ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 06.03.2026
CESTAT Mumbai Sets Aside Order on Misdeclaration and Re-Determination of Import Value
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), Mumbai, recently delivered a significant judgment in the case of Chandan Steel Limited vs. Commissioner of Customs (Import), Nhava Sheva. โ The case revolved around the import of used and unused articles of base metal and flange protection caps by Chandan Steel Limited from Germany, and the subsequent dispute over the valuation and classification of the imported goods. โ
Background of the Case โ
Chandan Steel Limited filed Bill of Entry No. โ 3347203 dated September 23, 2013, for the clearance of 24.105 MTs of “used/unused articles of base metal and flange protection caps, of various sizes (articles of plastics).” โ The goods were classified under Customs Tariff Item (CTI) 8487 9000 and CTI 3926 9099, with a declared assessable value of โฌ10,387.50 (FOB), freight charges of $1,650, and insurance costs of โน539, amounting to a total value of โน10,03,355. โ
The importer requested a first-check examination of the goods by customs authorities at the port of import, as the consignment contained both used and unused items. โ Upon examination, customs officers found that the goods consisted of old and used second-hand nuts, bolts, pipe fittings, V joints, and other items. โ They concluded that the goods required a No Objection Certificate (NOC) from the Pollution Control Board and Pre-Shipment Inspection Certificate (PSIC). โ The customs authorities deemed the goods as misdeclared and not allowed for import, as they were old and used items other than capital goods. โ
Adjudication and Appeals โ
Following adjudication proceedings, the original authority ordered the re-assessment of the imported goods based on the certificate provided by a Chartered Engineer and comparable values of contemporaneous imports. โ The differential duty payable was determined to be โน1,42,817, along with interest. โ The goods were confiscated under Section 111(m) of the Customs Act, 1962, and released upon payment of a redemption fine of โน60,000 under Section 125 of the Act. โ Additionally, a penalty of โน30,000 was imposed under Section 112(a). โ
Chandan Steel Limited challenged the order before the Commissioner of Customs (Appeals), who upheld the original authority’s decision. โ Dissatisfied with the outcome, the appellant approached the CESTAT.
Key Issues for Determination โ
The Tribunal was tasked with addressing two primary issues:
- Validity of Value Enhancement: Whether the enhancement of the value of imported goods and the determination of differential duty based on the Chartered Engineerโs certificate and contemporaneous imports were legally sustainable under Section 14 of the Customs Act, 1962, and the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 (CVR, 2007). โ
- Misdeclaration Allegations: Whether the confiscation of goods and imposition of redemption fine and penalty on the appellant for alleged undervaluation and misdeclaration were justified under the Customs Act, 1962. โ
Tribunalโs Observations and Findings โ
After hearing both sides and reviewing the case records, the Tribunal made the following observations:
- Re-determination of Value: The Tribunal noted that the authorities had failed to provide data on contemporaneous import values to justify the re-determination of the assessable value. โ The re-assessment was solely based on the Chartered Engineerโs certificate, which did not meet the requirements of Rule 3 and subsequent rules of CVR, 2007. โ The Tribunal emphasized that the proper officer must follow the sequential order of valuation methods outlined in Rules 3 to 9 of CVR, 2007, which was not done in this case. โ
- Misdeclaration Allegations: The Tribunal found that the appellant had requested a first-check examination of the goods to verify their description, classification, and condition. โ The Chartered Engineerโs certificate confirmed that the goods were in conformity with the appellantโs declaration. โ Therefore, the Tribunal held that the allegation of misdeclaration was not supported by evidence and was contrary to the facts of the case. โ
- Legal Precedents: The Tribunal referred to the case of RKG International Private Limited vs. Commissioner of Customs (Export), Nhava Sheva (2018), where it was held that enhancement of value based solely on a Chartered Engineerโs certificate, without considering contemporaneous imports, was arbitrary and unsustainable.
Final Decision
The Tribunal concluded that the authorities had not adhered to the legal provisions of Section 14 of the Customs Act, 1962, and CVR, 2007 in re-assessing the value of the imported goods. โ It also found no evidence to support the allegations of misdeclaration. โ Consequently, the Tribunal set aside the impugned order dated April 10, 2014, passed by the Commissioner of Customs (Appeals) and allowed the appeal in favor of Chandan Steel Limited.โ
Source: CESTAT Mumbai
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