Classification of modular kitchens as furniture affirmed; valuation must follow transaction value rules and requires comparability to reject it.

Modular kitchen units imported in CKD/SKD condition are classifiable as furniture under Chapter 94 and Heading 9403.40; classification is determined by the condition at import. Valuation must follow Section 14 and the Customs Valuation Rules, 2007, and extrastatutory DGOV furniture guidelines cannot override that statutory regime. The adjudicating authority wrongly rejected declared transaction value in 11 Bills of Entry by deriving a per kilogram rate without demonstrating identity/similarity, commercial comparability or influence of the relationship as required under the Rules; those rejections are set aside. Acceptance of declared values in the remaining consignments complies with Rule 3(3)(a).

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Issues: (i) Whether modular kitchens in CKD/SKD condition are classifiable as furniture under Chapter 94 and whether such classification permits application of DGOV furniture guidelines for 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 remaining Bills of Entry was contrary to Rule 3(3).

Issue (i): Whether modular kitchens in CKD/SKD condition are classifiable under Chapter 94 and whether classification allows application of DGOV furniture valuation guidelines.

Analysis: The goods were imported in CKD/SKD condition and were movable at the time of importation. Chapter 94 and Heading 9403.40, together with Chapter Note 2 and HSN explanatory notes, cover unit furniture and kitchen cabinets, including items designed to be fixed after installation. Classification must be determined at import in the condition imported. Classification and valuation are distinct exercises under Section 14 and the Customs Valuation Rules, 2007.

Conclusion: Modular kitchens imported in CKD/SKD condition are classifiable under Chapter 94 and Heading 9403.40; however, DGOV furniture guidelines do not supplant the statutory valuation regime and cannot be applied in derogation of Section 14 and the Customs Valuation Rules, 2007.

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

Analysis: The adjudicating authority derived a per kilogram value by dividing total CIF by total weight though invoices showed article/unit-wise pricing and not weight-based pricing. Rule 4 permits redetermination only by comparison with identical or similar goods imported at the same commercial level and substantially the same quantity, establishing identity/similarity and commercial comparability. No evidence of flow-back, compensatory arrangements, or other indicia that the relationship influenced price was shown; mere commercial discounts and derived per kilogram variations without proper comparability or adjustments were insufficient to reject transaction value under Rule 12 read with Rule 4.

Conclusion: The rejection of declared transaction value in the 11 Bills of Entry was not legally sustainable and is set aside.

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

Analysis: The authorities examined pricing across 72 Bills of Entry and found general consistency; Rule 3(3)(a) requires acceptance of transaction value where circumstances indicate the relationship did not influence price. The Department did not produce NIDB or third-party contemporaneous data demonstrating systematic undervaluation for the remaining consignments; relationship alone does not shift the burden to reject transaction value.

Conclusion: Acceptance of declared value in the remaining Bills of Entry is consistent with Rule 3(3)(a) and established law and is upheld.

Final Conclusion: The classification of modular kitchens as furniture under Chapter 94 is affirmed but valuation must follow the statutory scheme; the Department failed to validly reject transaction value in the 11 disputed consignments and the declared values in the other consignments are properly accepted, resulting in dismissal of the departmental appeals.

Ratio Decidendi: Classification is determined at import in the condition imported and modular kitchen units in CKD/SKD form fall under Chapter 94; valuation must follow Section 14 and the Customs Valuation Rules, 2007, and transaction value cannot be rejected under Rule 12 unless comparability and influence of relationship are established as required by Rule 4 and Rule 3(3).

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