Declared transaction value for imported machinery must be validly rejected before residual valuation can be applied.

Declared transaction value of imported second-hand machinery cannot be replaced by the residual valuation method unless that transaction value is first validly rejected under the Customs Valuation Rules, 1988. The text notes that a Chartered Engineer's certificate supported the reasonableness of the declared price, and the original authority relied on parts of that certificate while disregarding the portion supporting the declared value. Because the declared value was not properly rejected before recourse to the sequential rules and Rule 8, the use of the residual method was unjustified and the Revenue's challenge to the appellate order failed.

---

---

Issues: Whether the declared transaction value of imported second-hand machinery could be discarded and the assessable value determined under the residual method without a clear rejection of transaction value under the Customs Valuation Rules, 1988.

Analysis: The machinery was accompanied by a Chartered Engineer's certificate assessing the condition of the goods and indicating that the declared price was reasonable. The original authority accepted part of the certificate for estimating the value of new machinery, but disregarded the same certificate to the extent it supported the declared price. The governing principle is that the declared transaction value must first be rejected before recourse can be had to the sequential valuation rules and, finally, to the residual method. On the facts, the declared value was not properly discarded before resorting to Rule 8 of the Customs Valuation Rules, 1988.

Conclusion: The determination of value under the residual method was unjustified and the Revenue's challenge to the appellate order fails.

Ratio Decidendi: Transaction value under the Customs Valuation Rules, 1988 cannot be displaced and value cannot be determined under the residual method unless the declared transaction value is first validly rejected.

---