Maruti Fabric Impex Vs Commissioner of Customs (CESTAT Allahabad)
Summary: CESTAT Allahabad allowed 26 connected customs appeals filed by Maruti Fabric Impex and set aside the Orders-in-Appeal which had sustained enhancement of the assessable value of imported polyester knitted fabrics merely because the importer had submitted written letters accepting the enhanced valuation. The Tribunal held that acceptance of reassessment for clearance of goods and waiver of a speaking order under Section 17(5) of the Customs Act, 1962 cannot be treated as surrender of the independent statutory right to challenge the reassessment in appeal.
The appellant had imported 26 consignments of “Polyester Knitted Fabrics of Mixed Colour, Weight and Length” from China during 07.06.2019 to 07.08.2019 through ICD, Dadri and declared a transaction value of USD 1.35 per kg on the basis of the foreign supplier’s commercial invoices. On examination, the goods were found to conform to the declarations in the Bills of Entry and there was no allegation regarding their description, quantity or nature. According to the appellant, despite correct self-assessment, Out of Charge Orders were not issued. To avoid demurrage, detention and delay, it repeatedly requested provisional/final clearance on payment of duty on the enhanced value under protest. It contended that those requests were ignored and it was ultimately compelled to submit consent letters agreeing to the valuation adopted by Customs.
The Commissioner (Appeals) rejected the appeals principally on the ground that the appellant had accepted the enhancement in writing and, consequently, a speaking order under Section 17(5) was unnecessary. The appellant contended that rejection of the declared transaction value nevertheless had to satisfy Section 14 of the Customs Act and the Customs Valuation Rules, 2007. It argued that the alleged contemporaneous import data was not disclosed and that a bare statement about contemporaneous imports could not satisfy the valuation rules, which required consideration of relevant parameters including quantity, quality, GSM and comparable commercial transactions.
The Tribunal found significant the appellant’s contemporaneous letters seeking clearance either provisionally or finally on payment of duty on the enhanced assessable value under protest. Those communications demonstrated that this was not a case of simple or unconditional acceptance of the enhancement. The Commissioner (Appeals), while relying upon the acceptance letters, had failed to take these protest communications into account.
CESTAT relied upon the Supreme Court ruling in Century Metal Recycling Pvt. Ltd. v. Union of India for the principle that the mandate of Rule 12(2) of the Customs Valuation Rules, 2007 cannot be ignored or waived. Where the proper officer doubts the truth or accuracy of the declared transaction value, the grounds for such doubt must, when required, be communicated to the importer in writing. The Tribunal observed that the Bills of Entry in the present matter were dated between June and August 2019 and, therefore, the proper officer was bound to comply with that requirement. Although the consent letters stated that contemporaneous import details had been shown to the appellant, no actual comparable import data was mentioned.
The Tribunal particularly relied upon Niraj Silk Mills Vs Commissioner of Customs (ICD), decided by the Delhi High Court on 27.11.2024. The High Court had explained that acceptance of reassessment in writing under Section 17(5) at best relieves the proper officer from the obligation to pass a speaking order. Such acceptance cannot be construed as abandonment of the importer’s statutory right to question the reassessment in further proceedings. CESTAT accordingly held that the impugned order had conflated two distinct matters—the limited procedural waiver of a speaking order and the substantive right of appeal under Section 128 of the Customs Act.
The Tribunal further observed that there can be no estoppel against a statute and that acquiescence or consent cannot defeat a right conferred by law. It referred to Dunlop India Ltd. & Madras Rubber Factory Ltd. v. Union of India, Hero Motors Ltd. v. CCE, Ghaziabad and Shri Vallabh Glass Works Ltd. v. Union of India in support of the proposition that statutory rights in taxation matters are not lost merely because of consent or acquiescence.
The Department’s reliance upon M/s S.S. Overseas v. Union of India was distinguished. CESTAT held that S.S. Overseas dealt with the narrower question whether a writ of mandamus could be issued directing a speaking order after acceptance had been given. It did not decide or foreclose the separate statutory right of appeal against an assessment or reassessment under Section 128. The Tribunal also noted that a coordinate Bench in MKY Enterprises Pvt. Ltd. had already distinguished S.S. Overseas and applied Niraj Silk Mills on materially similar facts.
