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TMI Blog2006 (12) TMI 327X X X X Extracts X X X X X X X X Extracts X X X X ..... value and issued the following directions in paragraph 20 of the order :- 20. From the above, it is clear that the valuation of the items in question should be re-done by using lowest transaction value of Findlaters for determining the price of 100 Pipers. Further, due adjustments towards quantity difference and retail price difference should be made wherever warranted. In order to facilitate such revaluation, we set aside the impugned order and remit the case to the Commissioner for fresh adjudication. Both sides would be at liberty to present data relevant to the above issues (emphasis added). 3. The appellant had been engaged in bottling of international brands of scotch whisky in India since 1994. For such activities the appellant imported scotch whisky concentrates. The manufacturing process involved dilution of imported whisky concentrates (approximately 63% proof) to the permitted Indian concentration of 42.8% proof; and, in case of Scotch whiskies sold under Indian brands imported whisky concentrates (malts) were being mixed with indigenous whisky concentrates and bottled. 4. The imports were made by the appellant from M/s. Joseph Seagram and Sons Ltd., Scotland whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 27-8-2003 determining the value in terms of rule 6 of the Customs Valuation Rules holding that there was short levy of about Rs. 40 crores in respect of the consignments covered under the said two show cause notices. That order was again challenged before the Tribunal by the appellant on the grounds that :- (i) Rule 6 is not applicable for the valuation of the goods in India; (ii) The correct method to follow would have been deductive value method stipulated in Rule 7; and (iii) The Commissioner had fixed high assessable value arbitrarily by flouting the provisions of rule 6. 6.1 In their objection against selecting similar goods , it was contended that the price of a high branded consumer item was not dependent upon or determined by its intrinsic cost, but was given by its brand value. It was submitted that the transaction value of the appellant s imports should have been seen in the context of its brand position in the Indian market at the time of the imports. According to the appellant, the transaction value was about 9.5% higher than the value arrived at, if the deductive value method under Rule 7 had been followed. 6.2 In the context of rule 6, it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of CAB imported by the noticee, namely: whether any adjustment was required on account of alcoholic strength, whether the lowest price of similar goods was to be determined on year to year basis or the lowest price available for the entire period (1995 to 2001) was to be made applicable to the entire period, and as regards the adjustment on account of quantity imported by the noticee and the quantity imported by the importer of similar goods. From the material on record he found that the price of CAB in the international market was based on the alcoholic strength of the concentrates (para 31 of the order). It was noted that the value of bulk spirit was calculated at the time of sale based on its alcoholic strength and this was the industry s practice followed throughout the world. In paragraph 32 of the order the authority found that the noticee had changed its stand taken in the appeal memo and was now stating that lowest prices should be made applicable to the entire period. It was held that under rule 6(1) value of the imported goods shall be the transaction value of similar goods sold for export to India and imported at or about the same time as the goods being valued. It wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Malt, for determination of the value of the goods in question. On the basis of the material on record, he worked out the total differential duty of Rs. 23,54,15,685/- in respect of International Malt , Rs. 12,90,51,794/- in respect of 100 Pipers, Rs. 2,31,73,233/- in respect of Something Special, Rs. 1,10,23,217/- in respect of Passport, and also difference of customs duty payable on six bills of entry of Passport and Something Special at Rs. 15,71,610/-, i.e., in all a total sum of Rs. 40.37 crores and directed the appellant to deposit the same forthwith after adjusting the amount already paid by the noticee for the relevant period. 9. The learned Counsel appearing for the appellant contended that the Commissioner erroneously refused to consider whether rule 6 was applicable. According to him, in respect of the goods which were imported, trade mark had great value and the whiskies of particular trade mark and quality were not comparable with any other whiskies. He submitted that though the Tribunal had earlier left it open for the appellant to contest the applicability of rule 6, the Commissioner did not understand the order of the Tribunal when he held that application of rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of India reported in 2005 (186) E.L.T. 49 (Del.), to point out that the High Court observed in paragraph 3 of the judgement that, it would have been appropriate for the authorities concerned to hear the appellant without the pre-deposit condition of Rs. 20 lacs, because the appellant had already deposited a sum of Rs. 20 lacs which itself was considered by the Tribunal to be an adequate amount for compliance with the provisions of Section 35F of the Act. It will be noticed that in that case the assessing officer had earlier adjudicated the excise liability at Rs. 2,76,48,219/- and after the remand order made in an appeal by the Tribunal in which deposit of Rs. 20 / lacs was made, the assessing officer had once again re-adjudicated the matter confirming the same demand of Rs. 2,76,48,219/- and the penalty. The High Court directed the Tribunal to hear the appeal against the order of the adjudicating authority without enforcing further condition of pre-deposit. The learned Counsel also relied upon the decision of the Hon ble Delhi High Court in Writ Petition No. 432/06 dated 16-1-2006 in which the said decision in Super Tyres was followed. 