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Issues: Whether the importer and the foreign supplier were related persons for customs valuation purposes, and whether the declared transaction value could be rejected and loaded by 10% under the Customs Valuation Rules, 1988.
Analysis: Under Section 14(1) of the Customs Act, 1962, transaction value is ordinarily accepted where buyer and seller have no interest in each other's business and the sale is at arm's length. Where the parties are related, the declared value may still be accepted only if the circumstances of sale show that the relationship did not influence the price, or if the declared value is supported by comparable values of identical or similar goods. On the facts, the importer was a wholly owned subsidiary of the foreign supplier, making the parties related under Rule 2(2) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988. The importer failed to establish that identical or similar goods were sold to other Indian importers at the same price, and failed to dislodge the finding that the relationship affected pricing. The loading of 10% was therefore sustained under the valuation rules.
Conclusion: The relationship between the parties was held to have influenced the price, and the redetermination of assessable value by adding 10% was upheld against the importer.
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