ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 23.07.2025
CESTAT Delhi-Customs Cannot Alter FOB Value to Deny Export Incentives
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, allowed six appeals challenging the re-determination of Free on Board (FOB) export values and the resultant denial of export incentives. The judgment strikes at the root of Customs’ authority to modify transaction values between exporters and foreign buyers.
Background of the Case
Six appellants, including M/s Mahir Fashions (P) Ltd., Naaz Impex, Almas Creations, and individuals, were issued a common Show Cause Notice dated 27.02.2019 by the Directorate of Revenue Intelligence (DRI) alleging overvaluation of readymade garments exported under Drawback and DEPB schemes.
The Commissioner of Customs, ICD, Tughlakabad passed an Order-in-Original (No. 15/2011 dated 24.03.2011) which:
- Rejected declared FOB invoice values of exports.
- Re-determined lower FOB values.
- Ordered recovery of excess incentives (drawback and DEPB).
- Imposed confiscation of goods and penalties totaling several crores.
- Held the exported goods liable for confiscation under Section 113 of the Customs Act, 1962 and penalties under Section 114.
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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