Tax Vista Your weekly tax recap Edn. 273 - 2nd February 2026 Kasi Viswanathan V

 

 

Consignment Sale Imports and the Transaction Value Question:

CESTAT was faced with an interesting issue on customs valuation in the context of gold bars imported on what was described as a 'consignment sale' basis. The appellant had imported gold bars from foreign suppliers under such arrangement. At the time of supply, the suppliers issued proforma invoices indicating the price of the gold bars, with such price being determined on the basis of the rate published by the London Bullion Market Association (LBMA) nearer to the date of issuance of the proforma invoice.

 

On the basis of the proforma invoices, the appellant filed Bills of Entry for home consumption and discharged customs duty by adopting the value reflected therein. Subsequent to clearance of the goods and payment of customs duty, the price of the imported gold bars was mutually finalised between the appellant and the suppliers, final invoices were issued, and the appellant remitted the amounts so finalised to the overseas suppliers. As recorded in the facts, the rights, title, interest and ownership in the gold bars stood transferred to the appellant on remittance of the final invoice amount. It was undisputed that, in some cases, the amount declared in the proforma invoice was either higher or lower than the amount actually remitted based on final invoice.

 

A show cause notice was issued proposing demand of differential duty in case of three bill of entries, where final invoice value was higher, by treating the amount actually remitted to the foreign supplier as the correct transaction value, by placing reliance on Rule 3(1) of the Customs Valuation Rules, 2007. The demand was confirmed by the adjudicating authority by invoking Rule 3(2)(c) read with Rule 10(1)(d) of the Valuation Rules, and the same was upheld by the appellate authority, resulting in the matter travelling to Tribunal.

 

Before the Tribunal, the appellant contended that the basis for raising the demand had changed at each stage of adjudication and orders have travelled beyond show cause notice and hence not sustainable. On merits, it was argued that the value of imported goods under Section 14 of the Customs Act, 1962 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, and not amounts settled two to three months after import. Reliance was placed on Circular No. 11/2010-Cus dated 03.06.2010 to contend that post-importation resale value cannot be adopted for valuation under Section 14. It was submitted that the value declared in the Bills of Entry, being determined on the basis of the price prevalent at the time of import, constituted the correct value for customs purposes, and that remittances made after import could not be regarded as a sale for export to India.

 

It was further argued that where there is no sale at the time of import, in terms of Rule 3(4), valuation must be undertaken in accordance with the sequential methods prescribed under the Customs Valuation Rules, 2007. In the present case, the declared value was based on the London Metal Exchange price, which represented the value of similar goods in terms of Rule 5, and customs duty had accordingly been discharged on such basis. It was also contended that Rule 10(1)(d) applies only where a fixed percentage of the proceeds of a subsequent resale accrues to the foreign supplier as a condition of sale, which was not the case on the facts.

 

The Department argued that it was an admitted position that the appellant had remitted higher amounts to the overseas suppliers than the invoice value declared at the time of import, and therefore such remitted amounts represented the correct transaction value under Rule 3(1) read with Section 14 of the Customs Act, 1962.

 

The Tribunal placed reliance on the FAQs issued by the Directorate General of Valuation, reflecting the views of the Technical Committee on Customs Valuation, which state that goods imported on consignment sale basis do not constitute 'sales' meeting the requirements of Articles 1 and 8 of the Agreement on Customs valuation, and that in such cases valuation cannot be done using the transaction value method. The Tribunal observed that the proper course in such cases would be to determine value sequentially under Rules 4 to 9 of the Customs Valuation Rules, 2007.

 

The appellant had stated that the value declared in the Bills of Entry was based on the prevailing London Metal Exchange price, which constituted the value of similar goods under Rule 5, and this factual position was not disputed by the Revenue. On this basis, the Tribunal held that the value declared in the Bills of Entry was the correct value in terms of Section 14 of the Customs Act, 1962 read with the Customs Valuation Rules, 2007.

 

The Tribunal also dealt with the contention that if the amount actually remitted were to be treated as value, refunds would have to be granted in cases where such remitted amount was lower than the declared value. It held that even in such cases, the value declared at the time of import would continue to be the correct value, as the same was based on LBMA prices prevailing nearer to the date of import, which aligned with Rule 5 of the Valuation Rules. Therefore, there is no excess payment of duty to be refunded.

 

What ultimately emerges from the decision is that the Tribunal was persuaded that valuation based on LBMA prices proximate to the date of import yielded a value consistent with Section 14 of the Customs Act, 1962 read with Rule 5 of the Customs Valuation Rules, 2007. It further held that subsequent price finalisation or remittance, by itself, could not justify rejection of such value under Rule 12. The emphasis of the decision is thus squarely on the correctness of the value at the time and place of importation, rather than on post-import commercial adjustments between the parties particularly when such adjustments were not found to constitute a "condition of sale", a requirement flowing from Rule 3(1) read with Rule 10/Rule 3(2).

 

At the same time, the factual narrative recorded in the order introduces a layer of complexity that goes beyond a standard consignment sale arrangement. The appellant's own submission that rights, title and ownership in the gold bars stood transferred on remittance of the final invoice amount suggests that the transaction may not be a classic case of goods being sold on behalf of the overseas supplier, with the importer acting merely as a consignee. In a conventional consignment sale, subsequent sales are on account of the exporter and title does not pass to the consignee. This understanding is also reflected in the DGOV FAQ relied upon by the Tribunal, which proceeds on the premise that in a consignment sale there is no sale at the time of import and ownership continues to vest with the exporter.

 

While the proposition that there is no sale at the time of importation appears to hold good on the facts, the recorded transfer of ownership upon remittance suggests that the arrangement does not sit entirely comfortably within the classic consignment framework contemplated in the FAQ. However, the Tribunal proceeded on the factual findings as recorded by the lower appellate authority to treat the transaction as 'consignment sales' and did not have occasion to independently re-examine whether, in substance, the transaction qualified as a consignment sale in the strict sense.

 

Seen in this light, the decision reaches a valuation outcome that is aligned with the statutory scheme under Section 14 and the Customs Valuation Rules, even though the characterisation of the underlying transaction as a consignment sale is not subjected to a detailed test. The acceptance of the declared value ultimately rests on the finding that the LBMA-based price represented the value of similar goods under Rule 5, a conclusion that stands independently, irrespective of whether the transaction is ultimately qualifies as a consignment sale or otherwise. [2026-VIL-187-CESTAT-CHE-CU]

 

GSTN Portal - Advisories

i. Interest computation in GSTR-3B

• Interest auto-computed in Table 5.1 of GSTR-3B is minimum interest payable and will be non-editable downward. It can be revised upwards based on self-assessment.
• Computation now gives credit for minimum cash balance lying in Electronic Cash Ledger from due date till date of debit, in line with proviso to Rule 88B (1).
• Interest for delayed January-2026 return will reflect in February-2026 GSTR-3B

 

ii. Sequence of cross-utilisation of ITC for IGST liability

• Once IGST ITC is exhausted, IGST liability in Table 6.1 may be discharged using CGST and SGST /UTGST ITC in any sequence. [As per proviso to section 49(5)(d), CGST ITC to be utilised before SGST/UTGST ITC]

 

The above changes are applicable from January 2026 return period onwards.

[GSTN Advisory dated 30.01.2026]

 

(The views expressed are personal. The author can be reached for feedback or queries on v.k.vishwa@gmail.com)