Declared transaction value prevails where arm's length bidding is proved and inadmissible evidence cannot displace import valuation.

Declared transaction value in a composite EPC import contract was accepted where the imports were awarded through international competitive bidding to the lowest bidder and the related-party relationship was found not to have influenced price. Material relied on to allege over-valuation was disregarded for want of admissible proof under section 138C(4), and earlier final findings from the same investigation were followed. Once the declared value stood, confiscation under section 111(m) could not be sustained, and penalties under sections 112(a) and 114AA also failed because no misdeclaration or false declaration survived.

---

---

Issues: (i) Whether the declared value of the imported goods could be rejected and re-determined under the Customs Valuation Rules, 2007 read with section 14 of the Customs Act, 1962; (ii) Whether the imported goods were liable to confiscation under section 111(m) of the Customs Act, 1962 and whether penalties under sections 112(a) and 114AA of the Customs Act, 1962 were imposable.

Issue (i): Whether the declared value of the imported goods could be rejected and re-determined under the Customs Valuation Rules, 2007 read with section 14 of the Customs Act, 1962.

Analysis: The adjudicating authority had found that although the importers and the overseas supplier were related, the relationship had not influenced the price. The contracts were found to be composite EPC contracts awarded through international competitive bidding to the lowest bidder, and the declared transaction value was held to reflect an arm's length price. The evidence relied upon for alleging over-valuation was also treated as lacking evidentiary value in the absence of the certificate required under section 138C(4) of the Customs Act, 1962. The earlier adjudications arising from the same investigation had already attained finality, and the same reasoning was applied to the present notices.

Conclusion: The declared transaction value could not be rejected and had to be accepted; the issue was decided in favour of the assessee.

Issue (ii): Whether the imported goods were liable to confiscation under section 111(m) of the Customs Act, 1962 and whether penalties under sections 112(a) and 114AA of the Customs Act, 1962 were imposable.

Analysis: Once the declared value was accepted and no misdeclaration of value survived, the foundation for confiscation under section 111(m) did not remain. On the same footing, the proposed penalties under sections 112(a) and 114AA could not stand, since those consequences depended on a finding of misdeclaration or false declaration in the import documents.

Conclusion: The goods were not liable to confiscation and penalties were not imposable; the issue was decided in favour of the assessee.

Final Conclusion: The appeals failed because the valuation adopted in the impugned order was upheld, and the consequential confiscation and penalty proposals were also rejected.

Ratio Decidendi: Where a composite import contract is found to be concluded at arm's length through a transparent bidding process and the department's material lacks admissible evidentiary support, the declared transaction value cannot be displaced, and consequential confiscation and penalties cannot be sustained.

---