PERNOD RICARD INDIA (P) LTD.versusCOMMISSIONER OF CUSTOMS, ICD TUGHLAKABAD

                        [2010] 8 S.C.R. 996


A
                 PERNOD RICARD INDIA (P) LTD.
                                  v.
     COMMISSIONER OF CUSTOMS, ICD TUGHLAKABAD
              (Civil Appeal No. 5840 of 2008)
B
                           JULY 26, 2010

               [D.K. JAIN AND T.S. THAKUR, JJ.]

        Customs Act, 1962: s.130E - Statutory appeal filed
C before Supreme Court u/s. 130E against the order of tribunal
  - Challenging the applicability of rule 6 of 1988 Rules -
  Dismissal of appeal by Supreme Court by a non-speaking
  order - Held: Dismissal of appeal by Supreme Court was in
  exercise of appellate jurisdiction - Doctrine of merger would
D be attracted and the appellant is estopped from raising the
  issue of applicability of Rf.lie 6 - Doctrine of merger -
  Estoppel - Appeal before Supreme Court.

       Customs Valuation (Determination of Prices of Imported
E Goods) Rules, 1988 - Rule 5(1)(c) - Transaction value -
  "adjustment" in terms of Rule 5(1 )(c) for determination of value
  of goods imported - Tribunal's direction with regard to the
  adjustment on account of volume of the goods imported by
  the importer @ 20% in the price difference between each
F variety of its imported goods and the corresponding import
  of the competitor - Held: Not justified - Adjustment can be
  granted only on production of evidence which establishes the
  reasonableness and accuracy of adjustment and higher
  volumes of goods imported would not be sufficient to justify
G an adjustment - A commercial practice is not a conclusive
  evidence for determining real price of a consignment - In the
  absence of some documentary evidence indicating that any
  rebate/discount was given to the importer by the supplier,
  adjustments under Rule 5(1)(c) cannot be justified.

H                                996
PERNOD RICARD INDIA (P) LTD. v. COMMISSIONER 997
      OF CUSTOMS, ICD TUGHLAKABAD

     Appeal: Dismissal of statutory appeal vis-a-vis dismissal   A
of special leave petition by non speaking order - Distinction
between.

     Appellant, a manufacturer of spirits, imported
Concentrate of Alcoholic Beverages (CAB). The appellant          8
was a related person to the supplier. Two show cause
notices were issued against the appellant proposing
demand of differential custom duty in respect of imports
for the period January 1995 to June ~000 and July 2000
to May 2001. Against the first show cause notice, the            C
appellant filed a writ petition before High Court. The High
Court directed that the notice issued under Section 28 of
the Customs Act, 1962 should be treated as notice for
finalisation of th·e provisional assessment. The
Commissioner of Customs adjudicated up6n both the
show cause notices and confirmed the demand of                   D
Rs.40.37 crores as against the proposed demand of
Rs.50.04 crores. Appellant filed appeal before tribunal.

     By order dated 25th March 2003, while accepting the
claim of the appellant that CAB should be classified             E
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 Customs
Valuation (Determination of Prices of Imported Goods)            F
Rules, 1988. The Tribunal remanded the matter to the
adjudicating authority for a fresh consideration on the
question of applicability of Rule 6.

    The appellant challenged the order before Supreme
Court by way of appeal under Section 130E of the Act             G
which was dismissed on 21st November, 2003.

   Pursuant to the order of the Tribunal, dated 25th
March 2003, the Commissioner passed a fresh order
3.   (1988) 4 sec 409.                                           H
    998     SUPREME COURT REPORTS               (2010) 8 S.C.R.


A dated 29th August 2003 and held that Rule 6 was
  applicable on the facts of the instant case. He
  accordingly, confirmed the demand of duty of customs
  amounting to Rs.39.96 crores. The said order was again
  challenged by the appellant in the tribunal, mainly on the
B ground that the value of imported CAB could not be
  determined under Rule 6. In the alternative, it was
  pleaded that even the quantification of the value under
  Rule 6 was seriously flawed. The tribunal observed that
  the applicability of Rule 6 was left to the adjudicator in
c the remand order and no appeal was filed thereagainst.
  The Tribunal again set aside the order of adjudication by
  the Commissioner and remanded the matter to him with
  certain directions by order dated 29th June, 2005.
  Pursuant thereto, the Commissioner passed a fresh
  adjudication order on 20th June 2006, confirming a total
0
  differential duty of Rs.40.37 crores.

       The appellant challenged the said order by preferring
  yet another appeal to the Tribunal. The Tribunal upheld
  the decision of the Commissioner in determining the
E value of the imports under Rule 6. However, partly
  accepting the appeal, the tribunal directed adjustment @
  20% in the price difference between each variety of CAB
  of the appellant and the corresponding CAB of the
  competitor on account of higher volume of imports by the
F appellant for determining the value of import of CAB.
  Dissatisfied with the direction/order of Tribunal both the
  parties filed the appeals.

          Disposing of the appeals, the Court

G       HELD: 1. Having carefully perused the orders of
    remand passed by the Tribunal on 25th March 2003 and
    29th June 2005 the issue with regard to the applicability
    of Rule 6 of the Customs Valuation (Determination of
    Prices of Imported Goods) Rules, 1988 for valuation of
H
PERNOD RICARD INDIA (P) LTD. v. COMMISSIONER 999
      OF CUSTOMS, ICD TUGHLAKABAD

CAB had attained finality on the summary dismissal of the "\
appellant's appeal by this Court by order dated 21st
November 2003. It is clear from a bare reading of the
observations of the Tribunal in its order dated 25th March
2003, that remand to the Commissioner for fresh
adjudicatio.Q was confined only to the errors committed B
while determining the assessable values based on the
transaction value of "similar goods". Thus, in principle,
the Tribunal proceeded on the premise that the valuation
was to be done as per the procedure laid down in Rule
6. This was also evident from appellant's pleadings when    c
they challenged the order of remand contending in their
appeal under Section 130E of the Act that Rule 6 had no
application on the facts of their case and the value of
imported CAB by them had to be determined as per Rule
4(3)(b) of the 1988 Rules. The appeal was, however, .
                                                              0
dismissed in limine. Once a statutory right of appeal is
invoked, dismissal of appeal by the Supreme Court,
whether by a speaking order or non speaking order, the
doctrine of merger does apply, unlike in the case of
dismissal of special leave to appeal under Article 136 of E
the Constitution by a non-speaking order.In the present
case, the appellant preferred statutory appeal under
Section 130E of the Act against order of the Tribunal
dated 25th March 2003 and, therefore, the dismissal of
 appeal by this Court though by a non-speaking order,
was in exercise of appellate jurisdiction, wherein the F
 merits of the order impugned were subjected to judicial
scrutiny. In the instant case, the doctrine of merger would
 be attracted and the appellant is estopped from raising
the issue of applicability of Rule 6 in their case. Moreover,
the issue with regard to the applicability of Rule 6 had G
attained finality for yet another reason. It is manifest from
the Tribunal's order dated 29th June 2005, that the scope
and purpose of remand to the Commissioner was limited.
The Tribunal categorically declined to go into the issue
 of the appropriateness of Rule 6, with the result that the H
    1000    SUPREME COURT REPORTS                [2010] 8 S.C.R.


A finding of the Commissioner in his order passed
  pursuant to Tribunal's earlier order dated 29th August
  2003, regarding applicability of Rule 6 remained
  undisturbed and in fact attained finality, in as much as,
  the appellant did not question the correctness of the
B remand order passed by the Tribunal on 29th June 2005.
  The Tribunal erred in re-opening and examining afresh
  the question as to whether or not the value of CAB could
  be determined by applying Rule 6 and, therefore, the
  objection of the revenue in that regard is accepted.
c [Paras 22, 24, 26] [1013-F-G; 1014-A-D; 1017-8-D]
         2.1. 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 Interpretative note
D   (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
E   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
F   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
    such evidence could be a valid price list containing
G   prices referring to different levels or different quantities.
    (Para 31) (1021-F-H; 1022-A-BJ

        Commissioner of Central Excise, Jaipur v. Rajasthan
    SPG. & WVG. Mills Ltd. & Anr. (2007) 13 SCC 129; Mirah
    Exports Pvt. Ltd. v. Collector of Customs (1998) 3 SCC 292;
H
PERNOD RICARD INDIA (P) LTD. v. COMMISSIONER1001
      OF CUSTOMS, ICD TUGHLAKABAD

Basant Industries Nunhai, Agra v. Additional Collector of        A
Customs, Bombay 1995 Supp (3) 320 - referred to.

      2.2. 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                   B
'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     C
that such "adjustment" may not necessarily lead to a
decrease in the value. It rnay 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    D
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           E
not be sufficient to justify an adjustment, though it may
be one of the relevant considerations. Therefore, in so far
as the question of "adjustment" in terms of Rule 5(1 )(c)
is concerned, the revenue having accepted the order of
remand dated 29th June 2005, cannot turn around and              F
contend that no adjustment whatsoever is warranted.
Similarly, there may also be some substance in the
observation of the Tribunal that generally when the
transactions are in large volumes over a long period,
grant of discount is a normal commercial practice but            G
again a commercial practice, per se, cannot be treated as
conclusive evidence for determining real price of a
consignment. Therefore, in the absence of some
documentary evidence indicating that any rebate/
discount was given to the appellant by the supplier,             H
    1002    SUPREME COURT REPORTS               [2010] 8 S.C.R.

A adjustments under Rule 5(1)(c) cannot be justified. In the
  present case, it is evident from the impugned order that
  though the Tribunal had felt that requisite evidence to
  establish the range of adjustment was lacking and for that
  purpose, according to it, the matter was required to be
s remanded to the Commissioner but being influenced by
  the fact that there had already been three rounds of
  appeals to the Tribunal, it undertook the exercise itself.
  This approach of the Tribunal was not in order and
  therefore, in the absence of any demonstrated evidence,
c its direction for ad-hoc adjustment @ 20%, cannot be
  sustained. The order of the Tribunal under appeal, in so
  far as it pertains to the applicability of Rule 6 of 1988
  Rules, is affirmed, however, the direction with regard to
  the adjustment on account of volume of imports of CAB
  by the appellant @ 20% in the price difference between
0
  each variety of CAB imported by the appellant and the
  corresponding CAB of the competitor, is set aside. [Paras
  33-36] [1023-D-H; 1024-A-G]

        Metal Box India Ltd. v. Collector of Central Excise,
E Madras (1995) 2 SCC 90; Kunhayammed & Ors. v. State of
  Kera/a & Anr. (2000) 6 SCC 359. V.M. Sa/gaocar & Bros. Pvt.
  Ltd. v. Commissioner of Income Tax (2000) 5 SCC 373;
    Supreme Court Employees· Welfare Association v. Union of
    India & Anr. (1989) 4 SCC 187; Commissioner of Central
F   Excise, Jaipur v. Rajasthan SPG. & WVG. Mills Ltd. & Anr.
    (2007) 13 SCC 129, Mirah Exports Pvt. Ltd. v. Collector of
    Customs (1998) 3 SCC 292; Basant Industries Nunhai, Agra
    Vs. Additional Collector of Customs, Bombay 1995 Supp (3)
    320 - referred to.
G
                         Case Law Reference:
        (1995) 2 sec 90           referred to         Para 17
        (2000) s sec 359          referred to         Para 23
H       (2000) 5 sec 373          referred to         Para 25
 PERNOD RICARD INDIA (P) LTD. v. COMMISSIONER1003
       OF CUSTOMS, ICD TUGHLAKABAD

     (1989) 4 sec 187           referred to          Para 25     A
     (2007) 13 sec 129          referred to          Para 32
     (1998) 3 sec 292           referred to          Para 32
     1995 Supp (3) 320          referred to          Para 32.
                                                                 8
     (2001) 13 sec 129          referred to          Para 32

     (1998) 3 sec 292           referred to          Para 32

     1995 Supp (3) 320          referred to          Para 32
                                                                 c
      CIVIL APPELLATE JURISDICTION : Civil Appeal No.
· 5840 of 2008.

