Export valuation must rest on cogent evidence; market survey-based enhancement and consequential penalties were unsustainable.

Declared export value under section 14(1) of the Customs Act and Rule 3 of the Export Goods Valuation Rules must be accepted unless the Revenue displaces it through cogent evidence and sequential application of the valuation rules. A retail market survey and notional profit margin were held insufficient because they did not provide like-for-like export comparables and had no statutory basis for re-determination. Contemporaneous export data supported the declared FOB value, and no misdeclaration or legal prohibition was established. The consequential confiscation, redemption fine and penalties therefore could not be sustained.

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Issues: Whether the declared FOB value of the exported goods could be rejected and re-determined under the export valuation rules on the basis of a market survey and notional profit margin, and whether confiscation, redemption fine and penalties could be sustained.

Analysis: The valuation of export goods must begin with the declared transaction value under section 14(1) of the Customs Act, 1962 and Rule 3 of the Customs Valuation (Determination of Value of Export Goods) Rules, 2007. If the Revenue seeks to discard that value, it must do so on the basis of a lawful sequential application of the valuation rules and by producing cogent evidence that the declared price is unacceptable. The record did not show any reliable investigation or contemporaneous comparable export evidence discrediting the declared value. The Department's reliance on a retail market survey was found to be an improper comparison because the survey did not compare like goods on a like-for-like export basis. The adjudicating authority also travelled beyond the statutory scheme by re-determining unit value and adding a notional profit margin, for which no authority existed under the Customs Act, 1962 or the 2007 Rules. The contemporaneous export data produced by the exporter supported the declared value, and no misdeclaration or legal prohibition was established.

Conclusion: The rejection of the declared export value was unsustainable, and the consequential confiscation, redemption fine and penalties could not be upheld.

Ratio Decidendi: Declared export value cannot be rejected unless the Revenue discharges its burden by cogent evidence and applies the export valuation rules sequentially; a market survey or notional enhancement without statutory basis is insufficient to displace the transaction value.

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