SKD imports classified by true substance, with valuation upheld on corroborative evidence of the real transaction price.

Goods imported in SKD condition are classified by their true commercial substance, not merely by form. Where examination, carton markings and the importer's own statement show that the consignments are complete thermostatic expansion valves and dial thermometers, they fall outside OGL for components and require a specific licence. On valuation, foreign invoices, price lists and other investigation material may be relied on where they corroborate the real transaction and export price, especially if the declared value is unsupported by the manufacturer's own price list or invoice. The impugned confiscation, redemption fine, penalty and valuation determination were upheld.

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Issues: (i) Whether the goods imported as components in SKD condition were in substance complete thermostatic expansion valves and dial thermometers requiring a specific licence, or were covered by OGL as components; (ii) Whether the goods were undervalued and whether the foreign invoices, price lists and investigation material were admissible and relevant for valuation.

Issue (i): Whether the goods imported as components in SKD condition were in substance complete thermostatic expansion valves and dial thermometers requiring a specific licence, or were covered by OGL as components.

Analysis: The evidence showed that the goods were examined in the docks and by the adjudicating authority and were found to be complete expansion valves and dial thermometers though imported in SKD condition. The markings on the cartons and the statement of the director also supported the conclusion that the consignments represented complete goods assembled in parts. The import policy permitted components under OGL, but complete expansion valves and dial thermometers were placed in the restricted list and could not be imported without a specific licence. The argument that all components imported together must still be treated only as components was rejected.

Conclusion: The goods were correctly held to be complete expansion valves and dial thermometers imported in SKD condition, and they required a specific licence; the finding is against the assessee.

Issue (ii): Whether the goods were undervalued and whether the foreign invoices, price lists and investigation material were admissible and relevant for valuation.

Analysis: The valuation dispute was assessed on the basis of the total evidence, including the investigation material from abroad, export sales invoices, price lists and the surrounding circumstances of negotiations between the importer and the foreign supplier. The invoices described the supplies as export sales and the price list broadly matched the invoice prices. The importer did not produce the manufacturer's own price list or invoice to support the declared value. In these circumstances, the material was treated as relevant for determining assessable value and the declared value was not accepted.

Conclusion: The undervaluation finding was sustained and the valuation evidence was accepted; the finding is against the assessee.

Final Conclusion: The impugned confiscation, redemption fine, penalty and valuation determination were upheld, and the appeal failed in its entirety.

Ratio Decidendi: Goods imported in SKD condition are to be classified according to their true commercial substance, and valuation may be determined on the basis of corroborative documentary evidence showing the real transaction and export price where the declared value is not substantiated.

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