Contractual valuation of imported goods accepted where bona fide pricing formula and despatch money deduction were supported by the contract.

Where imported goods are sold under a bona fide pre-agreed pricing formula, the contractual final price computed from actual lead content and the agreed reference price may be accepted as the transaction value for customs valuation. The price was not rejected merely because it was finalised after importation, as no contemporaneous comparable imports or evidence of manipulation were shown, and substituting only one valuation factor was held impermissible. The contractually provided deduction for despatch money was also allowed because it reflected actual payment terms. The refund order was sustained, subject to examination of unjust enrichment before disbursement.

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Issues: Whether the contractually determined final price of imported lead concentrate, worked out on the basis of the agreed formula using actual lead content and the Metal Bulletin price for the quotational period after discharge, could be accepted as the transaction value for customs valuation, and whether deduction towards despatch money was allowable.

Analysis: The import price was fixed initially on a provisional basis and then finalised under a clear contractual formula linked to actual lead content and the agreed reference price for the relevant quotational period. The final value could not be assailed merely because it was calculated after importation, since the contract itself provided a definite and commercially agreed basis for computation. No evidence of contemporaneous imports of similar goods at a higher value was produced, and there was no material to show that the contractual method was capable of manipulation. The demand to substitute only one factor, namely the date-of-import LME price, while keeping the rest of the agreed formula intact, was held impermissible under the valuation rules. The deduction for despatch money was also found to be supported by the contract and based on actual payment terms.

Conclusion: The final value arrived at under the contract was accepted as the transaction value, the deduction towards despatch money was allowed, and the departmental challenge failed.

Final Conclusion: The order allowing refund was sustained, with the caution that unjust enrichment had to be examined before disbursing the refund.

Ratio Decidendi: Where imported goods are sold under a bona fide pre-agreed pricing formula, and no contemporaneous comparable import or evidence of manipulation is shown, the contractual value worked out under that formula may be accepted as the transaction value for customs valuation, including contractually permissible deductions actually passed on.

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