2026-VIL-601-CESTAT-DEL-CU
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CUSTOMS CESTAT Cases

Customs - Overvaluation of export goods – Export of goods claiming benefit of Merchandise Exports from India Scheme (MEIS) and Drawback - The Department found the goods to be overvalued and re-determined the value, leading to confiscation of the goods and imposition of penalties - Whether the Department was correct in re-determining the value of the exported goods and restricting the export incentives accordingly – HELD - The Export Valuation Rules under Section 14 of the Customs Act do not empower the Department to alter the transaction value. The Drawback and other export incentive schemes are based on the FOB value and not on the value determined by the Department under the Export Valuation Rules. The Commissioner committed illegality in ordering reduction of export incentives as he had no authority under the Customs Act or the Foreign Trade (Development and Regulation) Act, 1992 to do so - The Department cannot re-determine the Free on Board (FOB) value declared by the appellant, which is the transaction value between the exporter and the buyer. The Department has no authority to override the Drawback schedule notified by the Central Government or the Foreign Trade Policy which prescribes the MEIS benefits based on the FOB value. The Department can only re-determine the value for the purpose of Customs duty, but that does not affect the export incentives which are linked to the transaction value (FOB value) - The statements recorded by the Department under Section 108 of the Customs Act cannot be used as evidence without following the procedure under Section 138B of the Act. The market enquiry report relied upon by the Department was also not a proper method for re-determining the value under the Export Valuation Rules - The order of confiscation and penalties are set aside and the Department is directed to grant the export incentives based on the FOB value declared by the appellant - The appeal is allowed
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