Customs valuation must respect genuine invoice value when no reliable comparable market price supports rejection of declared import price.

Imported watch spare parts were to be valued on the declared invoice price where the importer showed genuine long-standing purchases at a competitive trade discount and the department failed to establish a reliable comparable market value. A foreign retail price list could not displace the transaction value because it did not reflect the price prevailing at the time and place of importation, and no sufficient relationship or other basis was shown to reject the invoice. The operative valuation rule was therefore Section 14(1)(a) of the Customs Act, 1962, and the rejection of declared value on suspicion was unsustainable.

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Issues: Whether the customs authorities were justified in rejecting the invoice value of imported watch spare parts and assessing the goods on the basis of a foreign price list instead of the price prevailing at the time and place of importation.

Analysis: The dispute turned on valuation under the Customs Act, 1962 and the Customs Valuation Rules, 1963. The importer had placed material before the department showing long-standing purchases from the foreign supplier at substantial trade discount, resulting in a competitive export price. The department relied on a 1967 price list from the Groupement, but that list reflected retail prices in France and did not furnish a proper comparable basis for the Indian import. The record also did not establish any sufficient interest of the importer in the foreign supplier so as to displace the invoice price or to justify rejection of the declared value under the statutory valuation scheme.

Conclusion: The invoice value could not be rejected, and valuation had to be made under Section 14(1)(a) of the Customs Act, 1962. The rejection of the declared value and the consequential customs action were unsustainable and were set aside in favour of the assessee.

Ratio Decidendi: Where imported goods are shown to have been purchased at a genuine competitive price and no reliable comparable market value is established, the customs authorities cannot discard the invoice value merely on suspicion or by reference to an unrelated foreign price list.

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