Customs valuation requires evidence-based loading; related-party supply may justify only a nominal addition, not an arbitrary margin.

Customs valuation turns on whether a foreign supplier and importer are related persons under the valuation rules, and the text treats a joint venture, business partnership, and nominee directors as sufficient indicators of relatedness. It also explains that any enhancement of declared value must rest on evidence, comparable material, and a rational basis. An arbitrary flat 8% profit loading was described as unsupported where no reliable comparator or contemporaneous import data was shown, while only a nominal 1% addition was treated as sustainable on the stated facts.

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Issues: (i) Whether the importer and the foreign supplier were related persons for customs valuation purposes; (ii) whether loading the declared value by a flat 8% profit margin was justified, or whether a nominal 1% margin was sufficient.

Issue (i): Whether the importer and the foreign supplier were related persons for customs valuation purposes.

Analysis: The relationship between the parties was examined in the context of the joint venture arrangement and business association between them. The foreign supplier and the importer were treated as partners in business, and two employees of the foreign supplier were nominated as directors of the importer. On those facts, the relationship fell within the scope of related persons for valuation purposes under the applicable valuation rule.

Conclusion: The importer and the foreign supplier were related persons.

Issue (ii): Whether loading the declared value by a flat 8% profit margin was justified, or whether a nominal 1% margin was sufficient.

Analysis: The enhancement of value by a flat 8% was found to be unsupported by material particulars. No reliable data was produced to justify reliance on the cited comparator, and the goods and circumstances were not shown to be comparable. The record also did not disclose contemporaneous import evidence indicating under-valuation. By contrast, the supplier's profit margin for one year was about 2.4%, and the tribunal approach cited in similar affiliated-supply circumstances supported only a nominal addition to the declared value rather than an arbitrary notional margin. In valuation of imported goods, any addition must rest on evidence and a rational basis.

Conclusion: Loading of 8% was not justified and a nominal 1% addition was sufficient.

Final Conclusion: The declared value could not be enhanced on an arbitrary flat margin, and the valuation was required to be modified by restricting the loading to a nominal 1% addition.

Ratio Decidendi: In customs valuation, an enhancement based on notional profit must be supported by evidence and comparable material; in the absence of contemporaneous import data or a rational basis, an arbitrary flat loading is impermissible, and only a nominal addition may be sustained.

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