Customs valuation and DGFT minimum import price clash - accepting enhanced value removes import ban and penalties.

Customs valuation must be determined under the Customs Act and Valuation Rules by assessing declared transaction value; DGFT minimum import price operates separately to regulate import permissibility. If the transaction value is correctly declared but below the DGFT threshold, the customs officer may accept the declared value for duty assessment and still invoke DGFT penalties for breach of import policy. Where the authority enhanced the assessable value to meet DGFT policy conditions without findings of misdeclaration, and the importer did not contest that enhancement, the goods become compliant and penal measures including confiscation and fines lose effect.

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Issues: Whether the confiscation of imported marble slabs and the concomitant redemption fine and penalty could be sustained where the departmental authority enhanced the declared value to the DGFT-prescribed minimum import price and the importer did not contest the enhanced value.

Analysis: The Tribunal analysed the interaction between Customs valuation under the Customs Act and Valuation Rules and the value-based restriction imposed by the DGFT notification (minimum import price). It observed that Customs assessable value for duty must be determined by the Customs Valuation Rules based on transaction value and that the DGFT floor price regulates permissibility of import. The Adjudicating Authority had enhanced the declared value to align with DGFT policy conditions without applying the Customs Valuation Rules or making findings of misdeclaration under the Customs Act. Once the departmental enhancement of value to the DGFT floor price is accepted and not contested by the importer, the goods become compliant with the DGFT notification for import permissibility; consequently, penal consequences premised on the goods being below the floor price fall away. The Tribunal therefore treated the accepted enhanced value as rendering the goods freely importable subject to payment of duty at that enhanced value and considered confiscation, redemption fine and the penalty under Section 112(a) in that factual context.

Conclusion: Confiscation of the goods, the redemption fine and the penalty are set aside; the goods shall be released on payment of duty as per the enhanced value and the appellant is entitled to consequential relief as per law.

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