Coerced Consent Cannot Justify Enhancement of Customs Transaction Value: CESTAT Chandigarh

Century Metal Recycling Ltd Vs Commissioner of Customs (CESTAT Chandigarh)

CESTAT Chandigarh allowed a batch of 105 appeals filed by Century Metal Recycling Ltd. challenging enhancement of the declared transaction value of imported aluminium scrap. A single appeal had originally been filed against a common Order-in-Appeal deciding 105 Bills of Entry. On the Registry’s objection, the appellant filed 104 additional appeals in terms of Rule 6A of the CESTAT Procedure Rules. Since all appeals arose from the same Order-in-Appeal dated 30.10.2018 and were inextricably connected, the Tribunal deemed the lead Appeal No. C/61302/2019 to have been listed with the remaining appeals and decided the entire batch together.

The appellant had imported aluminium scrap during July to September 2018 through ICD Piyala, Faridabad and filed 105 Bills of Entry declaring the import price as the transaction value. Customs considered the declared value to be on the lower side and enhanced it by referring to DGoV Circular F.No. VAL/TECH/36/2016 (Al Scrap) dated 01.12.2016 and DGoV Alert Circular No.14/2005 dated 16.12.2005. According to the appellant, faced with demurrage, delay penalties, ground rent, warehousing costs and other commercial consequences, it furnished letters accepting the enhanced valuation under pressure so that the consignments could be cleared. The Commissioner (Appeals) subsequently rejected the appellant’s challenge to the reassessment.

The appellant argued that Section 14 of the Customs Act, 1962 and the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 required Customs ordinarily to accept the transaction value actually paid or payable unless the statutory grounds for rejection were established. It contended that none of the exceptions under Rule 3(2) had been demonstrated. The Commissioner (Appeals), according to the appellant, had also introduced a completely new related-party valuation case even though the original reassessment was not made on that ground. Of the 105 Bills of Entry, the appellant specifically asserted that 82 did not even concern imports from the alleged related supplier, CMR America LLC, USA.

On the related-party issue, CESTAT found that the departmental officers had never claimed that their reassessment was based on a related-party transaction. It was the Commissioner (Appeals) who introduced that basis for the first time in an attempt to distinguish binding precedents favouring the assessee. The Commissioner (Appeals) had relied upon an Order-in-Original dated 14.12.2017 rendered in the case of Sanjivani Non-Ferrous Trading Pvt. Ltd., rather than in Century Metal Recycling’s own case. The Tribunal described reliance on that unrelated order without examining the facts of the appellant’s case as reflecting non-application of mind. It also noted that the order relied upon had itself been set aside in the other party’s proceedings following the Supreme Court ruling in CCE & ST, Noida Vs Sanjivani Non-Ferrous Trading Pvt. Ltd.

The principal question before CESTAT was whether enhancement of customs value based on allegedly coerced consent letters, a DGoV Circular and LME prices, without contemporaneous import data supporting the reassessment, could legally survive. The Tribunal noted that the issue had already been examined by different Benches and had also reached the Supreme Court in the appellant’s own case. The appellant relied particularly upon Century Metal Recycling Pvt. Ltd. Vs Union of India, 2019 (367) ELT 3 (SC), where the Supreme Court explained the safeguards contained in Rule 12 of the Customs Valuation Rules.

The Tribunal treated the Delhi High Court’s judgment in Hanuman Prasad & Sons Vs Commissioner of Customs, CUSAA No.27 of 2022, decided on 27.11.2024 as directly relevant. That judgment explained that the reasonable doubt contemplated by Rule 12 must relate to the valuation of imported goods and transaction value under Section 14. Relying upon Century Metal Recycling, the Delhi High Court stressed that the proper officer’s doubt regarding declared value must be based on legally justifiable factors, reasons must be recorded and the relevant material must be communicated to the importer as required.

