Transaction value for imported orchid flowers cannot be rejected without sequential valuation rules and fair disclosure of relied-upon material.

The declared transaction value of imported fresh orchid cut flowers could not be rejected because the authorities failed to apply the customs valuation hierarchy sequentially and relied prematurely on Rule 4 without adequate reasons. The so-called consent letter was not an unconditional admission for all imports, but was limited to the relevant consignment and subject to the outcome of pending appeals. As no contemporaneous import data or NIDB material was supplied for rebuttal, the enhancement offended natural justice. The declared price therefore remained unassailable and the value enhancement was unsustainable.

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Issues: Whether the declared transaction value of imported fresh orchid cut flowers could be rejected and the assessable value enhanced under Rule 4 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 on the basis of a so-called consent letter and without following the valuation rules sequentially.

Analysis: The letter relied upon by the authorities did not amount to an unconditional admission accepting enhancement for all imports; it was confined to the relevant consignment and was expressly subject to the final outcome of the pending appeals. The authorities also failed to give acceptable reasons for invoking Rule 4 straightaway, instead of proceeding through the valuation hierarchy in the prescribed sequence. No contemporaneous import data or NIDB material was supplied to the importer for rebuttal, which offended the principles of natural justice. The record did not show any valid basis to discard the declared price of US$ 0.03 per stem.

Conclusion: The enhancement of value was unsustainable and the declared transaction value could not be rejected. The issue is decided in favour of the assessee.

Ratio Decidendi: A declared transaction value cannot be displaced by enhanced valuation unless the statutory valuation method is properly applied and the importer is afforded a fair opportunity to meet the material relied upon.

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