2008 (6) TMI 536 - AT - Customs

Summary

Issues Involved:
1. Applicability of Rule 6 of the Customs Valuation Rules, 1988.
2. Determination of value under Rule 6.
3. Adjustments for high volume of imports.
4. Adjustments for differences in retail prices.
5. Compliance with procedural requirements and principles of natural justice.

Issue-Wise Detailed Analysis:

1. Applicability of Rule 6 of the Customs Valuation Rules, 1988:
The appellant contested the applicability of Rule 6, arguing that the determination of value under Rule 6 was beyond the show cause notice, which explicitly rejected Rule 6. The Tribunal, however, had directed the Commissioner to consider Rule 6 in its first remand order, thus making the applicability of Rule 6 a valid consideration. The Tribunal noted that the Commissioner did not issue a fresh show cause notice after the first remand order, but the appellant's participation in proceedings rendered this issue insignificant. The Tribunal concluded that the applicability of Rule 6 had to be examined in the present proceedings.

2. Determination of Value under Rule 6:
The Commissioner compared the imported CAB with similar goods based on various parameters such as origin, characteristics, components, and commercial interchangeability. The Tribunal upheld the Commissioner's decision, agreeing that the goods were of "substantially same quality." The Tribunal rejected the appellant's argument that no two branded goods can be similar, emphasizing that the existence of a trademark should not preclude such comparison. The Tribunal clarified that the retail price of the final product was used as an additional factor for identifying similar goods and was not the sole basis for valuation.

3. Adjustments for High Volume of Imports:
The appellant argued for adjustments based on their higher volume of imports compared to competitors. The Tribunal agreed that adjustments were warranted for high volume imports, as it is a normal commercial practice to grant discounts for large quantities. The Tribunal directed that the adjustments should be made by reducing the price difference by 20%, thus arriving at the value as PI + 80% of (PC - PI).

4. Adjustments for Differences in Retail Prices:
The Tribunal acknowledged that adjustments were required for differences in retail prices, as the retail prices of bottled whiskies were used to identify similar goods. The Tribunal directed that the percentage difference in retail prices should be used to adjust the value of the competitor's CAB to determine the assessable value for the appellant's CAB.

5. Compliance with Procedural Requirements and Principles of Natural Justice:
The appellant raised concerns about procedural lapses, such as not issuing a fresh show cause notice and not considering their submissions regarding Rule 6. The Tribunal found that these issues did not merit consideration as the appellant had participated in the proceedings and the Tribunal's remand orders had provided sufficient directions. The Tribunal emphasized that the proceedings were in compliance with the principles of natural justice.

Conclusion:
The Tribunal upheld the Commissioner's decision to determine the value under Rule 6 but directed significant adjustments for high volume imports and differences in retail prices. The appellant was instructed to calculate the differential duty based on these adjustments and submit the details to the jurisdictional Assistant Commissioner/Deputy Commissioner for verification. The appeal was disposed of on these terms.