Transaction value for imported second-hand machinery cannot be discarded without statutory grounds; residual valuation was unjustified.

Declared transaction value for imported second-hand machinery could not be rejected under the customs valuation rules absent valid, evidence-based reasons satisfying the statutory conditions for rejection. The declared price was supported by the purchase order, Chartered Engineer's certificate and contemporaneous documents, while no comparable contemporaneous import data was available. Resort to residual valuation was therefore unjustified, and the separate royalty allegation did not show any influence on the machinery price. The loading of value was held unsustainable.

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Issues: Whether the declared transaction value of the imported second-hand machinery could be rejected and the assessable value loaded by resort to the residual valuation method.

Analysis: The declared price was supported by the purchase order, Chartered Engineer's certificate and other contemporaneous documents. No contemporaneous import data was available for comparable machines, and the certificate itself indicated that the contract price was reasonable. Rejection of transaction value under Rule 4(1) could not be made without first satisfying the conditions for rejection under Rule 4(2). The Customs authorities selectively relied on one part of the certificate while ignoring the part supporting the declared price. In the absence of legally sustainable reasons to discard the transaction value, resort to Rule 8 was unjustified. The separate allegation regarding royalty did not establish any influence on the machinery price.

Conclusion: The loading of value was unsustainable and the declared transaction value could not be discarded.

Ratio Decidendi: Transaction value cannot be rejected and replaced by residual valuation unless the statutory conditions for rejection are first satisfied on valid reasons supported by evidence.

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