Declared transaction value must be accepted absent proof of extra consideration; confiscation and penalty fail with undervaluation.

The declared transaction value of imported goods had to be accepted where it reflected the negotiated price for export to India and there was no reliable evidence of any extra consideration outside the banking channel. Mere suspicion or an asserted domestic basis for price reduction was insufficient to reject the declared value under Section 14 of the Customs Act, 1962. Because the undervaluation allegation failed, the consequential confiscation, redemption fine and penalty based solely on rejection of that value also could not stand. The impugned orders were therefore set aside, with relief granted on valuation and the associated penal consequences.

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Issues: (i) Whether the declared value of the imported goods could be rejected and the assessable value redetermined under the customs valuation provisions; (ii) Whether confiscation of the goods, redemption fine and penalty could survive once the declared value was found acceptable.

Issue (i): Whether the declared value of the imported goods could be rejected and the assessable value redetermined under the customs valuation provisions.

Analysis: The declared price was the negotiated price for the goods sold for export to India, and there was no plausible evidence that the appellant had paid any additional consideration outside the banking channel. In the absence of material showing that the declared price was not the true transaction value, the value could not be discarded merely on suspicion or on the basis that the price reduction was said to arise from domestic considerations. Under Section 14 of the Customs Act, 1962, value is to be based on the price actually paid or payable for the goods when sold for export to India, and the declared value had to be accepted.

Conclusion: The rejection of the declared assessable value and its redetermination was unsustainable.

Issue (ii): Whether confiscation of the goods, redemption fine and penalty could survive once the declared value was found acceptable.

Analysis: The confiscation, redemption fine and penalty were founded on the allegation of undervaluation and rejection of the declared value. Once the declared transaction value was accepted, the foundation for those consequential orders disappeared. The valuation rules did not support the adverse consequences imposed in the impugned orders.

Conclusion: The confiscation, redemption fine and penalty could not be sustained.

Final Conclusion: The appeals succeeded, the impugned orders were set aside, and the appellant obtained complete relief on valuation as well as the consequential penal and confiscatory orders.

Ratio Decidendi: In the absence of reliable evidence of extra consideration or other material discrediting the declared price, the transaction value of imported goods sold for export to India must be accepted under Section 14 of the Customs Act, 1962, and consequential confiscation and penalty based solely on rejection of that value cannot stand.

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