Related-party import valuation cannot be rejected without positive evidence that the relationship affected price or consideration

Declared transaction value for imports from a related foreign principal cannot be rejected merely because comparable third-party import prices are higher. The Customs Valuation Rules require positive evidence that the relationship influenced the price, or that additional consideration flowed back to the supplier. Where the importer supports the invoice price with cost sheets, original invoices and related records showing a cost plus method, and the price comparisons involve different commercial levels and quantities, the declared value remains acceptable. On those facts, valuation enhancement is not justified and the invoice price should be accepted.

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Issues: Whether the declared transaction value for imported goods supplied by a related foreign principal could be rejected and the assessable value enhanced on the basis of third-party import prices, or whether the cost plus method and supporting invoices justified acceptance of the invoice price.

Analysis: The Tribunal found that the assessing authority had examined the price data, the cost sheets, and the terms of supply, and had recorded that the imports were at different commercial levels and quantities, making comparison with third-party imports unreliable for valuation under the Customs Valuation Rules. The Tribunal further found that the appellant had produced documentary evidence showing adoption of the cost plus method, including original invoices and related records, and that there was no evidence of any flow-back or additional consideration from the importer to the foreign supplier. In the absence of positive evidence that the relationship had influenced the price, the declared value could not be rejected merely because the parties were related.

Conclusion: The declared transaction value was held to be acceptable, and the enhancement of value was rejected.

Final Conclusion: The impugned order was set aside and the appeal succeeded, with consequential relief following in the assessee's favour.

Ratio Decidendi: A related-party transaction value cannot be rejected unless the Revenue establishes, with positive evidence, that the relationship influenced the price or that additional consideration flowed back to the supplier; comparable import prices from different commercial levels and quantities do not by themselves justify rejection of the declared value.

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