Customs Dept. Loses Rs. 5,000-Crore Adani Valuation Dispute as CESTAT Says Issue Already Settled

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has dismissed six appeals filed by the Customs Department against various Adani Group companies, bringing another chapter of a decade-long customs valuation dispute to a close. The allegations of overvaluation of imported equipment could not survive because identical allegations arising from the same investigation had already been rejected by adjudicating authorities, upheld by CESTAT, and ultimately affirmed by the Supreme Court. The bench of Justice Dilip Gupta, (President) and P. Anjani Kumar (Technical Member) has observed that the Principal Commissioner had committed no error in dropping the proceedings. The case arose from the same investigation and relied upon the same evidence that had already been examined and rejected in earlier proceedings, which were subsequently affirmed by the Supreme Court. Accordingly, the declared transaction values were accepted, confiscation was ruled out, and all consequential penalties failed. The case originated from an investigation conducted by the Directorate of Revenue Intelligence (DRI), which alleged that several Adani Group entities had imported equipment through UAE-based supplier Electrogen Infra FZE (EIF) at inflated prices. The Customs Department claimed that the imports were overvalued and sought rejection of the declared transaction value of imported goods; redetermination of customs value; confiscation of imported goods; and imposition of penalties on the importing companies and associated individuals. The six companies involved in the present appeals were: Adani Enterprises Limited (AEL); Adani Renewable Energy LLP (AREL); Adani Hazira Port Private Limited (AHPPL); Adani Ports and Special Economic Zone Limited (APSEZL); Adani International Container Terminal Pvt. Ltd. (AICTPL); and Adani Vizag Coal Terminal Pvt. Ltd. (AVCTPL) The Tribunal noted that the DRI investigation had earlier resulted in two separate show cause notices issued in 2014 against other Adani entities, including Adani Power Maharashtra Ltd. and Maharashtra Eastern Grid Power Transmission Company Ltd. Those notices were adjudicated by the Additional Director General (DRI), who dropped the proceedings in 2017. Customs challenged those decisions before CESTAT but lost. Thereafter, the Department approached the Supreme Court, which dismissed the appeals on 27 March 2023, holding that the matter stood concluded by findings of fact recorded by the authorities below. Even review petitions were subsequently dismissed. The Tribunal found that the present show cause notice dated 31 August 2016 arose from the very same DRI investigation and relied upon the same set of documents and evidence as the earlier cases. The Principal Commissioner had already recorded that the investigation was common; the evidence relied upon was identical; the methodology adopted by DRI was the same in all three show cause notices. Since the earlier proceedings had attained finality after approval by the Supreme Court, the Tribunal held that the present appeals had to meet the same fate. The Adani companies argued that the imports were made after transparent international competitive bidding processes. The records showed that solar power equipment, cranes, port machinery and other infrastructure assets were procured through global tenders; Multiple international bidders participated; Electrogen Infra FZE emerged as the lowest bidder in several projects; The contracts were comprehensive Engineering, Procurement and Construction (EPC) contracts containing warranties, performance guarantees, training obligations, commissioning responsibilities and long-term service commitments. The adjudicating authority concluded that although certain entities were related parties, the relationship had not influenced pricing because the contracts had been awarded through competitive bidding and the decision-making process was transparent and independent. One of the central issues was whether Customs could reject the declared transaction value under the Customs Valuation Rules. The Principal Commissioner had concluded that the contracts between EIF and the Adani entities were materially different from contracts between manufacturers and suppliers; The OEM prices could not automatically become the assessable value; The declared transaction value had to be accepted under Rule 3 of the Customs Valuation Rules read with Section 14 of the Customs Act. CESTAT agreed with this reasoning and found no justification to interfere. Another important aspect of the ruling concerns the evidentiary value of documents relied upon by DRI. The adjudicating authority observed that many documents obtained from overseas banks were computer printouts that did not contain the certification required under Section 138C(4) of the Customs Act. Since identical evidence had already been rejected in earlier proceedings that attained finality, the Principal Commissioner held that the Department's case could not succeed on the basis of those documents. CESTAT endorsed that conclusion. Having held that the declared value was correctly stated and that no overvaluation was established, the Tribunal also upheld the finding that the imported goods were not liable for confiscation under Section 111(m) of the Customs Act. Penalties under Section 112(a) could not be imposed. Penalties under Section 114AA were also unsustainable because there was no false declaration or misrepresentation. Case Details Case Title: The Commissioner of Customs (Import-I) Versus M/s. Adani Enterprises Limited Citation: JURISHOUR-1572-CES-2026(MUM) Case No.: CUSTOMS APPEAL NO. 86116 OF 2024 Date: 05.06.2026 Counsel For Appellant: Shambhoo Nath, Special Counsel Counsel For Respondent: V.S. Nankani, Senior Advocate Click Here To Read Order Read More: Promise-to-Marry Allegations Settled in Lok Adalat Cannot Automatically Disqualify Police Recruit: Supreme Court

Customs Dept. Loses Rs. 5,000-Crore Adani Valuation Dispute as CESTAT Says Issue Already Settled

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