Transaction value under customs valuation rules cannot be rejected without evidence of flow back or extra consideration.

Declared transaction value for imports from a related foreign supplier cannot be rejected merely because a discriminatory discount is alleged. The text states that the assessing authority had accepted the value after applying a cost-plus comparison and the deductive method under Rule 7 of the Customs Valuation Rules, 2007, while the lower appellate authority discarded it without reasons showing why the value was unacceptable. Rule 12 only identifies grounds for rejection and does not itself provide a valuation method; once rejection is justified, valuation must proceed sequentially under the rules. In the absence of contemporaneous independent imports and any proof of flow back or extra consideration, the declared value remains acceptable.

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Issues: Whether the declared transaction value of imports from a related foreign supplier could be rejected and enhanced on the basis of alleged discriminatory discount, in the absence of positive evidence of flow back or other consideration.

Analysis: The assessing authority had accepted the declared value after examining the transfer price on a cost plus basis, comparing it with supplies to other related entities, and applying the deductive method under Rule 7 of the Customs Valuation Rules, 2007. The lower appellate authority rejected that approach without giving reasons to show why the declared value was unacceptable. Rule 12 of the Customs Valuation Rules, 2007 only indicates circumstances for rejection of transaction value and does not itself provide a valuation method. Once rejection is contemplated, valuation must proceed sequentially under the valuation rules. In the absence of contemporaneous imports by independent buyers and in the absence of any allegation or proof of flow back or extra consideration, there was no basis to discard the declared transaction value.

Conclusion: The rejection of the declared transaction value was unsustainable, and the importer succeeded in restoring acceptance of the value declared to customs.

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