The Delhi High Court further held that a concession or written acceptance by an importer cannot automatically be treated as abandonment of the statutory right to question reassessment. The right to challenge the proper officer’s decision, whether concerning the formation of the valuation opinion or the merits of reassessment, remains protected by statute. Section 17(5) may relieve the proper officer from issuing a speaking order in the circumstances contemplated by that provision, but a consent letter cannot be treated as an unrestricted surrender of the right to assail the reassessment.

CESTAT also took note of the Delhi High Court’s analysis concerning NIDB data. The High Court had observed that transaction values cannot be rejected arbitrarily and that enhancement based solely on NIDB data is insufficient without cogent corroborative evidence. It referred to decisions holding that NIDB information alone cannot establish the correctness of a substituted customs value unless supported by appropriate comparable import material and compliance with the statutory valuation framework.

Applying these principles, CESTAT held that the Commissioner’s related-party reasoning could not sustain the reassessment and that the principal valuation controversy was covered by the Delhi High Court’s ruling in Hanuman Prasad & Sons. Consequently, the Tribunal held the impugned Order-in-Appeal unsustainable, set it aside and allowed all the appeals with consequential relief, if any, in accordance with law. The order was pronounced in open court on 27.02.2025.

Cases Discussed

• Century Metal Recycling Pvt. Ltd. Vs Union of India, 2019 (367) ELT 3 (Supreme Court) — The appellant’s own case was treated as a central authority on Rule 12 of the Customs Valuation Rules. Reasonable doubt regarding declared transaction value must have an objective basis, and the statutory valuation safeguards cannot be bypassed merely through consent/acceptance letters.
• Hanuman Prasad & Sons Vs Commissioner of Customs, CUSAA No.27 of 2022, order dated 27.11.2024 (Delhi High Court) — Followed by CESTAT. The Delhi High Court held that acceptance or concession regarding reassessment cannot be construed as complete abandonment of the statutory right to question the proper officer’s decision and emphasized compliance with Rule 12.
• CCE & ST, Noida Vs Sanjivani Non-Ferrous Trading Pvt. Ltd., 2019 (365) ELT 3 (Supreme Court) — Relied upon in connection with rejection of declared transaction value and the requirement that Customs support a substituted assessable value with legally sustainable reasons and material.
• Sanjivani Non-Ferrous Trading Pvt. Ltd. Vs CCE & ST, Noida, 2017 (7) GSTL 82 (CESTAT Allahabad) — Cited among the authorities supporting the appellant’s challenge to enhancement of transaction value.
• Guru Rajendra Metalloys India Pvt. Ltd. Vs C.C., Ahmedabad, 2020 (374) ELT 617 (CESTAT Ahmedabad) — Relied upon for the proposition that DGoV guidelines cannot override the statutory Customs Valuation Rules and that invoice/transaction value cannot be rejected without legally sustainable reasons.
• Supreme Industries Ltd. Vs CBIC, 2021 (377) ELT 698 (Bombay High Court) — Cited by the appellant among the authorities supporting its challenge to the customs valuation methodology.
• Agarwal Metals & Alloys Vs Commissioner of Customs, Kandla, 2021 (378) ELT 155 (CESTAT Ahmedabad) — Cited by the appellant in support of its valuation challenge.
• Sunland Alloys Vs Commissioner of Customs, 2020-TIOL-1235-CESTAT-AHM — Cited among the authorities challenging enhancement of declared customs value.
• Marcus Oils & Chemicals Pvt. Ltd. Vs Commissioner of Customs (Port), Kolkata, 2021 (376) ELT 637 (CESTAT Kolkata) — Relied upon for the proposition that the burden of establishing that the relationship between parties influenced the price lies upon the Department.
• Principal Commissioner of Customs Vs CISCO Systems India Pvt. Ltd., 2023 SCC OnLine Del 509 (Delhi High Court) — Cited in support of the appellant’s contention that challenging an assessed Bill of Entry demonstrates that the importer remained aggrieved by the enhancement and exercised the statutory appellate remedy.
• Agarwal Foundaries (P) Ltd. Vs Commissioner, 2020 (371) ELT 859 (CESTAT Hyderabad), upheld in Commissioner Vs Agarwal Foundries (P) Ltd., 2020 (371) ELT A295 (Supreme Court) — Cited against enhancement or reassessment based merely on external valuation data without adequate statutory foundation.
• Dunlop India Ltd. & Madras Rubber Factory Vs Union of India, 2002-TIOL-647-SC-CUS-LB (Supreme Court) — Relied upon for the appellant’s submission that acceptance or waiver cannot curtail a statutory right to challenge the enhanced value through appeal.

