Customs valuation under Rule 6 requires proven evidence for quantity-based adjustments; ad-hoc pricing changes fail without objective support.

In customs valuation, once appellate jurisdiction is exercised and the earlier appeal is dismissed, the doctrine of merger gives finality to the operative order, so the Tribunal cannot reopen the applicability of Rule 6. The text also states that quantity- or commercial-level adjustments under the Customs Valuation Rules must rest on demonstrated evidence showing reasonableness and accuracy; higher import volume alone is insufficient. On that basis, an ad-hoc 20% adjustment without documentary support was not sustainable and was set aside, while the Rule 6 valuation position was upheld.

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Issues: (i) Whether the Tribunal was justified in re-examining the applicability of Rule 6 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988; (ii) whether the ad-hoc adjustment of 20% in the price difference on account of volume of imports was sustainable in the absence of demonstrated evidence.

Issue (i): Whether the Tribunal was justified in re-examining the applicability of Rule 6 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988.

Analysis: The issue had attained finality when the Supreme Court dismissed the earlier statutory appeal against the Tribunal's remand order. Once appellate jurisdiction under Section 130E of the Customs Act, 1962 had been invoked and the appeal was dismissed, the doctrine of merger applied, and the order of the superior court became the operative order. The later remand order had also confined the controversy to valuation adjustments and had left the applicability of Rule 6 undisturbed.

Conclusion: The Tribunal was not justified in reopening the question of applicability of Rule 6; the finding that Rule 6 governed the valuation stood affirmed and the revenue succeeded on this issue.

Issue (ii): Whether the ad-hoc adjustment of 20% in the price difference on account of volume of imports was sustainable in the absence of demonstrated evidence.

Analysis: Rules 5 and 6 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 permit adjustment for differences in quantity or commercial level only on the basis of demonstrated evidence that clearly establishes the reasonableness and accuracy of the adjustment. Higher import volume by itself is not enough. In the absence of documentary material showing any rebate, discount, or comparable objective basis for quantification, an arbitrary percentage adjustment could not be sustained.

Conclusion: The 20% adjustment was not sustainable and was set aside, with the result that this issue was decided in favour of the revenue in the sense that the importer did not obtain the claimed relief.

Final Conclusion: The valuation method under Rule 6 was upheld, but the Tribunal's ad-hoc allowance for quantity-based adjustment was rejected for want of demonstrated evidence, leaving the importer unsuccessful on the principal challenge and the revenue successful on the adjustment issue.

Ratio Decidendi: In customs valuation, once appellate jurisdiction has been exercised and an appeal dismissed, the matter attains finality by merger; and any quantity or commercial-level adjustment in the transaction value of identical or similar goods can be made only on objectively demonstrated evidence establishing its reasonableness and accuracy.

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