Customs valuation and transitional import policy: declared value stood, but later letter of credit extension defeated policy protection.

Declared transaction value in customs valuation cannot be rejected merely because an earlier import of similar goods by the same importer fetched a higher price; the earlier import was not contemporaneous and suspicion alone was insufficient, so the value enhancement and misdeclaration-based confiscation were unjustified. Under the transitional import policy, protection for firm commitments depended on an irrevocable letter of credit opened before the cut-off date, and any extension after 31 March 1990 was treated as a fresh commitment; the later extension therefore defeated the policy benefit. The valuation challenge succeeded, but the import control objection sustained confiscation, with redemption fine and penalty reduced.

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Issues: (i) Whether the declared transaction value of the imported laptops could be rejected and enhanced on the basis of an earlier import of similar goods by the same importer; and (ii) whether the goods were importable under the transitional import policy in view of the letter of credit and the later extension of its expiry date.

Issue (i): Whether the declared transaction value of the imported laptops could be rejected and enhanced on the basis of an earlier import of similar goods by the same importer.

Analysis: Under the Customs Valuation Rules, 1988, the transaction value is the primary basis for valuation and can be displaced only in the circumstances permitted by the rules. No legally acceptable ground was shown for rejecting the declared value. The earlier import relied on by the adjudicating authority was not contemporaneous, as it arose from a contract entered into several months earlier. Mere suspicion arising from a higher earlier price was insufficient to discard the transaction value.

Conclusion: The enhancement of value was unjustified and the finding of confiscation on the basis of misdeclaration of value was set aside in favour of the appellant.

Issue (ii): Whether the goods were importable under the transitional import policy in view of the letter of credit and the later extension of its expiry date.

Analysis: Para 204(6) of the Import and Export Policy AM 1990-93 protected only firm commitments backed by irrevocable letters of credit opened before the cut-off date, and expressly treated any extension made after 31 March 1990 as a fresh commitment. Since the expiry of the letter of credit was extended after the cut-off date, the appellant could not claim the benefit of the old policy. The cited precedent was distinguishable because the controlling policy language there did not contain the same express proviso.

Conclusion: The goods were held to have been imported without a valid import licence and were liable to confiscation under the import control provision, in favour of Revenue.

Final Conclusion: The appeal succeeded on valuation but failed on the import control issue, resulting in confiscation under the import policy being sustained while the redemption fine and penalty were reduced substantially.

Ratio Decidendi: In customs valuation, the declared transaction value cannot be rejected merely because an earlier import of similar goods fetched a higher price unless the statutory grounds for rejection are established; and under a transitional import policy, an extension of a letter of credit after the specified cut-off date may be treated as a fresh commitment, defeating the protection otherwise available for earlier firm commitments.

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