FULL TEXT OF THE CESTAT CHANDIGARH ORDER

While preparing the order for these appeals, we note that a single appeal (bearing Diary No. 601472019 = Appeal No. C/61302/2019) was filed on 06.02.2019 against the Order-in-Appeal which decided 105 bills-of-entry by a single order; the same was listed before this Tribunal on 02.09.2019. On an objection raised by the Registry, the Appellant was directed by the Bench to file as many appeals as there are bills-of-entry (each of which is an Order-in- Original itself) to comply with the Rule 6A of the CESTAT Procedure Rules. Accordingly, the Appellant filed additionally 104 more appeals. However, on the day of hearing of the appeals, the main case i.e. Appeal No. C/61302/2019 was remained to be listed and tagged with 104 appeals which were heard on 31.01.2025. As all the appeals are arising out of a common impugned order i.e. Order-in-Appeal No. CC(A)CUS/D-II/ICD-PPG/PIYALA/2447-2551/2018 dated 30.10.2018 and are inextricably interlinked; therefore, in the interest of justice, we direct that Appeal No. C/61302/2019 shall be deemed to have been listed along with 104 appeals on 31.01.2025. Accordingly, all the appeals including the said appeal have been taken up for discussion and decision vide this order. However, for the sake of convenience, Appeal No. C/61302/2019 is taken up as a lead case.

2. Briefly the common facts involved in all 105 appeals are that the Appellant had imported aluminum scrap during the period July to September 2018 and sought assessment on the import price-based value for which 105 bills-of-entry were filed at ICD Piyala, Faridabad, Haryana. The department had an apprehension that the declared value is on the lower side and proceeded to re-assess these bills-of- entry and enhanced the declared value. The transaction value declared by the Appellant was not accepted by the Assessing Officer for the reason that the declared value appeared to be on a lower side in terms of the Circular F.No.VAL/TECH/36/2016 (AI Scrap) dated 01.12.2016 issued by the DGoV, CBEC, New Custom House, Ballard Estate, Mumbai and guidelines issued by DGoV Alert Circular No. 14/2005 dated 16.12.2005. The Appellant, fearing demurrage charges, delay penalties, ground rent, warehousing costs and commercial exigencies, had issued letters under pressure accepting the enhancement of the valuation; thereafter, the department assessed the bills-of-entry on the enhanced value. Aggrieved by the said order, the Appellant filed appeal before the learned Commissioner (Appeals), who rejected the same; hence the present appeals.

3. Heard both the parties and perused the material on record.

4.1 The learned Counsel for the appellant submits that the impugned order is not sustainable in law as the same has been passed without properly appreciating the facts and the law, and binding judicial precedents on identical issue. 4.2 The learned Counsel further submits that the impugned order is against the provision of Section 14 of the Customs Act, 1962 and Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. He further submits that it is a settled law that the value of imported goods shall be the transaction value i.e. the price which is actually paid or is payable for the goods when sold for export to India. He further submits that the transaction value declared by the Appellant at the time of filing bills-of-entry in question satisfies all the ingredients specified in Section 14(1) of the Customs Act, 1962. He further submits that the department has not proved that any of the exceptions specified in Rule 3(2) of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 was present in these cases.

