Customs valuation of aluminium scrap requires reliable evidence; unsupported enhancement, confiscation and penalties could not be sustained.

Declared transaction value of imported aluminium scrap could be rejected only on legally sustainable grounds under Section 14 of the Customs Act and the valuation rules. The department's reliance on an alert circular, LME-linked indications and a disputed foreign invoice was found insufficient because the invoice and related documents were unsigned, inconsistent in address and description, and did not reliably prove undervaluation. In the absence of contemporaneous import evidence and proper compliance with the Customs Valuation Rules, 1988, the enhancement could not be sustained. The declared value was accepted, and the duty demand, confiscation and penalties were held unsustainable.

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Issues: Whether the declared value of the imported aluminium scrap could be rejected and enhanced on the basis of the Directorate of Valuation alert circular, LME-linked indications, and the disputed foreign invoice, and whether the consequent duty demand, confiscation and penalties could be sustained.

Analysis: The declared invoice value could be displaced only on legally sustainable grounds under Section 14 of the Customs Act, 1962 and the valuation rules. The material relied upon by the department was found insufficient, as the foreign invoice and allied document were unsigned, differed in address and description, and did not satisfactorily establish that the imports under assessment were undervalued. The Tribunal also found that the department had not produced reliable contemporaneous import evidence to justify rejection of the transaction value, and that LME prices were only indicative for prime metal and not a conclusive basis for scrap valuation. Since the valuation machinery under the Customs Valuation Rules, 1988 was not properly followed and the evidentiary foundation for undervaluation was lacking, the enhancement could not stand.

Conclusion: The declared transaction value was accepted, and the re-valuation, duty demand, confiscation and penalties were held unsustainable, in favour of the assessee.

Final Conclusion: The appeals succeeded and the adjudication order was set aside with consequential relief.

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