice - supply of comparable chart - Held that - the considerable time has already been lapsed and the assessee-Appellants have not asked the relevant material in the first round of litigation before the Tribunal as well as before Hon ble Delhi High Court to support his arguments. At this belated stage demanding of the documents i.e. comparable chart is nothing but a dilatory tactics just to delay the proceedings as the period under consideration starts from 2003. The original authority has already given the chart by mentioning that the Concentrated Alcohol Beverages (CAB) was diluted upto 60% concentrate. There is no reason to interfere with the impugned order pertaining to the comparison of the price. It may be mentioned that the Department has not taken care of inflation in the price. The prices available in the year 1999 were applied in the year 2003 to 2011. If the prices have gone down in the subsequent period (under consideration) then the assessee-Appellants have not provided any comparable chart/material in spite of repeated requests by the Bench. When it is so then the impugned order appears reasonable. Hence by upholding the impugned order along with the reasons mentioned therein there is no merit in the appeal filed by the assessee-Appellants. Interest - Held that - the provisions of sub-sections (3) and (4) of Section 15 were inserted on 13.07.2006 vide Section 21 of the Taxation laws (Amendment) Act 2006 - The said provision is not applicable retrospectively. Hence prior to 13.07.2006 no interest can be charged. Therefore the ground for charging interest retrospectively is allowed in favour of the assessee-Appellants. Appeal allowed - decided partly in favor of appellant.

Summary

Issues Involved:
1. Valuation of imported goods.
2. Violation of principles of natural justice.
3. Applicability of interest on differential duty.

Detailed Analysis:

1. Valuation of Imported Goods:
The primary issue pertains to the valuation of imported foreign scotch by the assessee-Appellants from its principal company. The Customs Department rejected the invoices provided by the assessee-Appellants and determined the value based on their own resources, which were higher. The Department's valuation was based on the prices available in 1999, which the assessee-Appellants contested, arguing that the prices had fallen during the period under consideration (March 2003 to June 2011). The Tribunal previously remanded the matter to the original authority, and the Delhi High Court directed a de novo decision after setting aside the interim order of the Commissioner (Appeals).

2. Violation of Principles of Natural Justice:
The assessee-Appellants contended that the Department did not supply the complete data required under Rule 6, thus violating the principles of natural justice. They argued that the valuation was arbitrary and based on outdated prices. The Department, however, maintained that the principles of natural justice were not violated, as the assessee-Appellants were aware of the facts and were given opportunities to challenge the assessment. The Commissioner (Appeals) noted that the assessee-Appellants were aware of the subject matter and the basis of the show cause notice, and thus, there was no violation of natural justice.

3. Applicability of Interest on Differential Duty:
The assessee-Appellants argued that interest could not be charged for the period before 13.07.2006, as the relevant provisions of sub-sections (3) and (4) of Section 18 were inserted only on that date. They relied on the judgments in Sterlite Industries (India) Ltd. Vs CC, Tuticorin and CC (Preventive) Vs Goyal Traders to support their contention that interest cannot be charged retrospectively. The Tribunal agreed with this argument, stating that the provisions are not applicable retrospectively, and thus, no interest can be charged for the period before 13.07.2006.

Separate Judgments:
The Tribunal referred to the Supreme Court's decision in Pernod Ricard India (P) Ltd. Vs CC, ICD TKD, which upheld the applicability of Rule 6 of the Customs Valuation Rules, 1988, and stated that adjustments under Rule 5(1)(c) can only be granted on production of evidence establishing the reasonableness and accuracy of adjustments. The Tribunal found no reason to interfere with the impugned order regarding the comparison of prices, as the assessee-Appellants did not provide any comparable chart/material despite repeated requests.

Conclusion:
The Tribunal upheld the impugned order concerning the valuation of imported goods, finding no merit in the appeal filed by the assessee-Appellants. However, it allowed the appeal regarding the applicability of interest, ruling that no interest can be charged for the period before 13.07.2006. Both appeals were partly allowed, with the Tribunal emphasizing the need for demonstrated evidence to justify any adjustments in valuation.