4.3 He further submits that the learned Commissioner (Appeals), while dismissing their appeal vide the impugned order, has made a completely new case of related party valuation to distinguish the bindings precedents in favour of the assessee in the assessee’s own case. He further submits that the related party transaction was never even claimed as the basis for re-assessment and further, out of the 105 bills-of-entry, 82 bills-of-entry are not even imported from the so-called related party; moreover, the Order-in-Original dated 14.12.2017, rendered in another company’s matter, has been used as tool to arrive at a mixed finding of fact and law that the Appellant imported from related parties.

4.4 He further submits that the Commissioner (Appeals) has committed perversity and patent illegality in holding that re- assessment and re-determination of value was on account of host of factors, in addition to a DGoV Circular such as related party transaction.

4.5 He further submits that undoubtedly, even if, the Commissioner (Appeals)‟s reasoning is accepted only for the sake of arguments, still 82 bills-of-entry are not from CMR America LLC, USA but independent third parties. He also submits that the Commissioner (Appeals), while arriving at the findings of related party, has relied upon an Order-in- Original which is related to a different party and imported the said OIO without assessing the facts of the present case which shows complete non-application of mind. He further submits that the Commissioner (Appeals) has failed to consider that the said OIO, which has been relied upon by him, has been set aside and the matter was remanded by the Commissioner (Appeals) in that party’s case by following the judgment of Hon‟ble Supreme Court in the case of CCE & ST, Noida Vs Sanjivani Non-Ferrous Trading Pvt Ltd – 2019 (365) ELT 3 (SC). 4.6 He further submits that it is a settled law that onus to prove that the price has been influenced by the relation is on the department. In this regard, he relies on the decision in the case of Marcus Oils & Chemicals Pvt Ltd Vs Commr. of Cus. (Port), Kolkata – 2021 (376) ELT 637 (Tri.-Kolkata).

4.7 He further submits that the issue involved in the present case is no more res integra and has been settled by the Tribunal as well as by the Hon‟ble Supreme Court in the Appellant‟s own case, wherein it has been held that enhancement of value solely on the basis of coerced consent letters, DGoV Circular and in the absence of contemporaneous import data or any investigation is absolutely illegal and incorrect. In this regard, reliance is placed on the following decisions:

• CCE & ST, Noida Vs Sanjivani Non-Ferrous Trading Pvt Ltd – 2019 (365) ELT 3 (SC)
• Sanjivani Non-Ferrous Trading Pvt Ltd Vs CCE & ST, Noida – 2017 (7) GSTL 82 (Tri-All)
• Century Metal Recycling Pvt Ltd Vs UOI – 2019 (367) ELT 3 (SC)
• Guru Rajendra Metalloys India Pvt Ltd Vs Commr of Customs, Ahmedabad – 2020 (374) ELT 617 (Tri-Ahmd)
• Supreme Industries Ltd Vs CBIC – 2021 (377) ELT 698 (Bom)
• Agarwal Metals & Alloys Vs Commissioner of Customs, Kandala – 2021 (378) ELT 155 (Tri-Ahmd)
• Sunland Alloys Vs Commissioner of Customs – 2020-TIOL-1235-CESTAT-AHM

4.7 The learned Counsel further submits that the Tribunal in the case of Commissioner of Customs Vs Hanuman Prasad & Sons[in Appeal No. C/51601/2019] vide Final Order dated 20.10.2020 has held that in terms of provisions of Section 17 of the Customs Act, 1962, once the Appellant accepts the value adopted by the Revenue, he cannot be held to be aggrieved with the same and it is not open to the Appellant to challenge the same by way of filing appeal. The said order of the Tribunal in Hanuman Prasad & Sons„s case was challenged by the assessee before the Hon‟ble High Court of Delhi reported as Hanuman Prasad & Sons Vs Commissioner of Customs – CUSAA No. 27 of 2022and the Hon‟ble High Court vide its order dated 27.11.2024, after considering the catena of judgments of the Tribunal as well as the High Courts and the Supreme Court, has decided the issue in favour of the assessee- importer.

