Quantity-based customs valuation discounts must be allowed unless Revenue proves the claimed trade discount is unreasonable.

Comparative customs valuation must account for quantity-based trade discounts when contemporaneous imports differ materially in volume. Because the imported consignment formed part of a much larger bulk order, while the relied-on comparison imports were small quantities, the declared value could not be rejected without evidence that the claimed discount was unreasonable or contrary to trade practice. Rule 5 of the Customs Valuation Rules requires such adjustments for scale of import. In the absence of contrary evidence, enhancement of assessable value was unsustainable and the Revenue failed to justify disturbance of the declared value.

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Issues: Whether the declared value of the imported goods could be rejected and enhanced by relying on contemporaneous imports of smaller quantities without making adjustment for bulk import discount.

Analysis: The import in question was of 5 MT forming part of a larger order of 100 MT, whereas the comparison imports relied upon by the assessing officer were of around 1 MT or less. In valuation of imported goods, comparison with contemporaneous imports must account for differences in quantity, since higher-volume purchases ordinarily attract discount as a matter of trade practice. Rule 5 of the Customs Valuation Rules also contemplates adjustments for the scale of imports. As the Revenue produced no evidence to show that the 37.5% discount was unreasonable or contrary to trade practice, the enhanced valuation could not be sustained.

Conclusion: The rejection of the declared value was not justified and the enhancement of assessable value was unsustainable.

Final Conclusion: The Revenue failed to establish any legal or evidentiary basis for disturbing the lower appellate authority's acceptance of the declared value, and the appeal was rejected.

Ratio Decidendi: When imported goods are compared with contemporaneous imports for valuation purposes, allowance must be made for quantity-based discounts and other trade adjustments, and enhancement of value cannot be sustained without evidence that the discount claimed is unreasonable or inconsistent with normal trade practice.

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