Customs valuation cannot rely on Indian market prices for similar goods; reassessment, confiscation and penalty fail.

Customs value cannot be rejected and reassessed on the basis of the selling price of similar indigenous goods in the local market where the valuation rules expressly prohibit that method. A reassessment founded on a local market enquiry comparing imported radiators with domestic goods was therefore unlawful, and the resulting confiscation and penalty could not be sustained as they were consequential to the invalid valuation exercise. The declared value was to be accepted, and the importer was entitled to release of the goods.

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Issues: Whether the declared customs value of imported goods could be rejected and reassessed on the basis of the selling price of similar indigenous goods found in the local market, and whether the resulting confiscation and penalty could be sustained.

Analysis: Rule 8 of the Customs Valuation Rules prohibits determination of value on the basis of the selling price in India of goods produced in India. The reassessment in the case rested on a local market enquiry comparing the imported radiators with similar indigenous goods. Since that basis was specifically barred by the valuation rules, the foundation of the adjudication was unlawful. The confiscation and penalty, being consequential to the invalid reassessment, could not stand.

Conclusion: The rejection of the declared value was unsustainable and the adjudication order was set aside. The goods were directed to be assessed on the declared value and released to the appellant.

Final Conclusion: The appeal succeeded, and the importer obtained relief against the reassessment, confiscation, and penalty.

Ratio Decidendi: Customs value cannot be determined by adopting the selling price of similar goods produced in India where the valuation rules expressly prohibit that basis.

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