4.8 The learned Counsel further submits that acceptance of enhanced value of goods and waiver under Section 17(5) and/or Section 128 of the Customs Act does not operate as a bar to challenge the enhanced value by way of filing an appeal under Section 128 of the Customs Act. He further submits that Appellant‟s right to challenge the enhanced value by way of filing the appeal cannot be curtailed as held by the Hon‟ble Apex Court in the case of Dunlop India Led & Madras Rubber Factory Vs Union of India – 2002-TIOL-647-SC-CUS-LB.

4.9 The learned Counsel further submits that the waiver was given on the insistence of the department and the fact that the assessed bill-of-entry was challenged by the Appellant before the Commissioner (Appeals) by way of filing appeal, is itself indicative of the fact that the Appellant was aggrieved by such enhancement and has exercised his right of appeal provided under the statute. This is clearly an act of protest as held in the case ofPrincipal Commissioner of Customs Vs CISCO Systems India Pvt Ltd – 2023 SCC Online DEL 509.

4.10 The learned Counsel further submits that it is a common practice adopted by the department to take waiver/relinquishment letters from the assessee in order to clear the consignments. However, in such cases also, the department is bound to record reasons even when an assessee relinquishes his right to ask for speaking order. This view was taken by the Hon‟ble Supreme Court in the Appellant’s own case reported in 2019 (367) ELT 3 (SC).

4.11 The learned Counsel further submits that so-called „consent/acceptance letters‟ relied upon heavily by the Assessing Authority to adopt the enhanced valuation in terms of Rule 4 of Customs Valuation Rules cannot be considered as „consent letters‟ as the same have been obtained under pressure to clear the goods to avoid any further delay. He also submits that the enhanced value has been arrived at on the basis of LME price of prime metal minus discount given in DGoV Circular; this clearly shows that the enhancement of value is not on the basis of contemporaneous import data but it is only based on DGoV Circular which cannot be the basis for enhancement as held by the Tribunal in the case of Guru Rajendra Metalloys India Pvt Ltd Vs Commr of Customs, Ahmedabad – 2020 (374) ELT 61 (Tri-Ahmd).

4.12 He further submits that the Appellant was not given the NIDB/LME data or whatsoever document relied upon for enhancement of the value, which is clearly in violation of the principles of natural justice. He further submits that the transaction value or the invoice value cannot be rejected arbitrarily without giving any valid reasons. He also submits that even assuming without admitting that the letters were not coerced, the Assessing Authority still ought to have followed the principle of valuation as laid down under the Customs Act and Customs Valuation Rules.

4.13 The learned Counsel further submits that the Hon‟ble High Court of Delhi in the case of  Hanuman Prasad & Sons Vs Commissioner of Customs – CUSAA No. 27 of 2022 vide its order dated 27.11.2024, set aside the order of the Tribunal dated 20.10.2020 passed in Appeal No. C/51601/2019 in the case of Commissioner of Customs Vs Hanuman Prasad & Sons based on the judgment of the Hon‟ble Apex Court passed in the Appellant‟s own case. He further submits that it has been held by the Hon‟ble Apex Court that the power to doubt the declared value would have to be guided by the statutory provisions comprised in Rule 12. He also submits that the department purported reliance on NIDB/LME/DGoV for re-assessment/rejection of value and enhancement is directly contrary to the law as settled in the following judgments:

