CESTAT Ahmedabad Sets Aside Customs Duty and Penalties in Steel Import Valuation and Classification Dispute

Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 24.04.2026

CESTAT Ahmedabad Sets Aside Customs Duty and Penalties in Steel Import Valuation and Classification Dispute

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The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) Ahmedabad recently delivered a significant order in the appeals involving Vasko Steel Private Limited and Vasko Metalloys Private Limited. The case centers on the import of cold rolled stainless steel coils from China, with allegations of undervaluation, misclassification, and improper availing of customs duty exemptions. This article provides a comprehensive overview of the dispute, the arguments from both sides, and the Tribunal’s findings.

Background of the Case

Vasko Steel and Vasko Metalloys are engaged in wholesale trading of iron and steel articles. They imported cold rolled stainless steel coils, classifying them under CTH 7220 90 22 of the Customs Tariff Act, 1975. The customs department raised two primary allegations:

1. Undervaluation of Imported Goods: The department claimed the importers declared lower values than the actual transaction values to evade customs duty.
2. Misclassification and Denial of Exemption: The department alleged the goods were misclassified to avail benefits under Notification No. 50/2018-Cus, which provides tariff concessions for certain goods.

Key Allegations and Evidence

1. Undervaluation

• Department’s Evidence:
  • A note retrieved from the mobile phone of Mr. Madhur Jain (Marketing Manager) allegedly contained actual CIF values, which were higher than those declared in the Bills of Entry (BoEs).
  • Comparison with import prices of M/s Shah Foils Ltd. and other Delhi-based importers showed higher prices for similar goods.
• Appellants’ Defense:
  • The note’s data did not match the specifications and quantities of the actual imports.
  • Goods imported by Shah Foils and Delhi-based importers differed in thickness, width, and grade, making them non-comparable.
  • No evidence of extra remittance or payment beyond the declared values.

2. Misclassification and Exemption Denial

• Department’s Position:
  • Mill Test Certificates showed the imported coils had lower nickel and chromium content than required for “Nickel Chromium Austenitic Type” classification.
  • The invoices were issued by a third-party operator, rendering the Certificate of Origin ineligible for preferential treatment.
• Appellants’ Defense:
  • Indian Standards (IS 15997:2012) allow for austenitic stainless steel with nickel content as low as 0.2%.
  • The goods were correctly classified under CTH 7220 90 22.
  • The exemption should not be denied merely due to third-party invoicing, as the goods originated from China and all documents were submitted at the time of import.

Tribunal’s Findings

1. Valuation

• The Tribunal found that the department had not provided sufficient evidence to reject the transaction value declared by the appellants.
• The note from the mobile phone was not properly authenticated, and the goods compared were not similar or identical.
• The declared values were accepted, and the charge of undervaluation was set aside.

2. Classification and Exemption

• The Tribunal referred to previous decisions (e.g., Shah Foils Ltd.) and Indian Standards, noting that austenitic stainless steel can have nickel content as low as 0.2%.
• The issue of classification was left open for further determination, but the benefit of Notification No. 50/2018-Cus was not denied solely on procedural grounds.

3. Limitation and Penalties

• The Tribunal held that the extended period for raising duty demand was not invokable, as all relevant documents were submitted at the time of import and there was no suppression or collusion.
• Penalties imposed under Sections 114A and 114AA of the Customs Act were set aside.

Penalties and Duty Demands (Summary Table)

Entity	Duty Demand	Penalty
Vasko Steel Pvt Ltd	Rs. 2,94,01,991	Rs. 2,94,01,991 (Section 114A)
Vasko Metalloys Pvt Ltd	Rs. 68,70,721	Rs. 68,70,721 (Section 114A)
Vinaye Jain (Director)	–	Rs. 29,00,000 (Section 112), Rs. 50,00,000 (Section 114AA)
Madhur Jain (Manager)	–	Rs. 29,00,000 (Section 112), Rs. 80,00,000 (Section 114AA)

Legal Precedents Cited

• United Traders (India) vs. Commissioner of Customs, Chennai
• M/s Ruchi Enterprise vs. Commissioner of Customs – Kandla
• Commissioner of Customs, Ahmedabad v. M/s Hamilton Housewares Pvt. Ltd.
• Gulshan Exim Pvt Ltd & Ors. Vs. CCE, Mundra Gujarat

Conclusion

The CESTAT Ahmedabad order in the Vasko Steel case underscores the importance of proper evidence and comparability in customs valuation and classification disputes. The Tribunal’s decision to set aside undervaluation charges and penalties, while leaving classification open for further determination, provides clarity on the standards for importers and customs authorities alike. The case also highlights the role of Indian Standards and legal precedents in resolving complex issues related to steel imports.

Source: CESTAT Ahmedabad

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