2010 Supreme(SC) 616

Supreme Court of India
THE HONOURABLE MR. JUSTICE D.K. JAIN & THE HONOURABLE MR. JUSTICE T.S. THAKUR
Pernod Ricard India (P) Ltd.
Versus
Commnr. of Customs, ICD Tughlakabad
Civil Appeal No.5840 of 2008 with Civil Appeal No. 1110 of 2009
Decided on : 26-07-2010

Headnote:(a) Constitution of India – Article 136 – SLP and Appeal – Dismissal in limine – Distinction – SLP dismissed in limine by a non-speaking order – Doctrine of merger does not apply – In case of dismissal of Appeal whether by speaking or non-speaking order – Doctrine of merger applies – Applicability of rule 6 of Customs Valuation (Determination of Prices of Imported Goods) Rules, 1988 set at rest in earlier appeal dismissed by Supreme Court, though by non-speaking order – Appellant stopped from raising issue of applicability of rule 6. (Para 23, 24)

       (2000) 6 SCC 359; (2000) 5 SCC 373; (1989) 4 SCC 187 – Relied upon

       (b) Customs Valuation (Determination of Prices of Imported Goods) Rules, 1988 – Rule 6 – Tribunal in its earlier order refusing to go into appropriateness of Rule 6 and remanding matter to Commissioner to determine value of CAB accordingly – Appellant not challenging remand order – Applicability of Rule 6 attaining finality – Could not be re-opened by Tribunal – Objection of Revenue – Deserves to be accepted. (Para 26)

       (c) Rule 5(1)(c) – Fine distinction between the words "adjustment" and `discount’ – Irrelevant – Provision is meant to provide some adjustment in the price of identical goods, imported by two or more persons but in different quantities – Such "adjustment" may not necessarily lead to a decrease in the value – Can be granted only on production of evidence which establishes the reasonableness and accuracy of adjustment – Revenue having accepted the order of remand, cannot contend that no adjustment whatsoever is warranted – In absence of some documentary evidence indicating any rebate/discount given to appellant by the supplier, adjustments under Rule 5(1)(c) cannot be justified – Tribunal directing ad-hoc adjustment @ 20% without any demonstrated evidence – Not sustainable. (Para 33, 34, 35)

       (2007) 13 SCC 129; (1998) 3 SCC 292; (1995) 2 SCC 90; 1995 Supp (3) 320 – Referred

       Facts of the case:

       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%.

       The appellant is a "related person" to the supplier and this fact was disclosed to the Customs Authorities.

       In the year 1999, the Directorate of Revenue Intelligence commenced investigation into the imports of CAB by the appellant, which resulted in the issuance of two show cause notices. The first show cause notice dated 19th December 2000 was issued proposing demand of differential duty of customs amounting to Rs.37,96,70,451/-in respect of imports relating to the period from January 1995 to June 2000 and the second show cause notice dated 16th August 2001 was issued demanding differential duty of customs of Rs.12,08,42,462/-relating to imports during the period July 2000 to May 2001. Penal action was also proposed in both the show-cause notices.

       Against show-cause notice dated 19th December 2000, the appellant filed a writ petition. The High Court directed that the notice issued under Section 28 of the Act be treated as notice for finalization of the provisional assessment in terms of Section 18(2) of the Act. High Court observed that the authorities were free to decide as to whether any notice in terms of Section 111/124 of the Act was warranted. At the same time, the High Court granted liberty to the appellant to seek its remedy as per law in the event of issuance of such a show cause notice.

       The Commissioner of Customs adjudicated upon both the show cause notices by a common order dated 31st May 2002, finalizing the assessments and confirming the demand of Rs.40.37 crores as against proposed demand of Rs.50.04 crores. The Commissioner classified the imported CAB under the Chapter heading 2808.30 as whisky as against the claim of the appellant under the Chapter heading 2808.10.

       Appellant filed an appeal before the Tribunal. While accepting the claim of the appellant that CAB should be classified under heading 2808.10, the Tribunal rejected the plea of the appellant that in spite of the fact that the supplier was a "related person", 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.

       Upon re-consideration of the issue, the Tribunal upheld the decision of the Commissioner in determining the value of the imports under Rule 6. However, partly accepting the appeal, the Tribunal held that the appellant will be entitled to further adjustments in the value of CAB determined on the basis of the value of similar goods, on account of: (i) imports of substantially higher volumes of CAB; and (ii) where the retail price of bottled whisky was substantially lower than those of the comparable brands.

       Finding of the Court:

       In absence of some documentary evidence indicating any rebate/discount given to appellant by the supplier, adjustments under Rule 5(1)(c) cannot be justified.

       Result:

       Appeal preferred by the importer-appellant dismissed and the revenue’s appeal allowed.