Customs valuation cannot be enhanced beyond the notice or on weak comparable imports without independent evidence of undervaluation.

Customs valuation cannot be enhanced on a basis not put to the assessee in the show cause notice or adjudication order; applying a different valuation rule at appeal stage is legally unsustainable. The note also states that declared value cannot be displaced merely by comparing imports from a different crop period, especially for agricultural produce where quality and price may vary over time. In the absence of independent evidence of undervaluation, such as suppression, extra consideration, or unreliability of the declared price, enhancement is not justified. The impugned orders were set aside and the appeals were allowed.

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Issues: (i) whether the appellate authority could enhance the assessable value under a rule not invoked in the show cause notice or the adjudication order; (ii) whether enhancement of value based on contemporaneous imports of a different crop period was sustainable in the absence of independent evidence of undervaluation.

Issue (i): whether the appellate authority could enhance the assessable value under a rule not invoked in the show cause notice or the adjudication order.

Analysis: The notice and the adjudication order proceeded on one valuation rule, but the appellate authority determined valuation under another. A valuation or demand confirmation cannot travel beyond the scope of the notice and the adjudication proposal. Where the authority applies a different rule without it being put to the assessee, the order is legally unsustainable.

Conclusion: The enhancement made by the appellate authority beyond the scope of the notice and adjudication order was not permissible and could not be sustained.

Issue (ii): whether enhancement of value based on contemporaneous imports of a different crop period was sustainable in the absence of independent evidence of undervaluation.

Analysis: The enhancement was founded only on contemporaneous imports of pistachio of a later crop period. In the case of agricultural produce, quality and price may vary with the crop and the passage of time. The record did not disclose any additional evidence showing suppression of value, extra consideration, or unreliability of the declared price. In such circumstances, comparison with imports of a different crop period could not justify arbitrary enhancement.

Conclusion: The valuation enhancement based solely on contemporaneous imports of a different crop period was not sustainable.

Final Conclusion: The impugned orders were set aside and the appeals were allowed, the declared value not being displaced by a lawful and evidence-based valuation exercise.

Ratio Decidendi: Valuation under customs law cannot be sustained when the authority departs from the show cause notice or relies only on imperfect comparable imports without independent evidence to discredit the declared value.

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