SEAGRAM MANUFACTURING LTD. Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) M /s. Seagram Manufacturing Limited (SML) the appellant herein, is engaged in the manufacture of whiskies in India since 1994. The manufacture is from imported Scotch Whisky concentrates (approximately 63% proof). In the case of three whiskies sold in India under foreign brands, namely 'Something Special', '100 Pipers' and 'Passport', the manufacturing process involved is to dilute the imported whisky concentrates to the permitted Indian concentration (42.8% proof) and to bottle. In the case of Scotch whiskies sold under Indian brands, namely, 'Blenders Pride', 'Oaken Glow', 'Royal Stag' and 'Imperial Blue' imported whisky concentrates (Malts) are mixed with indigenous whisky concentrates and are bottled. For either activity, SML imports whisky concentrates.

(2.) THE appellant's imports started from 1994. The imports were from a related company, M/s. Seagram Distillers Plc. Therefore, the Customs authorities took a view that the transaction value between the appellant's related supplier and the appellant cannot form the basis for customs valuation. Accordingly, assessments were originally carried out on provisional basis. Subsequently, after investigation into import pricing by the Director General of Revenue Intelligence, two show cause notices were issued. One notice by that Directorate was in respect of imports for the period January, 1995 to June, 2000 and another notice by the Commissioner of Customs was for the period July, 2000 to May, 2001. These notices were adjudicated by the Commissioner of Customs under Order -in -Original No. AKR/CC/ICD/TKD/45 -46, dated 29 -8 -2003 holding to the effect that the transaction values were too low, and when the consignments are assessed at the value of comparable similar Scotch whisky concentrates, there would be a short -levy of about Rs. 42 crores.

(3.) THE appellant filed an appeal before this Tribunal against the aforesaid order challenging the method of valuation on the ground that Rule 6 of the Customs (Valuation) Rules which has been resorted to by the Commissioner had been ruled out in the show cause notice; that even otherwise, Rule 6 is not attracted to the instant case and that the Commissioner had not followed even the requirements of that Rule while adjudicating the case. This Tribunal passed Final Order No. 129/2003 -NB -A, dated 25 -3 -2003, 2003 (154) E.L.T. 610 (T) and remanded the matter to the Commissioner for a fresh decision in terms of the appropriate rule, be it Rule 8 of the Customs (Valuation) Rules which had been invoked in the show cause notices or in terms of Rule 6 which had been resorted to in the adjudication. Pursuant to that order, Commissioner passed an order dated 29 -8 -2003 determining the value in terms of Rule 6 of the Customs (Valuation) Rules and holding that there was a short -levy of about Rs. 40 crores in respect of the consignments covered by the two show cause notices. The present appeal challenges that order. We may straight away tabulate the comparative position between the appellants import prices (C.I.F. + cost of barrel) and the assessable value determined by the Commissioner based on the price of similar goods under Rule 6: