Higher discount justified if Goods imports in Bulk & maintain inventory by incurring Additional Cost

Lutron GL Sales & Services Pvt. Ltd. Vs Commissioner of Customs (CESTAT Delhi)

The issue under consideration is whether the percentage of enhancement to the transaction value ordered by the Deputy Commissioner of Customs is justified in law?

In the present case, the appellant M/s Lutron GL Sales & Services Pvt. Limited imports lighting control systems from their parent company, “related party”, M/s Lutron Electronics Co., Inc. USA. These products include sensors and dimmers, processors, controllers, radiofrequency, transmitters, interfaces, shades, etc. which are used for convenience and energy-saving solutions to customers. The appellant is registered with SVB. Revenue started an investigation into the matter of the influence of their relationship on the invoice value of imported goods. The Deputy Commissioner directed enhancement of value by 77%, to make it at par with the price offered to the ASD. It was further held that substantial incontrovertible documentary evidence could not be provided by the appellant, for acceptance of the transaction value.

CESTAT while allowing the application of the appellant held that the appellant imports in bulk for resale and also stock the goods in sufficient quantity to meet the demand for the goods which results in an additional cost to them in warehousing and reselling of the goods. Further, the appellant also undertakes sales promotion activity which is not done by the Authorised Stocking Distributors  (ASD) and other importers. Accordingly, the higher discount enjoyed by the appellant on the list price as compared to the ASD has got reasonable justification. Further they states that some of the identical goods imported by the appellant and other importers, there appears to be a requirement of some adjustment. Accordingly, we modify the direction of enhancement of transaction value by 77% to 20% for the period 2013-14 to 2016-17. For the year 2017-18, there is apparently no such difference in the import value by other importers and the appellant and as such, no enhancement in the transaction value is required.

Accordingly, CESTAT allow this appeal by way of remand to the Court below to the Deputy Commissioner, SVB to re-determine the adjustment, if any, in the transaction value on the basis of deductive value and computed value.

FULL TEXT OF THE CESTAT JUDGEMENT

The appellant has filed Miscellaneous Application No. 50977 of 2019 praying that the additional evidence may be taken on record in terms of Rule 23 of the CESTAT (Procedure) Rules, 1982, in the interests of justice, which is „certified by Chartered Accountant‟ confirming the „deductive value‟, derived from the re-sale price of the imported goods for the period under question, „computed value certificates‟, issued by M/s Lutron Electronics Co. Inc. USA for the financial year 2016-17 and 2017-18, in support of export by Lutron US, at arm‟s length price. The appellant further submitted that the certificate indicates that transaction value declared was at arm‟s length. Further, appellant relied on the ruling of Hon‟ble Supreme Court in North Eastern Railway Administration, Gorakhpur vs. Bhagwan Das -2012 (281) ELT 161 (SC) in support of their prayer for additional evidence, praying that such evidence is basically calculation based on the record, and in the interest of justice to be considered in this appeal.

2. The issue involved in this appeal is regarding „order of loading‟ in the transaction value, the impugned order confirming the percentage of enhancement to the transaction value, as ordered by the Deputy Commissioner of Customs vide order-in-original dated 11.2018.

3. The brief facts of the case are that the appellant M/s Lutron GL Sales & Services Pvt. Limited imports lighting control systems (products) from their parent company, “related party”, M/s Lutron Electronics Co., Inc. USA (Lutron US for short). These products include sensors and dimmers, processors, controllers, radio frequency (RF) transmitters, interfaces, shades, etc. which are used for convenience and energy saving solutions to customers. The appellant is registered with SVB. Revenue started investigation into the matter of influence of their relationship on the invoice value of imported goods and thus SVB had registered the case vide DOV No. DOV0007307 and sent questionnaire and other documents concerning imports to which the appellant replied as follows:-

a. That they are a private limited company;

b. That they import from M/s Lutron Electronics Co. Inc., USA and M/s VIMCO, USA;

c. That they are a subsidiary company and fellow subsidiary company to the foreign suppliers respectively;

d. That the nature of their transaction with the exporter is sale;

e. That John Woodman is Assistant Secretary at Lutron Electronics and Vimco;

f. That they are not the partners in the business of each other‟s;

g. That there is no employer employee relationship;

h. That M/s Lutron Electronics Co. Inc., USA, holds over 97% of their shares;

i. That Lutron Electronics Co. Inc., has control over the use of all intellectual property;

j. That no obligation of the supplier are transferable to the importer;

k. That they are not the members of the same family;

l. That they are not engaged in the local manufacture of the products of the Foreign Suppliers;

m. That the imported goods are not the components parts of CKD/SKD sets for local assembly into finished goods, as the imported goods are finished goods;

n. That they have not imported any capital goods, plant and machinery equipment‟s etc. from the Foreign Suppliers;

o. That no amount is paid or payable, directly or indirectly, to or on behalf of the Foreign Supplier for engineering development, artwork, design work, plans or sketches undertaken elsewhere than in India and connected with the production of the imported goods;

p. That the import of the goods are covered under distribution and other agreement, are marketing & communication agreement;

q. That the basis of arriving at the price in the invoice is ‘Transfer Price’;

r. That the foreign suppliers supply the identical goods to any other person also in India;

s. That the form of payment to the Foreign Suppliers of the imported goods is „Bank Transfer‟ and no other payments are made to the Foreign Suppliers;

t. That no amount on account of royalty/ technical know-how fee/ licence fee/ any other fee is paid or payable by their company to the foreign suppliers;

u. That their company does not receive any amount in the form of agency commission, over riding commission or any other remuneration;

v. That their company does not incur any expenses on behalf of, by understanding or agreement with, or under instructions from the supplier of the imported goods on advertising, propaganda expenses or any other expenses for the promotion of sale of the imported goods;

w. That the foreign suppliers supplies identical, similar or connected items to its subsidiaries in several countries.

From the submissions made by the appellant, it surfaced that the appellant is a subsidiary of M/s Lutron Electronics Co., Inc. Headquartered in Coopersburg, Pennsylvania, USA, which along with its subsidiaries and associated companies is engaged in the business of designing, manufacturing, marketing and selling variety of „total lighting management solutions – lighting control and shades‟ through a variety of channels including electrical contractors, lighting showrooms, window treatment dealers, retailers, custom electronics dealers and few other channels.

3. Considering the documents produced and reply to the questionnaire the SVB framed the issue for determination as follows:-

(i) Whether the importer and the foreign supplier are related person?

(ii) Whether the transaction value between importer and the parent supplier is influenced by such relationship; and

(iii) Whether there is any requirement of any addition of any value/cost/payment to the transaction value in terms of Rule 10 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007?

4. Learned Counsel for the appellant urges that the imported products, broadly fall in two categories –(i) those that require an import licence from the WPC, Department of Telecommunications, as they may receive or transmit radio frequency signals (RF Products), (ii) and others (Non-RF Products), for which no such licence is required. The RF products are being imported exclusively by the appellant under CTH 85269200 and 85437099. In certain exceptional cases however, where the customer is operating under the EPCG, EOU or SEZ or other duty exemption schemes, the RF products are also being imported by the customers, for their own use. The Non-RF products are imported both by the appellant and its network of „In Country Resellers‟ (ICR), including the „Authorised Stocking Distributors‟ (ASD), for sale in the Indian market. The non RF products fall in various headings including 8537, 3926, 8302 and 8479.

5. The ASDs do not import the RF products or certain Non-RF products. There are also „Made To Order‟ products that are imported both by the appellant and the ASD, but are not comparable. These imports constitute by quantity, a significant part of the total imports made by the appellant. The share of such imports out of the total imports made by the appellant in details are as under:

Year	RF Products (%)	Non RF products only imported by appellant (%)	Made To Order Products (%)	Total (%)
2013-14	39	18	2	59
2014-15	51	9	8	69
2015-16	16	58	2	76
2016-17	34	22	0	56
2017-18	39	31	1	70

6. The appellant commenced import of products, for re-sale in India, in 2012. The appellant entered into a Distribution agreement, whereby it was appointed a non-exclusive distributor of specified products for Lutron US. The Agreement provided for fixation of the distribution discount, based on ASD prices, and a periodic review of the prices and ASD discount, necessary to ensure such prices and discounts, and Distributor‟s resale margins, are at arm‟s length under applicable legal standards.

7. The appellant obtained its first Radio Frequency product Import Licence in October, 2012, and received a „domestic call centre license‟ (OSP) in July 2013. The appellant enjoyed higher discounts on its imports, as compared to the ASDs, due to its higher volume of purchases. Assuming the Lutron US list price to be same, the comparative average import price of ASDs vs. The appellant, would have been as under (rounded):

Year	Appellant price	ASD price	Difference
2013-14	21	42	21
2014-15	27	44	17
2015-16	28	43	15
2016-17	34	41	7
2017-18	35	34*	1
	Difference Average 15 (leaving 2017-18)

*Starting FY 2017-18 through the present, the appellant believes that there were no imports by the ASDs. The end customers purchased the goods from the ASDs on high sea sale basis.

8. The quantities imported by the appellant were significantly higher than those by the ASDs, and consequently the appellant enjoyed higher discounts. The appellant‟s imports were about 20 to 280 times greater than those  of the ASDs.  A comparison of the quantity imported is as under:

(emphasis supplied).

Year	Appellant Import Qty	Avg. ASD Import Qty
2013-14	8,773	427
2014-15	13,072	389
2015-16	73,674	256
2016-17	53,196	1,314
2017-18	44,798	1,492*

9. In the context of the aforesaid facts, the appellant submitted a questionnaire response to the Special Valuation Branch (SVB) which culminated in the Show Cause Notice dated April 7, 2017, proposing rejection of the transaction value, and enhancement of the declared value by 77%. The proposal was based on the following allegations:

(i) That the appellant and M/s Lutron US, are related as per rule 2(2)(i) & (v) of the Customs Valuation Rules, 2007 (‘Rules’).

(ii) That the foreign supplier is supplying identical / similar goods to four types of buyers in India – appellant, Authorised Stocking Distributor (ASD), Authorised Non-Stocking Distributors („NSD‟) and End Customers. That only the imports by the ASD are comparable to those of the appellant, as the nature of goods, nature of industry, season and volume of goods is identical.

(iii) That there are differences in commercial level and quantity, warranting adjustment, however in the absence of a quantified pricing policy, adjustment of 5% may be allowed.

(iv) That the imports consist of standard products, and project products (which have been customised).

10. In reply to the notice, the appellant inter-alia submitted as under:

(i) That the ASD were a separate class of buyers, who are given discounts based on their negotiation and minimum commitment of purchase turnover for Lutron products. Further there is a difference in the mode of supply, costs and quantity level at which the appellant and the ASD operate, and therefore, they cannot be treated as operating at the same commercial level.

(ii) That the appellant maintains an inventory of Lutron products, and thus incurs warehousing and other costs. As against this, the ASD typically purchase once they have an end user order in hand for immediate delivery. Evidence of the expenses incurred by ASDs in comparison to those incurred by the appellant was also furnished.

(iii) That the imports by the ASDs are not comparable to the imports by the appellant, on account of the huge difference in volumes. Further adjustment of 5% on account of the differences in quantity, is wholly unreasonable.

(iv) That the appellant incurs significant expenses in obtaining Radio Frequency Licences (WPC & DGFT), for import of RF products, whereas the ASDs do not import RF products,, and do not incur such expenses.

(v) The arm‟s length transaction was justified by the deductive methodology, indicating a nominal profit. Further, that with 77% loading, the appellant would incur losses on their imports.

(vi) That there is no published price list of Lutron US, for made to order (custom) products and import value of such products cannot be enhanced.

11. The appellant attended hearings on four dates, before different adjudicating authorities, and provided all the information and evidence requested for by the officers. The appellants were surprised and shocked to note that none of the evidence furnished or the arguments made, were considered by the Adjudicating authority, while deciding the case.

12. By an order dated 29.11.2018, the Deputy Commissioner directed enhancement of value by 77%, to make it at par with the price offered to the ASD. It was further held that substantial incontrovertible documentary evidence could not be provided by the appellant, for acceptance of the transaction value.

13. Against the aforesaid order, the appellant filed an appeal before the Commissioner of Customs (Appeals), inter-alia pointing the total non-application of mind to the issues by the original authority. Attention was also invited to the voluminous evidence furnished in support of the transaction value. The absurdity of loading the value by 77% was also pointed out, as it made the enhanced value, much higher than even the import price of ASDs.

14. By cryptic order dated June 11, 2019, the Commissioner of Customs (Appeals) rejected the appeal, without considering the submissions made in the appeal. Aggrieved by the aforesaid order, the appellant has come up in appeal, before this Tribunal.

15. Learned Counsel for the appellant urges that the original and appellate authority accept that the appellant submitted records, reply to the SCN and oral submissions in support of its defence. Without dealing with the correctness or otherwise of the defence put forth, the Court below held that substantial incontrovertible documents have not been provided. The Appellant submits that the impugned order does not give any reasons, as to why the evidence put forth by the Appellant is not adequate or incontrovertible. The appellate authority has also without any consideration, passed the impugned order, in total disregard of the statutory provisions, as also the facts on record. In the absence of a reasoned order, the direction for loading of value by 77% is wholly unjustified.

16. The Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 (hereinafter referred to as „Valuation Rules‟), provide for the manner of determination of the assessable value. Rule 3 provides that the value of imported goods shall be the transaction value, subject to fulfilment of the following conditions:

Sub Rule (3) of Rule 3 reads as under (Emphasis added):

(1) (a) Where the buyer and seller are related, the transaction value shall be accepted provided that the examination of the circumstances of the sale of the imported goods indicate that the relationship did not influence the price.

(b) In a sale between related persons, the transaction value shall be accepted, whenever the importer demonstrates that the declared value of the goods being valued, closely approximates to one of the following values ascertained at or about the same time.

(i) The transaction value of identical goods, or of similar goods, in sales to unrelated buyers in India;

(ii) The deductive value for identical goods or similar goods;

(iii) The computed value for identical goods or similar goods;

Provided that in applying the values used for comparison, due account shall be taken of demonstrated difference in commercial levels, quantity levels, adjustments in accordance with the provisions of Rule 10 and cost incurred by the seller in sales in which he and the buyer are not related;

(C) Substitute values shall not be established under the provisions of clause (b) of this sub-rule.

(4) if the value cannot be determined under the provisions of sub-rule (1), the value shall be determined by proceeding sequentially through Rule 4 to 9”.

(emphasis supplied).

17. The Rules provide that the transaction value in a sale between related persons shall be accepted, whenever the importer demonstrates that the declared value of the goods closely approximates to any of the listed methods, including the deductive value for identical or similar goods. It is for the imported to select, which of the listed methods, it adopts for demonstrating that the relationship has not affected the import price. The appellant submitted evidence of the deductive value, before the issuance of the show cause notice, as well as during the adjudication proceedings. The show cause notice in paragraph 10 refers to the evidence submitted in relation to the deductive method, including the fact that the profit was not high or disproportionate to industry norms. The profit earned on the imported goods was in the range of 2% to 15%. Before the adjudicating authority, the appellant submitted certificates for deductive value, the audited Profit and Loss statement for the relevant period, as also the profits earned by others in this industry. This fact is duly noted in paragraph 31 to 33 of the Order-in- Original. In the appeal filed before the Commissioner (A), the claim for acceptance of the value based on deductive method was reiterated. The Department has proceeded to re-determine the value under Rule 4, in clear violation of Rule 3(4) which provides that Rule 4 to 9 can be applied, only if the value cannot be determined under Sub Rule (1) of Rule 3. The orders of the lower authorities are contrary to the mandate of Rule 3 and the application of Rule 4, without first exhausting Rule 3 is impermissible under law.

(emphasis supplied).

18. The appellant submits that the deductive value calculation has not been rebutted by the Department and hence the transaction value is liable to be accepted in terms of Rule 3 (3) of the Rules. The appellants  have also submitted as „Additional evidence‟, computed value certificates, for the most recent period, 2016-2017, and 2017-2018 from the foreign suppliers. The evidence on record, reflects that the relationship has not affected the price.

(emphasis supplied).

19. The application of Rule 4 is even otherwise unjustified, as the requirements of Rule 4 are not met. Rule 4 provides as under (Emphasis added):

“4. Transaction value of identical goods.-

 (1) (a) Subject to the provisions of rule 3,  the  value  of  imported goods shall be the transaction value of identical goods sold for export to India and imported at or about the same time as the goods being valued;

Provided that such transaction value shall not be that value of the goods provisionally assessed under section 18 of the Customs Act, 1962.

(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 shall be used to determine the value of imported goods.

(c) Where no sale referred to in clause (b) of sub-rule (1), is found, the transaction value of identical goods sold at a different commercial level or in different quantities 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 adjustments, whether such adjustment leads to an increase or decrease in the  value”.

Rule 4 can be invoked only where there is an import of identical goods. The terms identical goods has been defined in Rule 2 (d) as under (Emphasis added):

“(d) “identical goods” means imported goods-

(i) Which are same in all respected, including physical characteristics, quality and reputation as the goods being valued except for minor differences in appearance that do not affect the value of the goods;

It is submitted that in respect of RF products, Made To Order products, and Non-RF products imported by the Appellant only, there are no imports of identical goods by ASDs. There are also no imports of similar goods. The term “similar goods” has been defined under the Rules, as under: (emphasis added)

“(f) “similar goods” means imported goods-

(i) Which although not alike in  all  respects,  have  like characteristics and like component materials which enable them to perform the same functions and to be commercially interchangeable with the goods being valued having regard to the quality, reputation and the existence of trade mark;

(emphasis supplied).

20. The impugned order does not indicate how the goods imported by the ASDs would qualify as identical or similar to the RF and Made To Order products imported by the appellant. The products imported by the ASD are not technically or commercially interchangeable with the RF and Made To Order products imported by the appellant. As there are no imports of identical or similar goods, neither Rule 4 nor Rule 5 is applicable to these categories of goods. Going sequentially, the next available option is Rule 7, which provides for a deductive value calculation for determination of assessable value. The appellant has furnished requisite information in this regard, however, the Department has failed to apply its mind to this evidence. The adoption of an ad hoc percentage for enhancement of value across the board, in respect of all imports, is specifically barred by Rule 9 (2), which does not permit adoption of arbitrary or fictitious values.

21. In so far as the products which are common to the ASDs and the appellant are concerned, it is submitted that the requirements of Rule 14 are not met, as the imports are not at the same commercial level or in substantially the same quantity. In the absence of any evidence for making an adjustment, the application of Rule 4 must be ruled out. The same holds good for Rule 5, which relates to similar goods.

(emphasis supplied).

22. The appellant submits that the average import quantity by an ASD is in the range of 0.5% to 5% of the imports made by the appellant. The imports by ASD‟s being negligible, as compared to that of the appellant, the imports are neither at the same commercial level nor in substantially the same quantity. The appellant had furnished evidence  of the expenses incurred by ASDs as compared to those incurred by the appellant, to demonstrate that they were different class of buyers. A difference in quantity of this magnitude would occasion a higher discount, based on commercial considerations, and hence there is no reason to doubt the transaction value.

23. Without prejudice to the above, the absurdity of the loading is evident from the fact, that no cognizance has been taken of the change in the import price of the appellant vis-a-vis that of the ASD, over the period. From 2016 onward the differential between pricing of the appellant and the ASD has declined significantly. In 2017-18 the prices for the appellant and the ASD are nearly at par. The loading, for most  of the period results in a value, which is even higher than the import price of the ASD‟s. The order suffers from a total non application of mind, as the loading has resulted in unintended consequences. Accordingly, prays for allowing the appeal.

24. Learned Authorised Representative appearing for the Revenue contends that admittedly the appellant is the foreign supplier related – party under Rule 2 of CVR, 2007 as such it is incumbent upon the appellant to satisfy that transaction value was not influenced by their relationship. Scrutiny of documents have revealed that the foreign supplier was also supplying the goods to Authorised Stock Distributor (ASD) whose price was comparable to that of the appellant to the ASD goods have been supplying at 50% discount of the list price whereas the appellant has supplied goods at  5% discount on this price.  Thus, there was difference of 22.5% in the price offered by foreign supplier to the ASD vis-a-vis the appellant. Thus, prima facie case was made out for rejection of transaction value. Reliance is placed on the following ruling:-

(i) Dott. Ing. Scandura Caliberation & Instrumentation India Pvt. ltd. -2013 (295) ELT 67 (Tri. Chennai);

(ii) Hydro aluminium Extrusion Building Sys. P. Ltd. -2014 (307) ELT 604 (Tri. Chennai);

(iii) Habasit Lakoka Pvt. Ltd. 2015 (321) ELT 15 (SC) and

(iv) Ansaldo STS Transportation System India Ltd. -2016 (339) ELT 436 (Tri. Chennai) affirmed by Hon‟ble Apex court – 2016 (339) ELT A295 (SC).

25. Thus, the discount was not extended to unrelated ASD and ordered to be added to the transaction value. Further, keeping in consideration, the difference between volume of import of appellant and that of the ASD, an adjustment factor of 5% was ordered. The redetermination of assessable value was rightly affirmed by the learned Commissioner (Appeals). The contention of appellant that 5% adjustment factor was too low is not plausible in view of the fact that proposal was made and communicated through the show cause notice. The appellant did not offer any comment to the quantum of volume discount and hence this cannot be termed arrived at unilaterally, keeping the appellant in dark. It is further urged that there is no rule or straight jacket formulae to determine at a different factor for volume discount. Reliance is placed on the ruling of the Apex Court in Pernod Ricard India (P) Ltd., -2010 (256) ELT 161 (SC) where it is held as follows:-

“33.  We are of the considered opinion, that 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 „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 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 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 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.”

Accordingly, learned Authorised Representative for the Revenue prays for dismissing of the appeal.

26. Having considered the rival contentions, we find that the miscellaneous application praying for admission of additional evidence whereby the appellant have filed copy of certificate of Chartered Accountant confirming the deductive value derived from the re-sale price of the imported goods, computed value certificate issued by the supplier/ Lutron USA in support of export at arm‟s length price. We find that these documents are based on the record and go to root of the matter and the same are admitted. Thus, the miscellaneous application stands allowed.

27. We find that the appellant is not the sole importer and the goods have also been imported by other distributor/ seller with respect to some of the goods namely Authorised Stocking Distributors (ASD). Further, most of the goods imported by the appellant like RF products and on made to order products as well as non RF products only imported by the appellant are not imported by the ASD and others. We further find that the appellant imports in bulk for resale and also stocks the goods in sufficient quantity to meet the demand for the goods which results to additional cost to them in warehousing and reselling of the goods. Further, the appellant also undertakes sales promotion activity which is not done by the ASD and other importers. Accordingly, the higher discount enjoyed by the appellant on the list price as compared to the ASD has got reasonable justification. We further find that the difference has gradually decreased after the year 2014-15 and it come at par in the year 2017-18, rather the average import price is higher of the appellant. Further, the quantity imported by the appellant are 20 to 280 times greater than that imported by ASD as already noticed herein above. Thus, mere 5% adjustment allowed by the Court below in the transaction value is without any justification. In view of the transaction  value of some of the identical goods imported by the appellant and other importers there appears to be requirement of some adjustment. Accordingly, we modify the direction of enhancement of transaction value by 77% to 20% for the period 2013-14 to 2016-17. For the year 2017-18, there is apparently no such difference in the import value by other importers and the appellant and as such no enhancement in the transaction value is required. We also noticed that part collection of deductive value submitted by the appellant, they are only making a nominal profit. The appellant has to occur significant reduce licences from the Telecom Department and DGFT for import of RF products which are not incurred by other resellers. Accordingly, the impugned order is modified to the extent as indicated hereinabove.

28. Having considered the rival contentions, we find that as the ASD do not import „RF products‟ as well as the „made to order products‟, but some products are imported both by the appellant and the ASD, but are not comparable. Such imports constitute a significant part of the total imports made by the appellant. Such imports are in the range of 16 to 51% during the period 2013-14 to 2017-18 or an average of 36% of the total imports made by the appellant. Further, we find that the quantity imported by the appellant is more than 200 times than the quantity imported by the ASD. Further, we find that the ASD placed order for import usually when they have sales order in hand and do not undertake stocking of the products. Whereas the appellant irrespective of the sales orders in hand, the appellant imports in bulk and stocks, and maintains an inventory. Thus they incur much higher selling and distribution Thus, we find that there is no reasonable basis for enhancement of 77% in the transaction value as per the impugned order. The proposition of Revenue that the import price of ASD are comparable to that of the appellant is a vague, in view of the heavy difference in the quantity imported of identical goods. Thus, the appellant and the ASD cannot be treated as a comparable at commercial level. We further take notice that there is no public price list of Lutrons US, for made to order or customs products and thus value of such products is not comparable in absence of import by the ASD of such products. We further find that the appellant had submitted the calculation of deductive value, which the Court below considered. We further find that sub-rule (3) of Rule 3 in clause (b) provides that, in case of sale between the related person the transaction value shall be accepted whenever the importer demonstrates that the declared value of the goods being valued, closely approximate to one of the following values imported at or about same time. Sub-clause (ii) in clause (b) provides for the deductive value of the identical goods or similar goods. Further, it is provided that in applying the value use for comparison,  due account shall be taken of demonstrated difference in commercial level, quantity levels, adjustment in accordance with the provision of Rule 10 and cost incurred by the seller in sales, in which he and the buyer are not related. Sub-rule (4) of Rule 3 further provides, if the value cannot be determined under the provisions of sub-rule (1) of Rule 3, the value shall be determined by proceedings sequentially through Rule 4 to 9. Admittedly, it is evident on the face of the record that deductive value was available before the Court below which have not been rejected by a speaking order, thus, violating the provisions of Rule 3 (3) of the Valuation Rules. Accordingly, we hold that as the deductive value for calculation have not been rebutted by the Revenue, the same has to be followed for calculation of any adjustment in the transaction value in terms of Rule 3(3) of the Valuation Rules. We further hold that application of Rule 4 by the Court below is not justified in the facts and circumstances. Accordingly, we allow this appeal by way of remand to the Court below to the Deputy Commissioner, SVB to re-determine the adjustment, if any, in the transaction value on the basis of deductive value and computed value. Further, we make an interim arrangement  in view of the facts recorded in para 7 of this order, that there is an average price difference of 15% in the import made by the appellant and the ASD. Accordingly, till the order is passed by the Deputy Commissioner, SVB pursuant to remand, the loading shall be restricted to 15% of the invoice value.

29. Thus, the appeal stands allowed in the aforementioned terms by way of remand. Misc. Application for additional evidence is also