The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Allahabad, has held that an importer’s written acceptance of an enhanced assessable value does not extinguish the statutory right to challenge the reassessment.
A Bench comprising P. K. Choudhary, Member (Judicial), and K. Anpazhakan, Member (Technical) has observed that Customs cannot reject the declared transaction value merely on the basis of import database entries without independent evidence and a proper comparison of the goods.
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The dispute concerned 29 consignments of fabrics imported from China. The importer maintained that it had correctly self-assessed Customs duty on the basis of the respective commercial invoices. However, the consignments were not granted out-of-charge clearance.
According to the importer, it repeatedly requested provisional clearance and offered to pay duty on the enhanced value under protest to avoid delays. It alleged that these requests were not acted upon and that it was consequently compelled to submit consent letters accepting the valuation proposed by Customs.
The importer argued that the authorities discarded the declared transaction values without following the requirements of Section 14 of the Customs Act, 1962, and the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.
The Commissioner (Appeals), through an order dated April 25, 2019, granted relief against the reassessments. The Customs Department challenged that decision before the Tribunal.
The Department argued that the importer’s written acceptance of reassessment attracted Section 17(5) of the Customs Act, under which a speaking order is not required where the importer confirms acceptance in writing.
It further contended that Rule 12(2) required communication of the grounds for doubting the declared value at the importer’s request, and that the Commissioner (Appeals) had failed to adequately consider whether such requests or protests had been made.
Customs also maintained that speaking orders had been issued for certain bills of entry after show cause notices and compliance with natural justice. According to the Department, contemporaneous imports of similar or identical fabrics at significantly higher values supplied a valid basis for doubting the declared prices.
The Department additionally questioned the maintainability of separate appeals against individual bills of entry where those assessments were also covered by a speaking order.
The Tribunal found that they did not contain the particulars necessary to substantiate the proposed enhancement.
A general statement that the declared value was liable to rejection and reassessment at a specified price did not satisfy the valuation rules. Even when applying Rule 5, the Tribunal observed, Customs had to examine relevant factors such as the quantity involved in comparable commercial transactions, fabric GSM, quality and the timing of the import order.
The Bench noted that although the letters stated that contemporaneous import details had been shown to the importer, the particulars of those alleged comparable transactions were not recorded.
It also accepted that the consent letters were not voluntary, noting the importer’s repeated requests for speaking orders.
The Tribunal relied on the Delhi High Court’s judgment in Niraj Silk Mills v. Commissioner of Customs (ICD), Patparganj, decided on November 27, 2024. The judgment distinguished between accepting reassessment for the purposes of dispensing with a speaking order under Section 17(5) and abandoning the statutory right to challenge the reassessment itself.
Applying that reasoning, the Tribunal held that an importer’s concession could not be treated as depriving it of the right to question either the officer’s grounds for rejecting the declared value or the merits of the revised valuation.
The legal issue was therefore whether written acceptance of a higher value prevented a subsequent challenge. Following the Delhi High Court, the Tribunal concluded that it did not.
The Bench also followed the Delhi High Court’s reasoning on reliance upon National Import Database (NIDB) data.
As reproduced in the Tribunal’s order, the High Court had held that valuation additions based solely on NIDB data required independent and cogent supporting evidence. Reliance on external data without corroboration or a clear justification did not meet the standards prescribed by the valuation rules.
The Tribunal further referred to the Supreme Court’s decision in Century Metal Recycling Pvt. Ltd. v. Union of India, emphasising the requirement to form and record reasonable doubts about the truth or accuracy of the declared value and comply with the prescribed procedure before resorting to alternative valuation methods.
CESTAT upheld the Commissioner (Appeals)’ order and rejected all the Department’s appeals.
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