10. The learned authorized representative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , nor any evidence submitted to demonstrate existence of such discount. As regards the adjustments on the basis of alcoholic strength in respect of 100 piper in comparison with similar goods findlater, the learned authorized representative submitted that increase in valuation was wholly justified. On the contention that retail price of findlater prevalent in Delhi, should not have been considered, the learned authorized representative for the department pointed out that the appellant itself had, in paragraph 4 of the reply to the show cause notice, asserted that they were certain that the findlater was being sold at a price ranging from Rs. 650/- to Rs. 768/- depending on the state in which the product is sold. Therefore, the contention that principles of natural justice were violated is not correct. It was argued that under rule 6(1), the transaction value of similar goods sold for export to India and imported at or about the same time as goods being valued, was required to be adopted in view of the scheme of valuation under Section 14 of the Act and therefore, the adjudicating authority had correctly applied the lowest value of imports of comparable goods on yearly basis since ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e should be made wherever warranted. The remand was made only to facilitate such revaluation. Thereafter, the adjudicating authority appears to have scrupulously followed these directions and has made the impugned order on the basis of the material on record, for cogent reasons. For deciding whether pre-deposit of further amount is warranted or whether pre-deposit is warranted at all, we are vitally concerned with the nature of the order now made by the Commissioner. The decision in Super Tyres Pvt. Ltd. (supra) which was followed in WPC 432/2006 appears to have been rendered in the context of the fact that the same demand was reiterated after the remand for de novo adjudication. The High Court observed that it would have been appropriate for the authorities concerned to hear the appellant without further pre-deposit. It is obvious that the Hon ble the High Court did not intend to take away the power of the Tribunal under Section 129E to require deposit to be made in cases where there is no undue hardship, having regard to the nature of the order which is challenged before it and in the facts and circumstances emanating pursuant to the remand. In the present case, the situation aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt did not adduce any evidence whatsoever to justify any quantity discount beyond merely a bare assertion. Therefore, the finding regarding differential duty in respect of International Malt payable by the appellant which is worked out at Rs. 23,54,15,685/-, prima facie, appears to be justified and based on the material on record. 13. Any adjustment on account of quantity imported could be made only on the basis of demonstrated evidence establishing the reasonableness and accuracy of the adjustment. This is clear from the provisions of clause (c) of rule 5(1) which also applied to determination of valuation under rule 6(2) and as per the interpretative note 4 of rule 5 which is also applicable to rule 6, a condition for adjustment because of different commercial level or different quantity is that, such adjustment, whether it leads to an increase or a decrease in the value, be made only on the basis of demonstrated evidence that clearly establishes the reasonableness and accuracy of the adjustment, e.g. valid price lists containing prices referring to different levels or different quantities. The appellant simply gave the total quantity of import of CAB by them for the period cov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8% on findlaters value was adopted for comparison. 15. The appellant had already asserted that it had the knowledge of the retail price of findlater , which was sold at prices ranging from Rs. 650 to Rs. 768/- depending upon the State in which the product was sold. Obviously, therefore, the appellant would be aware of the price at which it was sold at Delhi. Therefore, prima facie, there was no violation of principle of natural justice when the Commissioner referred to the fact that since the import had taken at Delhi, it was logical to compare the retail price of findlaters and 100 pipers prevalent in Delhi rather than the retail prevalent price in other States. During the arguments, this observation of the Commissioner was blown out of proportion and the learned counsel bestowed much of his advocacy on this aspect for urging violation of principles of natural justice. With the knowledge that the appellant itself claimed to have in respect of the prevalent prices of findlaters , there was hardly any valid reason to counter the reliance by the adjudicating authority on the retail price at Delhi, since the imports had taken place at Delhi, for comparing the retail price of fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sky imported by the noticee at 1.31/BL plus packing, insurance and ocean freight having alcoholic strength of 63% v/v which was found to be similar and comparable to Black Dog scotch whisky of United Distillers, the Commissioner accepted the appellant s claim that the retail price of similar and comparable brand Black Dog 12 years old scotch whisky was Rs. 1300/- per bottle whereas the retail price of Something Special 12 years old scotch whisky was Rs. 1100/- per bottle, and worked out the difference of Rs. 200/- per bottle at 18% which was adjusted with each year s lowest import value of Black Dog 12 years old scotch whisky, to arrive at the lowest import value of Something Special 12 years old scotch whisky, and the difference amount of duty was justifiably worked out at Rs. 2,31,73,233/-. 18. The grievance of the appellant voiced by the learned counsel that the lowest price of each year should not have been taken into account and the lowest price during the entire period 1995-01 should have been taken into account, cannot be accepted for the simple reason that the scheme of the provisions of Section 14 of the Act and rule 6 of the Rules clearly contemplated taking into cons ..... X X X X Extracts X X X X X X X X Extracts X X X X
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