Residual customs valuation applies when transaction, comparable, deductive, and computed methods are unavailable for free-of-charge spare parts.

Where exported spare parts were supplied free of charge under a service support arrangement, transaction value under Rule 3 was inapplicable because no sale price was payable. Comparable valuation under identical or similar goods could not be used, as no relevant market comparables were shown; deductive value failed because there was no sale in India; and computed value was impracticable because full historical cost data was unavailable for each part. In these circumstances, the residual method under Rule 9 was the appropriate basis, using reasonable means and available data consistent with the Customs Valuation Rules. The applicant's valuation methodology was therefore accepted as conforming to Rule 9.

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Issues: Whether the value of the service spare parts exported for free-of-charge replacement under the service support arrangement was correctly required to be determined under Rule 9 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.

Analysis: The valuation scheme under the Customs Act and the Customs Valuation Rules proceeds from transaction value under Rule 3, and where that cannot be applied, valuation moves sequentially through Rules 4, 5, 7 and 8 before resorting to the residual method in Rule 9. The absence of any sale or price payable for the spare parts meant that transaction value was inapplicable. Comparable valuation under identical goods or similar goods was unavailable because the spare parts were not shown to have relevant market comparables sold for export to India in the required sense. Deductive value was not workable because there was no sale in India from which a unit price could be derived. Computed value was also impracticable because the full historical cost data for the inventory was not available for each part. In these circumstances, the residual method based on reasonable means and available data was the appropriate route, and the applicant's valuation methodology was found to be consistent with that approach.

Conclusion: The question was answered in the affirmative, and valuation under Rule 9 was held to be appropriate.

Ratio Decidendi: Where transaction value and the successive methods under the Customs Valuation Rules cannot be applied on the facts, the value of goods may be determined under the residual method using reasonable means consistent with the rules and the available data.

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