DRI Can’t Reassess Already Enhanced Values: CESTAT Quashes Rs. 21 Lakh Customs Demand on DTH Component Imports

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), New Delhi, has set aside a customs duty demand of Rs. 21.09 lakh raised against a Delhi-based firm for alleged undervaluation of DTH receiver components. The bench of Dr. Rachna Gupta (Judicial Member) and Mr. P.V. Subba Rao (Technical Member) held that the Directorate of Revenue Intelligence (DRI) cannot reopen or enhance the value of goods that had already been reassessed by the proper customs officer at the time of import. The appellant, M/s H.R. Electronics vs Commissioner of Customs (Import & General), New Delhi, where the company had challenged the Commissioner’s 2007 order confirming duty demand, interest, and equal penalty under Section 114A of the Customs Act, 1962. Between February 2003 and September 2004, H.R. Electronics imported 12 consignments of DTH receiver components of Chinese origin. The declared CIF value was HK$ 35 (US$ 4.5) in ten consignments and HK$ 25 (US$ 3.2) in two consignments. Acting on intelligence, the DRI alleged undervaluation and compared these prices with imports by other firms — MCBS, Ahmedabad; Electronic Enterprises, Delhi; and Catvision Products Ltd. — who had imported similar goods at US$ 10–12 apiece. On this basis, DRI issued a show cause notice (SCN) dated February 9, 2007, leading to a duty demand and penalty. The Commissioner of Customs (I&G), agreeing with DRI, confirmed the demand under Section 28(1) (extended period) along with interest under Section 28AB, and imposed an equal penalty under Section 114A. The appellant contended that the goods’ prices depend on make, brand, and specifications, and the transaction values declared were genuine. The Commissioner failed to allow cross-examination of other importers whose values were used as benchmarks. The declared values had already been enhanced by the assessing officer during clearance; a second enhancement by DRI was impermissible. Once the Bills of Entry were assessed, DRI could not reopen them under Section 28 without challenging the original assessment, citing Priya Blue Industries vs Commissioner of Customs (2004). Under the Customs Valuation Rules, the lowest contemporaneous value should be adopted, not the highest. The Department argued that the case involved gross undervaluation established through comparative data and statements of the importers. Statements under Section 108 were valid evidence, as Customs officers are not police officers. The company’s claim of “stock lot purchase” was false since it had regularly imported similar goods. The tribunal ruled in favor of the importer, holding that bills of Entry had already been reassessed by the proper officer at higher values based on contemporaneous imports.“It is not a case where new evidence was found. The DRI simply differed from the earlier assessment without reason,” the Tribunal observed. The CESTAT noted that no justification was given as to why the values determined earlier were incorrect or why DRI’s values were preferable. The extended period under Section 28(1) could not be invoked merely because other importers had paid higher prices.“There was no evidence of collusion, willful misstatement, or suppression of facts,” the bench held. The statements recorded under Section 108 were not properly admitted as evidence under Section 138B, and therefore could not support the demand. CESTAT concluded that the duty demand, interest, and penalty were unsustainable, “the demand of duty redetermining the assessable values in the Bills of Entry cannot be sustained in absence of any evidence or reason as to why the values determined by the proper officer were not correct.” Case Details Case Title: M/S H.R. Electronics Versus Commissioner Of Customs (Import & General)- New Delhi Case No.: Customs Appeal No. 148 Of 2008 Date: 11/11/2025 Counsel For Appellant: Prabhat Kumar Counsel For Respondent: Rakesh Kumar Click Here To Read Order Read More: Service Tax Not Payable On Offshore Seismic Surveys Conducted Beyond Indian Waters: CESTAT

DRI Can’t Reassess Already Enhanced Values: CESTAT Quashes Rs. 21 Lakh Customs Demand on DTH Component Imports

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