Customs export valuation must follow the statutory sequence before any market enquiry can displace declared value.

Export valuation under the Customs Act must follow the statutory sequence in Section 2(41), Section 14(1) and the valuation rules, with the declared transaction value treated as the starting point. The Revenue bears the initial burden to show that the declared export value is incorrect; only then can the valuation move sequentially through the prescribed rules, with market enquiry as a last resort. Because the lower authorities relied on a market report without first applying the required valuation framework, the SC held that the matter had proceeded on an incorrect legal basis and remitted it for fresh adjudication in accordance with law.

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Issues: Whether the export value declared in the shipping bills could be rejected without first applying the prescribed valuation framework and whether the matter had been decided on the correct legal basis.

Analysis: The prescribed scheme under Section 2(41) and Section 14(1) of the Customs Act, 1962, read with Rule 4 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988, governs determination of export value. The ordinary price realised in the course of business is the starting point, and the burden initially lies on the Revenue to show that the declared value is incorrect. If the declared transaction value is rejected, the valuation must proceed sequentially through the remaining rules, and market enquiry is only a last resort. The impugned orders did not follow that statutory sequence. Instead, they treated the market report as the primary basis and did not first determine value by the legally required method. The adjudicating authority and the Tribunal therefore proceeded on an incorrect legal approach.

Conclusion: The declared export value could not be rejected and the drawback claim could not be finally determined on the basis adopted below without following the prescribed valuation procedure.

Final Conclusion: The appeal succeeded to the extent that the earlier orders were set aside and the matter was sent back for fresh adjudication in accordance with law after hearing the exporter.

Ratio Decidendi: Export valuation under the Customs Act must be determined in the statutory sequence prescribed by the Act and the valuation rules, with the Revenue bearing the initial burden to displace the declared value before any resort to market enquiry.

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