The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Hyderabad Bench, held that Customs authorities cannot revalue exports based on moisture content variations when the transaction value and final payment are undisputed.
The Bench of Angad Prasad (Judicial Member) and A.K. Jyotishi (Technical Member) noted that the declared transaction value per metric tonne was never disputed. CIQ analysis was contractually final, and ignoring it violated agreed terms. Since export duty is ad valorem, quantity adjustments are irrelevant once transaction value is accepted.
Feegrade had exported iron ore fines under contracts providing that the final price and quantity would be determined by China Inspection and Quarantine (CIQ) test results at the discharge port. At export, assessments were provisional pending test reports.
When finalising assessments, the Department relied on the Central Revenue Control Laboratory (CRCL) report showing lower moisture content than CIQ, which led to a reduced refund claim for the exporter.
The company argued that Customs had no grounds to question the transaction value, as the price realised matched the Bank Realisation Certificate (BRC) and final invoices. It stressed that in ad valorem export duties, moisture-based recomputation of quantity has no legal basis.
The Tribunal emphasized that Customs could not replace CIQ results with CRCL data without legally rejecting the transaction value under the Export Valuation Rules.
Holding that the 20% deposit made during provisional assessment was a revenue deposit, not duty, the Bench ruled that Feegrade is entitled to refund with interest if excess payment remains after final assessment.
Customs has been directed to recalculate the refund and pay interest within two months, in accordance with Section 18(4) of the Customs Act.
Allowing the appeals filed by M/s Feegrade and Co Pvt Ltd., the Tribunal directed the Visakhapatnam Customs Department to recompute the refund amount and pay statutory interest under Section 18(4) of the Customs Act, 1962. The ruling came in a batch of connected appeals concerning the finalisation of provisional assessments on iron ore exports.
The tribunal allowed the appeals by remand with consequential reliefs. Moisture-based recomputation of export value declared invalid. Refund and interest to be processed within two months.
Case Details
Case Title: M/s Feegrade And Co Pvt Ltd. Versus Customs Commissioners
Case No.: Customs Appeal No. 20970 of 2015
Date: 17.10.2025
Counsel For Appellant: S.C. Choudhury, Advocate
Counsel For Respondent: K. Sreenivasa Reddy, Authorised Representative
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