2026-VIL-1603-CESTAT-MUM-CU
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CUSTOMS CESTAT Cases

Customs – Rejection of declared transaction value, Burden of proof on Department to establish under-valuation, Evidentiary requirements for displacing transaction value under Rule 12 of Customs Valuation Rules 2007 – Importer imported fresh apples from Brazil through a French intermediary on CIF terms - Revenue rejected the declared CIF transaction value and sought to re-determine it on the basis of upstream Brazilian supplier's FOB price – Whether declared transaction value can be rejected and replaced with an upstream FOB price when no evidence has been brought on record of any additional or extra payment by the importer beyond the declared CIF value or any flow-back of funds – HELD – Section 14(1) of the Customs Act 1962 read with Rule 3(1) of Customs Valuation Rules makes the transaction value being the price actually paid or payable for goods when sold for export to India the primary and preferred basis of customs valuation - The law is settled that the burden of proving under-valuation lies upon the Department and that the declared value cannot be displaced except upon cogent positive evidence such as flow-back of funds, extra consideration passing outside the invoice or a relationship between parties influencing price. No evidence or any finding was brought on record to the effect that the importer made any payment to the foreign supplier in excess of the declared CIF invoice value - The CA-certified reconciliation of remittances placed on record demonstrates that remittances did not exceed and were in fact marginally lower than the declared value in every period under consideration. In the absence of any finding of excess payment or flow-back, the declared transaction value could not have been rejected. Mere suspicion regarding the correctness of the declared CIF price cannot take the place of evidence and without any cogent and corroborative evidence establishing additional payment by the importer or any flow-back of differential amount, the declared CIF transaction value could not have been rejected – The declared CIF transaction value is accepted and the enhancement of assessable value is set aside - Customs – Applicability of Rule 10(2) of Customs Valuation Rules 2007 for addition of freight and insurance – Revenue proposed re-determination of assessable value by adding freight and insurance under Rule 10(2) of CVR 2007 on the basis that the declared CIF price did not include actual freight and insurance elements – Whether freight and insurance can be added under Rule 10(2) when invoices are issued on CIF terms and freight was arranged and paid by the foreign supplier – HELD – Rule 10(2) of CVR 2007 permits addition to the price actually paid or payable of the cost of transport and insurance only to the extent not included therein. Where a contract is on CIF terms, the price paid by the buyer already by definition embeds the cost of freight and insurance to the place of importation and no further addition is warranted unless it is shown that the invoiced price though styled CIF did not in fact include these elements - On the material on record, invoices issued by the foreign supplier to the importer record the destination as Nhava Sheva and are admittedly on CIF terms - No evidence has been brought on record by Revenue of any payment of freight or insurance by the importer to any carrier insurer or to the foreign supplier over and above the declared CIF value - Where the declared transaction value is a CIF price and the Department has not established by cogent and objective material that the freight and insurance attributable to transportation of goods to the place of importation were not comprehended in the price actually paid or payable, no addition can be made under Rule 10. The existence and quantum of any additional cost attributable to transportation or insurance has not been established – No addition of freight or insurance under Rule 10(2) is warranted. The importer's declared CIF price is accepted - Customs – Status of Non-GMO certificates as valuation documents, Relevance of upstream transaction between foreign entities – Revenue relied upon Non-GMO certificates issued by Brazilian authorities for FSSAI compliance which disclosed a FOB value and on upstream FOB invoices issued by Brazilian supplier to the French intermediary to re-determine the assessable value of goods imported by the importer - Revenue proposed that the FOB value appearing on Non-GMO certificates and on Brazilian supplier's invoices be added with actual freight and insurance to determine the assessable value – Whether Non-GMO certificates and upstream FOB invoices can be used as basis for rejecting or replacing the importer's declared CIF transaction value for customs valuation purposes – HELD – Non-GMO certificate issued by competent Brazilian authorities is a regulatory instrument addressed to an entirely different statutory purpose for compliance with FSSAI non-GMO advisory - A Non-GMO certificate by itself cannot be used as basis for determining or enhancing the customs value of imported goods. It is not a valuation document and does not establish the price actually paid or payable nor does it by itself establish the quantum of any price differential. These certificates are neither commercial invoices exchanged between the importer and its seller nor documents prescribed under Section 14 of the Customs Act or CVR 2007 as constituting or evidencing transaction value - Section 14(1) confines the inquiry to the price paid or payable in the transaction when goods are sold for export to India being the sale between the foreign exporter and the importer. A prior upstream transaction in the supply chain between parties other than the importer and its own seller is not the transaction contemplated by the statute and cannot be substituted for it absent a specific finding that the upstream price influenced or was reflected in the price actually paid by the importer - The Brazilian FOB price pertains to an upstream transaction between two foreign entities and cannot be substituted for the CIF transaction value declared by the importer in the absence of evidence establishing that the two transactions were merely different manifestations of the same commercial transaction or that the difference between the two prices represented consideration actually paid or payable by the importer. The Department has failed to establish such a nexus. Elevating an ancillary regulatory compliance document over the primary commercial invoice and treating incidental figures appearing on it as determinative of assessable value is not warranted – Upstream FOB prices and Non-GMO certificates cannot be treated as basis for rejecting or replacing the importer's transaction value. The declared CIF transaction value is accepted - Customs – Invocation of extended period of limitation under Section 28(4), Meaning of suppression of facts and wilful misstatement, Distinction between difference of opinion on valuation and deliberate evasion – Whether extended period of limitation under Section 28(4) can be invoked on the basis of a disputed valuation methodology when no positive finding of collusion wilful misstatement or suppression of facts with intent to evade duty is established – HELD – Section 28(4) of the Customs Act can be invoked only upon a positive finding of collusion wilful misstatement or suppression of facts with intent to evade duty. It is not in dispute that all primary import documents were furnished to Customs at the time of assessment - The declared Incoterm CIF was disclosed on the face of every invoice and nothing was concealed. Suppression in the context of extended period connotes a positive deliberate act with intent to evade duty and not a mere omission nor a difference of opinion on valuation methodology - The present dispute is a contested question of valuation methodology whether an upstream FOB figure on a third party document can override a disclosed CIF transac
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