Transaction value in customs valuation must be accepted when a genuine later contract explains the revised price.

Transaction value under the Customs Valuation Rules must be accepted for imported goods unless a statutory exception applies. A genuine later memorandum of agreement could not be rejected merely because an earlier agreement showed a higher price, particularly where the authorities did not dispute its bona fides and the later contract reflected a different net LDT that could explain the revised consideration. Revenue precedents were distinguished on facts because they did not involve the same valuation situation or a comparable discrepancy. The later agreement was therefore required to form the basis of valuation, and rejection of the declared price was unsustainable.

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Issues: Whether the customs authorities were justified in rejecting the price declared in the later memorandum of agreement and in finalising provisional assessment on the basis of the earlier memorandum of agreement, despite no finding that the later agreement was fabricated or unreliable and despite a variation in the vessel's net LDT.

Analysis: The assessment of imported goods has to proceed on the transaction value under the Customs Valuation Rules unless the statutory exceptions apply. The declared price in a genuine contract cannot be ignored merely because an earlier agreement reflected a higher price, especially where the later agreement records a different net LDT and the authorities have not doubted its genuineness. The reasoning accepted that the actual price agreed between the parties is relevant when the contract is bona fide, and that the presence of a changed specification may legitimately explain the revised consideration. The authorities relied upon by the Revenue were distinguished on facts because they involved no comparable discrepancy or did not concern the same valuation situation.

Conclusion: The later memorandum of agreement was required to be accepted as the basis of valuation, and the rejection of the declared transaction value was unsustainable. The appeal was allowed and the impugned order was set aside.

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