Declared transaction value cannot be rejected without cogent evidence; valuation enhancement for old used garments was unsustainable.

Imported old and used garments classified under CTH 6309 were accepted as such, and that classification attained finality. The valuation dispute turned on whether the declared transaction value could be rejected and enhanced under the Customs Valuation Rules. The text states that Rule 12 permits rejection of declared value only on cogent material showing the invoice price is not genuine, and there was no finding of fake invoices, fabricated documents, or extra payment. Because the goods were accepted as old and used garments, valuation could not be reassessed on the contrary premise that they were new or differently described goods. The enhancement under Rule 9 was therefore unsustainable, and the importer's challenge succeeded.

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Issues: (i) whether the imported consignment of old and used garments was correctly classifiable under CTH 6309; (ii) whether the reassessment of value by rejecting the declared transaction value and applying Rule 9 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 was sustainable.

Issue (i): whether the imported consignment of old and used garments was correctly classifiable under CTH 6309.

Analysis: The goods were initially examined by the Customs Examination Committee by strip opening. The adjudicating authority accepted that the re-examination report did not establish the allegation that the goods had no signs of appreciable wear. On that basis, the goods were held to be old and used garments classifiable under CTH 6309. That finding was not challenged further and had attained finality.

Conclusion: The classification under CTH 6309 was upheld in favour of the assessee.

Issue (ii): whether the reassessment of value by rejecting the declared transaction value and applying Rule 9 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 was sustainable.

Analysis: Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 only provides the mechanism for rejection of declared value and requires the value to be determined sequentially under the valuation rules. The declared transaction value cannot be discarded unless there is cogent material showing that it is not genuine. Once the goods were accepted as old and used garments, their value could not be enhanced on the premise that they were new or otherwise different goods. There was no finding that the invoices were fake or fabricated, and there was no evidence of any extra payment over and above the invoice price. In those circumstances, the reassessment based on Rule 9 and the market price of comparable goods was not justified.

Conclusion: The enhancement of value was unsustainable and the issue was decided in favour of the assessee.

Final Conclusion: The impugned order could not be sustained on valuation, and the appeals by the importer and other noticees succeeded while the Revenue appeal failed.

Ratio Decidendi: Declared transaction value cannot be rejected or re-enhanced unless the department establishes by cogent evidence that the invoice price is not genuine, and once goods are accepted as old and used, their value cannot be determined on a contrary factual premise.

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