     From the Judgment & Order dated 25.06.2008 of the
 Customs, Excise & Service Tax Appellant Tribunal (CESTAT),
 New Delhi in Custom Appeal No. 559/2006.                        D

                            WITH

C.A. No. 1110 of 2009.

     8. Bhattacharya, ASG, V. Lakshmi Kumaran, R.                E
Parthasarthy, L. Sadri Narayan, Alok Yadav, M.P. Devanath,
Rupesh Kumar, Arijit Prasad, Debashis Mukherjee, Satish
Agarwal, Ajay Singh, Nishant Patil, B.K. Prasad, Anil Katiyar,
R. Parthasarthy for the appearing parties.
                                                                 F
     The Judgment of the Court was delivered by

     D.K. JAIN, J. 1. These two appeals under Section 130E
of the Customs Act, 1962 (for short "the Act") by the importer
(hereinafter referred to as "the appellant") (C.A. No. 5840 of   G
2008) as well as by the revenue (C.A. No. 1110 of 2009) arise
from the final order dated 25th June 2008, passed by the
Customs, Excise and Service Tax Appellate Tribunal, Principal
Bench, New Delhi (for short "the Tribunal"), in Custom Appeal
No.559 of 2006. By the impugned order, while upholding the
                                                                 H
    1004    SUPREME COURT REPORTS                  [2010) 8 S.C.R.


A decision of the Commissioner of Customs in determining the
  value of the "Concentrate of Alcoholic Beverages" ("CAB" for
  short}, imported by the appellant, under Rule 6 of the Customs
  Valuation (Determination of Prices of Imported Goods) Rules,
  1988 (for short "the 1988 Rules"), the Tribunal has directed the
B jurisdictional Commissioner to redetermine the customs duty
  liability of the appellant after making certain adjustments in the
  manner indicated in the order.

        2. As both the appeals call in question the same order,
    these are being disposed of by this common order.
c
         3. The case has had a chequered history and, therefore,
    in order to appreciate the controversy, it would be necessary
    to narrate the facts in detail.

D      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-
E owned subsidiary of Seagram Company Ltd., Canada. The
  strength of CAB imported was about 60%. It is not in dispute
  that the appellant is a "related person" to the supplier and this
  fact was disclosed to the Customs Authorities. The import of
  CAB was of four varieties, each one meant for manufacturing
  four brands of scotch whiskies, namely "100 Pipers",
F "Passport", "Something Special" and "International Malts"
  (Royal Stag; Oaken Glow; Blenders Pride and Imperial Blue).
  The import of CAB was in wooden barrels and their value was
  declared separately for assessment. The appellant diluted the
  imported CAB by adding demineralised water and reduced the
G strength to 42.8% v/v; packed them in bottles under respective
  brands; paid State excise duty and sold these to the dealers
  for ultimate sales to the consumers.

     4. In the year 1999, the Directorate of Revenue Intelligence
H commenced investigation into the imports of CAB by the
PERNOD RICARD INDIA (P) LTD. v. COMMISSIONER1005
 OF CUSTOMS, ICD TUGHLAKABAD [D.K. JAIN, JJ

appellant, which resulted in the issuance of two show cause           A
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            B
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.

     5. Against show-cause notice dated 19th December 2000,
                                                                      c
the appellant filed a writ petition before the High Court of Delhi.
Vide its order dated 27th August 2001, 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. While disposing of the petition, the     D
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.                                 E

     6. 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             F
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.

     7. Being aggrieved by the order of adjudication, the
appellant filed an appeal before the Tribunal. Vide order dated       G
25th March 2003, 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.        H
    1006     SUPREME COURT REPORTS                   [2010] 8 S.C.R.


A 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
B 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.
  Relevant portion of the order is extracted be" ... We are also of
  the view that while working out the provisions of Rule the
  Commissioner has not taken into consideration all the relevant
c factors. While fixing the value under Rule 6, the authority has
  to look into the definition of the term 'similar goods' under Rule
  2(e) and that the conditions contained therein are satisfied.
  Clauses (b) and (c) of sub-rule (1 ), sub-rule(2) and sub-rule(3)
  of Rule 5 are made applicable to Rule 6 also. We find that there
  is no proper consideration of the above provisions by the
0
  Commissioner while arriving at the ,value under Rule 6. The
  appellant is justified in complaining· that comparison was not
  made with the transaction of similar goods sold for export to
  India and imported at or about the time as the goods being
E valued, especially in the case of the goods covered by the
  second show cause notice dated 16th September, 2001.
  Comparison is made with imports which had taken place in
  January 1999, May 1999 and December 1998 for valuing the
  goods imported during the period July 2000 to May 2001."

F      8. The appellant challenged the said order before this
  Court by way of an appeal under Section 130E of the Act, which
  was dismissed on 21st November2003. The appellant pleaded
  that invocation of Rule 6 by the ·:commissioner in the final
  adjudication order was beyond the scope of the show cause
G notice, in as much as, in the show cause notice itself it was
  observed that Rule 6 could not be applied because of non-
  availability of requisite data for adjustments required to be
  made under the said Rule. It was asserted that the value of CAB
  imported had to be determined as per Rule 4(3)(b) of 1988
H Rules.
PERNOD RICARD INDIA (P) LTD. v. COMMISSIONER1007
 OF CUSTOMS, ICD TUGHLAKABAD [D.K. JAIN, J.]

     9. Pursuant to the order of the Tribunal, dated 25th March       A
2003, the Commissioner passed a fresh order dated 29th
August 2003 and held that Rule 6 was applicable on the facts
of the instant case. He accordingly, confirmed the demand of
duty of customs amounting to Rs.39.96 crores. The said order
was again challenged by the appellant in the Tribunal, mainly         B
on the ground that the value of imported CAB could not be
determined under Rule 6. In the alternative, it was pleaded that
even the quantification of the value under Rule 6 was seriously
flawed.

      10. Accepting the alternative submission of the appellant       C
relating to the errors committed by the Commissioner while
determining the assessable value of CAB on the basis of the
transaction value of "similar goods", by its order dated 29th
June 2005, the Tribunal again set aside the order of
adjudication by the Commissioner and remanded the matter              D
back to him with certain directions. Since the observations of
the Tribunal contained in paragraphs 7 and 13 have some
bearing on the merits of the rival stands on behalf of the parties,
these are extracted hereunder:
                                                                      E
     "7. We are not going into the above mentioned issue about
     the appropriateness of Rule 6 for two reasons. Firstly, we
     had left this Rule open to the adjudicator in our remand
     order and no appeal had been filed against that order.
     Secondly, the present appeal can be disposed of after            F
     considering the appellant's contentions in terms of Rule 6."

     "13. As already noted we are not going into the
     submissions made by the appellant against valuation under
     (sic) Rule 6. Instead, the appeal is being disposed of after
     considering the alternate submissions relating to errors         G
     committed while determining the assessable values based
     on the transaction value of similar goods."

     The final direction by the Tribunal reads as follows:
                                                                      H
    1008    SUPREME COURT REPORTS                   [2010] 8 S.C.R.


A       "From the above. it is clear that the valuation of the items
        in question should be re-done by using lowest transaction
        value of Find late rs for determining the price of 100 Pipers.
        Further, due adjustments towards quantity difference and
        retail price difference should be made wherever warranted.
B       In order to facilitate such revaluation, we set aside the
        impugned order and remit the case to the Commissioner
        for fresh adjudication. Both sides would be at liberty to
        present data relevant to the above issues."

C      11. This decision of the Tribunal was not put in issue by
  the appellant before a higher forum. Pursuant to and in
  furtherance of the directions issued by the Tribunal in the said
  order, the Commissioner passed a fresh adjudication order on
  20th June 2006, confirming a total differential duty of Rs.40.37
  crores, which happened to be more than the duty amount of
D Rs.39.96 crores as confirmed in the second adjudication order.

       12. As expected, the appellant challenged the said order
  by preferring yet another appeal to the Tribunal. lnter-alia,
  observing that in the first remand order the question of
E applicability of Rule 6 was left to be decided by the adjudicator
  and in the second remand order. dated 29th June 2005, the
  Tribunal did not go into the applicability of the said rule and
  allowed the appeal on the basis of alternative pleas of the
  appellant, the Tribunal decided to go into the question of
F applicability of Rule 6 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 appe!lant will be entitled
  to further adjustments in the value of CAB determined on the
G 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. It was, however, clarified that once the
  assessable value was determined for any brand by following
  the above method. the assessable value shall not be enhanced
H
PERNOD RICARD INDIA (P) LTD. v. COMMISSIONER1009
 OF CUSTOMS, ICD TUGHLAKABAD [D.K. JAIN. J]

till a higher import price of the similar goods was noticed. The    A
Tribunal also laid down the following methodology fur making
the adjustments on account of difference in volume of imports
and the retail price:-

    "The price difference between each variety of CAB of the        B
    importer (say Pl - Price of Import) and the corresponding
    CAB of competitor (say PC - Price of Comparable
    goods) shall be arrived at first as PC-Pl; thereafter value
    of the import of CAB of each brand shall be determined
    as Pl+80% of (PC-Pl). In other words, instead of adding         C
    the entire difference it shall be restricted to 80% i.e. by
    reducing the difference by 20%.

    We direct that the adjustments on account of difference in
    retail prices shall be made in the manner prescribed
    below. The percentage of difference between the retail          D
    price of any brand of the appellant with the corresponding
    brand being compared shall be arrived at and to that
    extent the value of CAB of the competitor's import shall be
    reduced to arrive at the assessable value for CAB
    imported by the appellant.                                      E

    The above determination is subject to the following
    conditions:-

            (a)   The value of any brand to be adopted shall
                  not _be higher than the value adopted by the      F
                  Commissioner in his second order dated
                  28.09.2003.

            (b)   The value of any brand to be adopted shall
                  not be lower than the value declared by the       G
                  importer."

     13. Being dissatisfied with the order/directions of the
Tribunal, as stated above, both the parties are before us in this
appeal.
                                                                    H
    1010    SUPREME COURT REPORTS                 [2010] 8 S.C.R.


A        14. We have heard Mr. V. Lakshmikumaran, learned
    counsel appearing for the appellant and Mr. B. Bhattacharya,
    learned Additional Solicitor General for the revenue.

         15. Learned counsel for the appellant strenuously urged
B that both the authorities below have committed a serious error
  of law by holding that the value of the imported CAB is to be
  determined as per the procedure prescribed in Rule 6 of the
  1988 Rules. It was argued that having regard to the fact that
  scotch whisky is a specialty goods and is not commercially
  interchangeable, the CAB imported by the appellant and by
C others cannot be said to be 'similar goods' as defined in Rule
  2(1 )(e) of the 1988 Rules. It was submitted that determination
  of similarity in terms of Rule 2(1 )(e) by the Commissioner and
  affirmed by the Tribunal is fallacious for the reasons: - (i) in
  specialty goods, the comparison of goods on the basis that
D such goods broadly contain the same components is
  misleading in as much as while all scotch whiskies are made
  from malt, have an age of at least three years and sold at the
  same concentration at the retail level yet such comparisons
  obliterate the inherent differences on the basis of which
E consumer preferences are decided. Different scotch whiskies
  have different tastes depending on the casks in which the
  scotch whisky is aged, the temperature during the ageing
  process, water used for making the scotch, the ingredients used
  etc. Additionally, blended scotch whiskies are blends of other
F scotch whiskies and blending formulae are kept secret, making
  each blended scotch whisky a unique product in the market;
  (ii) the CAB imported do not have the same quality, reputation
  and trademark. The concentrate imported by the appellant has
  a particular trademark i.e. 100 Pipers, Passport and
G Something Special 12 Years Old, which have certain quality
  and very little reputation in the Indian market whereas the
  concentrate imported by their competitors, having the trademark
  of Black Dog 12 Years Old, Black & White and VAT 69 have
  different quality and reputation as they are relatively very well
H known brands being sold in India for several decades and (iii)
PERNOD RICARD INDIA (P) LTD. v. COMMISSIONERl 011
 OF CUSTOMS, ICD TUGHLAKABAD [D.K. JAIN, J.]

the variation in price is largely due to the branding and individual   A
preferences and, therefore, some goods command a premium
price as compared to others, which is the case with regard to
scotch whisky market also. The appellant and their competitors
spend significantly on branding for differentiating their products
and such branding, coupled with individual preferences, render         B
such goods as not similar. Similarity cannot be determined on
the basis of similarity in the prices at which the goods
manufactured out of the imported goods are sold in the retail
market in as much as retail price of the same brand can, in fact,
be more or less in different States when compared with                 c
competitors' brand.

     16. Learned counsel then submitted that even if the goods
in question are treated as similar goods, Rule 6 cannot be
applied because no suitable adjustments can be made for
quantity difference. According to the learned counsel, apart from      D
the fact that any goods, such as scotch whiskies, which are
specialty goods, the variations in consumer preferences and
the value of trademark and reputation are difficult to ascertain
and adjust, there cannot be "demonstrated evidence" for
quantifying such differences and, therefore, Rule 6 cannot be          E
applied.

      17. Learned counsel for the appellant also urged that the
formula devised by the Tribunal, directing loading of the price
of imports with 80% of the price differential owing to the             F
differential in quantity imported is arbitrary. It was urged that
since the quantity imported by the appellant is 500% to 1500%
of the quantity imported by the identified brands, an adjustment
of at least 40% from the price of such identified brands should
have been allowed by the Tribunal. In support of the proposition       G
that deduction to the extent of 50% in cases of whole sales were
allowed, reliance was placed on a decision of this Court in
Metal Box India Ltd. Vs. Collector of Central Excise, Madras 1 •
It was, thus, pleaded that the order of the Tribunal, approving

1.   (1995) 2 sec 90.                                                  H
     1012     SUPREME COURT REPORTS                    [2010] 8 S.C.R


A    the application of Rule 6 deserves to be set aside. In the
     alternative, it was urged that if this Court comes to the
     conclusion that Rule 6 is to be applied for determining the value
     of CAB, comparison should be made for each year with the
     lowest price of other imports during the year with at least 40%
B    reduction from the list price to take care of quantity differences.

          18. Per contra, Mr. Bhattacharya, while supporting the
     decision of the Tribunal, in so far as the question of applicability
     of Rule 6 was concerned, submitted that the Tribunal committed
     a serious error of law in re-examining the said question. It was
C    contended that apart from the fact that second remand order
     dated 29th June 2005, whereby the Tribunal had directed the
     Commissioner to apply Rule 6 and re-determine the value of
     CAB after making adjustments wherever warranted, was not
     questioned by the appellant, in view 'of the dismissal of their
D    appeal by this Court against Tribunal's order dated 25th March
     2003, the said issue had attained finality and the appellant was
     estopped from raising it before any forum.

          19. In support of revenue's appeal. learned counsel
E    submitted that the direction by the Tribunal to the Commissioner
     to give adjustment of 20% while determining the value of the
     imported CAB is vitiated because no evidence in this behalf
     was produced by the appellant before the Commissioner.
     Referring to para 4 of the interpretative note to Rule 5 of the
F'   1988 Rules, learned counsel asserted that no adjustment on
     account of difference in quantity can be granted unless there
     is "demonstrated evidence" on the basis whereof
     reasonableness and accuracy of the adjustment could be
     established.

G         20. In rejoinder, Mr. V. Lakshmikumaran argued that the
     appellant was fully justified in agitating before the Tribunal the
     issue with regard to the applicability of Rule 6. It was submitted
     that since the applicability of Rule 6 had been left to the
     adjudicator to decide in the first remand order, the question of
H    applicability of Rule 6 arose before the Tribunal only in the
PERNOD RICARD INDIA (P) LTD. v. COMMISSIONER1013
 OF CUSTOMS, ICD TUGHLAKABAD [D.K. JAIN, J.)

second round. In second round again, appellant's appeal having          A
been disposed of on their alternative submissions regarding
Rule 6, the appellant's submission on applicability of Rule 6,
in fact, came up for consideration before the Tribunal for the
first time in the third round of appellant's appeal before the
Tribunal. It was, thus, argued that filing or non filing of an appeal   B
against the two earlier orders of the Tribunal is irrelevant.

