Declared transaction value for imported software stands unless relationship affects price or valuation rules justify rejection.

Declared transaction value for imported software could not be rejected merely because the importer and foreign supplier were treated as related. The Tribunal found that the importer acted as a sub-distributor and indenting agent, that the supplier dealt with multiple intermediaries, and that customers could place orders directly through different channels. On those facts, there was no evidence of mutuality of interest or of any influence on price, and the statutory conditions for rejecting the declared value were not met. The enhancement of assessable value was therefore held to be unjustified and relief followed.

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Issues: Whether the assessable value of the imported software could be loaded by rejecting the declared transaction value on the ground of relationship between the importer and the foreign supplier and alleged mutuality of interest.

Analysis: The declared value was enhanced because the authorities treated the importer and the foreign supplier as related in a manner affecting price. The Tribunal found that, on the facts and under the agreement, the importer was functioning as a sub-distributor and indenting agent for software sales in India. The arrangement showed that the foreign supplier dealt with several suppliers, paid commission to the distributor and sub-distributor, and that the customer could place orders directly with the supplier, distributor, or sub-distributor. The Tribunal held that there was no evidence of mutuality of interest between the importer and the foreign supplier and no basis to discard the transaction value. It further found that the circumstances required for rejection of declared value under the valuation rules were absent.

Conclusion: The loading of the declared transaction value was unjustified and the appeal succeeded.

Final Conclusion: The order enhancing the assessable value was set aside and relief followed in accordance with law.

Ratio Decidendi: In customs valuation, the declared transaction value cannot be rejected merely because the importer and foreign supplier are related unless there is evidence that the relationship influenced the price or that the statutory conditions for rejection of the value are satisfied.

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