Invoice value governs DTA clearances by export oriented units where the department cannot rely on unrelated comparables or cost-plus valuation.

Valuation of export oriented unit clearances into the domestic tariff area must follow the statutory customs valuation scheme, and the department cannot displace invoice value by adopting unrelated market comparisons or a cost-plus basis unless comparable goods and similarly placed clearances are shown. In this matter, the comparison with other manufacturers was rejected because the goods were not established as identical or comparable, and the Rule 8 cost method was also found inapplicable on the facts. The assessee's invoice-based transaction value was accepted as the proper basis, and the departmental demand was held unsustainable.

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Issues: Whether the valuation of clearances made by an export oriented unit into the domestic tariff area could be determined by adopting prices of other units and a cost-plus basis instead of the transaction value reflected in the assessee's invoices, and whether the resulting demand could be sustained.

Analysis: The clearances were made by an export oriented unit under the proviso to Section 3(1) of the Central Excise Act, 1944 and valuation had to be worked out on the customs side. The adopted method of comparing prices with other manufacturers was rejected because the goods were not shown to be identical or comparable in the relevant sense, and the comparable clearances were not shown to be clearances by similarly placed export oriented units into the domestic tariff area. The use of Rule 8 and a cost-based approach was also rejected as not being an approved method for the valuation exercise in the facts of the case. The Court treated the invoice price produced by the assessee as the proper basis since the value adopted by the department was not shown to be in accordance with the statutory valuation scheme or the Board's directions.

Conclusion: The valuation adopted by the department was not sustainable, and the assessee's transaction value was accepted.

Ratio Decidendi: Where valuation of export oriented unit clearances into the domestic tariff area is not supported by a valid comparable method under the customs valuation scheme, the transaction value evidenced by the assessee's invoices cannot be displaced by an arbitrary cost-plus or unrelated market comparison.

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