Mutuality of interest in customs valuation requires more than shareholding and collaboration rights; invoice price remains the basis absent real linkage.

Mere foreign shareholding, board nomination rights, or a technical collaboration agreement did not by themselves establish mutuality of interest between the parties for customs valuation. The collaborators were to supply components and spares at fair, reasonable and competitive prices, the technical assistance fee related to know-how and rights granted, the trade mark was to be used free of charge, and royalty was payable only on local or indigenously manufactured parts. On these facts, the declared invoice price remained the proper basis of assessment under section 14(1)(a) of the Customs Act, 1962, and resort to section 14(1)(b) with loading under the Customs Valuation Rules, 1963 was not justified.

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Issues: Whether the appellants and their foreign collaborators could be treated as having mutual interest in each other's business so as to exclude valuation under section 14(1)(a) of the Customs Act, 1962 and justify resort to section 14(1)(b) and loading of the declared invoice value under the Customs Valuation Rules, 1963.

Analysis: The foreign collaborators' 15% shareholding in the joint venture and their right to nominate directors did not, by themselves, establish that the parties had interest in each other's business. The agreements also showed that the collaborators were to supply components and spares at fair, reasonable and competitive prices. The lump sum technical assistance fee was linked to technical know-how and rights granted, while the trade mark was to be used free of charge. Royalty was payable only in respect of local or indigenously manufactured parts, and not on the imported goods. On these facts, the declared invoice price could not be displaced merely because the parties were connected by the joint venture and technical assistance arrangements.

Conclusion: The assessable value had to be determined under section 14(1)(a) of the Customs Act, 1962 on the invoice price, and recourse to section 14(1)(b) and loading under Rules 6 and 8 of the Customs Valuation Rules, 1963 was not justified.

Ratio Decidendi: Mere shareholding, board representation, or a technical collaboration agreement does not establish mutuality of interest in the business of each other; unless such mutuality exists, the invoice price remains the proper basis of valuation under section 14(1)(a).

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