Fabric Importer Could Challenge Customs Value Hike Despite Written Consent, CESTAT Holds

M/s Sea Bridge International imported eight consignments of polyester knitted fabric from China, declaring a unit price of USD 1.14 per kg.

Customs proposed enhancement to USD 1.77 per kg by reference to contemporaneous import data.

The importer alleged that it accepted the enhancement under pressure to secure clearance, that the supporting import data was not disclosed, and that its requests for speaking orders were not acted upon.

The Commissioner (Appeals) rejected the importer’s appeals, reasoning that its written acceptance of the enhanced value meant that no speaking order was required under Section 17(5) of the Customs Act, 1962.

The importer appealed to the Tribunal.

Section 14 of the Customs Act, 1962, read with Rule 3 of the 2007 Valuation Rules, governs valuation by reference to the transaction value, subject to the prescribed rules for rejecting it.

Rule 12(2) requires the proper officer, when required, to communicate in writing the grounds for doubting the truth or accuracy of the declared value; under Century Metal Recycling Pvt. Ltd. v. Union of India, that requirement cannot be ignored or waived, and rejection must be followed by valuation under the succeeding rules.

Section 17(5) permits written acceptance of reassessment to dispense with a speaking order, but, as explained in Niraj Silk Mills v. Commissioner of Customs, that concession does not extinguish the importer’s statutory right to challenge the reassessment in accordance with law.

Niraj Silk Mills also held that enhancement based solely on NIDB data is insufficient without independent, cogent evidence.

The Commissioner (Appeals) treated the importer’s written acceptance as conclusive and relied on Section 17(5) to find that no speaking order was required.

The Tribunal held that this did not answer whether the reassessment itself was lawful.

Although the acceptance letters referred to disclosed grounds and contemporaneous import data, the Tribunal found that the letters did not set out the relevant data, leaving an evidentiary gap that Revenue had not bridged.

Applying Niraj Silk Mills, the Tribunal concluded that acceptance relating to the speaking-order procedure did not forfeit the right to challenge the reassessment, and that a valuation addition could not rest solely on NIDB data without corroborative evidence.

It held that the written acceptance did not bar the appeals and that the impugned enhancement was not sustainable on the basis presented.

The common Orders-in-Appeal were set aside, all eight appeals were allowed, and consequential relief was granted in accordance with law.