Customs valuation cannot replace transaction value on undisclosed market enquiry; actual-user exemption denial was upheld

An assessable value based on undisclosed market enquiry and backward calculation from retail price was found unsustainable because the enquiry basis was not properly disclosed, the method lacked evidentiary support, and no adequate reason was shown to depart from transaction value or the customs valuation hierarchy for similar or identical goods. The denial of Notification No. 149/95 was upheld because the importer admitted it was not an actual user, and the record supported that factual finding. The commentary notes that the duty demand founded on the enhanced valuation could not stand, while the exemption denial remained valid.

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Issues: (i) Whether the enhanced assessable value based on market enquiry and retail price could be sustained; (ii) Whether denial of the benefit of Notification No. 149/95 was justified on the ground that the importer was not an actual user.

Issue (i): Whether the enhanced assessable value based on market enquiry and retail price could be sustained.

Analysis: The valuation adopted by the Department was founded on a market enquiry and a backward calculation from retail price, but the basis of the enquiry was not properly disclosed and the method of arriving at the assessable value was unsupported by evidence. The transaction value was not shown to be unacceptable under the customs valuation framework, and no adequate reason was given for bypassing the rules relating to transaction value, similar goods, or identical goods. The enquiry itself was rendered doubtful because the same retail price was applied across different brands without proper supporting material.

Conclusion: The enhancement of assessable value was not sustainable.

Issue (ii): Whether denial of the benefit of Notification No. 149/95 was justified on the ground that the importer was not an actual user.

Analysis: The importer admitted that it was not an actual user, and that factual position supported denial of the notification benefit. The record disclosed no basis to disturb that finding.

Conclusion: Denial of the benefit of Notification No. 149/95 was justified.

Final Conclusion: The duty demand based on enhanced valuation could not be sustained, but the denial of exemption benefit was upheld, and the Revenue's appeal failed overall.

Ratio Decidendi: An assessable value based on undisclosed and unsupported market enquiry cannot displace transaction value unless the customs valuation rules are properly applied and justified on evidence.

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