Declared customs value cannot be enhanced without proper doubt under valuation rules; confiscation for missing DGFT authorisation was sustained.

Declared transaction value for imported second-hand digital multifunctional devices cannot be discarded and replaced with a Chartered Engineer's estimate unless the customs officer first forms a legally sustainable doubt and follows the prescribed valuation process. On the facts, that process was not undertaken, so the enhanced valuation was set aside and the declared value restored for assessment. The goods were, however, treated as restricted imports imported without the required DGFT authorisation; environmental clearance did not substitute for that licence, so confiscation was sustained. The redemption fine and penalty were reduced in light of proportional treatment applied in similar second-hand goods matters.

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Issues: (i) Whether the declared transaction value of the imported second-hand digital multifunctional devices could be rejected and enhanced on the basis of a Chartered Engineer's certificate. (ii) Whether the goods were liable to confiscation for import without the requisite DGFT authorisation and, if so, what consequence should follow in respect of redemption fine and penalty.

Issue (i): Whether the declared transaction value of the imported second-hand digital multifunctional devices could be rejected and enhanced on the basis of a Chartered Engineer's certificate.

Analysis: The valuation rules permit rejection of the declared value only where the proper officer has reason to doubt its truth or accuracy and follows the prescribed process of seeking further information before moving away from the transaction value. On the facts, that exercise was not undertaken. The enhancement was based on the Chartered Engineer's estimate without first dislodging the declared transaction value in the manner required by the valuation framework.

Conclusion: The rejection of the declared transaction value was not justified and the declared value was restored for assessment.

Issue (ii): Whether the goods were liable to confiscation for import without the requisite DGFT authorisation and, if so, what consequence should follow in respect of redemption fine and penalty.

Analysis: The goods fell within the restricted import category and the importer had not produced the specific DGFT licence required for such import. The permission from the environmental authority did not dispense with the separate import authorisation requirement. Confiscation was therefore sustained, but the monetary consequences were moderated in line with the proportionate treatment adopted for similar second-hand goods matters.

Conclusion: Confiscation was upheld, while the redemption fine and penalty were reduced.

Final Conclusion: The appeal succeeded only to the extent of setting aside the enhanced valuation, but the confiscation was maintained with reduced redemption fine and penalty.

Ratio Decidendi: Declared transaction value under the customs valuation regime cannot be discarded and replaced by a notional value unless the proper officer first forms and acts upon a legally sustainable doubt as to its truth or accuracy in the manner prescribed by the valuation rules.

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