• Agarwal Foundaries (P) Ltd Vs Commissioner – 2020 (371) ELT 859 (Tri-Hyd) [upheld by Hon’ble Supreme Court in Commissioner Vs Agarwal Foundries (P) Ltd – 2020 (371) ELT A295 (SC)]
• yd) [upheld by Hon’ble Supreme Court in Commissioner Vs Agarwal Foundries (P) Ltd – 2020 (371) ELT A295 (SC)]
• Century Metals Recycling Pvt Ltd vs UOI – 2019(367) ELT 3 (SC).
• Hanuman Prasad & Sons Vs Commissioner of Customs – Order dated 27.11.2024 in CUSAA No. 27 of 2022

5. On the other hand, the learned Authorized Representative for the Revenue reiterates the findings of the impugned order and submits that the learned Commissioner (Appeals) has rejected the transaction value on the basis of related party transaction because the supplier namely CMR America LLC, USA and the Appellant have common directors and shareholdings, indicating a possible price influence. He further submits that LME price represents the market- driven international price for metals and contemporaneous import prices also indicate undervaluation. He further submits that the learned Commissioner (Appeals), while rejecting the declared value and re-assessment done by the Assessing Officer, has relied upon number of decisions wherein it has been held that the facts which are admitted need not be proved and that once the importer has admitted the re-determination of value on record and has accepted the method of valuation, he cannot subsequently challenge the same on the same ground.

6. We have considered the rival submissions made by both the parties and perused the material on record as well as various judgments relied upon by the both the parties cited above.

7. We find that the grounds on which the declared value has been rejected and same has been enhanced on the basis of related party transaction and LME prices as bench mark based on contemporaneous import data which indicates the undervaluation done by the Appellant.

8. As regards the related party transaction, we find that the departmental officers never even claimed the re-assessment done by them on the basis of related party transaction and it is the Commissioner (Appeals) who, for the first time, has made out a new case of related party transaction in order to distinguish the binding precedents in favour of the assessee. Further, we find that the Commissioner (Appeals) has unilaterally and erroneously relied upon the Order-in-Original dated 14.12.2017 to come to a conclusion that CMR America LLC, USA is a related party of the Appellant. This finding of the learned Commissioner (Appeals) is perverse for the reason that the said OIO was rendered in the case of M/s Sanjeevani Non-Ferrous Trading Pvt Ltd and not in the case of the Appellant and imported the said OIO without assessing the facts of the present case reflects complete non-application of mind. Further, we find that the said OIO, which has been relied upon by the learned Commissioner (Appeals), was even set aside by the Commissioner (Appeals) in that party‟s case by following the judgment of Hon‟ble Apex Court in the case of CCE & ST, Noida Vs Sanjivani Non-Ferrous Trading Pvt Ltd – 2019 (365) ELT 3 (SC).

9. Now, coming to the main issue whether the enhancement of value, solely on the basis of coerced consent letters, DGoV Circular and in the absence of contemporaneous import data, is legal and valid. We find that this issue has been considered by various benches of the Tribunal and also, in the Appellant’s own case which has gone upto the Supreme Court and has been decided in favour of the assessee as reported in 2019 (367) ELT 3 (SC). Further, we find that the Hon‟ble High Court of Delhi, in a bunch of appeals, has considered the identical issue in detail after considering the various judgments of the Tribunal as well as of the Supreme Court. After considering all the judgments, the Hon‟ble High Court of Delhi in the case of Hanuman Prasad & Sons Vs Commissioner of Customs – CUSAA No. 27 of 2022 vide its order dated 27.11.2024, has decided the issue in favour of the importer-assessee by setting aside the Tribunal‟s order dated 20.10.2020. Here, it is pertinent to reproduce the relevant findings of the Hon‟ble Delhi High Court‟s order dated 27.11.2024, which are reproduced herein below:

