Primacy of Transaction value in Customs

This case concerns the valuation of imported goods under the Customs law.

Flipkart India imported power banks from Xiaomi Singapore and declared a particular transaction value. Customs authorities believed the goods were undervalued and enhanced the value using data from other imports of similar goods.

They also imposed penalties and ordered confiscation. Flipkart challenged this action before the Tribunal.

The CESTAT held that Customs cannot enhance the value merely by referring to other import prices unless the declared transaction value is first rejected following the proper procedure under the Customs Valuation Rules.

Since the department failed to do so, the Tribunal set aside the enhancement and allowed the appeal.