TaxTMI 
TaxTMI 
2010 (7) TMI 467
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....for short "the 1988 Rules"), the Tribunal has directed the jurisdictional Commissioner to redetermine the customs duty liability of the appellant after making certain adjustments in the manner indicated in the order. 2. As both the appeals call in question the same order, these are being disposed of by this common order. 3. The case has had a chequered history and, therefore, in order to appreciate the controversy, it would be necessary to narrate the facts in detail.The appellant (formerly named and styled as Seagrams India Pvt. Ltd.) is a wholly-owned subsidiary of the Seagram Company Ltd., Canada, established for manufacturing/blending of non- molasses based spirits. The appellant imported CAB from M/s Joseph E Seagram and Sons Ltd., Scotland, a wholly- owned subsidiary of Seagram Company Ltd., Canada. The strength of CAB imported was about 60%. It is not in dispute that the appellant is a "related person" to the supplier and this fact was disclosed to the Customs Authorities. The import of CAB was of four varieties, each one meant for manufacturing four brands of scotch whiskies, namely "100 Pipers", "Passport", "Something Special" and "International Malts" (Royal Stag; O....
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....erson", the value declared by them should be accepted in terms of Rule 4(3)(b) of the 1988 Rules. Nevertheless, the Tribunal remanded the matter to the adjudicating authority for a fresh consideration on the question of applicability of Rule 6 as it felt that the appellant had not been granted adequate opportunity to put forth their case against the proposal to apply Rule 6. The Tribunal, however, permitted the Commissioner to proceed under Rule 7 or 8 in the event of his accepting the appellant's plea that Rule 6 could not be applied. Relevant portion of the order is extracted below:- "...We are also of the view that while working out the provisions of Rule the Commissioner has not taken into consideration all the relevant factors. While fixing the value under Rule 6, the authority has to look into the definition of the term `similar goods' under Rule 2(e) and that the conditions contained therein are satisfied. Clauses (b) and (c) of sub-rule (1), sub-rule(2) and sub- rule(3) of Rule 5 are made applicable to Rule 6 also. We find that there is no proper consideration of the above provisions by the Commissioner while arriving at the value under Rule 6. The appellant is justified....
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....hat order. Secondly, the present appeal can be disposed of after considering the appellant's contentions in terms of Rule 6." "13. As already noted we are not going into the submissions made by the appellant against valuation under (sic) Rule 6. Instead, the appeal is being disposed of after considering the alternate submissions relating to errors committed while determining the assessable values based on the transaction value of similar goods." The final direction by the Tribunal reads as follows: "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." 11. This decision of the Tribunal was not put in issue by the appellant before a higher forum. Pursuant to and in furtherance of the directions issued by the Tribunal in the ....
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....port shall be reduced to arrive at the assessable value for CAB imported by the appellant. The above determination is subject to the following conditions:- (a) The value of any brand to be adopted shall not be higher than the value adopted by the Commissioner in his second order dated 28.09.2003. (b) The value of any brand to be adopted shall not be lower than the value declared by the importer." 13. Being dissatisfied with the order/directions of the Tribunal, as stated above, both the parties are before us in this appeal. 14. We have heard Mr. V. Lakshmikumaran, learned counsel appearing for the appellant and Mr. B. Bhattacharya, learned Additional Solicitor General for the revenue. 15. Learned counsel for the appellant strenuously urged that both the authorities below have committed a serious error of law by holding that the value of the imported CAB is to be determined as per the procedure prescribed in Rule 6 of the 1988 Rules. It was argued that having regard to the fact that scotch whisky is a specialty goods and is not commercially interchangeable, the CAB imported by the appellant and by others cannot be said to be `similar goods' as defined in Rule 2(1)(....
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....ence. According to the learned counsel, apart from the fact that any goods, such as scotch whiskies, which are specialty goods, the variations in consumer preferences and the value of trademark and reputation are difficult to ascertain and adjust, there cannot be "demonstrated evidence" for quantifying such differences and, therefore, Rule 6 cannot be applied. 17. Learned counsel for the appellant also urged that the formula devised by the Tribunal, directing loading of the price of imports with 80% of the price differential owing to the differential in quantity imported is arbitrary. It was urged that since the quantity imported by the appellant is 500% to 1500% of the quantity imported by the identified brands, an adjustment of at least 40% from the price of such identified brands should have been allowed by the Tribunal. In support of the proposition that deduction to the extent of 50% in cases of whole sales were allowed, reliance was placed on a decision of this Court in Metal Box India Ltd. Vs. Collector of Central Excise, Madras1. It was, thus, pleaded that the order of the Tribunal, approving the application of Rule 6 deserves to be set aside. In the alternative, it was ....
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.... orders of the Tribunal is irrelevant. 21. The questions arising for determination are:- (i) Whether the Tribunal was justified in re-examining the question of applicability of Rule 6? (ii) If the answer to question (i) is in the affirmative, then whether the value of the CAB for the purpose of levying duty of customs is to be determined as per the procedure prescribed in Rule 6 or in terms of some other Rule? (iii) Whether the direction by the Tribunal regarding adjustment to the tune of 20% in the price difference between CAB of the appellant and the corresponding CAB of the competitor, on account of volume of imports, is justified? 22. Having carefully perused the orders of remand passed by the Tribunal on 25th March 2003 and 29th June 2005, we are of the opinion that the issue with regard to the applicability of Rule 6 of the 1988 Rules for valuation of CAB had attained finality on the summary dismissal of the appellant's appeal by this Court vide order dated 21st November 2003. It is clear from a bare reading of the observations of the Tribunal in its order dated 25th March 2003, extracted in para 11 supra that remand to the Commissioner for fresh adjudication w....
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....risdiction of this Court have been let open. The order impugned before the Supreme Court becomes an order appealed against. Any order passed thereafter would be an appellate order and would attract the applicability of doctrine of merger. It would not make a difference whether the order is one of reversal or of modification or of dismissal affirming the order appealed against. It would also not make any difference if the order is a speaking or non-speaking one. Whenever this Court has felt inclined to apply its mind to the merits of the order put in issue before it though it may be inclined to affirm the same, it is customary with this Court to grant leave to appeal and thereafter dismiss the appeal itself (and not merely the petition for special leave) though at times the orders granting leave to appeal and dismissing the appeal are contained in the same order and at times the orders are quite brief. Nevertheless, the order shows the exercise of appellate jurisdiction and therein the merits of the order impugned having been subjected to judicial scrutiny of this Court." 24. In the present case, the appellant preferred statutory appeal under Section 130E of the Act against order....
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....t from the Tribunal's order dated 29th June 2005, that the scope and purpose of remand to the Commissioner was limited. As it is evident from the afore-extracted paragraphs of the said order of the Tribunal, that the Tribunal categorically declined to go into the issue about the appropriateness of Rule 6, with the result that the finding of the Commissioner in his order passed pursuant to Tribunal's earlier order dated 29th August 2003, regarding applicability of Rule 6 remained undisturbed and in fact attained finality, in as much as, the appellant did not question the correctness of the remand order passed by the Tribunal on 29th June 2005. Keeping in mind the factual scenario, we are of the opinion 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. We order accordingly. 27. In the light of our opinion on the first question, we deem it unnecessary to assess the merits of the submissions made by learned counsel for the parties on the question of applicability of Rule 6 of the 1988 Rules. 28. Thi....
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....nces in such costs and charges between the goods being valued and the identical goods in question arising from differences in distances and means of transport. (3) In applying this rule, if more than one transaction value of identical goods is found; the lowest such value shall be used to determine the value of imported goods." 21 "6. Transaction value of similar goods.- (1) Subject to the provisions of Rule 3 of these rules, the value of 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. (2) The provisions of clauses (b) and (c) of sub-rule (1), sub-rule (2) and sub-rule (3), of Rule 5 of these rules shall, mutatis mutandis, also apply in respect of similar goods." 30. Rule 12 of the 1988 Rules provides that the interpretative notes specified in the Schedule to these rules shall apply for the interpretation of the rules. Notes to Rule 5 read as under:- "Notes to Rule 5 1. In applying rule 5, the proper officer of customs shall, wherever possible, use a sale of identical goods at the same commercial level and in substantially the same quantities as the goods bein....
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....) which has already been accepted under rule 4. 2. All other provisions contained in note to rule 5 shall mutatis mutandis also apply in respect of similar goods." 31. Rule 6 (2) provides that the provisions of clauses (b) and (c) of sub-rules (1) to (3) of Rule 5 of these rules shall mutatis mutandis also apply in respect of similar goods. A similar stipulation appears in note (2) to Rule 6. Rule 5(1)(c) provides that where no sale referred to in clause (b) of sub- rule (1) of this rule, is found, the transaction value of identical goods sold at different commercial level or in different quantities or both, adjusted to take account of the difference attributable to commercial level or to the quantity or both shall be used, provided that such adjustments shall be made on the basis of `demonstrated evidence', which clearly establishes the reasonableness and accuracy of the adjustments. Interpretative Note 4 to Rule 5 reiterates 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. One of such evidences could be a valid pri....
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....emanded the matter to the Commissioner in view of the mistake in the application of Rule 6, had not been questioned by the revenue. In the said order, the Tribunal had held that due adjustments towards quantity differences and retail prices difference should be made wherever warranted. Thus, recognizing that in the present case some "adjustments" were called for. 33.We are of the considered opinion, that bearing in mind the object behind the provision for "adjustment" in terms of Rule 5(1)(c), the fine distinction between the words "adjustment" and `discount' sought to be brought out by the appellant is of no relevance to the controversy at hand. The provision is clear and unambiguous meant to provide some adjustment in the price of identical goods, imported by two or more persons but in different quantities. It is plain that such "adjustment" may not necessarily lead to a decrease in the value. It may result in an increase as well. Reference to the word `discount' in the interpretative note is by way of an illustration to indicate that a seller's price list is one of the relevant pieces' of evidence to establish the factum of quantity discount by the seller. It is manifest that....