Whether Valuation of Seized Goods Without Independent Evidence Raises a Question of Law? Delhi High Court Says No

The Delhi High Court has dismissed an appeal challenging the valuation of smuggled foreign-origin cigarettes, holding that no substantial question of law arose for consideration under Section 130 of the Customs Act, 1962. The bench of Justice Nitin Wasudeo Sambre and Justice Ajay Digpaul upheld concurrent findings of the adjudicating authority, the Commissioner (Appeals), and the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), affirming the confiscation of 25,01,200 cigarette sticks and a penalty of Rs. 25 lakh imposed on the appellant. DRI Seizure and Investigation The case originated from a December 2018 operation conducted by the Directorate of Revenue Intelligence (DRI), Delhi Zonal Unit, following specific intelligence inputs regarding the storage and movement of smuggled foreign-origin cigarettes in Delhi. Officers intercepted a Swaraj Mazda vehicle and recovered 150 cartons of cigarettes from the vehicle and 33 cartons from a godown. In total, 183 cartons containing 25,01,200 cigarette sticks were seized. A Panchnama was drawn and statements of individuals present, including the appellant, were recorded under Section 108 of the Customs Act. A show cause notice issued in June 2019 invoked multiple statutory provisions, including Sections 2(33), 2(39), 110, 111(d), 112, and 123 of the Customs Act, along with relevant provisions under the Legal Metrology Act, 2009, and the Cigarettes and Other Tobacco Products Act, 2003. Confiscation and Penalty The Joint Commissioner of Customs (Preventive), Delhi, passed an Order-in-Original in November 2019 directing absolute confiscation of the seized cigarettes valued at ₹3.50 crore under Section 111(d) of the Customs Act. Imposition of a ₹25 lakh penalty on the appellant under Section 112(b)(i). Subsequent appeals before the Commissioner (Appeals) and CESTAT were dismissed, leading to the present appeal before the High Court. Core Legal Challenge: Valuation of Goods Before the High Court, the appellant primarily challenged the method of valuation adopted by the authorities, arguing that the valuation of cigarettes at ₹14 per stick was arbitrary and unsupported by documentary evidence. The method of valuation was not in accordance with the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. The penalty ceiling under Section 112(b)(i) was linked to the value of goods, and therefore an improper valuation vitiated the penalty. Cross-examination of witnesses was not permitted. The appellant contended that the absence of proper valuation constituted a substantial question of law warranting interference under Section 130 of the Act. Court’s Findings The High Court rejected these submissions and held the statements recorded under Section 108 of the Customs Act were never retracted. The Court observed that such statements carry evidentiary value and are binding unless withdrawn or proven involuntary. Since the goods were notified and seized, the burden shifted to the appellant under Section 123 of the Act to prove that the goods were not smuggled. The appellant failed to discharge this burden. The court noted that the show cause notice clearly specified the market value of ₹3.50 crore, derived from a market survey. The Court held that once the department disclosed the basis of valuation, the burden shifted to the appellant to demonstrate its incorrectness. The appellant merely denied the seizure and valuation without producing contrary evidence. Relying on settled Supreme Court precedents, the Court reiterated that the right to cross-examination is not absolute, especially when statements under Section 108 remain unretracted and no prejudice is demonstrated. The Court emphasized that an appeal under Section 130 of the Customs Act is maintainable only when a substantial question of law arises. In the present case, the findings on seizure, valuation, and penalty were concurrent findings of fact. No legal infirmity or misinterpretation of statutory provisions was shown. Concluding that the appellant had raised vague and non-specific pleas without substantiating any legal error, the High Court dismissed the appeal, holding that it did not involve any question of law. Case Details Case Title: Hira Singh Versus Commissioner Of Customs (Preventive) Case No.: CUSAA 7/2026 & CM APPL. 7007/2026 Date: 13/02/2026 Counsel For Petitioner: Rahul Raheja Counsel For Respondent: Senior Standing Counsel Gibran Naushad Click Here To Read Order

Whether Valuation of Seized Goods Without Independent Evidence Raises a Question of Law? Delhi High Court Says No

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