Proforma Invoices Cannot Replace Commercial Invoices Prepared After Negotiation and Accepted by Customs: CESTAT [Read Order]
CESTAT held that proforma invoices cannot replace commercial invoices prepared after negotiation and accepted by customs, setting aside penalties imposed on the importer.
![Proforma Invoices Cannot Replace Commercial Invoices Prepared After Negotiation and Accepted by Customs: CESTAT [Read Order]](https://images.taxscan.in/h-upload/2025/11/03/2101881-proforma-invoices-replace-commercial-invoices-negotiation-accepted-by-customs-cestat-taxscan.webp "Proforma Invoices Cannot Replace Commercial Invoices Prepared After Negotiation and Accepted by Customs: CESTAT [Read Order]")
The Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that proforma invoices cannot replace commercial invoices that were prepared after negotiation and accepted by customs authorities. Saurabh Kapoor, the appellant, was a partner in Chandra Impex and associated with M/s Chandra Chemicals, which imported spray paints from China between 2015 and 2019....
The Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that proforma invoices cannot replace commercial invoices that were prepared after negotiation and accepted by customs authorities.
Saurabh Kapoor, the appellant, was a partner in Chandra Impex and associated with M/s Chandra Chemicals, which imported spray paints from China between 2015 and 2019. The customs department alleged undervaluation of imports based on proforma invoices retrieved from the appellant’s email account.
The department claimed that these invoices reflected higher prices than those declared in the commercial invoices submitted to customs. Based on these findings and a statement recorded from the appellant under Section 108 of the Customs Act, the Principal Commissioner imposed penalties of Rs. 5 lakh under Section 112(b)(ii) and Rs. 50 lakh under Section 114AA.
The appellant’s counsel argued that the statement under Section 108 was obtained under coercion and was immediately retracted through a written letter. They further argued that the procedure prescribed under Section 138B of the Customs Act was not followed, making the statement inadmissible as evidence.
The counsel also argued that the proforma invoices could not be treated as proof of actual transaction value because they were not linked to the imports in question and were never retrieved under a proper panchnama. The appellant maintained that the commercial invoices, prepared after negotiation and verified by customs at the time of clearance, represented the true transaction value.
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The department’s counsel argued that the proforma invoices showed higher values and that the appellant’s voluntary statement confirmed undervaluation. It was contended that the subsequent retraction was an afterthought and that the penalties imposed were justified in light of the evidence collected.
The two-member bench comprising Justice DilipGupta (President) and Hemambika R. Priya (Technical Member) observed that the department failed to establish any connection between the alleged proforma invoices and the actual imports.
The tribunal explained that the statement recorded under Section 108 could not be relied upon because the mandatory procedure under Section 138B was not followed. It also observed that the proforma invoices did not have evidentiary value in the absence of supporting proof.
The tribunal held that the proforma invoices could not replace commercial invoices prepared after negotiation and accepted by customs. It set aside the penalties imposed on the appellant, finding that the charges of undervaluation were not supported by credible evidence. The appeal was allowed.
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