Accordingly, CESTAT held that the controversy was squarely covered by the Delhi High Court’s ruling in Niraj Silk Mills. The impugned Orders-in-Appeal were held unsustainable in law and were set aside, with consequential relief, if any, as per law.
Cases Discussed
- MKY Enterprises Pvt. Ltd. v. Commissioner of Central Excise & CGST, Noida, Final Order Nos. 70385–70424/2025, dated 25.06.2025 (CESTAT Allahabad) — The Tribunal followed this coordinate Bench decision, which distinguished S.S. Overseas and applied Niraj Silk Mills.
- Jai Mata Di Trading (CESTAT Allahabad) — The Tribunal cited it among decisions applying the principle in Niraj Silk Mills to consent letters obtained during customs clearance.
- Niraj Silk Mills v. Commissioner of Customs (ICD), Patparganj, CUSAA 26/2022, with CUSAA 27/2022, decided 27.11.2024 (Delhi High Court) — Followed: written acceptance of reassessment may dispense with a speaking order under Section 17(5), but does not extinguish the statutory right to appeal.
- Century Metal Recycling Ltd. v. Commissioner of Customs, Faridabad, Customs Appeal No. 61303 of 2019, Final Order Nos. 60266–60349/2025, dated 27.02.2025 (CESTAT Chandigarh) — Cited by the appellant in support of its valuation challenge.
- Century Metal Recycling Pvt. Ltd. v. Union of India, 2019 (367) E.L.T. 3 (S.C.) — Relied upon for the requirement under Rule 12(2) to communicate, when required, the grounds for doubting the declared transaction value.
- Commissioner of Customs, Patparganj v. Artex Textile Private Limited, Customs Appeal Nos. 51414, 52809 and 52810–52864 of 2019, Final Order Nos. 50769–50825/2020 (CESTAT New Delhi) — Cited by the appellant and referred to by the Tribunal among decisions concerning enhanced customs valuation.
- M/s S.S. Overseas & Ors. v. Union of India, Writ Tax No. 881 of 2022, decided 03.08.2022 (Allahabad High Court) — Distinguished: it concerned a request for a speaking order after written acceptance, rather than the independent right to appeal against reassessment.
- Kunhayammed & Ors. v. State of Kerala & Anr., (2000) 6 SCC 359 (Supreme Court) — Cited by the appellant on the effect of dismissal of a special leave petition and the doctrine of merger.
- Dunlop India Ltd. & Madras Rubber Factory Ltd. v. Union of India, 1983 (13) E.L.T. 1566 (S.C.) — Relied upon for the principle that consent or acquiescence does not bar assertion of a statutory right in taxation matters.
- Hero Motors Ltd. v. CCE, Ghaziabad, 2014 (307) E.L.T. 138 (Tri.-Del.) — Cited in support of the absence of estoppel against a statutory right in taxation matters.
- Shri Vallabh Glass Works Ltd. v. Union of India, 1984 (16) E.L.T. 171 (S.C.) — Referred to on the principle concerning statutory rights and estoppel.
FULL TEXT OF THE ORDER OF CESTAT ALLAHABAD
All the above Appeals are taken up together as the issue involved in all the appeals is primarily as to whether the Appeals filed by the Appellant were correctly rejected by the learned Commissioner (Appeals) holding that the Appellant has accepted the enhancement of the value in writing at the time of clearance of the consignment in question.
2. Learned Advocate appearing on behalf of the Appellant contended that the Appellant M/s Maruti Fabric Impex, is engaged in the business of importing ‘Polyester Knitted Fabrics of Mixed Colour, Weight and Length’ from China. The Appellant imported a consignment of Polyester Knitted Fabrics and filed 26(Twenty Six) Bills of Entry detailed in the impugned Orders-in-Appeal, declaring the transaction value at USD 1.35 per kg, in accordance with the commercial invoice issued by the foreign supplier.
3. Upon examination, the imported goods were found to be in conformity with the declarations made in the Bills of Entry. There was no allegation regarding the description, quantity or nature of the goods.
