Export valuation requires substantive proof of overpricing and non-arm's length dealing before declared FOB value can be displaced.

Declared FOB export value will not be displaced on suspicion alone; the Revenue must produce substantive material showing overvaluation, lack of arm's length dealing, mutuality of interest, or other evidence that the transaction price is unreliable. Mere comparison with foreign sale prices, without proof of hawala payments, backflow of funds, or illegal financing, is insufficient to justify interference with the valuation accepted by the Settlement Commission. A writ challenge filed without clear statutory authority was also found not to be cured merely by later impleadment of the Customs Commissioner. The declared export value was accepted and no basis was found to interfere with the Settlement Commission's order.

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Issues: (i) Whether the writ petition at the instance of the investigating authority was maintainable in the absence of specific statutory authorisation and whether the challenge could be sustained on the issue of jurisdiction; (ii) Whether the Revenue had established overvaluation of exports or lack of arm's length dealing so as to dislodge the declared FOB value and justify interference with the Settlement Commission's order.

Issue (i): Whether the writ petition at the instance of the investigating authority was maintainable in the absence of specific statutory authorisation and whether the challenge could be sustained on the issue of jurisdiction.

Analysis: The petition was questioned on the footing that the Directorate of Revenue Intelligence had not been shown to be the proper authority to seek reassessment or to challenge the settlement order. The Court noted the objection regarding absence of assigned functions under the Customs Act and the reliance placed on the requirement that powers for assessment and reassessment must vest in the proper officer. Although the Commissioner of Customs was later impleaded, the Court held that such impleadment did not cure the original want of authority in the filing of the petition.

Conclusion: The challenge on maintainability was not accepted as a valid basis to sustain the writ petition.

Issue (ii): Whether the Revenue had established overvaluation of exports or lack of arm's length dealing so as to dislodge the declared FOB value and justify interference with the Settlement Commission's order.

Analysis: The Court examined the material relied upon to dispute the declared export value under Section 14 of the Customs Act, 1962, including the comparison with foreign sale prices and the allegation of nexus between the exporter and overseas purchasers. It found that the Revenue had not led sufficient evidence to prove that the goods were overpriced, that the transactions were not in the ordinary course of trade, or that there was any mutuality of interest between the parties. The Court also noted the absence of evidence of hawala payment, backflow of money, or other illegal funding, and placed weight on the fact that remittances had been received through banking channels.

Conclusion: The declared FOB value was accepted and the allegation of overvaluation was rejected.

Final Conclusion: No ground was made out to interfere with the order of the Settlement Commission, and the writ petition failed.

Ratio Decidendi: In a challenge to export valuation, the declared FOB price will not be displaced unless the Revenue produces substantive evidence showing lack of arm's length dealing, mutuality of interest, or actual undervaluation or overvaluation supported by material, not merely suspicion or comparable foreign prices.

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