#AnkitImpex – 𝐀𝐚𝐝𝐫𝐢𝐤𝐚𝐚 𝐋𝐞𝐠𝐚𝐥 𝐒𝐞𝐫𝐯𝐢𝐜𝐞𝐬 (𝐀𝐋𝐒)

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 id 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. Ankit Impex & M/s. SBB International vs. 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. 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. Ankit Impex and M/s. SBB International, had imported goods declared as “Recycled LDPE Granules” under various Bills of Entry, including Bill of Entry No. 268168 dated July 22, 2009. The goods were provisionally assessed, and duties were paid based on the declared value. 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.

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. 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.

The Adjudicating Authority passed an Order-in-Original on March 29, 2023, upholding the allegations and imposing penalties. The importers appealed to the Commissioner of Customs (Appeals), who rejected their appeal on December 12, 2024. Subsequently, the importers filed appeals before the CESTAT, Chennai.

Key Issues Raised in the Appeals 

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. 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.
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. 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.

Tribunal’s Observations and Decision

The Tribunal carefully examined the facts of the case, the rival contentions, and the documents placed on record. It noted several discrepancies in the Adjudicating Authority’s findings, particularly regarding the availability of RUDs. The Tribunal also emphasized that the demands raised under Section 28 were premature, as the assessments were provisional and not finalized.

The Tribunal referred to its own previous decision in the case of M/s. Shami Impex vs. Commissioner of Customs & Ors.  [Final Order Nos. 40819-40823/2024 dated July 9, 2024], which held that demands under Section 28 cannot be raised for provisionally assessed consignments. 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.

Based on these findings, the Tribunal set aside the demands, penalties, and confiscation orders imposed by the Adjudicating Authority and the Commissioner (Appeals). The appellants were granted consequential reliefs as per the law.

Key Takeaways from the Judgment 

Importance of Relied Upon Documents: The Tribunal highlighted the necessity of providing all relied-upon documents to the appellants along with the SCN. 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. The section is applicable only after the finalization of assessments.
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.

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. 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. 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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