Customs valuation follows the original export price; post-import contract reductions do not replace transaction value absent a legal defect.

For customs valuation, the relevant transaction value is the price actually paid or payable for goods sold for export to India under Section 14 of the Customs Act and Rule 4(1) of the 1988 Valuation Rules. A later post-import addendum reducing the contract price of an imported vessel does not replace the original import price, because it is not part of the international trade transaction. Such a reduction can matter only if it reflects a legally cognisable contractual defect, non-conformity, or a serious breach affecting the bargain. On the stated facts, the original agreed price remained the assessable value and the post-import reduction was ineffective.

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Issues: Whether a reduction in the contract price of an imported vessel, effected by addenda executed after importation, could be treated as the transaction value for customs valuation.

Analysis: The valuation under Section 14 of the Customs Act, 1962 and Rule 4(1) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 turns on the price actually paid or payable for the goods when sold for export to India. A subsequent modification of the agreement after the goods have been imported does not form part of the international trade transaction for valuation purposes. The accepted reduction was not shown to arise from any serious breach that rendered the contract void or voidable, nor from a case of non-conformity of the goods. On the contrary, the original agreed price reflected the import transaction value, and the later reduction could not displace it.

Conclusion: The reduced price of US $ 9,45,000/- could not be adopted as the assessable value. The original assessable value of US $ 9,60,750/- was correctly restored, in favour of Revenue.

Final Conclusion: Post-import amendments reducing the agreed price do not govern customs valuation where the original import transaction value remains unchanged in law.

Ratio Decidendi: For customs valuation, only the price agreed for export to India up to the date of import is relevant; a later contractual reduction after importation is ineffective unless it arises from a legally cognisable defect in the contract.

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