4. The learned Advocate appearing for the Appellant contended that the Appellant is a regular Importer of different kinds of Fabrics and have imported 26 consignments of fabrics from China during the period from 07.06.2019 to 07.08.2019 at ICD, Dadri against negotiated price. It has further been contended that the Appellant had self-assessed the duty correctly as per the respective Invoices. However, no ‘Out of Charge Orders’ were passed. The Appellant made written requests to the Proper Officer to clear the consignments provisionally paying duty on the enhanced value under protest in Order to avoid delay in clearance of consignments and the losses on account of demurrage and detention. According to the Appellant, no cognizance was taken by the Proper Officer despite several written requests made for clearance of consignment on enhanced value under protest. Finally, the Appellant was coerced to submit letters of consent agreeing to assessment/valuation by the Customs Authorities. The Appellant further contended that the Customs Authorities without observing the mandate of Section 14 of the Customs Act, 1962, discarded the declared transaction value and enhanced the value on the basis of the consent letter.
5. The learned Advocate submitted that since the acceptance letters were not voluntary, the Appellant wrote several letters requesting the learned Assessing Officer to issue Speaking Orders. However, no speaking Order was passed. Hence, the Appellant filed respective Appeals before the Commissioner (Appeals) against the assessment made in the respective Bills of Entry. The Appellate Authority sought comments from the Department on the Appeals filed by the Appellant, wherein the Department contended that the re-assessment has been done under Section 17(4) of the Customs Act, 1962 on the basis of written consent, therefore, no speaking Order was passed. All the Appeals were rejected merely on the ground that since the Appellant has accepted the enhancement of value in writing, there was no requirement of issuance of speaking Order under Section 17(5) of the Customs Act, 1962 and therefore, the assessable value determined by the Adjudicating Authority on reassessment of imported goods in the Bills of Entry and accepted by the Appellant in writing was legal and binding on the Appellant.
6. Learned Counsel further submitted that the letter of acceptance which has been re-produced in the Orders-in-Appeal does not provide any evidence of contemporaneous import and merely mentions that the declared value is liable to be rejected and redetermined on the basis of the data of contemporaneous import. It is further submitted that merely mentioning that the declared value is liable to be rejected and the same is liable to be assessed at a particular price, does not meet the requirement of Customs Valuations Rules, 20071 as even for applying Rule 5 of CVR, 2007, several parameters like quantity in comparable commercial transactions, GSM, quality, time of placement of Order for import etc. has to be fulfilled.
7. The learned Advocate also submitted that similar letters of acceptance were submitted by the importers in the case of Hanuman Prasad & ors. and in the Appeals filed by them, the learned Commissioner (Appeals) set aside the enhancement of value merely on the basis of letter of acceptance. The Department filed Appeals against the Orders of the learned Commissioner (Appeal) wherein the Tribunal allowed the Appeals holding that once letter of acceptance has been submitted, the importers cannot question the assessment later on. The said importer filed Appeals before the Hon’ble High Court of Delhi titled as Niraj Silk Mills vs. Commissioner of Customs & Ors. – CUSAA 26/2022. The Hon’ble High Court of Delhi after analyzing the provisions of law and judgments, allowed the Appeals. The present Appeals are squarely covered by the judgment of the Hon’ble High Court.
8. The learned Advocate further submitted that the mandate of Rule 12(2) of CVR, 2007 is to intimate the importer in writing the ground of doubting the truth of accuracy of the declared value.
9. The learned Advocate also relied on the following judgements:-
I. M/s Century Metal Recycling Ltd. Vs. Commissioner of Customs, Faridabad. Customs Appeal No.61303 of 2019 decided vide Final Order No.60266-60349/2025 dated 27.02.2025 by CESTAT Bench at Chandigarh.
II. Commissioner of Customs, Patparganj Vs. M/s Artex Textile Private Limited-Customs Appeal Nos.51414,52809 and 52810 to 52864 of 2019 decided vide Final Order No.50769-50825/2020 dated 14.09.2020 2025 by CESTAT Bench at New Delhi.
