The Hyderabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside the enhancement of declared export value of iron ore fines, holding that the rejection of transaction value without following due process and without disclosing relied-upon materials violates principles of natural justice.
The bench of Angad Prasad (Judicial Member) and A.K. Jyotishi (Technical Member) has observed that even the Commissioner (Appeals) had recorded a clear finding that the adjudicating authority failed to follow the mandatory procedure under Rule 8. This included: issuing a proper query memo seeking additional information, providing reasons for doubting the declared value in writing, granting an opportunity of personal hearing before rejecting the value, and supplying the relied-upon documents to the exporter.
The case involved an appeal filed by M/s Orissa Stevedores Ltd. against an order of the Commissioner (Appeals), which had upheld the adjudicating authority’s decision to enhance the declared export price from USD 130 PMT FOB to USD 161 PMT FOB based on external data and alleged contemporaneous exports.
The appellant had exported iron ore fines under a shipping bill dated 13.05.2011, declaring the transaction value based on a contractual agreement with a foreign buyer. The export was provisionally allowed and later finalized by the department.
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However, during final assessment, the adjudicating authority rejected the declared value and enhanced it relying on data from MetalBulletin and certain contemporaneous export transactions. The authority also ordered refund of a revenue deposit made by the appellant.
A key issue before the Tribunal was whether the rejection of transaction value complied with Rule 8 of the Customs Valuation (Determination of Value of Export Goods) Rules, 2007.
Despite acknowledging these lapses, the Commissioner (Appeals) still dismissed the appeal, which the Tribunal found contradictory and legally unsustainable.
The Tribunal emphasized that the department had relied on external data such as MetalBulletin pricing and alleged contemporaneous exports, but failed to furnish these materials to the appellant.
Relying on settled Supreme Court jurisprudence, the Tribunal held that valuation cannot be enhanced based on undisclosed material. The denial of access to such documents deprived the appellant of a fair opportunity to rebut the evidence, thereby vitiating the proceedings.
Reaffirming the statutory position under Section 14 of the Customs Act, 1962, the Tribunal held that transaction value — i.e., the price actually paid or payable — must be accepted unless valid and cogent reasons exist for rejection.
The Tribunal observed that the declared value was based on a valid contract. Bank Realisation Certificate (BRC) supported the actual receipt of consideration. No evidence was brought on record to show any extra consideration flowing from the buyer
Further, the department failed to establish comparability in terms of quality, quantity, and commercial level while relying on contemporaneous exports, which is a mandatory requirement under valuation principles.
The Tribunal categorically held that once violation of principles of natural justice is established, the order cannot be sustained on merits. The failure to disclose relied documents and to follow due procedure under Rule 8 rendered the valuation enhancement legally untenable.
The Tribunal set aside the impugned order and remanded the matter back to the adjudicating authority for fresh consideration in accordance with law and after complying with procedural safeguards.
The appeal was thus allowed by way of remand.
Case Details
Case Title: M/s Orissa Stevedores Ltd. Versus Commissioner of Customs
Citation: JURISHOUR-921-CES-2026(HYD)Â
Case No.: Customs Appeal No. 23619 of 2014
Date: 23.04.2026
Counsel For Appellant: Hari Radha Krishnan, Advocate
Counsel For Respondent: M Anukathir Surya, Authorized Representative
