Transaction value in customs valuation cannot be displaced merely because the foreign supplier holds equity in the importer.

Declared transaction value remains the starting point for customs valuation, and it cannot be rejected merely because the foreign supplier holds an equity interest in the importer. The text states that an assumed possibility of profit or sale proceeds accruing to the supplier is insufficient, by itself, to justify departure from the declared value or the use of alternative valuation methods. It further notes that resort to deductive valuation was unwarranted on the facts, so the declared CIF value was accepted and the enhanced assessable value was held unsustainable.

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Issues: Whether the declared transaction value of the imported modem was liable to be rejected on the ground that the foreign supplier held equity in the buyer company, and whether the value could be enhanced by departing from transaction value and resorting to alternative valuation methods.

Analysis: The valuation could not be displaced merely because the foreign supplier had an equity interest in the importer. Applying the principle that transaction value is the starting point for customs valuation, the mere assumption that sale proceeds or profit might accrue to the supplier was held insufficient to reject the declared value. The provisions governing departures from transaction value and permissible additions did not justify moving outside transaction value on the facts. Resort to deductive valuation was also found unwarranted, and the declared CIF value was treated as acceptable in the light of the binding precedent on similar facts.

Conclusion: The rejection of transaction value and the enhancement of assessable value were unsustainable, and the importer succeeded.

Final Conclusion: The assessable value had to be determined on the basis of the declared transaction value, and the contrary valuation adopted in appeal could not be sustained.

Ratio Decidendi: Transaction value cannot be rejected or replaced by an alternative valuation method unless the statutory grounds for departure and the permissible additions are lawfully established on the facts.

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