CESTAT Allahabad Sets Aside Value Enhancement, Finds Import Data Missing From Acceptance Letters

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Allahabad has recently refused to treat an importer's written acceptance of enhanced customs values as conclusive after finding that the letters did not contain the contemporaneous import data cited as the basis for the enhancement.

“Given the language as noted in some of the letters as written by the appellant and placed above, there is a wide gap which has not been bridged by the Revenue, in the matter. The contents of this communication cannot therefore be taken on its face value,” the tribunal observed.

A Bench comprising Judicial Member P.K. Choudhary and Technical Member K. Anpazhakan allowed eight appeals filed by Seafox Impex against reassessment of imported polyester knitted fabrics. The appeals arose from a common order passed by the Commissioner (Appeals), CGST, Noida.

Seafox Impex imported mixed lots of 100% polyester knitted fabrics from China between July and November 2020. It filed eight Bills of Entry, declaring values of USD 1.11 to USD 1.30 per kg, which Customs later enhanced to between USD 1.626 and USD 1.971990 per kg based on contemporaneous import data.

The importer claimed it sought clearance on the enhanced values under protest. It alleged that it was later coerced into submitting letters accepting the enhanced assessment to avoid delays in clearance.

It challenged the reassessments before the Commissioner (Appeals), but the appeals were rejected because the enhanced values had been accepted in writing.

The tribunal found that the acceptance letters referred to contemporaneous imports but did not contain details of those transactions. It also found that the Commissioner (Appeals) had not properly examined whether the declared value was rejected in accordance with Section 14 and Rule 12 of the Customs Valuation Rules, 2007.

Under Rule 12, Customs must communicate the grounds for doubting the declared value before rejecting it. The tribunal, relying on Century Metal Recycling, noted that this requirement cannot be ignored or waived.

It also relied on the Delhi High Court's Niraj Silk Mills ruling and held that the appeals were covered by that decision. The tribunal set aside the Orders-in-Appeal and allowed all eight appeals

For Appellant: Sagar Rohatgi, Advocate

For Respondent: J.S. Upadhyay, Authorised Representative and Chitra Srivastava, Authorised Representative