Customs valuation after rejection of transaction value must follow the statutory sequence, not a proforma invoice or quotation.

After rejection of the declared transaction value, assessable value under the Customs Valuation Rules, 1988 could not be enhanced merely on the basis of a proforma invoice or quotation, because such documents are only indicative of price and are not a safe standalone basis for valuation. The sequential valuation mechanism in Rules 5 to 8 had to be applied before any fresh enhancement could be sustained. Where the lower authorities failed to undertake that statutory exercise and relied on inconsistent material, the valuation determination was unsustainable and the matter required de novo adjudication in accordance with law after hearing the parties.

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Issues: (i) Whether, after rejection of the declared transaction value, the lower authority could sustain enhancement of assessable value on the basis of a proforma invoice and quotation; (ii) Whether, once transaction value was rejected, the assessable value had to be determined sequentially under the Customs Valuation Rules, 1988 or the matter remanded for fresh adjudication.

Issue (i): Whether, after rejection of the declared transaction value, the lower authority could sustain enhancement of assessable value on the basis of a proforma invoice and quotation.

Analysis: A proforma invoice is only a quotation of price and, by itself, cannot form a safe basis for enhancement of the value of imported goods. The original authority also proceeded on a confused factual basis by relying on materials that did not coherently support the enhanced valuation adopted in the adjudication order.

Conclusion: The proforma invoice and quotation could not be accepted as the sole basis for enhancement of assessable value.

Issue (ii): Whether, once transaction value was rejected, the assessable value had to be determined sequentially under the Customs Valuation Rules, 1988 or the matter remanded for fresh adjudication.

Analysis: Once the declared transaction value was rejected under Rule 4(1), the proper course was either to determine the assessable value under the residual valuation mechanism in the Rules or to remand the matter for such determination. The lower authorities did not carry out the sequential exercise contemplated by the valuation scheme from Rules 5 to 8, and the orders were therefore unsustainable.

Conclusion: Fresh determination of assessable value was required under the sequential valuation scheme, warranting remand.

Final Conclusion: The impugned orders were set aside and the valuation dispute was sent back for de novo adjudication in accordance with law and after giving the parties a reasonable opportunity of hearing.

Ratio Decidendi: Where declared transaction value is rejected, assessable value must be determined by the statutory sequential valuation mechanism, and a mere proforma invoice or quotation cannot, by itself, justify enhancement.

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