Customs valuation must rest on reasoned comparison of contemporaneous imports, not a single untested higher price.

Customs mis-declaration was established where import documents described the goods as Methyl Acrylate Polymer, but chemical testing identified Polymethyl Methacrylate. The declared value could not be sustained because the enhancement rested on one higher comparable import without reasoned rejection of three contemporaneous lower imports; the valuation was remanded for de novo determination under the customs valuation framework. Because valuation was reopened, the redemption fine and penalty imposed on that basis were set aside for reconsideration, while the mis-declaration finding remained intact and the quantum could be reworked on remand.

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Issues: (i) whether the imported goods were mis-declared in description; (ii) whether the declared value could be rejected and the matter required fresh valuation; (iii) whether the redemption fine and penalty could stand in the form imposed.

Issue (i): whether the imported goods were mis-declared in description.

Analysis: The import documents, namely the bill of entry, invoice, certificate of origin and bill of lading, all described the goods as "Methyl Acrylate Polymer" and were linked to the sale note dated 2-3-1985. The chemical test, however, showed the goods to be Polymethyl Methacrylate. The alternative reliance on the sale note dated 12-4-1985 was not accepted because that document was not reflected in the documents filed before the Customs authorities or the bank.

Conclusion: The mis-declaration of description was established and the finding was against the assessee.

Issue (ii): whether the declared value could be rejected and the matter required fresh valuation.

Analysis: The enhanced value was based on one comparable import at US $ 1475 PMT, while the assessee produced three contemporary imports at US $ 728 PMT, US $ 710 PMT and US $ 710 PMT. The adjudicating authority did not give reasons for preferring the single higher import or for rejecting the other contemporaneous imports. In valuation under the customs framework, the authority must determine the price of such or like goods on a reasoned basis and, where necessary, proceed in accordance with the statutory valuation rules.

Conclusion: The valuation finding was set aside and the matter was remanded for de novo examination, in favour of the assessee.

Issue (iii): whether the redemption fine and penalty could stand in the form imposed.

Analysis: Since valuation was remanded, the redemption fine and penalty could not be finally sustained in the existing form. At the same time, the finding of mis-declaration remained intact, and the authority on remand was permitted to reconsider the quantum with the stated ceiling.

Conclusion: The redemption fine and penalty were set aside for reconsideration, in favour of the assessee to that extent.

Final Conclusion: The finding of mis-declaration of description was maintained, but the valuation and consequential fiscal consequences were reopened for fresh determination confined to valuation and the quantum of redemption fine and penalty.

Ratio Decidendi: Where customs valuation is based on comparable imports, the adjudicating authority must give reasoned grounds for rejecting contemporaneous comparable prices and cannot sustain enhancement on a single unreasoned instance when other proximate import prices are available.

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