Export price as valuation benchmark accepted for 100% EOU clearances to related buyers over cost construction.

For valuation of domestic clearances by a 100% EOU to a related buyer, the export value of the same or similar goods could be used where it provided a better comparable than cost construction under Rule 8 of the Customs Valuation Rules, 1988. The department had rejected the invoice price because the buyer and seller were related and sought valuation on cost basis, but the available export sales of identical yarn to Norway and the UAE were higher than the domestic sale price. On that basis, the export price was accepted as the proper valuation benchmark, and waiver of pre-deposit with stay of recovery was granted during the appeal.

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Issues: Whether, for valuation of goods cleared by a 100% EOU into the domestic market to a related buyer, the export price of the same or similar goods could be accepted instead of resorting to cost construction under Rule 8 of the Customs Valuation Rules, 1988, and whether the appellant had made out a case for waiver of pre-deposit.

Analysis: The valuation dispute arose from domestic clearance of yarn manufactured in a 100% EOU and sold to a sister concern. The department rejected the invoice price on the premise of relationship between buyer and seller and adopted cost construction under Rule 8. The Board's circular on valuation of EOU clearances indicated that the export value of same or similar goods could form the basis for assessment of domestic sales. As the appellant had exported identical yarn to Norway and UAE at prices higher than the domestic sale price, there was no basis to insist on cost construction when a better comparable market value was available.

Conclusion: The export value of the same goods was accepted as the proper basis for valuation, and the appellant was entitled to waiver of pre-deposit and stay of recovery during the appeal.

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