Transaction value governs customs valuation unless valid grounds justify rejection before resorting to best judgment valuation.

Declared transaction value remains the normal basis for customs valuation unless the authority first rejects it on valid and reasonable grounds. Best judgment valuation under Rule 8 cannot be applied merely by enhancing the price on a proportional basis or by comparing imported parts with the value of a complete article. In the absence of material showing undervaluation, suppression, manipulation, or other legally sustainable reasons to discard the invoice value, enhancement is not justified and Rule 8 valuation is impermissible. The principle stated is that rejection of transaction value must precede any resort to best judgment valuation.

---

---

Issues: Whether the declared transaction value of the imported goods could be discarded and the value enhanced on a proportional basis under Rule 8 of the Customs Valuation Rules, 1963.

Analysis: The declared invoice value is the normal basis of valuation unless there are valid grounds for rejecting it. Before resorting to best judgment valuation under Rule 8, the customs authority must first discard the transaction value on a reasonable and legally sustainable basis. In the absence of any proper material showing undervaluation, suppression, manipulation, or other valid grounds for rejection, enhancement of value merely by comparing the imported parts with the value of the complete article is not justified.

Conclusion: The transaction value could not be rejected on the facts found, and valuation under Rule 8 was impermissible. The enhancement of value was set aside and the appeal was allowed.

Ratio Decidendi: Best judgment valuation under Rule 8 can be applied only after the declared transaction value is first rejected on valid and reasonable grounds.

---