CESTAT Mumbai Allows Flipkart Appeal, Rules Re-Determination Of Import Value Unsustainable Without Evidence

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) on 9 March, held that re-determination of value of imported goods without proper evidence of undervaluation is unsustainable in law.

A Bench comprising Judicial Member Justice S.K. Mohanty and Technical Member M.M. Parthiban allowed an appeal by Flipkart India Pvt. Ltd., which challenged the enhancement of value, confiscation of goods, and imposition of penalty by the customs authorities. The Bench stated:

“…the whole process of arriving at the re-determined value… is contrary to the law and factually incorrect.”

The dispute arose from the import of 28,600 units of “Power Bank 5200mAH” from Xiaomi Singapore, where Flipkart had declared the value at USD 3.64 per unit.

The Department rejected the declared value and enhanced it to Rs. 454.50 per unit based on contemporaneous data of “similar goods”, alleging mis-declaration and undervaluation. Consequently, confiscation and penalties were also imposed.

Flipkart contended that the declared transaction value was genuine and part of a larger supply agreement involving bulk imports of 2,00,000 units at the same price, many of which had already been accepted by customs without dispute. It also argued that authorities failed to consider identical goods and wrongly relied on a single transaction of another importer at a different commercial level.

The Tribunal noted that the customs authorities had not followed the mandatory sequential rules under the Customs Valuation Rules and had relied on a solitary import transaction without proper comparability. It further observed that there was no evidence of mis-declaration or additional consideration to justify rejection of the declared value.

Importantly, the Tribunal held that valuation must be based on transaction value unless cogent evidence exists to reject it, and comparison must be made with imports at the same commercial level and quantity.

On confiscation and penalty, the Tribunal found no basis, noting that even at the time of examination, no mis-declaration was reported and statutory requirements were complied with.

Accordingly, the Tribunal set aside the impugned order and allowed the appeal in favour of Flipkart.

Appearance for the Appellant: Shri Kishore Kunal, Advocate

Appearance for the Respondent: Shri Deepak Sharma, Authorized Representative