Customs valuation must use ascertainable independent import prices when Section 14(1)(a) conditions are met, despite extra service obligations.

Imported scientific instruments were to be valued under Section 14(1)(a) of the Customs Act, 1962 where an ascertainable transaction price existed from comparable imports by independent buyers. Although the appellants' own import price was not the sole consideration because they also undertook installation, training, after-sale service, warranty and related promotional obligations for the foreign supplier, those additional services did not justify shifting valuation to Section 14(1)(b). The availability of prices paid in the ordinary course of international trade by independent importers meant that the statutory conditions for Section 14(1)(a) were satisfied, and resort to the residual valuation provisions was not permissible.

---

---

Issues: Whether the assessable value of the imported scientific instruments was to be determined under Section 14(1)(a) of the Customs Act, 1962 on the basis of the price paid by other independent importers, or under Section 14(1)(b) read with Rule 5(a) of the Customs Valuation Rules, 1963 on the ground that the price paid by the appellants was not the sole consideration for sale.

Analysis: The appellants' net invoice price could not be treated as the sole consideration because, under their arrangements with foreign suppliers, they undertook installation, training, after-sale service, warranty obligations, and allied promotional services at their own cost. Those services constituted additional consideration flowing to the foreign supplier, so the appellants' own import price did not satisfy the conditions of Section 14(1)(a). However, the presence of sizeable imports of the same goods by independent importers at prices paid in the ordinary course of international trade, without any direct or indirect extra consideration, meant that an ascertainable price under Section 14(1)(a) was available. Where such price is ascertainable, recourse to Section 14(1)(b) and the Valuation Rules is not permissible.

Conclusion: The assessable value was correctly fixed under Section 14(1)(a) of the Customs Act, 1962, and the appellants' plea for valuation under Section 14(1)(b) failed.

Ratio Decidendi: Where comparable imports by independent buyers establish an ascertainable price satisfying the statutory conditions of Section 14(1)(a), customs valuation cannot be shifted to Section 14(1)(b) merely because the appellant's own price was accompanied by additional non-monetary consideration.

---