Acceptance of reassessed customs value waives only the speaking order, not the statutory right to appeal.

The appellant imported 26 consignments of polyester knitted fabrics from China and declared the transaction value at USD 1.35 per kg in the Bills of Entry. Upon examination, the goods were found to conform to the declared description, quantity and nature.

The Customs authorities did not grant clearance at the declared value and enhanced the assessable value, allegedly on the basis of contemporaneous import data. The appellant sought provisional or final clearance upon payment of duty on the enhanced value under protest, but alleged that it was compelled to submit letters accepting the enhanced value and waiving a show-cause notice and speaking order.

The Commissioner (Appeals) rejected the appellant’s appeals on the ground that the enhanced valuation had been accepted in writing and, consequently, no speaking order was required under Section 17(5) of the Customs Act, 1962.

The appellant challenged those orders before the Tribunal, contending that the declared transaction value had been rejected without complying with Section 14 of the Customs Act and Rule 12 of the Customs Valuation Rules, 2007, and that the acceptance letters did not bar a statutory appeal.

1. Whether the appellant’s written acceptance of the enhanced assessable value waived or extinguished its statutory right to challenge the reassessment under Section 128 of the Customs Act, 1962?

2. Whether the Customs authorities could reject the declared transaction value and enhance it without communicating the grounds for doubting its truth or accuracy and without following the sequential valuation mechanism under Rule 12 and Rules 4–9 of the Customs Valuation Rules, 2007?

3. Whether the Commissioner (Appeals) was justified in rejecting the appeals solely because the appellant had accepted the enhanced value in writing and had waived a speaking order under Section 17(5)?

Section 14 of the Customs Act, 1962 requires imported goods ordinarily to be valued on the basis of their transaction value, subject to the statutory valuation rules.

Under Section 17(4) and (5), reassessment may be undertaken by the proper officer, and a speaking order is required where the importer does not accept the reassessment; however, acceptance of reassessment can waive only the procedural requirement of a speaking order and does not necessarily waive the substantive statutory right of appeal under Section 128.

Rule 12(2) of the Customs Valuation Rules, 2007 makes it mandatory for the proper officer, upon request, to communicate in writing the grounds for doubting the truth or accuracy of the declared value; after rejecting the transaction value, valuation must proceed sequentially under Rules 4 to 9.

In Century Metal Recycling Pvt. Ltd. v. Union of India, 2019 (367) E.L.T. 3 (S.C.), the Supreme Court held that the Rule 12(2) mandate cannot be ignored or waived.

In Niraj Silk Mills v. Commissioner of Customs (ICD), Patparganj, CUSAA Nos. 26 and 27 of 2022, decided on 27 November 2024, the Delhi High Court held that acceptance of reassessment does not deprive an importer of the right to challenge the proper officer’s decision in statutory proceedings.

The Tribunal distinguished S.S. Overseas v. Union of India, Writ Tax No. 881 of 2022, as a decision concerning issuance of a writ for a speaking order, not the maintainability of an independent statutory appeal.

The Tribunal found that the Commissioner (Appeals) had treated the acceptance letters as conclusive without considering the appellant’s prior written requests for provisional or final clearance under protest.

The letters merely stated that the appellant had been informed of contemporaneous import data and agreed to the enhanced value; they did not disclose the actual comparable imports or material particulars such as quantity, quality, GSM, commercial level or contemporaneity.

Consequently, the Tribunal held that the letters could not establish a voluntary and unconditional abandonment of the appellant’s right to contest valuation.

Applying Century Metal Recycling, it held that the Customs authorities were required to communicate the grounds for doubting the declared value and to undertake valuation in accordance with the statutory sequence under the Customs Valuation Rules.

Applying Niraj Silk Mills, the Tribunal further held that waiver of a speaking order under Section 17(5) is distinct from waiver of the statutory right to appeal against reassessment under Section 128.

The Tribunal also reiterated that there can be no estoppel against a statute and that consent or acquiescence cannot defeat a statutory right in taxation matters.

The impugned Orders-in-Appeal were set aside, with consequential relief, if any, in accordance with law.