Export valuation cannot be rejected on unreliable market enquiries when domestic price evidence is unsuitable for FOB assessment.

Declared export value for garments could not be discarded on the basis of unreliable domestic market enquiries and statements alleging overvaluation. The enquiries were conducted without the exporter or CHA, lacked precise descriptions of the goods, and were not a fair comparison for valuation. Domestic market price may be relevant only to restrict drawback or DEPB benefits under Section 76 of the Customs Act, 1962, but it cannot by itself determine FOB value of export goods. As the record did not show non-realisation of sale proceeds or any credible basis to treat the export value as false, the consequential confiscation, drawback recovery and penalties were not sustainable.

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Issues: Whether the declared export value could be discarded and the impugned confiscation, drawback recovery and penalty sustained on the basis of domestic market enquiries and statements admitting overvaluation.

Analysis: The market enquiries were held to be unreliable because they were conducted without the presence of the exporter or the CHA and without precise description of the goods. The value of garments depends on several factors, and a comparison based on incomplete particulars was not a fair basis to reject the declared export value. The domestic market price could, at most, be relevant for restricting drawback or DEPB benefits under Section 76 of the Customs Act, 1962, but it could not be used to determine the FOB value of the export goods. The record did not show that the entire sale proceeds were not realised or that the export FOB of similar goods was otherwise different. In these circumstances, the market enquiry reports were not credible evidence to discard the export value.

Conclusion: The declared export value could not be rejected on the basis of the market enquiries and the consequential confiscation, recovery and penalties could not be sustained.

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