Customs valuation of ATA Carnet imports: Carnet value cannot replace transaction value where price influence is not shown.

For customs valuation of cars imported under an ATA Carnet, the Carnet declaration showing the commercial value in the country of issue cannot override transaction value where contemporaneous imports support the declared price and the Special Valuation Branch has found that the related-party relationship did not affect pricing. The note explains that goods imported duty free under Notification No. 157/90-Cus could later be sold in India with prior approval on payment of duty, but the Carnet value was intended for insurance and guarantee purposes, not as the assessable value. It also states that the residual method under Rule 8(2)(iii) does not permit adoption of the foreign domestic market value.

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Issues: Whether the assessable value of cars imported under an ATA Carnet, and later sold in India with prior governmental approval, could be taken as the higher Carnet value instead of the transaction value supported by contemporaneous imports and the SVB finding.

Analysis: Goods imported under ATA Carnet were duty free under Notification No. 157/90-Cus dated 28.3.1990, and sale on payment of duty had been permitted with prior approval. The Carnet declaration reflected the commercial value in the country of issue and was intended for insurance and guarantee purposes, not as the customs assessable value. Contemporaneous imports of identical cars had been assessed at lower values, and the Special Valuation Branch had accepted that the relationship between the importer and its principal had not influenced the price. Under Section 14 of the Customs Act, transaction value is accepted where the price is not influenced by relationship, and the residual method under Rule 8(2)(iii) of the Customs Valuation Rules does not permit valuation on the basis of the domestic market price of the country of exportation.

Conclusion: The Carnet value could not be adopted as the assessable value, and the declared transaction value was required to be accepted.

Final Conclusion: The demand based on the higher Carnet value was unsustainable, and the appeal succeeded.

Ratio Decidendi: For customs valuation, a Carnet declaration showing commercial value in the country of issue cannot displace transaction value where contemporaneous imports and the accepted SVB position show that the related-party relationship did not influence price, and the residual method cannot be used to adopt the foreign domestic market value as assessable value.

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