2026-VIL-985-CESTAT-MUM-CU
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CUSTOMS CESTAT Cases

Customs – Valuation, Related Party Transactions – Supply from an associated enterprise - Rejection of Declared Transaction Value based on International Competitive Bidding – Import of goods under comprehensive engineering, procurement and construction contracts following international competitive bidding process for Solar Photovoltaic Power Project - Rejection of declared value of imported goods redetermination under Rule 12 of the Customs Valuation Rules – HELD - Where contracts between importers and suppliers encompass both supply and service components including design, engineering, manufacturing, procurement, packing, forwarding, supply, transportation, installation, testing, commissioning and performance guarantees at a lump-sum price determined through international competitive bidding awarded to the lowest bidder, the relationship between the parties does not influence pricing, thus making the declared transaction value acceptable under Rule 3 of the Customs Valuation Rules - The contractual obligations encompass comprehensive engineering, procurement, construction services and performance guarantees at lump-sum prices determined through transparent and independent decision-making. The evidence relied upon by the Revenue comprises computer printouts of overseas banker letters lacking certification under Section 138C(4) of the Customs Act, 1962, thereby losing evidentiary value. The identical factual situations in earlier appeals involving the same investigation and evidence have been decided by the Tribunal and upheld by the Supreme Court, establishing that declared transaction values could not be rejected - The Principal Commissioner correctly accepted the declared transaction value and rejected the proposed rejection under Rule 12 of the Customs Valuation Rules, 1962, as there exists no valid basis to challenge the genuineness or accuracy of the invoiced values when derived from arms length transactions conducted through competitive international bidding - The impugned order rejecting the show cause notice is upheld and the Revenue appeals are dismissedrnrnConfiscation and Penalties - Whether goods are liable to confiscation and whether penalties can be imposed when there is no misdeclaration of value – HELD - Since the imported goods were established to be correctly valued and declared by the importers, confiscation under Section 111(m) of the Customs Act is not permissible as the goods are neither prohibited nor have any duty implications - Consequently, penalty under Section 112(a) of the Customs Act cannot be imposed as it is contingent upon confiscation of goods - Further, penalty under Section 114AA of the Customs Act cannot be imposed on the importer parties since the charges of over-invoicing have been found unmaintainable and no false or incorrect declarations exist in the import documentation - When goods are held not liable for confiscation due to correct valuation and declaration, no ancillary penalties can follow - The appeals are dismissed.
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