“58. Before we proceed to analyse Section 17 of the Act and its application to the appeals before us, it would be pertinent to preface the discussion by acknowledging the statutory position as it exists. An entity intending to import goods is firstly required to self-assess the duty which would be leviable. This obliges the importer to comply with the prescriptions set out in Section 46 of the Act. As that provision stands in its present avatar, the importer of any goods is required to electronically present on the customs automated system, the BoE for the consideration of the proper officer. The BoE is to include all particulars required in terms of the provisions made in the Act and corresponding rules. In addition to the presentation of a BoE, the importer is also statutorily obliged to submit a declaration as to the truthfulness of the contents of such BoE and in support thereof produce before the proper officer the invoice and other documents relating to the imported goods as may be prescribed. In terms of sub-section (4A) of Section 46, the importer who presents a BoE is to ensure that the said document is accurate and complete in respect of the information disclosed therein, the authenticity and validity of documents filed in support thereof and the import itself being compliant with any restriction or prohibition imposed in relation to those goods by law.

59. Upon the proper officer being satisfied that the goods entered for home consumption are not prohibited and import duty has been paid, it would pass an order permitting clearance of those goods for home consumption. This flows from a reading of Section 47 of the Act. In terms of Sections 48 and 49, an importer is also entitled to warehouse the imported goods after the same have been unloaded at a customs station or even transhipped within 30 days therefrom. The goods can thereafter remain in the warehouse pending clearance for removal.

60. Undisputedly, a self-assessed BoE which is submitted by an importer, if accepted and endorsed by the proper officer, would be deemed to have been duly assessed. This clearly flows from the manner in which the word „assessment‟ has been defined in Section 2(2) of the Act and is in any case, an issue that is no longer res integra, bearing in mind the decision of the Supreme Court rendered in the matter of ITC Ltd. vs. CCE – (2019) 17 SCC 46.

………

…….

71. On an overall consideration of the statutory scheme governing the valuation of imports and reassessment, it becomes clear that the reasonable doubt which is spoken of in Rule 12 is indelibly connected to the aspect of the valuation of imported goods and the identification of the transaction value which is spoken of in Section 14. Section 14 introduces a deeming fiction when it provides that the value of the imported goods “shall be the transaction value” and which is ordained to be the price actually paid or is payable for the goods when sold. The 2007 Rules themselves owe their genesis to the identification of transaction value and which subject is principally regulated by Section 14 of the Act.

……

……

75. The imperative of reasons being recorded in support of the doubt with respect to declared value and the same being communicated to the importer were aspects on which due emphasis was laid by the Supreme Court in Century Metal Recycling as is evident from a reading of para 25 of the report. In fact, the Supreme Court pertinently observed that the aforenoted mandate of Rule 12(2) cannot be “ignored or waived”. The statutory obligations flowing from Rule 12 in this regard were reemphasized by the Supreme Court in that decision when their Lordships observed that the same would constitute the only manner in which the proper officer could proceed to make an assessment under Rules 4 to 9. The interplay between Sections 14 and 17, and the 2007 Rules was lucidly explained by the Supreme Court in Century Metal Recycling and where the Supreme Court was faced with a somewhat similar situation of an appellant who alleged that they had been coerced and intimidated into submitting a letter of consent conceding to the assessment and valuation exercise undertaken by the customs authorities compelled by the delay being caused in the clearance of imported articles and the continued levy of demurrage, warehousing charges and other liabilities. After noticing the language in which Rule 12 stood couched, the Supreme Court in Century Metal Recycling observed that while the expression “reason to doubt” may not be akin to a “reason to believe” or a subjective satisfaction being arrived at, it would clearly have to be reasonable and thus the doubt formed would have to be informed by a degree of objectivity.

…….

…….

78. The key takeaways from the decision in Century Metal Recycling would thus be the reasonable doubt being based on empirical and legally justifiable factors illustratively spelt out in Rule 12, the mandate to record reasons in support of the formation of that opinion and the mandatory requirement of communicating that material to the importer upon request.

…….

…….

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.

…….

