ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 03.03.2026
CESTAT Chennai Quashes Undervaluation Demand
This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email idย intelconsul@gmail.com or on his Mobile +91-9999005379.
The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Chennai, recently delivered a significant judgment in the case of M/s. โ Ankit Impex & M/s. โ SBB International vs. โ The Principal Commissioner of Customs. This case revolved around allegations of undervaluation of imported goods and the subsequent imposition of penalties and confiscation of goods under the Customs Act, 1962. โ The Tribunal’s decision, pronounced on February 4, 2026, has set a precedent for similar cases involving provisional assessments and the invocation of Section 28 of the Customs Act.
Background of the Case
The appellants, M/s. โ Ankit Impex and M/s. โ SBB International, had imported goods declared as “Recycled LDPE Granules” under various Bills of Entry, including Bill of Entry No. โ 268168 dated July 22, 2009. โ The goods were provisionally assessed, and duties were paid based on the declared value. โ However, the Directorate of Revenue Intelligence (DRI) initiated an investigation based on intelligence suggesting that the importers were undervaluing their goods to evade customs duties. โ
During the investigation, incriminating documents, including an actual invoice, were recovered, which allegedly proved that the importers had submitted fabricated invoices to the customs authorities. โ A Show Cause Notice (SCN) was issued on August 23, 2013, proposing to reject the declared value, re-determine the value based on the recovered invoice, demand differential duty, confiscate the goods, and impose penalties under Sections 112(a), 114A, and 114AA of the Customs Act, 1962. โ
The Adjudicating Authority passed an Order-in-Original on March 29, 2023, upholding the allegations and imposing penalties. โ The importers appealed to the Commissioner of Customs (Appeals), who rejected their appeal on December 12, 2024. โ Subsequently, the importers filed appeals before the CESTAT, Chennai. โ
Key Issues Raised in the Appeals โ
- Non-availability of Relied Upon Documents (RUDs): The appellants argued that the relied-upon documents mentioned in the SCN were not provided to them, despite repeated requests. โ The Adjudicating Authority claimed that the documents were provided, but this assertion was contradicted by the Authority’s own findings in the Order-in-Original. โ
- Provisional Assessment and Section 28: The appellants contended that the consignments were cleared provisionally, and the assessments were not finalized due to pending test reports. โ They argued that a demand under Section 28 of the Customs Act, 1962, was premature and legally unsustainable, as the section applies only to finalized assessments. โ
Tribunal’s Observations and Decision
The Tribunal carefully examined the facts of the case, the rival contentions, and the documents placed on record. โ It noted several discrepancies in the Adjudicating Authority’s findings, particularly regarding the availability of RUDs. โ The Tribunal also emphasized that the demands raised under Section 28 were premature, as the assessments were provisional and not finalized. โ
The Tribunal referred to its own previous decision in the case of M/s. โ Shami Impex vs. Commissioner of Customs & Ors. โ [Final Order Nos. 40819-40823/2024 dated July 9, 2024], which held that demands under Section 28 cannot be raised for provisionally assessed consignments. โ The Tribunal also cited judgments from the Hon’ble Supreme Court and various High Courts, which consistently held that Section 28 of the Customs Act applies only to finalized assessments. โ
Based on these findings, the Tribunal set aside the demands, penalties, and confiscation orders imposed by the Adjudicating Authority and the Commissioner (Appeals). โ The appellants were granted consequential reliefs as per the law. โ
Key Takeaways from the Judgment โ
- Importance of Relied Upon Documents: The Tribunal highlighted the necessity of providing all relied-upon documents to the appellants along with the SCN. โ Failure to do so violates the principles of natural justice and undermines the adjudication process.
- Provisional Assessments and Section 28: The judgment reinforces the principle that demands under Section 28 of the Customs Act, 1962, cannot be raised for provisionally assessed consignments. โ The section is applicable only after the finalization of assessments. โ
- Judicial Precedents: The Tribunal’s decision aligns with previous judgments from the Supreme Court and High Courts, emphasizing the importance of adhering to established legal principles in customs cases. โ
Conclusion
The CESTAT Chennai’s decision in this case serves as a reminder of the importance of procedural fairness and adherence to legal provisions in customs adjudications. โ It underscores the need for authorities to provide all relevant documents to appellants and to ensure that assessments are finalized before invoking Section 28 of the Customs Act, 1962. โ This landmark judgment will undoubtedly serve as a guiding precedent for similar cases in the future, ensuring that justice is served in accordance with the law.
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Source: CESTAT Chennai
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