Declared transaction value cannot be rejected without statutory basis; MRP confiscation depends on finding pre-packaged imports.

Declared transaction value cannot be rejected unless the statutory conditions for rejection are established and valuation is then carried out through the prescribed sequential rules; here, the enhancement based only on a comparison with domestic raw-material prices was found unsustainable, so the resulting confiscation under section 111(m) and penalty under section 112 also fell. Liability for confiscation under section 111(d) for non-affixation of MRP depended on a finding that the imported bulbs were pre-packaged commodities covered by the relevant policy requirement; because that factual finding was absent, the MRP issue was remanded for fresh adjudication.

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Issues: (i) Whether the declared transaction value of the imported goods could be rejected and re-determined by resort to the Customs Valuation Rules; and whether confiscation under section 111(m) and penalty under section 112 could survive on the basis of such revaluation. (ii) Whether the imported FSL bulbs and Halogen bulbs were liable to confiscation under section 111(d) for non-affixation of MRP, and whether that question required fresh adjudication.

Issue (i): Whether the declared transaction value of the imported goods could be rejected and re-determined by resort to the Customs Valuation Rules; and whether confiscation under section 111(m) and penalty under section 112 could survive on the basis of such revaluation.

Analysis: Rejection of declared value is permissible only when the statutory conditions for acceptance of transaction value are not satisfied or the proper officer proceeds in accordance with Rule 12. The order under challenge did not record a legally sustainable basis for rejecting the declared value, and the sole reason adopted that the declared price was lower than the price of raw materials in India was held to be untenable, particularly when the goods were imported from China. Even after rejection of transaction value, valuation had to proceed sequentially under Rules 5 to 8, and the assessing authority could not directly invoke Rule 7 without establishing the necessary foundation. The order also failed to identify the relevant importer or the basis of comparable like or similar goods. In these circumstances, the enhancement of value could not stand.

Conclusion: The rejection of the declared transaction value was unsustainable. The consequential confiscation under section 111(m) and the penalty imposed on that count were also unsustainable and were set aside in favour of the assessee.

Issue (ii): Whether the imported FSL bulbs and Halogen bulbs were liable to confiscation under section 111(d) for non-affixation of MRP, and whether that question required fresh adjudication.

Analysis: The obligation to declare MRP under Note 5(e) of the Foreign Trade Policy applies to pre-packaged commodities imported for sale to ultimate consumers. The record did not contain a clear finding whether the goods were imported in pre-packaged form or in bulk. In the absence of such a finding, the applicability of the MRP requirement could not be finally determined on the existing record.

Conclusion: The question of confiscation under section 111(d) required de novo adjudication after a clear finding on whether the goods were imported in pre-packaged form.

Final Conclusion: The impugned order was set aside to the extent it sustained rejection of valuation and the related confiscation and penalty, while the limited issue concerning confiscation of FSL bulbs and Halogen bulbs for alleged non-declaration of MRP was remanded for fresh decision.

Ratio Decidendi: Declared transaction value cannot be rejected or re-determined unless the statutory conditions for rejection are established and valuation proceeds in the prescribed sequential manner; confiscation based on MRP requirements depends on a finding that the imported goods were pre-packaged commodities covered by the relevant policy provision.

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