Customs valuation accepts renegotiated transaction value when the imported vessel materially differs from the contracted goods.

Reduced transaction value may be accepted for customs valuation where the imported vessel materially differs from the ship contracted for, because Rule 4 of the Customs Valuation Rules, 1988 looks to the price actually paid or payable for the goods imported. The valuation must correspond to the goods actually delivered, and a post-inspection renegotiated price can represent that value when the agreement itself contemplated discrepancies in description and equipment. A bare departmental concern about possible misuse is insufficient where the factual difference in the goods is undisputed, so the reduced value was upheld and the department's challenge failed.

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Issues: Whether the reduced price agreed after inspection of the imported ship could be accepted as the transaction value for assessment under the Customs Valuation Rules, 1988 when the goods actually imported materially differed from the goods contracted for.

Analysis: Rule 4 of the Customs Valuation Rules, 1988 requires valuation on the basis of the price actually paid or payable for the goods imported. That price must correspond to the goods contracted to be bought and sold. Where the vessel delivered differed materially from what had been agreed, and the agreement itself contemplated exceptions and discrepancies in description and equipment, the subsequent renegotiation produced the relevant price for the goods that actually arrived. The departmental objection based on the possibility of misuse was insufficient, since a mere possibility of undervaluation or misdeclaration cannot defeat a commercially accepted valuation method in a case where the factual difference in the goods was not disputed.

Conclusion: The reduced transaction value was rightly accepted, and interference with the appellate orders was not warranted. The department's appeals were rejected.

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