Valuation Enhancement Solely on Chartered Engineer’s Certificate Unsustainable: CESTAT

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai Bench, has held that re-determination of value based solely on a Chartered Engineer’s certificate, without following the sequential mandate of the Customs Valuation Rules, is legally untenable. The bench of Dr. Suvendu Kumar Pati, (Judicial Member) and M.M. Parthiban (Technical Member) has observed that the Chartered Engineer confirmed that the goods were in conformity with the importer’s declaration. The importer had proactively sought a first check examination. Goods consisted of mixed used/unused parts, consistent with the declared description. The allegation of intentional mis-declaration under Section 111(m) was held to be unsustainable. Chandan Steel Limited had imported 24.105 MTs of “used/unused articles of base metal and flange protection caps (articles of plastics)” from Germany and filed Bill of Entry dated 23.09.2013. The goods were declared under Customs Tariff Items 8487 9000 and 3926 9099 with an assessable value of Euro 10,387.50 (FOB). Significantly, the importer had requested a first check examination, given that the consignment contained a mix of used and unused goods. Upon examination, customs officers reported that the goods consisted of old and used second-hand nuts, bolts, pipe fittings, V-joints, cables, grinding wheels, plastic pipes, etc. A Chartered Engineer was appointed, who inspected the goods and estimated their value at Euro 16,500 (FOB), higher than the declared value. The adjudicating authority rejected the declared transaction value. Re-determined the assessable value based on the Chartered Engineer’s certificate and alleged contemporaneous imports. Demanded differential duty of ₹1,42,817 with interest. Ordered confiscation under Section 111(m) of the Customs Act, 1962. Imposed redemption fine of ₹60,000. Imposed penalty of ₹30,000 under Section 112(a). The Commissioner (Appeals) upheld the order, holding that there was mis-declaration and undervaluation. The appellant argued that they themselves sought first check examination, which negates any allegation of deliberate mis-declaration. The Chartered Engineer’s certificate specifically recorded that the goods were in conformity with the importer’s declaration. No contemporaneous import data was disclosed to justify rejection of transaction value. The valuation rules under the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 were not followed sequentially. The appellant relied on precedent decisions including RKG International Pvt. Ltd. and others. The issue raised was whether enhancement of value based solely on the Chartered Engineer’s certificate and alleged contemporaneous imports, without following Section 14 of the Customs Act and the Valuation Rules, is sustainable. The Tribunal observed that there was no material on record showing data of contemporaneous imports. The authorities did not properly reject the transaction value under Rule 12 of the Valuation Rules. The re-determination was done solely on the basis of the Chartered Engineer’s certificate. The Tribunal elaborated that valuation of second-hand goods requires adherence to the sequential application of Rules 3 to 9 of the Customs Valuation Rules, and residual methods must be applied only where justified. The Tribunal referred to the decision in RKG International Pvt. Ltd., where enhancement of value without contemporaneous import evidence was held to be arbitrary. The Tribunal held that the enhancement of assessable value was not in accordance with Section 14 of the Customs Act, 1962 and the Customs Valuation Rules, 2007. Confiscation, redemption fine, and penalty were not legally sustainable. The impugned Order-in-Appeal dated 10.04.2014 was liable to be set aside. Case Details Case Title: Chandan Steel Limited Versus Commissioner of Customs (Import), Nhava Sheva Citation: JURISHOUR-177-CESTAT-2026(Mum) Case No.: Customs Appeal No. 86517 of 2014 Date: 27.02.2026 Counsel For Petitioner: Vikas Doiphode, Advocate Counsel For Respondent: Deepak Sharma, Authorized Representative Click Here To Read Order Read More: JURISHOUR | TAX LAW DAILY BULLETIN : MARCH 2, 2026

Valuation Enhancement Solely on Chartered Engineer’s Certificate Unsustainable: CESTAT

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