Transaction value of imported goods cannot be rejected without proper comparables or evidence of misdeclared value.

Declared transaction value of imported goods could not be rejected merely by comparing the import price with raw material prices in India, where no contemporaneous imports of identical or similar goods at a higher price were shown and the goods matched the declared description on examination. The upward revision of assessable value under the Customs Valuation Rules was therefore unsustainable. On that basis, the duty demand, confiscation under Section 111(m) of the Customs Act, and the penalty based on alleged misdeclaration of value were set aside.

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Issues: Whether the declared transaction value of the imported goods could be rejected and the goods confiscated under Section 111(m) of the Customs Act, 1962 on the allegation of misdeclaration of value.

Analysis: The goods were found on examination to conform to the declared description. The only basis for rejecting value was a comparison of the declared price with the apparent price of raw materials in India, without establishing whether those raw material prices or manufacturing costs pertained to the country of origin. No contemporaneous import of identical or similar goods at a higher price was shown, and the acceptance of value under Rule 7 of the Customs Valuation Rules, 1988 was unsupported by any disclosed wholesale market basis. The declared transaction value could not be discarded on such material, and the upward revision of assessable value was unsustainable. The consequent duty demand, confiscation under Section 111(m), and penalty attributable to that allegation also could not survive.

Conclusion: The rejection of the declared transaction value was unjustified, and the demand, confiscation under Section 111(m), and penalty based on alleged misdeclaration of value were set aside in favour of the assessee.

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