Importer’s Admission on Undervaluation of Goods Does not Absolve Customs from Verification before Redetermining Value: CESTAT [Read Order]

The Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) of New Delhi bench held that mere admission of undervaluation by an importer is not sufficient to re-determine the value of imported goods unless corroborated by independent evidence like by verifying quality, quantity and characteristics of goods. 

The appeal was filed by Krishna Impex International, which faced allegations of undervaluing consignments of Tussah Silk Yarn imported between 2005 and 2008. The Revenue authorities, relying heavily on the statement of the proprietor, Shri Amarnath Jhunjhunwala, had re-determined the value and imposed differential duty, penalty, and redemption fine.

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The Tribunal found that the basis for revaluation was flawed as it lacked substantive verification or evidence apart from the self-incriminatory statement of the importer. The statement itself was conditional in nature, with the repeated use of the phrase “might be” when estimating actual values, which clearly indicated uncertainty and lacked conclusive admission.

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The bench also noted that such speculative statements, in the absence of corroborative documents or proof of extra consideration paid to suppliers, cannot justify enhancement of assessable value. It noted that the customs department has bypassed his essential process, merely enhancing the value based on an unverified admission.

In addition, it noted several landmark decisions including Eicher Tractors Ltd. v. Commissioner of Customs, Sanjivani Non-Ferrous Trading Pvt. Ltd., and Neeraj Silk Mills, reiterating that the burden of proving undervaluation lies with the department. Without any inquiry into the quality, quantity, or characteristics of the goods, or any proof of contemporaneous imports at higher prices, the Tribunal concluded that the customs authorities had failed to discharge their burden of proof.

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Binu Tamta (Judicial Member) and P.V. Subba Rao (Technical Member) noted that “Merely because there is admission by the importer does not absolve the department to act in compliance of the mandatory provisions. Recording the basis for such an enhancement is the sine-quo-non of re-determination”

“From the perusal of the records of the case, we do not find that the department has made any effort to ascertain quality, quantity, characteristics of the goods of contemporaneous import from which the basis for such reassessment can be made out. In fact, there is no evidence at all to show that the department had carried out any exercise for ascertaining the basis for redetermining the value of the imported goods” stated the bench.

Accordingly, the Tribunal set aside the impugned order and allowed the appeal in favour of the appellant restoring the original declared transaction value for assessment by noting that the revenue has not discharged its burden.

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To Read the full text of the Order CLICK HERE

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M/s. Krishna Impex International vs Commissioner of Customs (ICD) , 2025 TAXSCAN (CESTAT) 523 , Customs Appeal No. 610 of 2011 , 16 May 2025 , Shri Prachit Mahajan , Shri Rajesh Singh