     21. The questions arising for determination are:-

             (i)     Whether the Tribunal was justified in re-
                     examining the question qf applicability of         C
                     Rule 6?

             (ii)    If the answer to question (i) is in the
                     affirmative, then whether the value of the
                     CAB for the purpose of levying duty of             D
                     customs is to be determined as per the
                     procedure prescribed in Rule 6 or in terms
                     of some other Rule?

             (iii)   Whether the direction by the Tribur.al
                     regarding adjustment to the tune of 20% in         E
                     the price difference between CAB of the
                     appellant and the corresponding CAB of the
                     competitor, on account of volume of imports,
                     is justified?
                                                                        F
      22. Having carefully perused the orders of remand passed
by the Tribunal on 25th March 2003 and 29th June 2005, we
are of the opinion that the issue with regard to the applicability
of Rule 6 of the 1988 Rules for valuation of CAB had attained
finality on the summary dismissal of the appellant's appeal by          G
this Court vide order dated 21st November 2003. It is clear
from a bare reading of the observations of the Tribunal in its



                                                                        H
    1014 SUPREME COURT REPORTS                      [2010] 8 S.C.R.

A order dated 25th March 2003, extracted in para 11 supra that
  remand to the Commissioner for fresh adjudication was
  confined only to the errors committed while determining the
  assessable values based on the transaction value of "similar
  goods". Thus, in principle, the Tribunal proceeded on the
B premise that the valuation had to be done as per the procedure
  laid down in Rule 6. This is also evident from appellant's
  pleadings when they challenged the order of remand inter-a/ia,
  contending in their appeal under Section 130E of the Act that
  Rule 6 had no application on the facts of their case and the
c value of imported CAB by them had to be determined as per
  Rule 4(3)(b)of the 1988 Rules. The appeal was, however,
  dismissed in limine. In our opinion, once a statutory right of
  appeal is invoked, dismissal of appeal by the Supreme Court,
  whether by a speaking order or non speaking order, the
  doctrine of merger does apply, unlike in the case of dismissal
0
  of special leave to appeal under Article 136 of the Constitution
  by a non-speaking order.

      23. The nature, concept and logic of doctrine of merger
  was explained elaborately in Kunhayammed & Ors. Vs. State
E of Kera/a & Anr. 2 . Speaking for a bench of three learned
  Judges, R.C. Lahoti, J. (as His Lordship then was) observed:
  (SCC p. 370, para 12)

        "12. The logic underlying the doctrine of merger is that
F       there cannot be more than one decree or operative orders
        governing the same subject-matter at a given point of time.
        When a decree or order passed by an inferior court,
        tribunal or authority was subjected to a remedy available
        under the law before a superior forum then, though the
        decree or order under challenge continues to be effective
G
        and binding, nevertheless its finality is put in jeopardy. Once
        the superior court has disposed of the lis before it either
        way - whether the decree or order under appeal is set
        aside or modified or simply confirmed, it is the decree or
H 2.   c2000) 6 sec 359.
PERNOD RICARD INDIA (P) LTD. v. COMMISSIONER1015
 OF CUSTOMS, ICD TUGHLAKABAD [D.K. JAIN, J.]

    order of the superior court, tribunal or authority which is the   A
    final, binding and operative decree or order wherein
    merges the decree or order passed by the court, tribunal
    or the authority below. However, the doctrine is not of
    universal or unlimited application. The nature of jurisdiction
    exercised by the superior forum and the content or subject-       B
    matter of challenge laid or which could have been laid shall
    have to be kept in view."

The Court further observed:

    "41. Once a special leave petition has been granted, the          C
    doors for the exercise of appellate jurisdiction of this Court
    have been let open. The order impugned before the
    Supreme Court becomes an order appealed against. Any
    order passed thereafter would be an appellate order and
    would attract the applicability of doctrine of merger. It would   D
    not make a difference whether the order is one of reversal
    or of modification or of dismissal affirming the order
    appealed against. It would also not make any difference if
    the order is a speaking or non-speaking one. Whenever
    this Court has felt inclined to apply its mind to the merits      E
    of the order put in issue before it though it may be ir1clined
    to affirm the same, it is customary with this Court to grant
    leave to appeal and thereafter dismiss the appeal itself
    (and not merely the petition for special leave) though at
    times the orders granting leave to appeal and dismissing          F
    the appeal are contained in the same order and at times
    the orders are quite brief. Nevertheless, the order shows
    the exercise of appellate jurisdiction and therein the merits
    of the order impugned having been subjected to judicial
    scrutiny of this Court."
                                                                      G
     24. In the present case, the appellant preferred statutory
appeal under Section 130E of the Act against order of the
Tribunal dated 25th March 2003 and, therefore, the dismissal
of appeal by this Court though by a non-speaking order, was
in exercise of appellate jurisdiction, wherein the merits of the      H
    1016     SUPREME COURT REPORTS                     [2010] 8 S.C.R.


A   order impugned were subjected to judicial scrutiny. In our
    opinion, in the instant case, the doctrine of merger would be
    attracted and the appellant is estopped from raising the issue
    of applicability of Rule 6 in their case.

