1. The present appeal (A. No. C/51434/2014) is filed by the assessee-Appellants against the Order-in-Appeal No. 877/2013 dated 31.12.2013 passed by the Commissioner of Customs (Appeals), New Delhi. The period in dispute is March 2003 to June 2011.
2. The brief facts of the case are that, during the period under consideration, the assessee-Appellants have imported the foreign scotch from its principal M/s. Beam Global. 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. So, the Department raised the demand. Being aggrieved, the assessee-Appellants have filed the present appeal.
3. It may be mentioned that the grievances of the assessee-Appellants have travelled widely. From the record, it appears that earlier the matter had come up before the Tribunal. The Tribunal vide Final Order No. 55772/2013 dated 07.03.2013 remanded the matter to the original authority. The matter had ultimately reached to the Hon'ble Delhi High Court where the interim order of the Commissioner (Appeals) was challenged. The Hon'ble High Court vide order dated 31.07.2013 had set aside the order-in-appeal dated 20.06.2013 and directed the assessee-Appellants to deposit Rs. 15 crores. The direction was also given to decide the issue de novo. As per the direction, the issue was decided de novo which resulted in the present appeal.
4. With this background, we have heard Shri V. Lakshmikumaran, learned counsel for the assessee-Appellants and Shri Govind Dixit, learned DR for the Revenue.
5. The learned counsel for the assessee-Appellants submits that though the value of the impugned goods cannot be determined under Rule 6, even then if Rule 6 is applicable, then it is obligatory on the part of the Department to supply the complete data which was not supplied to the assessee-Appellants. He further submits that the value was taken by the Department in an arbitrary manner on the basis of the value which was available in the year 1999. He also submits that due to the fact that the principal had supplied the goods at the prices available during the period under consideration have now fallen down, so the prices taken by the Department in the year 1999 is not applicable in the instant case. To support his arguments, he relied upon the ratio laid down in the following cases:
(i) Seagram Manufacturing Ltd. vs. CC, New Delhi : 2003 (154) ELT 610 (Tri.-Del);
(ii) Pernod Ricard India (P) Ltd. vs. CC, ICD, TKD : 2010 (256) ELT 161 (SC); and
(iii) SRF Ltd. vs. CC, Chennai : 2003 (158) ELT 642 (Tri.- Del)
Lastly, the learned counsel submits that the impugned order may be set aside and necessary directions be given to the original authority to supply the complete data. He also submits that the comparison was taken on the basis of Black & White whisky which was having the lower price. He has agreed that the goods were imported by the assessee-Appellants from its principal.
6. As regards the interest, he submits that the interest before 13.07.2006, cannot be charged for the reason that the provisions of sub-sections (3) and (4) of Section 18 were inserted on 13.07.2006 vide Section 21 of the Taxation Laws (Amendment) Act, 2006. To support his contention that interest cannot be charged retrospectively i.e. prior to 13.07.2006, he relied upon the judgment of the Tribunal in the case of Sterlite Industries (India) Ltd. vs. CC, Tuticorin : 2008 (223) ELT 633 (Tri.-Chennai) and also of the Hon'ble High Court of Gujarat in CC (Preventive) vs. Goyal Traders : 2014 (302) ELT 529 (Guj).
7. On the other hand, Shri Govind Dixit, learned DR, justifies the impugned order and submits that the assessee-Appellants, during the period under consideration, had imported the 'Concentrated Alcohol Beverages' (CAB) which was diluted in India. He submits that the issue of comparable prices has already come up before the Tribunal as well as Hon'ble Supreme Court in the case of Pernod Ricard India (P) Ltd. vs. CC, ICD TKD : 2010 (256) ELT 161 (SC), wherein the assessee's appeal was dismissed and the question of bulk discount was rejected. He also submits that the valuation of the goods, in the instant case, was taken on comparison with the similar goods. He also submits that, to substantiate findings, the original authority has prepared the chart, as mentioned in his order. The learned DR further submits that the main grievance of the assessee-Appellants is that, the comparative chart was not provided and that is the violation of the principles of natural justice before applicability of Rule 5 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 and Rule 6 of the then Customs Valuation Rules, 1988. In this regard, he submits that the principle of natural justice was not violated especially when the Commissioner (Appeals) in his order has mentioned:
"7. It has been argued that the principles of natural justice were violated in terms of non-intimation about the import data of such period for challenging the assessment, especially, to ascertain the lowest contemporaneous transaction value as per the said Valuation Rules. I find that this contention is totally untenable as the Appellant is aware of the entire facts throughout the disputed period and also was given opportunity by issuing the show cause notice dated 24.07.2003. In fact, it is also observed that the Appellant approached Hon'ble High Court for issuance of assessment Order after hearing the importer; which was appropriately followed by the Ld. Adjudicating Authority. The allegations in general and vide para 7 to 28 in specific of the impugned show cause notice are self explanatory about the intention of the Department based upon the given facts and evidences. Hence, it is not the case that the Appellant was not aware of the subject matter and the basis of issuance of show cause notice.
