CESTAT Mumbai Bars Customs From Rejecting Declared Value, Upholds Relief For Adani Entities

On 5 June, the Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that customs authorities cannot reject the declared transaction value of imported goods when they rely on allegations of overvaluation arising from the same Directorate of Revenue Intelligence (DRI) investigation and evidence that earlier proceedings had already rejected and the Supreme Court had affirmed.

President Justice Dilip Gupta and Technical Member P. Anjani Kumar dismissed six appeals filed by the Customs Department and upheld the order that dropped proceedings against Adani Group entities. The Bench held:

“...these findings have been recorded by the Principal Commissioner on the basis of the findings recorded by the Tribunal in the earlier Customs Appeals filed by the department. The appeals filed by the department to assail the order passed by the Tribunal in these two appeals were dismissed by the Supreme Court. There is, in such circumstances, no error in the findings recorded by the Principal Commissioner.”

The dispute arose from a common DRI investigation into imports made by Adani Group entities through Electrogen Infra FZE (EIF). The imports included solar modules, solar inverters, cranes, tugs, and other equipment procured for power, renewable energy, and port infrastructure projects through international competitive bidding.

The Department alleged overvaluation of imports and sought rejection of the declared transaction value, confiscation of goods, and imposition of penalties under Sections 112(a) and 114AA of the Customs Act. The adjudicating authority held that although the importers and EIF were related parties, no evidence showed that their relationship influenced the pricing of goods.

The Tribunal upheld this finding and noted that the present show-cause notice stemmed from the same DRI investigation and relied on the same documents as two earlier show-cause notices issued in 2014. It also noted that the earlier proceedings had already been dropped and that CESTAT and the Supreme Court had affirmed those orders.

The Bench held that the Department could not reopen issues or reach a different conclusion once earlier proceedings based on the same investigation and evidence had attained finality. It held that the declared transaction value could not be rejected. It also ruled that the goods could not be confiscated under Section 111(m) of the Customs Act and that the proposed penalties could not survive.

Accordingly, the CESTAT dismissed all six appeals filed by the Customs Department and upheld the order dropping proceedings against the Adani Group entities.

For Appellant: Shri Shambhoo Nath, Special Counsel

For Respondent: Shri V.S. Nankani, Senior Advocate, Shri J.H. Motwani, Shri Sachin Mishra and Shri Archi Aditya, Advocates