CESTAT Chandigarh: NIDB Data Alone Cannot Justify Customs Valuation Enhancement

Gian Castings Pvt Ltd Vs Commissioner of Central Excise and Customs (CESTAT Chandigarh)

CESTAT Chandigarh considered 25 appeals arising from a common Order-in-Appeal No. ASR-CUSTOMS-PVR-APP-147-171-14-15 dated 23.07.2014 concerning enhancement of the assessable value of imported Heavy Melting Steel Scrap and Light Melting Steel Scrap. The appellant had filed 25 Bills-of-entry declaring the goods under Customs Tariff Sub-heading 72044900. The declared rates ranged from USD 220 to USD 375 per MT, while the enhanced rates were USD 393 or USD 400 per MT. The appellant paid customs duty on the enhanced transaction values and obtained clearance of the goods, but subsequently challenged the rejection of the declared values and the enhancement before the Commissioner (Appeals), who dismissed the appeals.

The appellant submitted that the enhancement was based on data provided by the Department of Valuation and that the declared transaction value could not be rejected without cogent evidence. It was contended that payment of enhanced duty was made out of compulsion to clear the goods and did not prevent the appellant from challenging the assessment. The appellant also relied on Section 14 of the Customs Act, 1962 and several judicial decisions concerning transaction value, NIDB data, valuation rules, Directorate of Valuation guidelines and the requirement for individual examination of imported transactions. The Revenue supported the enhancement, relying on Directorate of Valuation guidelines and decisions concerning acceptance of enhanced values and subsequent challenges.

The Tribunal identified the issue as whether enhancement based on NIDB data, contemporaneous imports of identical goods and Directorate of Valuation guidelines was legally sustainable. It held that the appellant’s payment of enhanced duty did not debar it from challenging the enhancement and that there was no estoppel in law. The Tribunal followed the Delhi High Court’s order dated 27.11.2024 in Niraj Silk Mills Vs. Commr of Customs (ICD) Patparganj along with Hanuman Prasad & Sons Vs Commissioner of Customs. The Delhi High Court had decided the issue in favour of the importer-assessee and, among other matters reproduced in the Tribunal’s order, held that the statutory requirements concerning reassessment had to be followed and that NIDB data alone could not justify enhancement without corroborative evidence.

Following the Delhi High Court’s decision, CESTAT Chandigarh concluded that the impugned order was not sustainable in law. The Tribunal accordingly set aside the impugned order and allowed all 25 appeals, with consequential relief, if any, as per law. The order was pronounced in the open court on 10.03.2025.

Cases Discussed

• Niraj Silk Mills Vs. Commr of Customs (ICD) Patparganj (Delhi High Court), CUSAA 26 of 2022
• Hanuman Prasad & Sons Vs Commissioner of Customs (Delhi High Court), CUSAA No. 27 of 2022
• Gypsie Impex Vs. Commr of Customs (CESTAT Chennai), F.O. No. 40131/2024 dated 05.02.2024
• Commr of Customs Port Vs. JJR Associates (Supreme Court), 2023 (386) ELT 877 (SC)
• JJR Associates Vs. Commr of Customs (Tri-Kolkata), 2023 (12) Centax 269 (Tri-Kolkata)
• Unik Traders Vs. Commr of Customs, Tuticorin (Tri-Chennai), 2023 (386) ELT 759 (Tri-Chennai)
• National Steel & Agro Pvt Ltd Vs. Commissioner of Customs, Mumbai-I (Tri-Mumbai), 2022 (381) ELT 693 (Tri-Mumbai)
• B.B. Impex Pvt Ltd Vs. Commissioner of Customs (Prev.), New Delhi (Tri. Delhi), 2021 (376) ELT 743 (Tri. Delhi)
• ITC Ltd. vs. CCE (Supreme Court), (2019) 17 SCC 46

