The Allahabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside customs duty enhancement, confiscation and penalties imposed on imports of computer cabinet cases, holding that a cabinet containing only motherboard and fan without CPU cannot be treated as an incomplete or unfinished computer system.
The bench of P.K. Choudhary (Judicial Member) and Rajeev Tandon (Technical Member) observed that the customs department failed to produce any technical evidence or contemporaneous import data to justify enhancement of valuation from USD 4–7 per unit to USD 25 per unit. It further held that the Chartered Engineer’s report relied upon by the department was casual in nature and unsupported by evidence.
The dispute arose after M/s Daya Exports imported consignments declared as “Barebone System without Hard Disk & RAM for Data Processing Machines” through three Bills of Entry filed in November and December 2024.
During examination conducted by customs officers, the department found that the consignments contained motherboards, power supplies, cooling fans, heat sinks, wiring and cabinet cases of brands such as HP, Dell and Lenovo. The goods allegedly bore marks of prior usage including scratches, stickers and signs of wear and tear, leading the department to suspect that they were old and used computer systems.
The department relied upon reports of Chartered Engineers who opined that the goods were old and used and estimated their market value at USD 25 per unit for two consignments and USD 12 per unit for another consignment.
Based on these reports, the adjudicating authority rejected the declared transaction value under Rule 12 of the Customs Valuation Rules, re-determined the assessable value under Rule 9, confiscated the goods under Sections 111(d), 111(m) and 111(o) of the Customs Act, and imposed redemption fines and penalties under Sections 112 and 114AA of the Customs Act.
The Commissioner (Appeals) upheld the orders, observing that Chartered Engineer reports are important evidence for determining the condition, residual life and depreciated value of imported goods and can be relied upon for re-determination of assessable value.
Before the Tribunal, the importer argued that merely waiving issuance of a show cause notice to avoid detention and demurrage charges did not amount to acceptance of the department’s allegations. It was also contended that there was no evidence of undervaluation or any payment made over and above the invoice value to the foreign supplier.
The Tribunal found that the Revenue had failed to establish any basis for rejecting the declared transaction value. The Bench noted that the Chartered Engineer had indicated the value “in a casual manner without any supporting evidence.”
The Tribunal further observed that no evidence was produced to show that similar or identical goods were imported at prices comparable to the enhanced valuation adopted by customs authorities. It also noted that the department never alleged that the importer paid any extra amount beyond the invoice price.
The Bench held that the authorities failed to provide reasons for treating the imported goods as incomplete computer systems. The Tribunal observed that the Chartered Engineer had interchangeably used the expressions “computer cabinet cases” and “bare bone systems” without proper technical basis.
The Tribunal held that a cabinet fitted only with motherboard and fan cannot attain the essential character of a computer system in the absence of a Central Processing Unit (CPU). It ruled that such goods cannot be treated as unfinished or incomplete computer systems merely because they contain certain components.
The CESTAT therefore concluded that the importer’s declaration could not be brushed aside in absence of technical evidence and set aside the impugned orders passed by the adjudicating authority as well as the Commissioner (Appeals). The appeals were accordingly allowed with consequential relief.
Case Details
Case Title: M/s Daya Exports Versus Commissioner, CGST & Customs, Noida
Citation: JURISHOUR-1116-CES-2026(ALL)
Case No.: Customs Appeal No.70068 of 2026
Date: 05.05.2026
Counsel For Appellant: Stuti Saggi, Advocate
Counsel For Respondent: Chitra Srivastava, Authorized Representative
