The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Allahabad Bench, has held that an importer’s written acceptance of enhanced customs valuation does not extinguish the statutory right to challenge the reassessment.
Setting aside a series of appellate orders, the bench of P.K. Choudhary (Judicial Member) and K. Anpazhakan (Technical Member) ruled that customs authorities cannot rely solely on consent letters to justify value enhancement without complying with the requirements of the Customs Valuation Rules and the Customs Act.
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The appeals arose from imports of Polyester Knitted Fabrics from China made by the appellant/assessee through ICD Dadri during the period from May to July 2019. The importer had declared the transaction value at USD 0.95 per kilogram based on supplier invoices and filed multiple Bills of Entry. Customs authorities, however, enhanced the declared value during assessment.
According to the importer, the goods were found to conform to the declarations made in the Bills of Entry and there were no allegations regarding misdescription, quantity discrepancies, or the nature of the imported goods.
The importer contended that although it repeatedly sought provisional clearance and offered to pay duty on the enhanced value under protest to avoid demurrage and delays, customs officials did not act on those requests. Instead, the importer claimed it was compelled to furnish letters accepting the enhanced valuation in order to secure clearance of the consignments.
The Commissioner (Appeals) dismissed the importer’s appeals on the ground that the importer had accepted the enhanced value in writing. Since the reassessment had allegedly been accepted, the appellate authority held that there was no requirement for issuance of a speaking order under Section 17(5) of the Customs Act, 1962, and that the reassessed value became binding on the importer.
The Department argued before the Tribunal that the importer had expressly acknowledged the grounds for rejecting the declared value, understood the contemporaneous import data relied upon by customs, agreed to the enhancement, and waived the right to receive a show cause notice or speaking order.
The importer countered that the consent letters were not voluntary and that customs authorities had failed to follow the valuation mechanism prescribed under Section 14 of the Customs Act and the Customs Valuation Rules, 2007. It was argued that the letters merely referred to contemporaneous import data without disclosing the details necessary for a proper comparison, such as quantity, quality, GSM specifications, commercial level, and timing of imports.
The importer further relied on the Delhi High Court’s decision in Niraj Silk Mills v. Commissioner of Customs, contending that a waiver of a speaking order cannot be interpreted as a waiver of the statutory right to challenge reassessment.
The Tribunal observed that the appellate authority had considered only the acceptance letters while ignoring the importer’s repeated communications seeking clearance on payment of duty under protest. Those communications, according to the Tribunal, demonstrated that the importer had not accepted the enhancement unconditionally.
The Bench noted that customs authorities were required to communicate in writing the grounds for doubting the truth or accuracy of the declared value as mandated under Rule 12(2) of the Customs Valuation Rules, 2007. Referring to the Supreme Court’s ruling in Century Metal Recycling Pvt. Ltd., the Tribunal emphasized that this requirement is mandatory and cannot be bypassed.
The Tribunal found that although the acceptance letters referred to contemporaneous import data, no actual details of such comparable imports were disclosed to the importer.
A key issue before the Tribunal was whether acceptance of reassessment in writing prevented the importer from challenging the enhanced valuation through appellate proceedings.
Relying extensively on the Delhi High Court’s judgment in Niraj Silk Mills, the Tribunal held that a written acceptance under Section 17(5) merely relieves customs authorities from the obligation of issuing a speaking order. It does not amount to a surrender of the importer’s statutory right to question the reassessment itself.
The Tribunal observed that the Commissioner (Appeals) had incorrectly treated the waiver of a speaking order as a waiver of the right to appeal. It clarified that these are distinct legal concepts and that the right of appeal under Section 128 of the Customs Act remains intact.
Further, the Tribunal reiterated the settled principle that there can be no estoppel against a statute and that consent or acquiescence cannot defeat rights granted by law.
The Department relied upon an earlier Allahabad High Court judgment involving S. S. Overseas, which held that no speaking order was required once enhancement had been accepted in writing. The Tribunal, however, distinguished that decision, observing that it dealt only with the limited question of whether a writ of mandamus could be issued for passing a speaking order. It did not decide whether an importer could challenge the reassessment itself through the statutory appellate mechanism.
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