Customs valuation under Rule 5 does not apply to self-consumption imports; unsupported invoice loading is unsustainable.

Rule 5 of the Customs Valuation Rules, 1963 applies only to imports by an agent, distributor, indentor, or a branch or subsidiary acting in that capacity for further distribution, and not to goods imported for the importer's own consumption. A contractual condition requiring diversion of part of the consignment to the State Trading Corporation did not convert the importer into that corporation's agent or distributor. The agreement also showed that the corporation was to bear part of the related expenses, which undermined any basis for adding the importer's expenses to the invoice price. The proposed 2% loading to the invoice value was therefore unsupported and unsustainable.

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Issues: Whether Rule 5 of the Customs Valuation Rules, 1963 applied to imports made by the petitioner for its own consumption with a stipulated diversion of part of the consignment to the State Trading Corporation, and whether the loading of 2% to the invoice value was sustainable.

Analysis: Rule 5 applies to imports by a sole agent, distributor or indentor, or by a branch or subsidiary of the exporter treated as a sole agent, where the imported goods are brought in for further distribution and not for self-consumption. The petitioner imported the goods for its own use, and the condition requiring diversion of 50% of the consignment to the State Trading Corporation did not convert the petitioner into an agent or distributor for that corporation. The agreement also showed that the State Trading Corporation was to bear part of the related expenses, negativing the basis for adding the petitioner's expenses to the invoice price. The revisional authority's assumption that 2% could be loaded was unsupported and without foundation.

Conclusion: Rule 5 of the Customs Valuation Rules, 1963 did not apply to the import in question, and the 2% loading to the invoice value was unsustainable. The impugned valuation orders were liable to be set aside.

Ratio Decidendi: Rule 5 of the Customs Valuation Rules, 1963 applies only where the import is by an agent, distributor, indentor, or branch or subsidiary acting in that capacity for further distribution, and not to goods imported for the importer's own consumption.

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