Transaction value must be used where an independent sale price is available; comparable-goods valuation and penalty were set aside.

Where goods were sold to an independent buyer and the price was found to be the sole consideration, valuation on the basis of comparable goods under Rule 7 was not justified because the actual transaction price was available and had not been rejected. On that footing, the department's adoption of comparable-goods valuation failed, and the differential duty demand could not be sustained. The penalty was also set aside because it rested on the same unsustainable valuation basis.

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Issues: Whether the differential duty demand could be sustained by rejecting the actual sale price and valuing the goods on the basis of comparable goods under Rule 7, and whether the penalty was maintainable.

Analysis: The sale to an independent buyer was undisputed, and the price was found to be the sole consideration. In such a situation, resort to comparable goods under Rule 7 was unwarranted, particularly when the actual transaction price was available and had not been rejected. Once the valuation adopted by the department could not be sustained, the basis for the differential duty demand also failed.

Conclusion: The differential duty demand was held unsustainable and the penalty was set aside.

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