2026-VIL-1455-CESTAT-HYD-CU
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CUSTOMS CESTAT Cases

Customs - Export Valuation - Transaction Value - Iron Ore Fines - Appellant exported iron ore fines under a contract which provided for price adjustment based on quality parameters including Fe content, Alumina, and Silica, with final destination results to determine the contractual price. The appellant declared the export at the transaction value based on the final commercial invoice and Bank Realization Certificate reflecting the amount actually realized from the overseas buyer. However, the customs authority enhanced the assessable value based on their laboratory analysis showing different quality parameters than those reflected in the final commercial invoice - Whether the customs authorities can enhance the assessable value of exported goods on the basis of laboratory analysis when the final transaction value has been settled with the foreign buyer and the amount actually realized is evidenced by the final commercial invoice and Bank Realization Certificate – HELD - Section 14 of the Customs Act recognizes transaction value namely the price actually paid or payable for goods when sold for export from India as the basis for valuation. The Customs Valuation Rules make transaction value the primary basis for valuation. A laboratory report may be relevant for establishing composition or quality of goods but cannot substitute transaction value with a hypothetical value unless the statutory requirements for rejection of transaction value are satisfied - The Department cannot presume that the exporter received higher consideration merely because the Fe content found in the Department laboratory is higher. The taxable event is export but valuation is governed by price actually paid or payable subject to statutory provisions. Final invoice and Bank Realization Certificate have material relevance to transaction value where unrelated parties are involved and no evidence of additional consideration is produced. A test report relied upon against an assessee cannot ordinarily be kept undisclosed. Selective adoption of different reports for different parameters lacks satisfactory justification. Enhancement of assessable value is not sustainable in absence of evidence of additional remittance or consideration – The appeal is allowed
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