10. The learned Departmental Authorized Representative reiterated the finding of the Commissioner (Appeals) and has drawn our attention to the acceptance letter submitted by the Appellant agreeing to enhancement of value in writing. The learned Departmental Authorized Representative submitted that the Appellant had accepted the enhancement of value in writing stating that they have gone through the details narrated by the concerned Officer including the grounds of rejection of declared value and understood the details of contemporaneous import of similar/identical goods and that they fully agree with the enhancement of value and that they do not want show cause notice2 or speaking Order. Based on the said letter of acceptance, the Appellate Authority came to the conclusion that the reassessment of the Appellants import consignments were done by the Assessing Officers only after disclosing all the ingredients of reassessment to the Appellant and after acceptance in writing and hence no speaking Order was required to be passed under Section 17(5) of the Customs Act, 1962. The Ld. Departmental Authorized Representative relied on the judgment of the Hon’ble High Court of Allahabad in the case of M/s S. S. Overseas & Ors. being Writ Tax No.881/2022 and submitted that the Hon’ble High Court has held that once acceptance of enhancement of value by the importer is made in writing there is no requirement of issuance of Speaking Order under Section 17(5) of the Customs Act, 1962. The Ld. Departmental Authorized Representative further submitted that this judgment of the Hon’ble High Court has also been upheld by the Hon’ble Supreme Court being SLP (Civil) No.38571/2023 titled as M/s S. S. Overseas vs. Union of India & Anr. Hence, according to the Departmental Authorized Representative, there is no infirmity in the Orders passed by the Ld. Commissioner (Appeals).
11. The learned Advocate for the Appellant, in their written submissions have submitted that the issues in M/s S. S. Overseas & Ors. were entirely different in as much as it was the case of provisional assessment and non-issuance of finalized Bills of Entry. In any case, the Order of the Hon’ble Supreme Court was merely dismissal of the SLP which does not operate as merger with the Order of the High Court. In this regard, the Ld. Advocate relied upon the judgment of Hon’ble Supreme Court in the case of Kunhayammed & Ors. Vs. State of Kerala & Anr. (2000) 6 Supreme Court Cases 359.
12. Heard both the sides and perused the appeal records.
13. We have examined the impugned Orders-in-Appeal vide which the Appeals filed by the Appellant were rejected holding that the Appellant has accepted the enhancement of value in writing and therefore, there was no question of issuance of Speaking Order under Section 17(5) of the Customs Act, 1962. From the impugned Orders-in-Appeal, it is further revealed that the Appellate Authority sought parawise comments from the Department and in response, the Department filed parawise comments and the acceptance letters regarding enhancement of assessable value by the Appellant. However, we find that none of the letters written by the Appellant seeking clearance of the consignments either provisionally or finally on payment of duty on enhanced assessable value under protest have been referred too. We have seen the letters written by the Appellant requesting the clearance of consignments either provisionally or finally on payment of duty on enhanced value under protest which clearly proved that it was not the case of acceptance of enhancement of value simplicitor.
14. We find that the Order of the Commissioner (Appeals) merely proceeded on the ground that the Appellant had accepted the enhancement of value under Section 17(5) of the Customs Act, 1962 and therefore, there was no requirement of issuance of Speaking Order. The Commissioner (Appeals) referred to the judgment of Century Metal Recycling (supra) for rejecting the Appeal, more specifically relying on Para 26 to hold that there was no any general or omnibus direction has been passed by the Hon’ble Supreme Court to the effect that the transaction value declared in the bills of entry should invariably be accepted in all cases. However, it is seen that the Commissioner (Appeals) has failed to take on account the ratio of the judgment in entirety. The issue as to whether assessable value can be rejected without following the mandate of Section 14 of the Customs Act, 1962, read with Rule 12 of CVR, 2007 and the declared transactional value be re-determined following sequentially from Rule 4 to 5 of CVR, 2007, is no more res-integra as the Hon’ble Supreme Court in the case of Century Metal Recycling Pvt. Ltd. vs. UOI reported in 2019 (367) E.L.T. 3 (SC) has held that the mandate of Rule 12(2) of CVR, 2007 to intimate the importer in writing the ground of doubting the truth of accuracy of the declared value cannot be ignored or waived. The Hon’ble Supreme Court has held as under:-
“…….As per sub-rule (2) of Rule 12, the proper officer when required must intimate to the importer in writing the grounds for doubting the truth or accuracy of the value declared. The said mandate of sub-rule (2) of Rule 12 cannot be ignored or waived. Formation of opinion regarding reasonable doubt as to the truth or accuracy of the valuation and communication of the said grounds to the importer is mandatory, subterfuge to by-pass and circumvent the statutory mandate is unacceptable. Formation of belief and recording of reasons as to reasonable doubt and communication of the reasons when required is the only way and manner in which the proper officer in terms of Rule 12 can proceed to make assessment under Rules 4 to 9 after rejecting the transaction value as declared.
