Declared transaction value and sequential customs valuation require comparable evidence, recorded reasons and fair hearing before enhancement.

Declared transaction value may not be rejected merely by reference to another importer's earlier imports unless the comparison is truly comparable on supplier, quantity, quality and time, and cogent reasons are recorded for discarding the declared value; on those facts, the comparative valuation was found insufficient. Valuation must also follow the prescribed sequential scheme under the Customs Valuation Rules, 1988, and the importer must receive a fair opportunity to respond before enhancement is finalised; compressed notice and hearing that defeat effective reply offend natural justice. The demand was therefore unsustainable where the process bypassed the required valuation steps and did not properly address the declared retail sale price.

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Issues: (i) whether the declared transaction value of the imported goods could be rejected and the assessable value enhanced on the basis of imports made by another importer in an earlier year; (ii) whether the adjudication was vitiated for violation of natural justice and non-compliance with the sequential scheme of valuation under the Customs Valuation Rules, 1988.

Issue (i): whether the declared transaction value of the imported goods could be rejected and the assessable value enhanced on the basis of imports made by another importer in an earlier year.

Analysis: The valuation was founded on imports of similar branded goods by another importer made about two years earlier, without establishing comparable parameters such as supplier, importer, quantity, quality, and time of import. No adequate reasons were recorded for discarding the declared value, and the comparison relied upon was held insufficient to displace the transaction value.

Conclusion: The rejection of the declared transaction value and the enhancement of value were unsustainable.

Issue (ii): whether the adjudication was vitiated for violation of natural justice and non-compliance with the sequential scheme of valuation under the Customs Valuation Rules, 1988.

Analysis: The importer was not given sufficient opportunity to respond before finalisation, and the notice and hearing process was compressed in a manner that defeated the substance of fair hearing. The valuation was also not undertaken in the required sequential manner, as the authorities moved directly to an estimated value without first establishing valid grounds under the earlier valuation rules. The differential duty computation was also made without properly addressing the declared retail sale price.

Conclusion: The adjudication was vitiated by violation of natural justice and by failure to follow the mandatory valuation sequence.

Final Conclusion: The impugned valuation and duty demand could not be sustained, and the appeal succeeded with consequential relief.

Ratio Decidendi: Declared transaction value cannot be discarded and replaced by an arbitrary comparable value unless the comparison is truly comparable and cogent reasons are recorded, and valuation must follow the prescribed sequential statutory scheme with observance of natural justice.

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