The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), New Delhi, has upheld the enhancement of the declared customs value of imported wallpaper from USD 2.20 per kg to USD 3.50 per kg, holding that higher values of contemporaneous imports available in the National Import Database (NIDB) provided sufficient grounds for Customs to doubt the declared transaction value.
The bench of Dr. Rachna Gupta (Officiating President) and Hemambika R. Priya (Technical Member) has referred to the Bombay High Court’s decision in J.K.C. General Trading Company v. Union of India & Ors. The High Court had observed that Customs authorities have a duty to pass a speaking order and that failure or delay in doing so cannot be used to frustrate an importer’s right to pursue an effective appeal or other legal remedies.
The dispute arose from two Bills of Entry under which the importer declared the value of wallpaper at USD 2.20 per kg. The Faceless Assessment Group (FAG) rejected the declared value and enhanced it to USD 3.50 per kg, relying upon NIDB data relating to imports through Nhava Sheva Port.
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The importer challenged the enhancement before the Commissioner (Appeals), arguing that the declared value was supported by the supplier’s proforma invoice and by earlier imports of similar goods that had been accepted by Customs at the same rate.
The Commissioner (Appeals), however, rejected the challenge concerning Bill of Entry No. 2231054 dated January 4, 2021, thereby sustaining the enhanced valuation.
Before CESTAT, the importer contended that Customs had wrongly increased the value from USD 2.20 to USD 3.50 per kg.
The importer relied on a proforma invoice dated December 7, 2020, issued by the overseas supplier, which showed the price at USD 2.20 per kg. It was argued that the Department had also accepted the same value in an earlier import transaction.
The importer further challenged the reliance on NIDB data from Nhava Sheva Port, arguing that Customs had not supplied the complete details of the comparable Bill of Entry used for enhancement.
The appellant also relied upon Rule 5(3) of the Customs Valuation Rules, 1988, contending that where multiple transaction values of identical goods were available, the lowest value should be adopted. According to the importer, Customs should therefore have considered an earlier import cleared at USD 2.20 per kg instead of adopting the higher figure of USD 3.50 per kg.
The Department maintained that the declared value was not acceptable because NIDB data showed higher transaction values for identical or comparable wallpaper imported around the same period.
According to the Department, the NIDB data demonstrated that similar goods had been assessed at USD 3.50 per kg, compared with the importer’s declared USD 2.20 per kg.
The Department therefore argued that there was sufficient justification for rejecting the declared transaction value and reassessing the goods under the Customs Valuation Rules, 2007.
The Tribunal identified the central question as whether Customs was justified in enhancing the declared value from USD 2.20 to USD 3.50 per kg.
CESTAT noted that Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007empowers Customs to reject a declared transaction value where there is reasonable doubt regarding its truth or accuracy.
In the present case, the Tribunal found that the availability of higher import values for identical goods in the NIDB was sufficient to create such a doubt.
The assessing authority was therefore justified in rejecting the declared value and proceeding to determine the value under Section 14 of the Customs Act, 1962.
A key factor in the Tribunal’s decision was the availability of contemporaneous import transactions involving similar wallpaper.
The assessing authority relied upon three Bills of Entry:
| Bill of Entry | Date | Declared Unit Price |
| 2203827 | January 2, 2021 | USD 3.725416/kg |
| 2322894 | January 12, 2021 | USD 6.328775/kg |
| 2466837 | January 22, 2021 | USD 3.50/kg |
The Tribunal noted that the relied-upon imports involved goods at the same commercial level, similar quantities and the same country of origin.
Importantly, CESTAT observed that among the contemporaneous imports considered by the assessing authority, USD 3.50 per kg was itself the lowest value. This weakened the importer’s argument that Customs had ignored the requirement to adopt the lowest available comparable value.
The importer had pointed to Bill of Entry where the goods had reportedly been assessed at USD 2.20 per kg.
CESTAT, however, found that this transaction preceded the contemporaneous imports relied upon by the assessing officer. The disputed Bill of Entry was filed on January 4, 2021, while the Department had considered a comparable import dated January 22, 2021.
The Tribunal therefore accepted the Department’s reliance on the contemporaneous import data and rejected the contention that the earlier USD 2.20 transaction necessarily had to be adopted.
The importer had argued that the Department had not established that the goods relied upon for comparison were truly identical.
CESTAT noted, however, that the importer’s own documentation described the goods simply as “Wall Paper.” The invoice and packing list contained details such as packages, rolls, quantity, gross weight and net weight, but did not specify important characteristics such as size or thickness.
The Tribunal observed that even the earlier Bill of Entry relied upon by the importer contained the same generic description. Consequently, the argument that the goods might not have been identical could not be accepted on the available documentation.
The Tribunal also considered the position relating to another Bill of Entry, No. 9999472 dated December 17, 2020.
In that matter, an earlier appellate order had remanded the case to the assessing officer with directions to issue a speaking order after granting an opportunity of personal hearing. Despite the remand, a speaking order had not been passed.
The Commissioner (Appeals) had observed that the importer could approach the concerned authorities for issuance of the speaking order.
CESTAT found no infirmity in this part of the Commissioner (Appeals)’s order.
CESTAT took note of this principle while considering the pending speaking-order issue in the present matter.
The Tribunal found no infirmity in the enhancement of the customs value and upheld the impugned order.
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