Related-party customs valuation requires proof of undervaluation, not equity participation alone, before declared value can be rejected.

Equity participation by a foreign supplier in the importer did not, by itself, establish mutuality of interest or related-party status for customs valuation purposes. The declared transaction value could therefore not be rejected merely on that basis. A commercial arrangement requiring the importer to source its annual requirements from the same supplier and a corresponding increase in import volume did not prove undervaluation. In the absence of contemporaneous imports of identical goods at a higher price or other evidence justifying rejection of the declared value, the burden on the Revenue was not discharged and enhancement of assessable value was unwarranted.

---

---

Issues: Whether the declared value of the imported goods could be rejected on the ground of relationship between the importer and the foreign supplier and whether enhancement of assessable value under the Customs Valuation Rules, 1988 was justified.

Analysis: The imported goods were being sourced from a supplier holding equity in the importer, but equity participation by itself did not establish mutuality of interest so as to treat the parties as related for valuation purposes. The import price was reduced after a commercial arrangement requiring the importer to source its annual requirement from the same supplier, and the record showed a substantial increase in import volume over the relevant years. No contemporaneous imports of identical goods by other importers at a higher price were produced by the Revenue. In the absence of such evidence, the burden to prove under-valuation and to justify rejection of the declared value was not discharged.

Conclusion: The declared value could not be rejected and enhancement of assessable value was not warranted.

---