Customs valuation must rest on proper Rule 5 comparison and proven undervaluation, not suspicion alone.

Declared transaction value for imported batteries cannot be rejected under the Customs Valuation Rules merely on suspicion or on an unsuitable comparison with contemporaneous imports. Where imports are made under an existing supply agreement, with prior imports from the same supplier accepted at the same price and no extra-commercial consideration proved, the department must show a proper Rule 5 comparison reflecting the relevant commercial level and quantity basis. On those facts, value enhancement was unsustainable and assessment had to be made on the declared value.

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Issues: Whether the declared value of the imported batteries could be rejected and enhanced under the Customs Valuation Rules on the basis of contemporaneous imports and alleged undervaluation.

Analysis: The import was made under an existing sale agreement covering a defined period and requiring regular supply in large quantities. The factual record showed prior imports from the same supplier under the same contractual arrangement, without objection to the declared price. The department did not establish any extra-commercial consideration over and above the invoice price. The comparison adopted by the department was found to be flawed because it did not reflect the relevant commercial level and quantity basis required for valuation under Rule 5. In these circumstances, the declared value could not be rejected merely on suspicion or on an unsuitable comparison with other imports.

Conclusion: The enhancement of value was unsustainable and the assessment had to be made on the declared value. The appeal was therefore against the assessee.

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