B       25. In the view we have taken, we are fortified by a decision
  of this Court in V.M. Salgaocar & Bros. Pvt. Ltd. Vs.
  Commissioner of Income Tax, 3 wherein the Court was called
  upon to consider the effect of dismissal of an appeal under
  Section 261 of the Income Tax Act, 1961 by a non speaking
  order. Speaking for the Bench, D.P. Wadhwa, J. while drawing
C distir:ction between an order dismissing in limine a special
  leave petition under Article 136 of the Constitution and. an
  appeal under Article 133, and drawing support from the
  decision of this Court in Supreme Court Employees' Welfare
  Association Vs. Union of India & Anr., 4 held that former case
  does not but the latter does attract the doctrine of merger. The
  Court observed thus:-

          "Different considerations apply when a special leave
          petition under Article 136 of the Constitution is simply
E         dismissed by saying 'dismissed' and an appeal provided
          under Article 133 is dismissed also with the words 'the
          appeal is dismissed'. In the former case it has been laid
          by this Court that when a special leave petition is
         .dismissed this Court does not comment on the
          correctness or otherwise of the order from which leave to
F
          appeal is sought. But what the court means is that it does
          not consider it to be a fit case for exercise of its jurisdiction
          under Article 136 of the Constitution. That certainly could
          not be so when appeal is dismissed though by a non-
          speaking order. Here the doctrine of merger applies. In that
G
          case, the Supreme Court upholds the decision of the High
          Court or of the Tribunal from which the appeal is provided
          under clause (3) of Article 133. This doctrine of merger
    3.   (2000) 5 sec 373.
H 4.     (1989) 4 sec 187.
             .                                            .

PERNOD RICARD INDIA(P) LTD. v. COMMISSIONER1017
 OF CUSTOMS, ICD TUGHLAKABAD [D.K. JAIN, J.]

     does not apply in the case of dismissal of special leave         A
     petition under Article 136. When an appeal is dismissed
   · the order of the High Court is merged with that of the
     Supreme Court."

.     26. Moreover, in the instant case the issue with regard to      8
 the applicability of Rule 6 had attained finality for: yet another
 reason. It is manifest from the Tribunal's order dated 29th June
 2005, that the scope and purpose of remand to the
 Commissioner was limited. As it is evident from the afore-
 extracted paragraphs of the said order of the Tribunal, tha.t the    C
 Tribunal categorically declined to go into the issue about the
 appropriateness of Rule 6, with the result that the finding of the
 Commissioner in his order passed pursuant to Tribunal's earlier
 order dated 29th August 2003, regarding applicability of Rule
 6 remained undisturbed and in fact attained finality, in as much
 as, the appellant did not question the correctness of the remand     D
 order passed by the Tribunal on 29th June 2005. Keeping in
 mind the factual scenario, we are of the opinion that the Tribunal
 erred in re-opening and examining afresh the question as to
 whether or not the value of CAB could be determined by
 applying Rule 6 and, therefore, the objection of the revenue in      E
 that regard deserves to be accepted. We order accordingly.

     27. In the light of our opinion on the first question, we deem
it unnecessary to assess the merits of the submissions made
by learned counsel for the parties on the question of                 F
applicability of Rule 6 of the 1988 Rules.

    28. This takes us to the last question. viz. whether or not
the direction of the Tribunal to the Commissioner to grant
adjustment @ 20% in the price difference between each variety
of CAB of the appellant and the corresponding CAB of the              G
competitor on account of higher volume of imports by the
appellant. for determining the value of the CAB is justified?

     29. The appellant as well as the revenue are both
dissatisfied with the said direction, The former claims that they     H
    1018    SUPREME COURT REPORTS                     [2010] 8 S.C.R.


A   should get discount of at least 40%. The stand of the latter, to
    the contrary, is that no demonstrated evidence, establishing the
    reasonableness and accuracy of the adjustment, having been
    adduced, the appellant is not entitled to any adjustment.

        Rules 3, 5 and 6 of the 1988 Rules are relevant for our
8
    purpose and they read as follows:-

        "3. Determination of the method of valuation.-For the
        purpose of these rules,-

c       (i) the value of imported goods shall be the transaction
        value;

        (ii) if the value cannot be determined under the provisions
        of clause (i) above, the value shall be determined by
        proceeding sequentially through Rules 5 to 8 of these
D       Rules."

        "5. Transaction value of identical goods.- (1 )(a) Subject
        to the provisions of Rule 3 of these rules, the value of
        imported goods shall be the transaction value of identical
E       goods sold for export to India and imported at or about the
        same time as the goods being valued.

         (b) In applying this rule, the transaction value of identical
         goods in a sale at the same commercial level and in
         substantially the same quantity as the goods being valued
F
         shall be used to determine the value of imported goods.

         (c) 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 a different commercial level or in different quantities
G        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
H
PERNOD RICARD !NOIA (P) LTD. v. COMMISSIONER! 019
 OF CUSTOMS, ICD TUGHLAKABAD [D.K. JAIN, J.]

    adjustments, whether such adjustment leads to an increase        A
    or decrease in the value.

    (2) Where the costs and charges referred to in sub-rule (2)
    of Rule 9 of these rules are included in the transaction
    value of identical goods, an adjustment shall be made, if
                                                                     8
    there are significant differences in such costs and charges
    between the goods being valued and the identical goods
    in question arising from differences in distances and
    means of transport.

    (3) In applying this rule, if more than one transaction value    C
    of identical goods is found; the lowest such value shall be
    used to determine the value of imported goods."

    "6. Transaction value of similar goods.- (1) Subject to the
    provisions of Rule 3 of these rules, the value of imported
                                                                     0
    goods shall be the transaction value of similar goods sold
    for export to India and imported at or about the same time
    as the goods being valued.

    (2) The provisions of clauses (b) and (c) of sub-rule (1),
    sub-rule (2) and sub-rule (3), of Rule 5 of these rules shall,   E
    mutatis mutandis, also apply in respect of similar goods."

     30. Rule 12 of the 1988 Rules provides that the
interpretative notes specified in the Schedule to these rules
shall apply for the interpretation of the rules. Notes to Rule 5     F
read as under:-

    "Notes to Rule 5

    1. In applying rule 5, the proper officer of customs shall,
    wherever possible, use a sale of identical goods at the          G
    same commercial level and in substantially the same
    quantities as the goods being valued. Where no such sale
    is found, a sale of identical goods that takes place under
    any one of the following three conditions may be used :
                                                                     H
    1020   SUPREME COURT REPORTS                    [2010] 8 S.C R.