FULL TEXT OF THE CESTAT CHANDIGARH ORDER

These 25 appeals are directed against a common impugned order i.e. Order-in-Appeal No. ASR-CUSTOMS-PVR-APP-147-171-14-15 dated 23.07.2014 passed by the Commissioner of C. Ex. & Cus. (Appeals), Chandigarh whereby the assessable value of the melting scrap imported by the appellant has been enhanced and duty was levied on the enhanced value. Since the issue involved in all the appeals is identical and there is a common impugned order vide which 25 appeals, against assessment of 25 Bills-of-entry, have been decided by the learned Commissioner (Appeals), therefore, all 25 appeals are taken up together for discussion and decision vide this order. The details of all 25 Bills-of-entry are given herein below:

2. Briefly the common facts involved in all 25 appeals are that the appellant had filed Bills-of-entry mentioned above for clearance of consignments of impugned imported goods declared as Heavy Melting Steel Scrap/ Light Melting Steel Scrap. The appellant declared impugned goods under Customs Tariff Sub-heading 72044900. During the assessment, the Assessing Authority rejected the declared value as cited above in the table (column 3) and enhanced the same as cited above in the table (column 4) in respect of each impugned Bill-of-entry. The appellant paid the customs duty on the enhanced transaction value and got the clearance of the impugned imported goods. Aggrieved by the rejection of declared transaction value and enhancement of the same, the appellant filed appeals before the learned Commissioner (Appeals) on various ground, but the learned Commissioner (Appeals), after considering the grounds raised by the appellant, has dismissed the appeals of the appellant. 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 assessable value was enhanced on the basis of data provided by the department of valuation. He also submits that in the appellant‟s own case, in the matter of assessment of one Bill-of-entry, the Commissioner (Appeals) vide Order-in-Appeal No. LUD-EXCUS-001-APP-2230-19 dated 26.03.2019 has held that there is no basis for rejection of the declared value.

4.3 The learned Counsel further submits that the appellant paid the enhanced duty out of compulsion to clear the goods but that does not mean that the appellant had accepted the enhancement of the transaction value and there is no estoppel in law and the appellant is legally entitled to challenge the enhancement of assessable value or transaction value by way of filing the appeal against assessment of Bill-of-entry.

4.4 The learned Counsel further submits that the impugned order is based on the erroneous presumption that since the appellant deposited the duty, they had forfeited the right to contest the correctness of the enhanced transaction value. He also submits that the impugned order is a non-speaking order as the Commissioner (Appeals) has not given findings on the various submissions made by the appellant and therefore, the impugned order being non-speaking, is not sustainable in law. He also submits that the impugned order is in gross violation of principles of natural justice because the Commissioner (Appeals) has relied upon the letter dated 20.05.2014 of the Deputy Commissioner but the copy of the said letter was not given to the appellant to rebut the contents of the same and further, the said letter was obtained behind the back of the appellant.

4.5 The learned Counsel further submits that the Commissioner (Appeals), while acting as a quasi-judicial authority, was not bound by the data of the department of valuation or the letter of the Deputy Commissioner. He ought to have called for the data from the department of valuation, analyzed the data, given an opportunity to the appellant to rebut the same then pass the impugned order after applying his mind to the facts of the case.

4.6 The learned Counsel further refers to the provisions of Section 14 of the Customs Act, 1962 and submits that as per Section 14 ibid, the value of imported goods and export goods is the transaction value thereof and the said Section further elaborates that the transaction value of the goods is the price actually paid or payable for the goods when sold for export to India for delivery at the time and place of importation, where the buyer and seller are not related and price is the sole consideration for sale. He further submits that the proper officer can reject the declared value/transaction value under clause-(iii) of the second proviso to Section 14 ibid only if he has reason to doubt the truth and accuracy of the declared value. Such reason has to be based on some cogent evidence. However, no such evidence has been adduced by the department and onus to prove under­valuation was on the department. For this submission, he relies on the decision of the Tribunal in the case of H.S. Chadha Vs. Commr of Customs [Final Order Nos. 50063-50066/2020 dated 09.01.2020].

