2005 (6) TMI 193 - AT - Customs

Summary

Issues Involved:
1. Appropriateness of Rule 6 for customs valuation.
2. Method of identifying 'similar' whisky brands for comparison.
3. Exclusion of certain similar goods from consideration.
4. Adjustment for differences in quantity and retail prices.

Detailed Analysis:

1. Appropriateness of Rule 6 for Customs Valuation:
The appellant contested the method of valuation under Rule 6, arguing that Rule 6 (transaction value of similar goods) was not appropriate for the valuation of the goods in India. They asserted that the correct method should have been the deductive value method stipulated in Rule 7 of the Customs (Valuation) Rules. The Tribunal, however, did not delve into this issue because it had already been left open to the adjudicator in a previous remand order, and no appeal had been filed against that order.

2. Method of Identifying 'Similar' Whisky Brands for Comparison:
The appellant objected to the method used for identifying 'similar' whisky brands, arguing that the impugned order relied on Indian retail prices of various whisky brands, which was contrary to the rule. The rule contemplates first identifying similar goods and then using the transaction values of these goods, not comparing prices first and then determining the similarity of goods based on prices. The definition of 'similar goods' in the Customs Valuation Rules requires that they have like characteristics and component materials, and be commercially interchangeable, considering quality, reputation, and trademark.

3. Exclusion of Certain Similar Goods from Consideration:
The appellant argued that the Commissioner did not disclose or consider the entire data relating to the import of 'similar goods' during the period of dispute, which violated the rule stipulating that the lowest transaction value should be used to determine the value of imported goods. The Commissioner's rejection of the appellant's demand for full import data was deemed erroneous. The Tribunal directed the investigation to disclose particulars of all imports and considered the data so disclosed. It was found that Findlaters, a brand mentioned in the show cause notice, was excluded from consideration, which was illegal as the rule required using the lowest transaction value of similar goods.

4. Adjustment for Differences in Quantity and Retail Prices:
The appellant contended that adjustments were required for differences in quantity and retail prices. The rule mandates that adjustments be made based on demonstrated evidence of commercial practice in relation to quantity discounts. The appellant provided examples where the import quantities were significantly higher than those of similar goods, warranting quantity discounts. Additionally, differences in retail prices between the compared and similar goods necessitated adjustments in import prices. The Tribunal noted that differences in retail prices were significant and required due adjustment.

Conclusion:
The Tribunal found that the valuation should be re-done using the lowest transaction value of Findlaters for determining the price of 100 Pipers and making due adjustments for quantity and retail price differences. The impugned order was set aside, and the case was remitted to the Commissioner for fresh adjudication, allowing both sides to present relevant data.