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CA Final · Integrated Business Solutions (Multidisciplinary Case Study with Strategic Management) · Indirect Tax Laws

Case: Kaveri Precision Tools Ltd, Pune, imported goods and the customs officer doubts the declared transaction value because the importer and supplier are related. Which statement follows under the Customs Valuation Rules?

Relationship between buyer and seller alone does not disqualify the transaction value. It is accepted if the relationship did not influence the price, and the importer must be given a chance to justify it. Automatic rejection or skipping the sequential methods is incorrect.

  1. ATransaction value must be rejected automatically because the parties are related
  2. BTransaction value is accepted if the relationship did not influence the price, and the importer is given a chance to explainCorrect
  3. CThe officer can directly fix the value under the residual method without any reasons
  4. DTransaction value is accepted only if the supplier is an Indian resident

Explanation

Relationship alone does not disqualify the transaction value. It is accepted if the relationship has not influenced the price, such as when it closely approximates test values. The proper officer must give the importer an opportunity to respond to doubts, and reasons on request. Automatic rejection or direct use of residual method is wrong.

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