8. The Appellant contested that Rule 5 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 and Rule 6 of then Customs Valuation Rules, 1988 are not applicable as the comparable values of the similar goods imported ought to be in close temporal proximity to the goods being valued in order to comply with the said Rules. From the perusal of the impugned order, I find that this aspect has been considered on the facts that the RSP of the similar goods and the brands thereof vis-à-vis the impugned goods and the brands thereof of each year were considered and after giving proper adjustment of percentage concentration by volume and RSP of bottle whisky of the said brand is sold in Delhi, while ignoring the non-substantial differences in RSP. Moreover, Chart V, VI and VII of the impugned order categorically provide that the value was considered based upon contemporaneous value of the similar goods imported."
Finally, he justified the impugned order and submitted that the same has been passed as per law. According to him, no old record is available with the Department
8. In counter, the learned counsel for the assessee-Appellants, submits that para 8 of the impugned order is factually incorrect as the original authority in his chart has mentioned that the prices were not available. At the cost of repetition, the Department has not given any comparable list.
9. At this stage, learned DR for the Department submits that no old record is available and assessee-Appellants might have arranged the comparable list which was not done.
10. Heard both sides at length and gone through the material available on record. We find that an identical issue has come up before the Hon'ble Supreme Court in the case of Pernod Ricard India (P) Ltd. (supra), where the appeal was dismissed. In the impugned order, the Commissioner (Appeals) has relied upon the ratio laid down in the case of Pernod Ricard India (P) Ltd. (supra) by mentioning that:
"f. It was observed that from the same port one more importer namely M/s. Pernod Ricard Spirits and Wine Limited have also been importing blended whiskies of higher concentration since 1994 for their brands namely 100 Pipers, Passport and Something Special. In this case also the importer has been importing these whiskies from related person. In this case also the importer had not correctly declared the value of the imported CAB imported from the related party, therefore, provisional assessment was done and the investigation was conducted by DRI. On the basis of these investigations, two show cause notices dated 19.12.2000 and 19.08.2001 were issued for redetermination of value and demand of differential duty to M/s. Pernod Ricard which got finality on 26.07.2010 from the Hon'ble Supreme Court of India. The applicability of Rule 6 of the Customs Valuation Rules, 1988 (presently Rule 5 of Customs Valuation of Imported Goods Rules 2007) was upheld and also upheld that adjustment under Rule 5(1)(c) can be granted only on production of evidence establishing reasonableness and accuracy of adjustments. Therefore, the assessment of value of CAB used in manufacture of various brands manufactured by M/s. Pernod Ricard done on the lowest value of Contemporaneous import of similar used in the manufacture of branded bottled whisky of comparable standard after adjustment of difference of RSP, of any, of bottle whisky was upheld by the Hon'ble Supreme Court."
11. Needless to mention that the Hon'ble Supreme Court in the case of Xerographic Ltd. vs. CCE, Ahmedabad, 2006-TIOL-201-SC-CX, has observed that for the term of 'related person', following three conditions are to be satisfied:-
(i) There should be mutuality of interest;
(ii) The alleged related person should be related to the assessee as per definition of Section 4(4)(c) given in the Central Excise Act, 1944;
(iii) The price charged from the 'related persons' was not the normal price but the price lower than the normal price and because of extra commercial considerations the price charged was less than the normal value.
