Importers can challenge customs value enhancements despite signing acceptance letters, CESTAT rules

Siddhi Vinayak Importers imported 29 consignments of fabrics and declared transaction values based on the respective invoices.

Customs rejected or reassessed the declared values by reference to contemporaneous import data.

The importer alleged that it agreed to enhanced values under pressure to secure clearance and sought speaking orders; it then appealed the assessments.

The Commissioner (Appeals) set aside the reassessments, finding the enhancement unsustainable.

The Department appealed to the Tribunal, arguing, among other things, that the importer’s written acceptance barred further challenge and that the reassessments were supported by contemporaneous data.

The Tribunal considered the Department’s appeals together.

Whether the importer’s written acceptance of reassessed values precluded it from challenging the reassessments in appeal

Whether the declared transaction values could be rejected and enhanced on the basis of contemporaneous import/NIDB data without adequate particulars and compliance with the Customs Valuation Rules, 2007

Whether the Commissioner (Appeals) was justified in setting aside the reassessments and the Department’s appeals should be rejected

Section 17(5) of the Customs Act, 1962 requires a speaking order where the importer does not confirm acceptance of a reassessment in writing; written acceptance relieves the proper officer of that obligation but does not, by itself, extinguish the importer’s statutory right to challenge the reassessment.

Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 requires a proper officer who has reasonable doubt about the truth or accuracy of the declared value to follow the prescribed process before rejecting transaction value; the Supreme Court in Century Metal Recycling Pvt. Ltd. v. Union of India, 2019 (367) E.L.T. 3 (S.C.), treated the formation and communication of such doubt as mandatory.

Valuation under the Rules, including comparison under Rule 5, must satisfy relevant comparability requirements, such as quantity and commercial level.

As stated by the Delhi High Court in Niraj Silk Mills v. Commissioner of Customs, CUSAA 26/2022, a written concession concerning reassessment or waiver of a speaking order does not waive the right to contest the reassessment, and valuation additions based solely on NIDB data require independent, cogent support.

The Tribunal found that the acceptance letters did not themselves establish the validity of the enhanced values: they referred to contemporaneous imports but did not set out the supporting particulars needed to test comparability, including relevant transaction and goods characteristics.

Relying on Century Metal Recycling and the Delhi High Court’s decision in Niraj Silk Mills, it held that acceptance of reassessment did not bar a later statutory challenge and that NIDB or comparable-import data alone could not sustain an enhancement absent adequate justification and supporting material.

The Commissioner (Appeals) had therefore correctly set aside the reassessments.

The reassessments and enhanced values were not sustained on the record before it.