Customs valuation must follow transaction value; notional high seas sale commission was rejected where supporting documents were produced.

Under customs valuation law, assessable value must normally be based on the actual transaction value under Section 14 and the Customs Valuation Rules, so a 2% notional high seas sale commission could not be added as a general practice when the contract price and supporting materials were available. The tribunal also held that the declared high seas sale price could not be rejected on the revenue's objection as to genuineness, because the invoice and agreement with the public sector undertakings sufficiently supported the transaction and no sustainable basis existed to discard them. The duty demand based on the notional addition was therefore set aside.

---

---

Issues: (i) Whether 2% notional high seas sale commission was includible in the assessable value of imported goods. (ii) Whether the revenue's objection regarding genuineness of the declared transaction value and non-production of documents could sustain the duty demand.

Issue (i): Whether 2% notional high seas sale commission was includible in the assessable value of imported goods.

Analysis: The valuation had to be tested on the basis of transaction value under Section 14 of the Customs Act and the Customs Valuation Rules. The cited circular and the prior tribunal and Supreme Court guidance emphasized that where the actual contract price and actual costs are available, notional additions are not justified. The reasoning also distinguished cases where transaction value is doubtful and sequential valuation methods may be invoked, but found that the present facts did not warrant an automatic 2% addition merely as a general practice.

Conclusion: The 2% notional high seas sale commission was not includible and the issue was decided in favour of the assessee.

Issue (ii): Whether the revenue's objection regarding genuineness of the declared transaction value and non-production of documents could sustain the duty demand.

Analysis: The record showed that the relevant invoice and the agreement with the public sector undertakings were produced, and those materials were sufficient to support the declared high seas sale price. In the absence of a sustainable basis to reject the documents or the declared price, the objection to genuineness could not be maintained.

Conclusion: The objection failed and the issue was decided in favour of the assessee.

Final Conclusion: The duty demand based on addition of notional high seas sale commission was set aside and the appeals were allowed.

Ratio Decidendi: Under customs valuation law, notional additions to assessable value cannot be made as a matter of general practice when the actual transaction price and relevant supporting documents are available; only actual costs or a duly rejected declared value can justify resort to alternate valuation methods.

---