21. The mandate to record reasons at the second stage of enquiry is not expressly stipulated, albeit it has been read by us by implication in Rule 12. Being conscious that this mandate if applied to past cases would possibly lead to complications and difficulties, we would invoke the doctrine of prospective application with the direction that the past cases will be decided on a case to case basis, depending upon the factual matrix and considerations like whether the importer has asked for ‘certain reasons’, whether the reasons were not communicated, whether ‘certain reasons’ can be deciphered from the assessment/valuation Order, whether mis-description or false declaration was apparent, etc.”
15. We notice that in the present case, all bills of entry are dated 07.06.2019 to 07.08.2019 and therefore, the Proper Officer was duty bound to communicate the reasons for rejection of the transaction value in writing as mandated by the Hon’ble Supreme Court. We find that in the Century Metal Recycling Pvt. Ltd. (supra) facts were also similar to the present case in as much as in that case also requests for provisional assessment by the importer was ignored and the importer was forced to submit letter of acceptance. We further find that although the letter of acceptance states that the ground for rejection of the declared value has been narrated to the Appellant and that details of contemporaneous import of similar and identical goods have been shown to them and on the basis of which, the Appellant accepted that their value were significantly lower than the value at which identical/similar goods imported at or about the same time in comparable commercial transactions were assessed at other ports of the country, however, no such details of alleged contemporaneous import data have been mentioned.
16. We further find that the issue as to whether the Department can enhance the value relying on NIDB data and on the basis of the acceptance letter and once there is acceptance letters, the importer cannot contest the same also came up for consideration before the Hon’ble High Court of Delhi in the case of Niraj Silk Mills vs. Commissioner of Customs (ICD) Patparganj passed in CUSAA 26/2022 and the Hon’ble High Court vide its judgment dated 27.11.2024 has held that the right to question the correctness of the decision of the proper officer, be it with respect to the formation of opinion or even on merits, is one which is protected by statute. The Hon’ble High Court formulated the question of law as under:-
“Whether the Tribunal misdirected itself in holding that the appellants in the above-mentioned matter could not question the enhancement made concerning the valuation of the imported goods, once the appellants had given up their right to seek issuance of a show cause notice and/or speaking Order under Section 17 of the Customs Act, 1962?”
The Hon’ble High Court vide its judgment held as under:-
“83. That then takes us to the concession which the importer could tender and which would require us to identify the subject in respect of which that concession may be made. When we examine this aspect on the anvil of Section 17(5), it becomes apparent that the statute speaks of the concession being with reference to the reassessment made under Section 17(4). It thus proceeds to provide that in a case where the importer confirms his acceptance of the reassessment in writing, the proper officer would stand relieved of the obligation of passing a speaking Order in respect of such reassessment. In all other cases and where the reassessment is not acceded to, the proper officer is obliged to pass a speaking Order. Thus, the waiver or concession is at best confined to the speaking Order which the proper officer is obliged to frame in affirmation of the provisional opinion that it may have formed under Section 17(4).
84. We find ourselves unable to construe Rule 12(2) as contemplating any concession or waiver at least in explicit terms. All that Rule 12(2) stipulates is that the proper officer would intimate to the importer the grounds for doubting the declared value at its request. It is in the aforesaid context that we would thus have to adjudge whether the CESTAT was correct in holding that the exchange of communications amounted to a waiver or abandonment not just of the right to question and assail the reassessment but to impugn it in further proceedings in accordance with the procedure prescribed under the Act.
85. In our considered opinion, the perceived concession made in respect of the opinion harboured by the proper officer cannot possibly be interpreted or construed as detracting from or depriving the importer of the right to question the decision of the proper officer in accordance with law. The right to question the correctness of the decision of the proper officer, be it with respect to the formation of opinion or even on merits, is one which is protected by statute. The question, which as a sequitur, arises is whether that right itself can be said to have been abandoned.”
