TMI Blog2013 (9) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... Scotch Whisky - The submission of the foreign supplier was also confirmed by the literature available on the subject matter in the internet wherein it was stated that production of grain whisky was much easier and cheaper than distillation of malt whisky - Wikipedia also confirmed that Neutral spirits, near-neutral spirits and other ‘fillers’ were usually much cheaper to produce than straight or single malt whisky, so blends containing them were usually much cheaper to buy. There was no evidence available on record to prove that the appellant had paid higher sum than what was declared in the import documents as also in the bank documents - the Revenue had completely failed to prove the charge of under-valuation in the case - EICHER TRACTORS LTD. Versus COMMISSIONER OF CUSTOMS, MUMBAI [2000 (11) TMI 139 - SUPREME COURT OF INDIA] - merely because of the appellant obtained the higher discount from the foreign supplier that by itself cannot be a reason for rejection of the transaction value – Order Set aside – Decided in favour of Assessee. - C/430-432/2010-Mum - A/366-368/2012-WZB/C-I(CSTB) - Dated:- 11-4-2012 - S/Shri Ashok Jindal, P.R. Chandrasekharan, JJ. REPRESENTED BY : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the invoices relating to the imports were No. 4254 dated 15-8-2006 and 4823 dated 17-8-2007. Enquiries made from different ports about the import of similar goods indicated that identical goods were imported and cleared at much higher value ranging from GBP 1.45 (CF) per bulk litre to GBP 3.58 per bulk litre. The investigation further revealed that M/s. Loch Lomand Distilleries Ltd., Scotland had supplied similar goods to M/s. Mc Dowell and Co. Ltd., India at prices ranging from GBP 1.45 to 1.65 per bulk litre and to M/s. United Spirits India Ltd. at prices ranging from GBP 1.45 to 1.65 per bulk litre and alcoholic content in respect of these imports were in the range of 66% to 67% comparable to the imports made by the appellant in the present case. In the absence of any satisfactory explanation for the difference in prices, a show-cause notice was issued to the appellant proposing to demand differential customs duty by enhancing the value of the imported consignment from US $ 1.00 per bulk litre under Rule 5 of the Customs Valuation Rules, to the value of contemporaneous imports of identical goods under Section 28 of the Customs Act, 1962, along with interest thereon under Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... og brand whereas in the instant case, the goods imported were not branded. He also submitted that the appellant had imported Concentrate of Alcoholic Beverages for diluting the same with demineralised water and supplied the diluted whisky in the Indian market. In other words, they were only bottling the diluted whisky under licence from the foreign supplier and the foreign supplier s name also indicated in the labels stating that diluted under licence from British East India Company by M/s. Vasco da Gama. In the case of imports by M/s. Mc Dowell Co. Ltd., the concentrate of alcoholic Beverages were imported for blending with Indian whisky and it was not for dilution and bottling; the same was the case in respect of imports by United Spirits Ltd. In those cases a higher malt content was required since they were blended with Indian made whisky whereas in the case of the appellant, the product imported was a blend of grain and malt whisky suitable for direct consumption after dilution with water. The cost of production of malt whisky is much higher than that for grain whisky. The learned Advocate further contended that as per the directions of the department, they had also produced a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances indicated in Section 14(1) of the Customs Act, 1962 and particularized in Rule 4(2) of the Customs Valuation Rules, 1988. In the said decision the Hon ble Apex Court allowed even a discount as high as 77% from the list price holding that it was not abnormal in the facts and circumstances of the case. 4.2 The learned Advocate submits that in their case the ratio of the above judgment would squarely applies inasmuch as they had negotiated the price with the foreign supplier and all the documents available on the record indicates that the prices which they declared in the import documents were the prices which were paid to the foreign supplier and there was no evidence what-soever of paying a higher price to the foreign supplier or any other consideration was involved in the transaction which had the impact of reducing the transaction value. 5. The learned AR appearing for the Revenue on the other hand reiterates the findings given by the adjudicating authority. He submits that in the case of comparable value, which have been adopted for enhancement of the value in the appellant s case, the supplier was the same, namely M/s. Loch Lomand Distilleries Ltd. The description of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms. All other importers in India are either importing concentrate of scotch whisky for the purpose of blending/mixing it with indigenous material to produce their own brand of Indian whisky, or they are importing concentrate of scotch whisky to bottle/produce some foreign brand of scotch whisky in India. The company, M/s. Loch Lomand Distilleries Ltd. also wanted to establish themselves in India and in order to advertise their product in India, they agreed to supply us concentrates of scotch whisky at a rate which was affordable to us. In fact, they even offered to supply one container free of cost as a sample for promotional purposes. Therefore, when we offered them rate of $ 1 per litre (Ex-Goa) for supply of eight containers (1,28,000 ltrs) of concentrate of scotch whisky, it was readily agreed upon by them. Q11. What was the basis of your offer price of $ 1.0 per litre?. Ans. We have just carried out certain calculations and thought that if we are able to procure raw material, i.e., concentrate of scotch whisky, at $ 1.0 per litre we would be able to sell our finished product at competitive price in Indian market. Q12. How you are popularising the products of M/s. Loch Lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch easier and cheaper than distillation of malt whisky (www.maltmadness.com). Similarly Wikipedia also confirms that Neutral spirits, near-neutral spirits and other fillers are usually much cheaper to produce than straight or single malt whisky, so blends containing them are usually much cheaper to buy. In the light of these documents available on record we are of the view that the explanation given by the appellant for obtaining the lower price in respect of the supplies from the foreign supplier is convincing and, therefore, there was no reason to reject the transaction price declared by them. 7.5 Thus there is no evidence available on record to prove that the appellant had paid higher sum than what was declared in the import documents as also in the bank documents. Thus, the Revenue has completely failed to prove the charge of under-valuation in the instant case. As held by the Hon ble High Court in the case Eicher Tractors Ltd. (supra) merely because of the appellant obtained the higher discount from the foreign supplier that by itself cannot be a reason for rejection of the transaction value. The ratio of the said judgment applies squarely to the facts of the case. 8. I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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