Customs valuation and related-party dealing: declared invoice price stands absent proof of non-arm's length pricing or market evidence.

Declared invoice value in customs valuation was accepted because the joint venture and technical collaboration arrangement did not, on the record, establish the mutuality of interest needed to disregard arm's length pricing. Mere shareholding, proportional board representation, and separate royalty or know-how payments were insufficient to show that the buyer and seller were not dealing commercially. In the absence of evidence of international market price or any extra-commercial consideration, resort to best judgment valuation under Rule 8 was unwarranted. Valuation under Section 14(1)(a) therefore remained applicable, and loading under Section 14(1)(b) was not justified.

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Issues: Whether the invoice value of imports by the respondent could be rejected and enhanced by resort to valuation under Section 14(1)(b) of the Customs Act, 1962 read with Rule 8 of the Customs Valuation Rules, 1963, on the ground of related-party relationship and royalty/technical collaboration payments, or whether valuation under Section 14(1)(a) remained applicable.

Analysis: The respondent and the foreign collaborator had a joint venture and technical collaboration arrangement, but the material on record did not establish mutuality of interest in the sense required to displace valuation on the declared invoice price. Mere shareholding, proportional board representation, and separate royalty or know-how payments did not by themselves show that the buyer and seller lacked arm's length dealing or that the invoice price was not a commercial price. The revenue also failed to adduce evidence of international market price or extra-commercial consideration for the imports. The reliance on best judgment valuation under Rule 8 was therefore unwarranted.

Conclusion: Valuation under Section 14(1)(a) was applicable, and the proposed loading under Section 14(1)(b) read with Rule 8 was not justified. The respondent succeeded.

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