Rejecting Paper Cup Machines' Transaction Value Merely Relying on Earlier Set-Aside Order is Unsustainable: CESTAT [Read Order]

In a recent ruling, the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) of Delhi bench has held that rejection of the transaction value of paper cup machines based solely on previous which was set aside by the tribunal cannot be upheld. It stated that there is no apparent reason for rejection of the value.

M/s Tradewell, Jaipur, challenged the assessment of two Bills of Entry from 2015, where the declared value of USD 3,500 per machine was rejected, and the value was enhanced to USD 7,500 per machine.

The Deputy Commissioner’s order did not provide independent reasoning or specific grounds for rejecting the declared value but instead relied solely on an earlier order dated August 8, 2019, passed by the Commissioner of Customs, Jodhpur, in relation to other import consignments.

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Aggrieved, the assessee went to the Commissioner (Appeals), who confirmed the order of the Deputy Commissioner, once again based on the same August 2019 order. The genesis of the dispute lies in investigations by the Directorate General of Revenue Intelligence (DGRI) in December 2015, which resulted in show cause notices for undervaluation.

These notices led to the August 2019 Commissioner's order, levying penalties and seizures. This very order was, however, subsequently set aside by the Tribunal in February 2022, and the Revenue's appeal against the Tribunal's ruling was rejected by the Rajasthan High Court as non-maintainable. There is no report of any subsequent challenge or stay issued by the Supreme Court.

The tribunal stated that under Section 14 of the Customs Act, 1962, the assessable value is primarily the transaction value unless exceptions apply. As per the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, particularly Rule 12, the proper officer can reject declared values only after establishing reasonable doubt, seeking additional information, and, if unsatisfied, following a sequential re-determination under Rules 4 to 9.

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In this case, the bench of Binu Tamta (judicial member) and P.V. Subba Rao (accountant member) noted that neither the Deputy Commissioner nor the Commissioner (Appeals) provided such analysis or followed the prescribed procedure. Instead, they merely adopted the findings of an earlier order that had already been set aside, rendering their decisions unsustainable.

Accordingly, the Tribunal allowed the appeal, setting aside the impugned order.

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To Read the full text of the Order CLICK HERE

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