In view of the above, the assessee-Appellants is "related person" to the supplies who is the present company. It is the allegation of the Department that the goods were supplied to the assessee-Appellants at a "lower price".
12. Further, it appears that regarding the applicability of the Rule 5 and 6, the Hon'ble Supreme Court in its order in the case of Pernod Ricard India (P) Ltd. has observed as under:
"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 price list containing prices referring to different levels or different quantities.
32. The case of the revenue is that the term 'demonstrated evidence' means some evidence to establish that the seller had agreed to give some discount to the importer on the listed price of the product on account of high volume of purchase, which in common parlance is termed as bulk discount and the production of such evidence is a pre-requisite for any adjustment under the Rule. The stand of the appellant, on the contrary, is that Rule 5(1)(c) and the interpretative Note (4) to Rule 5 only seek to clarify that where identical goods are sold to two or more buyers at a time but are not at the same commercial level or quantity, an "adjustment" shall be made to take account of the difference attributable to commercial level or to quantity or both. Their plea is that since the rule itself recognizes that prices differ when quantity differs, reference to 'discount' in the interpretative note needs to be viewed in a wider context because according to the appellant, the expression "demonstrated evidence" is broader in scope than the term 'discount', which is used only as an example of such evidence for adjustment. It is also pleaded that tying the concept of "adjustment" to 'discount' would severely restrict the application of Rule 5 or 6 as a clear evidence of 'discount' may not be available in all cases though on the facts of a particular case adjustment may be needed. In support of the proposition that there is a difference between the concept of "adjustment" and 'discount', reliance was placed on the decision of this Court in Commissioner of Central Excise, Jaipur v. Rajasthan SPG. & WVG. Mills Ltd. & Anr., wherein it was observed that the concept of 'discount' and 'abatement' are different. It was also argued on behalf of the appellant that it is a well accepted norm that higher quantity of goods attract lower prices, which fact has received judicial recognition by this Court in Mirah Exports Pvt. Ltd. v. Collector of Customs, Metal Box India Ltd. (supra) and Basant Industries Nunhai, Agra v. Additional Collector of Customs, Bombay. Responding to the stand of the revenue that on the facts of the case, no adjustment was warranted, the appellant asserts that the issue of adjustment has reached finality as the correctness of the second remand order, whereby the Tribunal had remanded 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 "adjustment" in terms of Rule 5(1)(c) of 1988 Rules, for the purpose of determination of value of an import, can be granted only on production of evidence which establishes the reasonableness and accuracy of adjustment and higher volumes of imports per se, would not be sufficient to justify an adjustment, though it may be one of the relevant considerations."
13. Regarding sole grievance of the assessee-Appellants i.e. violation of natural justice and supply of the comparable chart, it appears 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.
14. It may be mentioned that the matter has reached to the Hon'ble Delhi High Court, but nowhere the assessee-Appellants demanded the documents in question. Hence, at this stage, the request of the assessee-Appellants cannot be acceded to, specifically when the learned DR for the Department did mention that no old record/document is available in this case.
15. In the instant case, the original authority has applied the principle of ejusdem generis as is evident from the chart mentioned in the order-in-original and the same appears reasonable in the peculiar facts and circumstance
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s of the case. 16. Further, identical matter has already been settled by the Hon'ble Supreme Court in the case of Pernod Ricard India (P) Ltd. (supra), then we find 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, we find no merit in the appeal filed by the assessee-Appellants. 17. Regarding the applicability of the interest, it may be mentioned 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 as mentioned in the case of Sterlite Industries (India) Ltd. as well as Goyal Traders (supra). 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. 18. In the result, Appeal No. C/51434/2014 filed by the assessee-Appellants is partly allowed. M/s. Pernod Ricard India (P) Ltd. vs. CC, New Delhi 19. Since in Appeal No. C/52635/2015, filed by the assessee-Appellants, the facts, circumstances and counsels are identical and the period in dispute is same, so in the light of the above discussion, this appeal is partly allowed for the reasons mentioned in the earlier order (supra). 20. In the result, both the appeals are partly allowed.