Declared transaction value cannot be rejected without statutory grounds and evidence; residual valuation under Rule 8 was unsustainable.

Declared transaction value for imported second-hand machinery cannot be rejected unless the statutory grounds under Rule 4 of the Customs Valuation Rules, 1988 are supported by material evidence. Selective acceptance of a Chartered Engineer's certificate for some purposes, while rejecting it for valuation without contrary evidence, was impermissible. In the absence of a lawful basis to discard the declared value, recourse to the residual method under Rule 8 could not be sustained, and the assessee's valuation was upheld.

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Issues: Whether the declared transaction value of the imported second-hand machinery could be rejected and valuation determined under the residual method.

Analysis: Rule 4 of the Customs Valuation Rules, 1988 permits rejection of transaction value only on the specified grounds contained in the rule. The authorities had accepted the Chartered Engineer's certificate for some purposes, including the condition and value of the machinery when new, but rejected the same material only for valuation without any contrary evidence. Such selective acceptance and rejection of the same certificate was held to be impermissible. In the absence of any material justifying rejection of the declared value, resort to Rule 8 could not be sustained.

Conclusion: The rejection of transaction value was not justified and valuation under Rule 8 was unsustainable. The issue was decided in favour of the assessee.

Ratio Decidendi: Declared transaction value cannot be rejected, and the residual valuation method cannot be invoked, unless the statutory conditions for rejection under Rule 4 are satisfied on the basis of material evidence.

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