Declared import value cannot be rejected without proof of related-person status or contemporaneous comparable imports.

Declared import value could not be rejected merely because the foreign supplier was a subsidiary of another overseas company and the importer acted as its Indian representative; no statutory basis or proof of related-person status was shown. The department also could not re-determine assessable value by using invoices from two years earlier and foreign comparables from another country, because valuation rules require contemporaneous comparable imports and proper adjustments for commercial level and quantity. In the absence of cogent evidence of undervaluation, the value enhancement, confiscation-related consequences, duty demand, and penalties were unsustainable.

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Issues: (i) Whether any nexus or related-person relationship existed between the importer and the overseas supplier so as to justify rejection of the declared transaction value; (ii) whether the department lawfully re-determined the assessable value by relying on older invoices and foreign comparables from another country.

Issue (i): Whether any nexus or related-person relationship existed between the importer and the overseas supplier so as to justify rejection of the declared transaction value.

Analysis: The mere fact that the foreign supplier was shown to be a subsidiary of another overseas company and that the importer represented the supplier in India did not by itself establish that the importer and supplier were related persons under the valuation rules. The importer was an independent Indian company, and there was no specific allegation or proof bringing the parties within the statutory categories of related persons. The relationship relied upon by the department was therefore insufficient to displace the declared value.

Conclusion: The importer was not proved to be a related person of the supplier, and the declared transaction value could not be rejected on that ground.

Issue (ii): Whether the department lawfully re-determined the assessable value by relying on older invoices and foreign comparables from another country.

Analysis: The valuation rules require comparison with identical or similar goods imported at or about the same time, with due regard to commercial level, quantity, and relevant adjustments. The department instead relied on invoices from two years earlier and on prices of imports from the USA when no contemporaneous comparable imports from the same source were shown. Such comparisons were not in accordance with the statutory valuation method, and the department also failed to establish undervaluation by cogent evidence of prevailing international prices.

Conclusion: The re-valuation was unsustainable and the enhancement of value was set aside.

Final Conclusion: The impugned valuation, confiscation-related consequences, duty enhancement, and penalties could not be sustained, and the appeals succeeded with consequential relief.

Ratio Decidendi: Rejection of the declared import value requires proof of a statutory ground under the valuation rules, and any alternative valuation must be based on contemporaneous comparable imports made in accordance with the prescribed hierarchy of valuation methods.

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