Customs valuation must be reassessed on true facts when party relationship is admitted and import-linked payment is disputed.

Where the relationship between the parties is admitted or otherwise established, customs valuation must be reconsidered on the true facts and surrounding circumstances, and not confined to the apparent scope of the earlier appellate order. The authority must examine whether the disputed payment was a condition for importing quality raw material and whether it formed part of the assessable value under the Customs Valuation Rules, 1988. The Tribunal was therefore not justified in limiting the enquiry, and the valuation issue required de novo reconsideration by the adjudicating authority.

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Issues: Whether the Tribunal was justified in holding that the addition of DM 5,00,000 to the cost of the raw material was not in issue before the appellate authority and in declining to permit its consideration in valuation of the imported raw material.

Analysis: The adjudication had proceeded on the premise that the two companies were not related, but that premise disappeared once the assessee conceded the relationship before the appellate authority. In that situation, the matter could not be confined to the narrow view taken by the Tribunal. The relationship between the parties and the terms of the technical collaboration agreement required fresh examination to determine whether the payment was a condition for import of quality raw material and whether the relevant amount was includible in the assessable value. The dispute had to be decided on the facts and circumstances in accordance with the Customs Valuation Rules, 1988, rather than by limiting the enquiry to the apparent scope of the earlier order.

Conclusion: The Tribunal was not justified in restricting the issue in that manner; the matter required de novo reconsideration by the adjudicating authority.

Final Conclusion: The appeal succeeded and the Tribunal's order was set aside, with the valuation dispute remitted for fresh decision under the Customs Valuation Rules, 1988.

Ratio Decidendi: Where the relationship between the parties is admitted or established, valuation must be reconsidered on the true facts and surrounding circumstances, and the authority is not confined to the apparent tenor of the agreement alone.

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