4.7 The learned Counsel further submits that as a basic rule, the transaction value is the assessable value of imported goods, for delivery at the time and place of importation where the price is the sole consideration for sale and the buyer and seller are not related to each other. He further submits that in the present case, there is no allegation that the price is not the sole consideration for sale or that the buyer and seller are related to each other, and in the absence of this allegation, there can be no justification for rejection of the transaction value and the imported goods must be assessed to duty on the basis of the transaction value only. In support of this submission, he relies on the following decisions:

• Eicher Tractors Ltd Vs. Commr of Customs – 2000 (122) ELT 321 (SC)
• Commr of Customs Port Vs. JJR Associates – 2023 (386) ELT 877 (SC)
• JJR Associates Vs. Commr of Customs – 2023 (12) Centax 269 (Tri-Kolkata)
• Unik Traders Vs. Commr of Customs, Tuticorin – 2023 (386) ELT 759 (Tri-Chennai)
• National Steel & Agro Pvt Ltd Vs. Commissioner of Customs, Mumbai-I – 2022 (381) ELT 693 (Tri-Mumbai)
• Peekay Steel Castings Pvt Ltd Vs. Commissioner of Customs – 2016 (340) ELT 389 (Tri-Bang.)

4.8 The learned Counsel also relies on the decision of the Tribunal in the case of B.B. Impex Pvt Ltd Vs. Commissioner of Customs (Prev.), New Delhi – 2021 (376) ELT 743 (Tri. Delhi) wherein the Tribunal has held that NIDB data of contemporaneous import is not reliable as there may be difference in quantity and quality. It has also been held that transaction value must be accepted where the buyer and seller are not related to each other and there is no evidence of any extra financial consideration.

4.9 The learned Counsel further submits that a genuine transaction value cannot be rejected and valuation Rule 10A cannot be invoked on the ground that identical goods have been imported into India at higher price. In this regard, he relies on the following case-laws:

• Topsia Estates Pvt Ltd Vs. Commr of Customs (Imprt-Export) – 2015 (330) ELT 799 (Tri-Chennai)
• Bayer India Ltd Vs. Commr of Customs, Mumbai – 2006 (198) ELT 240 (Tri-Mumbai)
• National Organic Chemicals Limited Vs. Commr of Customs, Kandla – 2009 (279) ELT 454 (Tri-Ahmd)
• Speco Industrial Corpn Vs. Commr of Customs, Amritsar – 2003 (157) ELT 284 (Tri-Del.)
• Commr of Customs, Chennai vs. Adani Exports Ltd – 1999 (111) ELT 143 (Tribunal) : 2003 (156) ELT A168 (SC)
• In RE : Asian Hotels Ltd – 2003 (157) ELT 239 (Commr. Appl.)
• CBEC Circular F.No. 467/09/2001-Cus.V & 16/2003-Cus dated 17.03.2003

4.10 The learned Counsel further submits that NIDB data cannot be made the basis for rejecting the transaction value as has been held in the following cases:

• Niraj Silk Mills Vs. Commr of Customs (ICD) Patparganj – Order dt. 27.11.2024 in CUSAA 26/2022 & CM APPL 22868/2022 (stay) – High Court of Delhi
• Gypsie Impex Vs. Commr of Customs – F.O. No. 40131/2024 dated 05.02.2024 – CESTAT CHENNAI
• Neha Intercontinental Pvt Ltd Vs. Commr of Customs, Goa – 2006 (202) ELT 530 (Tri-Mumbai)
• Commr of Customs Vs. Modern Overseas – 2005 (184) ELT 65 (Tri-Del.)
• Akash Enterprises Vs. Commissioner of Customs, Delhi – 2017 (358) ELT 987 (Tri-Del.)
• Venture Impex Pvt Ltd Vs. Commissioner of Customs (Import & General) – 2016 (338) ELT 759 (Tri-Del.)

