Transaction value for imported goods can be rejected only on statutory grounds; unsupported internal material cannot displace invoice price.

Declared import transaction value may be rejected only when the statutory conditions for doing so under the Customs Valuation Rules are satisfied. Internal correspondence, an office memorandum, or other surrounding material is not enough by itself to justify discarding the invoice price and fixing a higher assessable value. The alleged second-hand nature of the machine was not treated as decisive for rejection of the declared price. In the absence of a legally sustainable basis to displace the invoice value, the transaction value must be accepted and a speculative reassessment cannot stand.

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Issues: Whether the declared transaction value of the imported machine could be rejected and the assessable value determined on the basis of an office memorandum and other surrounding material.

Analysis: Rejection of transaction value is permissible only where the conditions under Rule 4 of the Customs Valuation Rules are satisfied. On the facts, there was no sufficient basis to conclude that the declared price could not be accepted, and the record did not justify adopting a higher value merely on the strength of internal correspondence. The alleged nature of the machine as second hand or otherwise was not decisive for rejecting the declared price. In the absence of a legally sustainable ground for discarding the invoice price, the declared transaction value had to be accepted.

Conclusion: The rejection of the transaction value was unjustified and the valuation adopted by the department could not stand; the issue was decided in favour of the assessee.

Final Conclusion: The appeal succeeded and the department's valuation order was set aside.

Ratio Decidendi: A declared import price can be rejected only when the statutory conditions for rejection of transaction value are satisfied, and assessable value cannot be fixed on speculative or unsupported material when those conditions are absent.

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