17. The impugned order proceeds on the footing that once the Appellant confirmed acceptance of the re-assessed value in writing, no speaking order was required under Section 17(5) of the Customs Act, and that this acceptance also forecloses the right to challenge the enhancement itself. This conflates two distinct things- the limited procedural waiver of a speaking order, and the independent, substantive right of appeal conferred by Section 128 of the Act.
18. This precise question stands authoritatively settled in the Appellant’s favour by the Hon’ble Delhi High Court in Hanuman Prasad and Niraj Silk Mills v. Commissioner of Customs (ICD), Patparganj, CUSAA 26/2022 (with CUSAA 27/2022), decided 27.11.2024 and the principles in the said decision is has been consistently and repeatedly applied by the Tribunal on identical facts (acceptance/consent letters obtained at the threshold of clearance of imported fabric/scrap consignments) in the following very recent orders:
i. M/s Artex Textile Pvt. Ltd. (Supra)
ii. M/s Jai Mata Di Trading (Supra)
iii.M/s MKY Enterprises Pvt. Ltd. (Supra)
19. In each of these decisions, the Tribunal found that letters of acceptance which merely recite that contemporaneous import data was “gone through and understood”, without disclosing the actual comparable data (quantity, quality, contemporaneity), cannot be read as an unconditional and voluntary surrender of the right to contest valuation. The same reasoning applies squarely to the facts of the present case.
20. There can be no estoppel against a statute, and that acquiescence or consent by an assessee cannot operate to defeat rights conferred by law. The Hon’ble Supreme Court in Dunlop India Ltd. & Madras Rubber Factory Ltd. v. Union of India, 1983 (13) E.L.T. 1566 (S.C.) has held that there is no estoppel in law, particularly in taxation matters, against a party seeking to assert a statutory right.
21. This principle has consistently been followed, including by the Tribunal in Hero Motors Ltd. v. CCE, Ghaziabad, 2014 (307) E.L.T. 138 (Tri-Del), holding that there are no estoppels in taxation matters and that consent given by an assessee cannot take away a right otherwise available under law; and by the Hon’ble Supreme Court in Shri Vallabh Glass Works Ltd. v. Union of India, 1984 (16) E.L.T. 171 (S.C.).
22. The reliance placed by the Department upon the judgment of the Hon’ble Allahabad High Court in M/s S.S. Overseas v. Union of India, Writ Tax No. 881 of 2022, decided 03.08.2022, which dismissed a batch of writ petitions filed by importers seeking a writ of mandamus directing issuance of a speaking order under Section 17(5) is irrelevant.
23. We find that M/s S.S. Overseas answers a narrow question, whether a writ of mandamus lies for issuance of a speaking order once acceptance has been given and does not, either expressly or by necessary implication, adjudicate upon or foreclose the independent statutory right of appeal against the assessment/re-assessment itself under Section 128 of the Customs Act. No such appeal was under consideration before the Hon’ble High Court in that writ jurisdiction.
24. This very submission has already been examined, and effectively accepted and the said decision of the Hon’ble High Court was distinguished, by a coordinate Bench of this very Tribunal in MKY Enterprises Pvt. Ltd. v. Commissioner of Central Excise & CGST, Noida (Final Order Nos. 70385-70424/2025 dated 25.06.2025) and proceeded to apply Niraj Silk Mills in its entirety and allowed the appeal, thereby declining to treat the Department’s reliance on S.S. Overseas as a bar to the appeals on merits.
25. The Department again seeks to press S.S. Overseas in the present proceedings, the identical argument stands already considered and not accepted as determinative by a coordinate Bench of this Tribunal, and S.S. Overseas ought to be treated as confined to its own narrow controversy of mandamus for a speaking order, and not as authority for the proposition that an acceptance letter forecloses the statutory right of appeal.
26. In view of the above discussions, it is our considered view that the issue involved in the present appeal is squarely covered by the judgment of the Hon’ble Delhi High Court in the case of Niraj Silk Mills (supra) and therefore, the impugned Orders-In-Appeal is not sustainable in law and accordingly, we set aside the same with consequential relief, if any, as per law.
(Order pronounced in open court on 07.09.2026)
Notes:
1 CVR, 2007
2 SCN
