Transaction value rejection requires evidence, not suspicion, and valuation must follow the Customs Valuation Rules sequentially.

Declared transaction value under the Customs Valuation Rules may be rejected only on reasonable doubt supported by material evidence; generalized suspicion, alert notes, or the fact that a director resides abroad are insufficient. Contemporaneous import data must be genuinely comparable, and the sequential valuation scheme must be followed before resorting to the residual method. The residual method is permissible only where value cannot be determined under the preceding rules and must rely on reasonable, reliable means consistent with the Rules. On the stated record, there was no evidence of extra consideration, related-party influence, or lack of genuineness, so rejection of the declared value and enhancement of assessable value were not sustainable.

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Issues: Whether the rejection of the declared transaction value and the consequential enhancement of assessable value under the Customs Valuation Rules, 2007 was sustainable.

Analysis: The declared value can be rejected only when the proper officer has reasonable doubt about its truth or accuracy and the rejection is supported by material evidence. Alert notes, generalized suspicion, or unsupported assumptions, including the fact that a director is residing abroad, are not by themselves sufficient. The data relied upon for contemporaneous imports must be genuinely comparable, and where the department itself proceeds on Rule 5 and thereafter invokes Rule 9, the sequential scheme of valuation under the Rules must be followed. The residual method cannot be used unless valuation cannot be determined under the preceding rules, and it must rest on reasonable means consistent with the Rules and on reliable data. The record did not show any evidence of extra consideration, related-party influence, or lack of genuineness in the declared transaction value.

Conclusion: The rejection of the transaction value and the enhancement of value were not sustainable, and the appeal succeeds.

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