2026-VIL-1049-CESTAT-MUM-CU
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CUSTOMS CESTAT Cases

Customs – Valuation, Recovery of Duty – Appellant imported embroidery threads from China declaring goods under Customs Tariff Item (CTI) 5403 4190. During investigation by the DRI, the Director voluntarily admitted to undervaluation by suppressing actual transaction values in commercial invoices and making differential payments to the overseas supplier through illegal cash channels - The importer subsequently paid differential duty during investigation. A show cause notice was issued demanding recovery of differential duties, confiscation of goods, and imposition of penalties - Whether the re-determination of assessable value of imported goods and the confirmation of duty demand under section 28 of the Customs Act, 1962 read with section 14 ibid and the Customs Valuation Rules, 1988 is sustainable in the absence of comparable value data provided by the department, and whether penalties imposed on the importer and its director under sections 114A and 112(b) of the Act are legally sustainable – HELD - The valuation of imported goods must be determined under section 14 read with the Customs Valuation Rules, 1988 based on the transaction value, which represents the actual price paid or payable for goods. In the present case, the appellants themselves provided evidence of the suppressed value through voluntary statements and supplementary invoices, establishing that the real transaction value included all payments made to the supplier through both banking and illegal channels. Rule 4 and Rule 9 of the Customs Valuation Rules require that the transaction value include all costs and payments incurred by the buyer in procuring the goods - In the present matter, the appellants themselves furnished detailed information about the differential price paid through illegal channels, and the undervaluation was established with adequate evidence through the director's own admissions and supplementary invoices. The original authority had also reduced duty demands where corrections were required, demonstrating due application of law. The extended period of recovery under section 28 is justified as the case involves wilful misstatement and suppression of facts by the appellants with intent to evade customs duty. Penalties under sections 114A and 112(b) are warranted as the appellants knowingly and deliberately undervalued goods and made illegal payments to avoid duty - The appeals filed by the appellants are dismissed, and the impugned order upholding the confirmation of adjudged demands is upheld
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