A      (a) a sale at the same commercial level but in different
       quantities;

       (b) a sale at a different commercial level but in substantially
       the same quantities; or

B      (c) a sale at a different commercial level and in different
       quantities.

       2. Having found a sale under any one of these three
       conditions adjustments will then be made, as the case may
       be, for:
c
       (a) quantity factors only;

       (b) commercial level factors only; or

       (c) both commercial level and quantity factors.
0
       3. For the purposes of rule 5, the transaction value of
       identical imported goods means a value, adjusted as
       provided for in rule 5(1) (b) and (c) and rule 5(2), which
       has already been accepted under rule 4.
E
       4. A condition for adjustment because of different
       commercial levels or different quantities is that such
       adjustment, whether it leads to an increase or a decrease
       in the value, be made only on the basis of demonstrated
F      evidence that clearly establishes the reasonableness and
       accuracy of the adjustment, e.g. valid price lists containing
       prices referring to different levels or different quantities. As
       an example of this, if the imported goods being valued
       consist of a shipment of 10 units and the only identical
       imported goods for which a transaction value exists
G
       involved a sale of 500 units, and it is recognised that the
       seller grants quantity discounts, the required adjustment
       may be accomplished by resorting to the seller's price list
       and using that price applicable to a sale of 10 units. This
       does not require that a sale had to have been made in
H
PERNOD RICARD INDIA (P) LTD. v. COMMISSIONER1021
 OF CUSTOMS, ICD TUGHLAKABAD [D.K. JAIN, J.J . .

     quantities of 10 as long as the price list has been               A
     established as being bona fide through sales at other
     quantities. In the absence of such an objective measure,
     however, the determination of a value under the provisions
     of rule 5 is not appropriate."
                                                                       B
     Notes to Rule 6 are also relevant for our purpose and read
     as follows:

     "Note to Rule 6

             1.    In applying rule 6, the proper officer of           c
                   customs shall, wherever possible, use a sale
                   of similar goods at the same commercial
                   level and in substantially the same quantities
                   as the goods being valued. For the purpose
                   of rule 6, the transaction value of similar         o
                   imported goods means the value of imported
                   goods, adjusted as provided for in rule 6(2)
                   which has already been accepted under rule
                   4.
             2.    All other provisions contained in note to rule      E
                   5 shall mutatis mutandis also apply in
                   respect of similar goods."

     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         F
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       G
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         H
    1022    SUPREME COURT REPORTS                   [2010) 8 S.C.R.

A   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 evidence could be a valid price list containing prices
B   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
C 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
D 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
E 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'
F 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
G on the decision of this Court in Commissioner of Central
  Excise, Jaipur Vs. Rajasthan SPG. & WVG. Mills Ltd. & Anr. 5 ,
  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
H s.   (2007) 13 sec 129.
PERNOD RICARD INDIA (P) LTD. v. COMMISSIONER1023
 OF CUSTOMS, ICD TUGHLAKABAD [D.K. JAIN, J.]

goods attract lower prices, which fact has received judicial          A
recognition by this Court in Mirah Exports Pvt. Ltd. Vs. Collector
of Customs 6 , Metal Box India Ltd. (supra) and Basant
Industries Nunhai, Agra Vs. Additional Collector of Customs,
Bombay7. Responding to the stand of the revenue that on the
facts of the case, no adjustment was warranted, the appellant         B
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 i"n 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     C
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      D
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 tl1e controversy at hand. The provision is clear and
unambiguous meant to provide some adjustment in the price             E
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   F
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          G
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.
e.   (1998) 3 sec 292.
7.   1995 Supp (3) 320.                                               H
    1024    SUPREME COURT REPORTS                   [2010] 8 S.C.R.


A       34. Therefore, in so far as the question of '·adjustment" in
   terms of Rule 5(1 )(c) is concerned, we are in agreement with
   the Tribunal that the revenue having accepted the order of
   remand dated 29th June 2005, cannot now turn around and
   contend that no adjustment whatsoever is warranted. Similarly,
B there may also be some substance in the observation of the
   Tribunal that generally when the transactions are in large
   volumes over a long period, grant of discount is a normal
   commercial practice but again a commercial practice, per se,
   cannot be treated as conclusive evidence for determining real
c· price of a consignment. In our opinion, therefore, in the absence
   of some documentary evidence indicating that any rebate/
   discount was given to the appellant by the supplier, adjustments
   under Rule 5(1 )(c) cannot be justified.
         35. In the present case, it is evident from the impugned
o order that though the Tribunal had felt that requisite evidence
  to establish the range of adjustment was lacking and for that
  purpose, according to it, the matter was required to be
  remanded to the Commissioner but being influenced by the fact
  that there had already been three rounds of appeals to the
E Tribunal, it undertook the exercise itself. We are convinced that
  this approach of the Tribunal was not in order and therefore, in
  the absence of any demonstrated evidence, its direction for ad-
  hoc adjustment @ 20%, cannot be sustained.
       36. In the result, the appeal preferred by the importer-
F appellant is dismissed and the revenue's appeal is allowed.
  The order of the Tribunal under appeal, in so far as it pertains
  to the applicability of Rule 6 of 1988 Rules, is affirmed, however,
  the direction with regard to the adjustment on account of volume
  of imports of CAB by the appellant @ 20% in the price
G difference between each variety of CAB imported by the
  appellant and the corresponding CAB of the competitor, is set
  aside.
         37. In the circumstances, there will be no order as to costs.

H D.G.                                        Appeals disposed of.