Mandatory customs procedure and lawful valuation are required before confiscation or enhancement of assessable value.

Mandatory procedural safeguards under the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 must be complied with before imported goods suspected of trademark infringement can be detained or absolutely confiscated; because the required notice, registration, and time-limit requirements were not shown to have been followed, the confiscation of the 'Dove' branded goods was set aside. Rejection of transaction value and enhancement of assessable value under customs valuation law must rest on a lawful, reasoned basis supported by reliable contemporaneous evidence; because the valuation exercise relied on unestablished market enquiry material and no cross-examination was allowed on statement-based evidence, the re-determination of value was also set aside.

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Issues: (i) Whether the absolute confiscation of the goods branded 'Dove' was sustainable when the procedure under the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 had not been duly complied with. (ii) Whether the re-determination of value and consequent enhancement of the assessable value under the Customs valuation regime was justified.

Issue (i): Whether the absolute confiscation of the goods branded 'Dove' was sustainable when the procedure under the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 had not been duly complied with.

Analysis: The statutory scheme required notice by the right holder, registration with Customs, and compliance with the prescribed time-limits before imported goods suspected of infringing intellectual property rights could be detained or confiscated. The record did not show compliance with the mandatory procedural requirements under the rules. Where the prescribed procedure is not followed, the goods cannot be treated as liable to confiscation merely on the allegation of trademark infringement.

Conclusion: The absolute confiscation of the 'Dove' branded goods was not sustainable and was set aside in favour of the assessee.

Issue (ii): Whether the re-determination of value and consequent enhancement of the assessable value under the Customs valuation regime was justified.

Analysis: The transaction value was rejected without a proper and reasoned basis. The valuation exercise relied on market enquiry material that was not transparently established, contemporaneous import data for identical goods was available, and no opportunity was given for cross-examination of the persons whose statements formed part of the valuation exercise. In these circumstances, the enhancement of value under the alternative valuation method was not properly supported.

Conclusion: The re-determination and enhancement of value were not justified and were set aside in favour of the assessee.

Final Conclusion: The impugned order was quashed in entirety and the appeal succeeded with consequential relief.

Ratio Decidendi: Mandatory procedural safeguards under the intellectual property enforcement rules must be strictly followed before confiscation, and rejection of transaction value must rest on a lawful and reasoned valuation process supported by reliable contemporaneous evidence.

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