……

89. The question of abandonment arose for consideration again before a Constitution Bench of the Supreme Court in Bhau Ram vs. Baij Nath Singh – 1961 SCC OnLine SC 292. The issue itself arose in light of the stand of the respondents that the appellants upon withdrawing the pre-emption price would be deemed to have accepted the decree and thus being deprived of the right to assail or question the same. …….

……

97. By virtue of Section 17(5) of the Act, the proper officer stands relieved of the obligation to pass a speaking order only in cases where the importer confirms his acceptance of the reassessment in writing. However, and as was noted in the preceding parts of this decision, the different Benches of the CESTAT have consistently taken the position that letters of consent of the like submitted by the appellants in this batch cannot be viewed as a complete or abject surrender of the right to assail or question a reassessment. However, the host of past precedents rendered on this aspect have come to be overlooked and ignored by the CESTAT which has merely proceeded to toe the line taken in the Advanced Scan Support and Vikas Spinners. We have already taken note of the distinguishing features which inform the aforementioned two decisions.

98. Therefore, the proper officer could not be said to have been relieved of its obligation to pass a speaking order in terms of Section 17(5). The process of rejecting the declared value and reassessing the transaction value is statutorily required to be preceded by the proper officer having drawn an opinion of why the declared value was not liable to be accepted before consequently proceeding to reassess the value. While the said reassessment may not be framed in elaborate terms, it would necessarily have to be reflective of the reasons which weighed upon the respondent to form the opinion that the declared value was not liable to be accepted.

……..

100. Insofar as the aspect of whether the enhancement or reevaluation of the ‘declared value’ can be based solely on the data available in the NIDB, in Agarwal Foundries, the Hyderabad Bench of the CESTAT had held that the customs authorities would be unjustified in enhancing the declared import values solely on the basis of NIDB data. It emphasized that transaction values cannot be rejected arbitrarily and that the authenticity of importer-issued invoices must be accepted unless discredited on the basis of cogent evidence.

……

……..

103. The Chennai Bench of the Tribunal in M/s Gypsie Impex vs. Commissioner of Customs [Final Order No. 40131/2024 dated 5.2.2024] addressed the limitations besetting the usage of NIDB data as the sole basis for re- determining transaction values. It is pertinent to note that Rule 10A of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988, as analysed by the CESTAT in this decision, was similar to Rule 12 of the 2007 Rules. The CESTAT ruled in favour of the appellant, holding that NIDB data alone would be insufficient for value reassessment without corroborative evidence or contemporaneous import comparisons. This decision underscored the importance of comprehensive evidence and procedural compliance in customs disputes, cautioning against arbitrary reliance on NIDB data.

104. It becomes apparent from a reading of these decisions collectively that the Tribunal has consistently found that a valuation addition based solely on NIDB data would wholly unwarranted and that any such reassessment would have to be shored by independent and cogent evidence. The legal position so articulated would ensure fairness and transparency in the determination of import values. The body of precedent noticed above have in unison held that mere reliance on external data without corroborative evidence or clear justification would fail to meet the tests and principles underlying the provisions enshrined in the 1988 Rules and 2007 Rules. They correctly lay emphasis on the imperatives of a reasoned approach to customs valuation and a deviation from declared values being founded on tangible and justiciable material. A reassessment or rejection of declared value would thus have to necessarily be established as being compliant with the aforenoted requirements of pre-eminence. Relieving the respondents of this obligation would clearly lead to pernicious consequences.

105. Accordingly, and for all the aforesaid reasons, we would answer the question framed in the affirmative and in favour of the importers. The appeals are consequently allowed and the impugned orders of the CESTAT set aside. The order of the Commissioner (Appeals) shall in consequence stand restored.”

10. In view of our discussion above and by following the ratio of the decision of Hon‟ble High Court of Delhi in the case of  Hanuman Prasad & Sons (supra), we are of the considered opinion that the impugned order is not sustainable in law, accordingly, we set aside the same and allow all the appeals, with consequential relief, if any, as per law.

(Order pronounced in the open court on 27.02.2025)