Customs valuation requires valid rejection of transaction value before any enhancement of assessable value.

Declared assessable value cannot be enhanced unless the transaction value is first rejected on lawful grounds under the Customs Valuation Rules, 2007. Rule 12 permits rejection only where valid reasons are recorded, and the order must disclose the basis and the relevant provisions of the Customs Act supporting that rejection. Where the assessing authority enhances value without such reasons, the enhancement is unsustainable, and the appellate order setting it aside is properly maintained in favour of the assessee.

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Issues: Whether the enhancement of the declared assessable value of imported goods was sustainable when the transaction value had not been properly rejected under the Customs Valuation Rules, 2007.

Analysis: The declared value was enhanced by the assessing authority without first rejecting the transaction value on valid grounds. Rule 12 of the Customs Valuation Rules, 2007 permits rejection of the declared value only where lawful reasons exist. The order under challenge did not disclose proper reasons or the provisions of the Customs Act under which the transaction value was rejected, and the appellate authority had therefore rightly set aside the enhancement.

Conclusion: The enhancement of value was not justified, and the order of the Commissioner (Appeals) was sustained in favour of the assessee.

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