Customs valuation sequence and comparable imports: declared value cannot be enhanced without following the prescribed rules and using a proper comparator.

When declared import value is doubted, the Customs valuation rules must be applied sequentially and the authority cannot jump to Rule 11 as a method of valuation; Rule 11 serves only to resolve disputes. The rejection of transaction value was also unsustainable because the relied-upon contemporaneous import differed in country of origin, quantity and commercial level, making it an improper comparator for enhancement. No sufficient evidence showed that the sale was outside the ordinary course of trade, and the declared range was supported by PLATT quotations. The value enhancement was therefore set aside and assessment had to proceed on the declared value.

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Issues: (i) Whether the adjudicating authority was justified in relying on Rule 11 of the Customs (Determination of Price of Imported Goods) Rules, 1988 without first proceeding sequentially through Rules 5 to 8 after doubting the declared value. (ii) Whether the declared value of the imported goods could be rejected and enhanced on the basis of a contemporaneous import of goods from a different country of origin and different commercial level.

Issue (i): Whether the adjudicating authority was justified in relying on Rule 11 of the Customs (Determination of Price of Imported Goods) Rules, 1988 without first proceeding sequentially through Rules 5 to 8 after doubting the declared value.

Analysis: The valuation scheme requires the declared transaction value to be accepted subject to the limited grounds for rejection, and if it is doubted, the authority must move sequentially through the prescribed alternative methods. Rule 11 is only a settlement-of-dispute provision and does not itself supply a method for determining assessable value. The adjudicating authority did not examine the applicability of Rules 5 to 8 before invoking Rule 11, which was contrary to the statutory sequence.

Conclusion: The reliance on Rule 11 for determining assessable value was not in accordance with law.

Issue (ii): Whether the declared value of the imported goods could be rejected and enhanced on the basis of a contemporaneous import of goods from a different country of origin and different commercial level.

Analysis: The comparable import relied upon by the department was of goods from a different country of origin, at a different quantity, and at a different commercial level. For valuation under the sequential rules and the residual method, comparable imports must bear legally relevant similarity, and due weight must be given to country of origin, quantity, commercial level, and time of import. No acceptable evidence was produced to show that the sale was not in the ordinary course of trade or under fully competitive conditions, and the PLATT quotations supported the declared range of value. On these facts, the relied-upon import was not a proper basis for enhancement.

Conclusion: The contemporaneous import was not comparable, and the declared transaction value was required to be accepted.

Final Conclusion: The appeal succeeded, the enhancement of value was set aside, and the assessment had to be completed on the declared value.

Ratio Decidendi: Where the declared import value is doubted, the Customs valuation rules must be applied in sequence, and enhancement cannot rest on an import that is not comparable in legally material respects such as country of origin, quantity, and commercial level.

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