Imported modular kitchens stay classifiable as furniture, while valuation can be disturbed only on strict Customs Valuation Rules grounds.

Modular kitchen components imported in CKD/SKD condition are classified as furniture under Chapter 94 because tariff classification depends on the condition of the goods at import, and later installation does not change that position. The document also states that DGOV furniture guidelines cannot replace the statutory valuation scheme under Section 14 of the Customs Act and the Customs Valuation Rules, 2007. Declared value may be rejected only on proper Rule 12 and Rule 4 grounds, with real comparability and evidence that relationship affected price; a derived per-kilogram comparison alone is insufficient. Where the relationship did not influence price, transaction value remains acceptable under Rule 3(3)(a).

---

---

Issues: (i) Whether modular kitchens imported in CKD/SKD condition are classifiable as furniture under Chapter 94 and whether DGOV furniture guidelines can govern valuation; (ii) Whether rejection of declared value in 11 Bills of Entry under Rule 12 and redetermination under Rule 4 was legally justified; (iii) Whether acceptance of declared value in the remaining Bills of Entry was contrary to Rule 3(3).

Issue (i): Whether modular kitchens imported in CKD/SKD condition are classifiable as furniture under Chapter 94 and whether DGOV furniture guidelines can govern valuation.

Analysis: Classification is to be determined at the time of import and in the condition in which the goods are imported. Modular kitchen components imported in CKD/SKD condition remain movable goods at import and are covered by Chapter 94, which includes unit furniture designed to be fixed to walls or assembled according to space requirements. The subsequent installation at site does not alter tariff classification. However, classification under Chapter 94 does not by itself authorise use of DGOV benchmark guidelines in place of the statutory valuation scheme under Section 14 of the Customs Act, 1962 and the Customs Valuation Rules, 2007.

Conclusion: Modular kitchens imported in CKD/SKD condition are classifiable under Chapter 94 as furniture, but DGOV guidelines cannot override the statutory valuation rules.

Issue (ii): Whether rejection of declared value in 11 Bills of Entry under Rule 12 and redetermination under Rule 4 was legally justified.

Analysis: The rejection rested mainly on relationship between the parties and a derived per kilogram comparison with earlier imports. The invoices were not weight-based, and the per kilogram figure was only an arithmetical construct made by dividing CIF value by weight. Rule 4 requires comparison with identical or similar goods at the same commercial level and in substantially the same quantity, with real comparability in model, specification and sale conditions. No adequate evidence of identicality or similarity was established, nor was it shown that the relationship influenced the price by any flow-back, additional consideration or compensatory arrangement. The variation in derived per kilogram values, by itself, was insufficient to reject transaction value under Rule 12 read with Rule 4.

Conclusion: Rejection of the declared value in the 11 Bills of Entry was not legally sustainable.

Issue (iii): Whether acceptance of declared value in the remaining Bills of Entry was contrary to Rule 3(3).

Analysis: Rule 3(3)(a) requires acceptance of transaction value if examination of the circumstances of sale indicates that the relationship did not influence the price. The record showed broad consistency across the bulk of the consignments, and no reliable contemporaneous third-party data was produced to show systematic undervaluation in the remaining Bills of Entry. Mere existence of relationship does not justify rejection of transaction value absent specific grounds.

Conclusion: Acceptance of declared value in the remaining Bills of Entry was consistent with Rule 3(3)(a).

Final Conclusion: The appeals failed because the imported modular kitchens were correctly treated as furniture for classification purposes, but the Department did not establish a lawful basis for rejection of transaction value or for enhancement of assessable value under the Customs Valuation Rules, 2007.

Ratio Decidendi: Classification of imported goods must be determined on their condition at the time of import, but valuation can be disturbed only on the specific statutory grounds prescribed under the Customs Valuation Rules, 2007, with real comparability and proof that relationship influenced price.

---