Customs valuation and related-party imports: declared transaction value stands unless the department proves price influence.

Declared transaction value for imported goods cannot be rejected or enhanced merely because the importer and foreign supplier are related persons. The department must prove with cogent evidence that the relationship influenced the price; absent such material, the declared value remains acceptable under customs valuation principles. On the facts, the revenue failed to establish distortion of value, so the 50% enhancement was arbitrary and unsustainable. The order-in-appeal was therefore upheld in favour of the assessee and the revenue challenge failed.

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Issues: Whether the declared transaction value of the imported goods could be rejected and enhanced on the basis that the importer and the foreign supplier were related persons.

Analysis: The department accepted that the supplier and the importer were related, but it did not produce evidence to show that the relationship had influenced the transaction value. The onus to prove that the declared price did not reflect the true transaction value remained on the department. In the absence of cogent material justifying enhancement, the increase of value by 50% was held to be arbitrary. The principles under Section 14 of the Customs Act, 1962, as applied in the cited valuation rulings, require acceptance of the declared transaction value unless the department establishes valid grounds for rejection. The reasoning also accords with the position that mere shareholding or related-person status does not by itself disqualify transaction value.

Conclusion: The enhancement of assessable value was not sustainable and the order-in-appeal was upheld in favour of the assessee.

Final Conclusion: The Revenue's challenge failed because the declared value was not shown to be distorted by the relationship, and the appeal was dismissed.

Ratio Decidendi: The declared transaction value under customs valuation cannot be rejected or enhanced merely because the parties are related; the department must prove, with evidence, that the relationship influenced the price.

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