Customs valuation of imported copper cathodes cannot be rejected without corroborative evidence or Rule 12 triggers.

Declared transaction value of imported copper cathodes could not be rejected under Rule 12 of the Customs Valuation Rules merely because the bill of lading preceded the invoice date. The importer's explanation that price variation arose from the LME-linked trade mechanism, premium and backwardation or rollover cost was treated as normal in the trade and was not disproved by evidence. No allegation of non-banking payment or any other Rule 12 circumstance was established, and prior acceptance of loaded values in other clearances did not bar challenge because estoppel does not apply in taxation matters. In the absence of contemporaneous corroborative evidence, rejection of transaction value was unwarranted, so confiscation under Section 111(m) and penalty under Section 112(a) were unsustainable.

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Issues: Whether the declared transaction value of imported copper cathodes could be rejected under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 and whether the resulting confiscation under Section 111(m) of the Customs Act, 1962 and penalty under Section 112(a) of the Customs Act, 1962 could be sustained.

Analysis: The only circumstance relied upon for doubting the declared value was that the bill of lading preceded the invoice date. The explanation offered for the price variation with reference to the LME-linked trade mechanism, premium and backwardation or rollover cost was found to be normal in the trade and was not rebutted by evidence. No allegation of payment through non-banking channels or any other circumstance contemplated by Rule 12 was established. The earlier acceptance of loaded values in other clearances could not justify rejection of the declared value, since estoppel does not apply in taxation matters. The absence of contemporaneous corroborative evidence meant that the Revenue had not made out a case for rejection of the transaction value.

Conclusion: The rejection of the declared value was not justified, and the consequential confiscation and penalty were unsustainable. The appeal succeeded and the impugned order was set aside.

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