Customs Can’t Reduce Declared Import Value to Levy ADD: CESTAT Quashes Anti-Dumping Duty Demand

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has quashed a massive anti-dumping duty (ADD) demand exceeding ₹6.5 crore on melamine imports, ruling that Customs authorities cannot reject a higher declared transaction value merely to artificially trigger anti-dumping duty liability. The bench of Dr. Suvendu Kumar Pati (Judicial Member) and M.M. Parthiban (Technical Member) has set aside penalties and redemption fines imposed on company directors and alleged intermediaries, holding the entire case to be legally unsustainable. The dispute arose from imports of melamine by Surbhit Impex Pvt. Ltd. (SIPL) and B.M. Jain & Sons Pvt. Ltd. (BMJSPL), which later merged with SIPL. Between 2013 and 2014, the companies imported 38 consignments, many on a high-sea sale basis. Acting on intelligence from the Directorate of Revenue Intelligence (DRI), Customs authorities alleged that the importers had artificially inflated CIF values to keep the landed price marginally below the reference price notified under Notification No. 10/2010-Cus., thereby neutralising anti-dumping duty. Relying on international price data published by ICIS, the department reduced the declared assessable value of the goods and demanded ADD on the differential amount. The adjudicating authority confirmed ADD of over ₹6.5 crore, imposed equivalent penalties under Section 114A, levied redemption fines despite goods not being available for confiscation, and imposed heavy penalties on directors and alleged collaborators. The appellants argued that the transaction value declared was higher, not lower, than comparable international prices. Rule 12 of the Customs Valuation Rules permits rejection of value only when the declared value is suspect due to undervaluation, not when it is higher than market prices. High-sea sales are a legally recognised mode of transaction, and no evidence existed of any “kickback” or remittance of differential amounts. Statements recorded under Section 108 of the Customs Act were coerced and promptly retracted. Electronic evidence relied upon by the department was seized and analysed without complying with Sections 138B and 138C of the Customs Act. The appellants also contended that ICIS price bulletins cannot substitute actual transaction values, particularly when ADD proceedings must adhere to strict statutory and WTO-aligned valuation principles. Allowing all appeals, the CESTAT delivered a detailed and scathing analysis of the department’s approach. The Tribunal held that Rule 12 does not empower Customs to reduce a declared value that is otherwise acceptable, merely to impose anti-dumping duty. The provision allows rejection of transaction value only when there is reason to believe it does not represent the true price—typically in cases of undervaluation. In the present case, the department’s allegation was paradoxical: that the value was too high. The Bench categorically observed that Customs valuation cannot be reversed to create ADD liability, noting that “Such redetermination of lesser value against a higher transaction value is impermissible under the Customs Valuation Rules.” On the department’s reliance on electronic records, emails, and computer printouts allegedly showing lower negotiated prices, the Tribunal found serious procedural lapses. It noted that the source, authorship, and integrity of the digital data were never established. Allegedly “coded” documents were not deciphered by their creators. Statements relied upon were retracted at the earliest opportunity, nullifying their evidentiary value in quasi-judicial proceedings. The Tribunal declined to apply the Supreme Court’s ruling in ADG, DRI v. Suresh Kumar & Co., holding that the factual foundation necessary to rely on electronic evidence was absent in this case. The CESTAT reiterated that anti-dumping duty is not a revenue-generating tool, but a trade-remedial measure intended to protect domestic industry from injury caused by dumped imports. Referring to Article VII of GATT and India’s ADD framework under the Customs Tariff Act, the Tribunal held that ADD cannot be imposed based on journal price ranges or arbitrary benchmarks when the actual transaction value is known and accepted. The Tribunal further noted that all Bills of Entry were assessed on a first-check basis. Queries raised by Customs were answered satisfactorily. Duties were accepted by the department at the declared value. Accordingly, invocation of the extended period of limitation was held to be unjustified. Setting aside the entire order-in-original, the Tribunal allowed all appeals and granted consequential relief, bringing to an end the prolonged litigation involving massive duty demands and penalties. Case Details Case Title: M/s. Surbhit Impex Pvt. Ltd. Versus Commissioner of Customs Case No.: Customs Appeal No. 86623 of 2024 Date: 06/02/2026 Counsel For Appellant: Ashwini Kumar, Advocate Counsel For Respondent: Mahesh Yashwant Patil, Additional Commissioner Click Here To Read Order Read More: Service Tax Not Leviable on Advocate’s Legal Services to Law Firm: Bombay HC

Customs Can’t Reduce Declared Import Value to Levy ADD: CESTAT Quashes Anti-Dumping Duty Demand

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