4.11  The learned Counsel further submits that DGoV Circular cannot override the provisions of Valuation Rules as has been held in the following case:

• Commr of Customs (Import), Nhava Sheva Vs. Bharathi Rubber Lining & Allied Services – 2013 (287) ELT 124 (Tri-Mumbai)

4.12 The learned Counsel also submits that Assessing Authority has to examine each and every case on merits and all transaction values cannot be rejected on the basis of DGoV Circular and the value of imported goods cannot be loaded across board on general criteria as has been held in the following cases:

• Commr of Customs, Mumbai Vs. FPS (India) Pvt Ltd – 2009 (234) ELT 268 (Tri-Mumbai)
• Ganesh Agro Vs. UOI – 2012 (276) ELT 459 (P&H)
• Gupta Agri Care Pvt Ltd vs. UOI – 2013 (290) ELT 207 (P&H)
• Lifestyle International Pvt Ltd Vs. UOI – 2011 (271) ELT 190 (Bom.)

5. On the other hand, the learned Authorized Representative for the Revenue reiterates the findings of the impugned order and submits that the Assessing Authority has rightly enhanced the values on the basis of the guidelines issued by the Directorate of Valuation which flagged imports of iron and steel scrap as potentially under­valued. He further submits that when the appellant has accepted the enhancement, thereafter, there is no need to pass a speaking order before clearance of the goods. He further submits that the appellant lodged a protest against the enhanced value after having cleared the goods and paid duty which the Commissioner (Appeals) has declined to accept. In support of his submission, he relies on the following decisions:

a. Varun Overseas Vs. CC, Delhi-IV – 2011 (272) ELT 579 (Tri-Del.)

b. Advanced Scan Support Technologies Vs. CC, Jodhpur – 2015 (326)n ELT 185 (Tri-Del.)

c. Varsha Plastics Pvt Ltd Vs. UOI – 2009 (235) ELT 193 (SC)

d. Singal Bearing Co Vs. CCE, Delhi-IV – 2013 (293) ELT 284 (Tri-Del.)

e. Om Drishian International Ltd Vs. CC, ICD, Tkd New Delhi – 2016 (343) ELT 159f (Del.)

f. DJP International Vs. CC, ICD, New Delhi – 2017 (350) ELT 294 (Tri-Del.)

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 as cited above.

7. We find that the only issue to be decided in this case is whether enhancement based on NIDB data as well as based on contemporaneous import of identical goods and also based on the guidelines issued by the Directorate of Valuation, is legally correct or not?

8. We find that in the present case, when the Bills-of-entry were assessed, the Assessing Officer sought to enhance the values which were accepted by the appellant-importer and enhanced duty was paid and the goods were cleared. But thereafter, the appellant-importer challenged the enhancement being violative of the provisions of Customs Valuation Rules/Act made thereunder.

9. Further, we find that the appellant had accepted the enhanced duty and paid the same out of compulsion to clear their goods, but accepting the same, will not debar the appellant to challenge the same by filing the appeal. There is no estoppel in law and the appellant is entitled to challenge the enhancement of assessable value by way of filing the appeal. This issue has been considered in various cases by the Tribunal/High Courts/Supreme Court.

10. 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 Niraj Silk Mills Vs. Commr of Customs (ICD) Patparganj – CUSAA 26 of 2022 along with 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. Here, it is pertinent to reproduce the relevant paras of the judgment of the Hon’ble Delhi High Court passed on 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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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 re­determining 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.”

11. In view of our discussion above and by following the ratio of the judgment of Hon‟ble High Court of Delhi passed vide its order dated 27.11.2024, we are of the considered opinion that the impugned order is not sustainable in law, accordingly, we set aside the same and allow all 25 appeals, with consequential relief, if any, as per law.

(Order pronounced in the open court on 10.03.2025)