2026-VIL-1266-CESTAT-CHE-CU
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CUSTOMS CESTAT Cases

Customs - Valuation - Rejection of Transaction Value because it appears low – Import of plastic LED bulbs from China - Department rejected declared value on basis of NIDB data and enhanced value on basis of NIDB data - Whether declared transaction value can be rejected and re-determined under Rule 5 of Customs Valuation Rules, 2007 - HELD - Section 14 of Customs Act and Rule 3 of Customs Valuation Rules, 2007 recognize transaction value as primary basis for customs assessment. Declared value cannot be rejected merely because it appears low. Rule 12 permits rejection only where reasonable doubt exists regarding truth or accuracy of declared value and such doubt remains unresolved after considering importer's explanation - In present case, appellant produced commercial invoice showing supply with complete details and banking evidence establishing remittance of entire invoice value through banking channels. Dept neither alleged any additional remittance, extra commercial consideration, flow-back arrangement nor any relationship between buyer and seller or any amount paid over and above invoice value - Dept relied solely on NIDB data without furnishing all details of comparable Bills of Entry, connected invoices and supporting documents, thereby denying appellant effective opportunity to test comparability - Rule 5 requires comparison with similar goods imported at or about same time. Similarity not established merely because both products are described as LED bulbs. Dept not established comparability on any parameters except wattage - The NIDB data alone cannot constitute basis for enhancement of value and Transaction value cannot be discarded merely because some imports reflect higher prices. Department must first establish circumstances warranting rejection of declared value under Rule 12. Requirements of Rule 12 for rejection of declared value are not satisfied - The enhancement of valuation based solely on NIDB data and resulting demand of differential duty, interest, confiscation, redemption fine and penalty are set aside - The appeal is allowed - Confiscation and Penalty - Goods subjected to confiscation and redemption fine and penalty imposed on allegation of undervaluation - Whether confiscation, redemption fine and penalty are sustainable in law - HELD - Confiscation ordered by Commissioner entirely founded upon allegation of undervaluation. Once rejection of transaction value is held to be not tenable, consequential re-determination of value under Rule 5 cannot survive. Apart from allegation of undervaluation there is no evidence of any misdeclaration by appellant. Goods were imported under valid commercial invoices, invoice value was remitted through banking channels and goods were subjected to First Check examination. In these circumstances no basis exists for confiscation or imposition of penalty - Once valuation enhancement is set aside, confiscation under Section 111(m) cannot independently survive. Redemption fine imposed under Section 125 is liable to be set aside. For identical reasons, penalty imposed under Section 112(a) also becomes unsustainable.
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