Declared export value cannot be rejected without reliable evidence, and confiscation or penalty needs proven Customs Act violation.

Declared commercial invoice evidence was treated as the best proof of export value, and customs could not displace it on the basis of unreliable market witnesses or inconclusive departmental material where supplier verification was readily possible. In the absence of credible evidence that the declared market value was false, and with no established violation of the Customs Act, confiscation and penalty had no legal foundation. The note also records that departmental circulars required consideration of sale invoices and similar documents before rejecting declared value, and that the exporter was therefore entitled to the declared DEPB benefit on the FOB and market values stated.

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Issues: (i) Whether the market value declared for the exported goods could be displaced by the customs authorities on the basis of the material relied upon by them; (ii) Whether confiscation of the goods and imposition of penalty were sustainable when the export price was not challenged and no violation of the Customs Act was established.

Issue (i): Whether the market value declared for the exported goods could be displaced by the customs authorities on the basis of the material relied upon by them.

Analysis: The purchase invoice issued by the manufacturer was the primary commercial document and the best evidence of the transaction. The customs authorities were bound to examine that evidence, particularly when verification from the supplier was readily possible. In the absence of any material discrediting the invoice price, and in view of the departmental circular requiring consideration of sale invoices and similar documents, the declared market value could not be rejected merely on the basis of inconclusive opinions of two market witnesses whose evidence lacked particulars and reliability.

Conclusion: The rejection of the declared market value was unsustainable and the market value fixed by the authorities could not be upheld.

Issue (ii): Whether confiscation of the goods and imposition of penalty were sustainable when the export price was not challenged and no violation of the Customs Act was established.

Analysis: Confiscation and penalty required a legal basis arising from violation of the Customs Act. Once the declared market value was not shown to be false on reliable evidence, and the export price itself was not disputed, there was no foundation for treating the goods as liable to confiscation or for visiting the exporter with penalty. The consequential action under the Customs Act therefore could not survive.

Conclusion: Confiscation and penalty were set aside and were not sustainable against the assessee.

Final Conclusion: The order of the customs authority failed on evidence and on law, and the exporter was entitled to the declared DEPB benefit on the FOB and market values declared.

Ratio Decidendi: Where the best available commercial evidence supports the declared transaction value and the departmental material is unreliable, customs authorities cannot reject the value or impose confiscation and penalty without a proven statutory violation.

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