Customs valuation accepts renegotiated invoice price where currency depreciation drives genuine pre-clearance price revision.

Shareholding by a foreign supplier in an importer, without proof that the statutory ownership or control test was met, does not by itself establish related-person status for customs valuation. The parties were found to have negotiated on commercial terms, so the relationship objection failed. Where currency depreciation led to a genuine renegotiation of price before clearance, and the revised invoice was supported by bank and supplier correspondence, the original invoice value could not be rejected merely because it differed from the first agreement. The renegotiated invoice price was accepted as the transaction value for assessment.

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Issues: (i) Whether the importer and the foreign supplier were related persons for customs valuation purposes merely because the supplier held 20% of the importer's share capital. (ii) Whether the invoice value could be rejected and the re-negotiated price linked to currency depreciation could be accepted as the transaction value.

Issue (i): Whether the importer and the foreign supplier were related persons for customs valuation purposes merely because the supplier held 20% of the importer's share capital.

Analysis: Under Rule 2(2)(iv) of the Customs Valuation Rules, 1988, relationship is attracted where a person directly or indirectly owns, controls or holds 5% or more of the outstanding stock or shares of both parties. Mere shareholding by the supplier in the importer, without proof that any third person held the requisite interest in both entities, was insufficient to establish relationship. The price negotiations were also found to have been on commercial terms.

Conclusion: The parties were not related persons for valuation purposes.

Issue (ii): Whether the invoice value could be rejected and the re-negotiated price linked to currency depreciation could be accepted as the transaction value.

Analysis: The correspondence with the bank and supplier showed depreciation of the Korean currency, re-negotiation of price, and opening of the letter of credit only after the revised price was agreed. In such circumstances, the declared price could not be rejected merely on the original agreement price. The declared/re-negotiated invoice price was therefore the proper value for assessment.

Conclusion: The re-negotiated invoice value was accepted as the transaction value and the enhancement was not sustainable.

Final Conclusion: The importer succeeded on valuation, and the Revenue's challenge to the finding on relationship and acceptance of the declared value did not survive.

Ratio Decidendi: Where currency fluctuation leads to genuine re-negotiation of price before clearance and the statutory test of relationship is not satisfied, the re-negotiated invoice price must be accepted as the customs transaction value.

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