2026 (3) TMI 599 - AT - Customs

Transaction value requires disclosed reasons and an opportunity to be heard before rejection; undisclosed comparator pricing invalidates reassessment.

Challenge to rejection of declared transaction value under the Customs Valuation Rules focuses on Rule 12's requirement that an officer who doubts ... Rejection of transaction value under Customs Valuation Rules - contemporaneous price - burden of proof - requirement of giving reasons and opportunity under Rule 12 - reasonable doubt that the declared value does not represent the transaction value - Whether rejecting the price declared by the appellant of imported goods and enhancement of assessable value by the respondent relying upon the prices of contemporary imports made through other ports is as per law. Rejection of transaction value under Customs Valuation Rules - HELD THAT: - The Tribunal found that although the adjudicating authority had reason to doubt the declared transaction value, the method and basis for adopting contemporaneous prices (NIDB data) for re-determination were not made available to the importer prior to hearing and were not transparently explained. Rule 12 mandates that when the proper officer doubts the declared value he must intimate the grounds in writing and provide a reasonable opportunity to be heard; the authorities must give cogent reasons both at the preliminary and final stages before discarding the transaction value. The reassessment here lacked a clear, disclosed justification showing that the comparable prices related to identical or similar goods within the meaning of the Valuation Rules and did not afford the importer sufficient opportunity to rebut the applicability of the substitute value. [Paras 18, 19, 20] Rejection of the declared transaction value and the manner of re-determination by reference to contemporaneous prices was held improper for lack of transparent reasoning and failure to afford appropriate opportunity; impugned order set aside. Final Conclusion: The Tribunal allowed the appeal, set aside the impugned order because the reassessment adopting contemporaneous prices was not shown to be consistent with the Valuation Rules and was effected without adequate disclosure of reasons and opportunity to the importer. Issues: Whether the rejection of the importer's declared transaction value and the enhancement of assessable value by adopting contemporaneous import prices from other ports was lawful.Analysis: The Court examined the statutory framework governing customs valuation, principally Section 14 of the Customs Act, 1962 and the Customs Valuation Rules, 2007 (notably Rule 3 and Rule 12). Rule 12 mandates that when the proper officer has reason to doubt the truth or accuracy of the declared value, the officer must request further information and, if doubt persists, must intimate the grounds in writing and provide a reasonable opportunity of being heard before rejecting the declared value. The authorities and Supreme Court precedents cited establish that transaction value supported by invoice, contract and bank realization cannot be discarded without cogent reasons, disclosure of the basis for rejection and an opportunity to rebut. On the facts, although the assessing authority had reason to doubt the declared value and relied on contemporaneous NIDB data to re-determine value, the basis and data used for adopting the contemporaneous price were not disclosed to the importer before reassessment; the importer was not given a transparent opportunity to contest whether the comparator imports were identical or similar within the meaning of the valuation rules; and the method of re-determination was not demonstrated to be consistent with the Valuation Rules.Conclusion: The rejection of the declared transaction value and the re-determination of assessable value by reference to contemporaneous import prices was not sustained. The appellate order upholding the reassessment is set aside and the appeal is allowed in favour of the assessee.