Transaction value controls customs valuation of a vessel for breaking; Light Displacement Tonnage was not a valid basis for enhancement.

For a vessel imported for breaking, assessable value had to be determined on the transaction value under Section 14 of the Customs Act and Rule 4 of the Customs Valuation Rules, because the sale was for a lump-sum price supported by the agreement and payment through letter of credit. With no evidence of extra consideration or flow back, and no showing that the price was fixed in proportion to Light Displacement Tonnage, enhancement on that basis was not justified. The valuation dispute over LDT was held irrelevant on these facts, and the transaction value was accepted in favour of the assessee.

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Issues: Whether, for a vessel imported for breaking in 2003, the assessable value had to be determined on the basis of the transaction value under Section 14 of the Customs Act and Rule 4 of the Customs Valuation Rules, or could be enhanced by relying on the vessel's Light Displacement Tonnage.

Analysis: The sale between the parties was for a lump-sum price supported by the memorandum of agreement and payment through letter of credit. There was no evidence of any extra consideration or flow back of money. The dispute on LDT was held to be irrelevant for valuation in the facts of the case, particularly because the tariff regime at the relevant time required duty to be assessed on the basis of assessable value and not with reference to LDT. The agreement also did not show that the price was fixed proportionately to LDT.

Conclusion: The transaction value was required to be accepted and the enhancement of value on the basis of LDT was not justified; the issue was decided in favour of the assessee.

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