Declared transaction value needs proper doubt and enquiry; MRP-based import restrictions apply only to pre-packaged consumer goods.

Declared transaction value under the Customs Valuation Rules, 1988 cannot be rejected unless a legally sustainable doubt is supported by proper enquiry and reliable contemporaneous evidence; on that basis, reassessment was unsustainable. A broad description in the import documents did not itself establish general misdeclaration, so valuation-linked confiscation and penalty could not survive, but undeclared goods remained liable to confiscation and duty consequences. Non-declaration of MRP for CFLs could not be upheld without a finding that the goods were pre-packaged commodities intended for sale to ultimate consumers, so that limited issue required de novo adjudication.

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Issues: (i) Whether the declared transaction value of the imported goods could be rejected and reassessed under the Customs Valuation Rules, 1988. (ii) Whether the alleged misdeclaration of description and the undeclared items justified confiscation and penalty. (iii) Whether confiscation of CFLs for non-declaration of MRP was sustainable, and if not, whether that issue required remand.

Issue (i): Whether the declared transaction value of the imported goods could be rejected and reassessed under the Customs Valuation Rules, 1988.

Analysis: During the relevant period, assessable value had to be determined under Section 14(1A) of the Customs Act, 1962 read with the Customs Valuation Rules, 1988. Transaction value is the primary basis of valuation under Rule 3, and rejection of that value requires a legally sustainable doubt under Rule 10A, supported by proper enquiry. The record did not show satisfaction of the conditions in Rule 4(2), nor any enquiry forming a proper basis to discard the declared value. No reliable contemporaneous imports of identical or similar goods at higher prices were produced. The alleged comparison with raw-material prices was found unsustainable, and the quotation relied upon for Rule 7 valuation was shown to be forged and fabricated.

Conclusion: The rejection of the declared transaction value was unjustified and the reassessment was unsustainable, in favour of the assessee.

Issue (ii): Whether the alleged misdeclaration of description and the undeclared items justified confiscation and penalty.

Analysis: The broad description of the declared goods did not support a finding of general misdeclaration of description or value. Once the valuation basis failed, the connected duty demand, confiscation under the valuation-related clauses, and penalty could not survive. However, goods that were not declared at all in the bills of entry stood on a different footing and remained liable to confiscation under Section 111(l) of the Customs Act, 1962.

Conclusion: The allegation of misdeclaration of description and value was rejected, but confiscation and duty liability in respect of the undeclared goods was upheld, partly in favour of the Revenue.

Issue (iii): Whether confiscation of CFLs for non-declaration of MRP was sustainable, and if not, whether that issue required remand.

Analysis: The requirement to declare MRP under paragraph 5(e) of the General Notes of the Foreign Trade Policy applies to pre-packaged commodities intended for sale to ultimate consumers. The order did not record a finding that the CFLs were imported in pre-packaged form for such sale. In the absence of that foundational finding, the issue could not be finally decided on the existing record and required fresh adjudication.

Conclusion: The confiscation of CFLs for non-declaration of MRP was set aside and the matter was remanded for de novo decision on that limited question, in favour of the assessee.

Final Conclusion: The valuation-based demand, related confiscation, and penalties were set aside, while liability for undeclared goods was sustained and the MRP issue concerning CFLs was sent back for fresh decision.

Ratio Decidendi: Declared transaction value cannot be rejected absent a legally sustainable doubt and proper enquiry, and MRP-based import restrictions apply only to pre-packaged commodities intended for sale to ultimate consumers.

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