ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 28.05.2025
CESTAT Delhi- Honest Valuation Error Not Penalized
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi has allowed a group of appeals filed by M/s Delphi Automotive Systems Pvt. Ltd., along with its directors and employees, setting aside a customs duty demand of โน25,53,891 and penalties imposed under Sections 114A and 114AA of the Customs Act, 1962.
The Tribunal held that the valuation errorโtreating Ex-Works prices as FOB for air importsโwas a genuine mistake and not a willful misstatement. Hence, the extended limitation period and penalties were held to be inapplicable.
Case Background
- Appellant: Delphi Automotive Systems Pvt. Ltd. & its Directors
- Nature of Imports: Goods imported by air on Ex-Works basis
- Dispute: Incorrect computation of transport cost under Rule 10(2) of the Customs Valuation Rules, 2007
- Duty Demanded: โน25.53 lakh
- Penalties: Under Sections 114A and 114AA
- Relevant Provisions:
- Section 14 of Customs Act, 1962 (Valuation)
- Rule 10(2) of Valuation Rules (Inclusion of freight & insurance)
- Fifth proviso to Rule 10(2) (Air freight cap at 20% of FOB value)
This Article has been written by Shri Ravi Shekhar Jha, Advocate Delhi High Court based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.
Source: CESTAT Delhi
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