In a major relief to importers, the Delhi High Court has held that a valuation addition based solely on National Import Database (NIDB) data would wholly unwarranted and that any such reassessment would have to be shored by independent and cogent evidence.
The bench of Justice Yashwant Varma and Justice Ravinder Dudeja has observed that NIDB data alone would be insufficient for value reassessment without corroborative evidence or contemporaneous import comparisons. This decision underscored the importance of comprehensive evidence and procedural compliance in customs disputes, cautioning against arbitrary reliance on NIDB data.
The National Import Database (NIDB) is an electronic database focussing on the Customs Valuation and classification aspects of all goods imported at various customs stations in India. The NIDB provides instant access to the combined data, duly analyzed and flagged by the Directorate of Valuation (DOV), to assessing officers all over India for their use as an effective tool to check possible under-valuation and commercial fraud on imported goods.
As many as 10 writ petitions were filed challenging the decision rendered by the Customs Excise & Service Tax Appellate Tribunal1 holding that the appellants, having conceded to the valuation undertaken by the proper officer as contemplated under Section 17(5) of the Customs Act, 1962, would have no right to question or assail such assessment and would also be deemed to have waived their right to question that decision by resorting to the statutory remedies otherwise available under the Act.
The appellant/assessee had imported polyester knitted fabrics of different weights during the period November 2018 to April 2019. Those imports were affected on the basis of 27 Bills of Entry3 which were submitted.
The department disputed the ‘declared value’ of the imported goods on the basis of contemporaneous import data obtained from the National Import Database. It is the case of the appellant that since the clearance of the goods was being inordinately delayed, it was compelled to pay differential customs duty on the enhanced value as computed by the proper officer.
It is alleged that the appellant was compelled and coerced into voluntarily relinquishing its right to receive a speaking order as contemplated under Section 17(5).
Post the BoE being reassessed, the appellant preferred first appeals before the Commissioner of Customs (Appeals). The first appellate authority by a common order disposed of 27 appeals filed by the appellant holding that the mere clearance of goods at a higher value would not deprive the assessee of the right to institute a statutory appeal and that NIDB data alone could not have constituted the basis for enhancing the value of the imported goods. It was this order of the first appellate authority which was challenged by the respondents before the CESTAT.
The CESTAT in terms of the order has essentially held that once the appellant had come to accept the enhanced valuation of the imported goods and waived its right of adjudication, it could not have challenged the reassessment by preferring appeals before the first appellate authority. It has consequently proceeded to set aside the order of the first appellate authority dated 26 April 2019 and allowed the appeals that were preferred by the respondents.
As per Section 14 of the Customs Act, the value of imported and exported goods is recognized to be the transaction value and which expression is explained to mean the price actually paid or payable for those goods when sold for export to India or for export from India for delivery at the time and place of exportation.
The Proviso to Section 14(1) then stipulates that the transaction value would include various additional components such as amounts paid or payable for costs and services, design work, royalties, license fees and others to be determined in the manner specified by statutory rules which may be made in that regard. The Second Proviso proceeds to identify some of the aspects which could be regulated by way of those rules.
Sections 15 and 16 of the Act deal with the date with reference to which the rate of duty and tariff evaluation of imported or exported goods is to be determined.
The importers contended that even if it were assumed that the importer had conceded to the proper officer proceeding to re-determine the transaction value, the same could have clearly not been read as detracting from its right to question and impugn the assessment at a later stage. The concession, even if assumed to have been made, could have neither deprived the importer of the right to assail the reassessment at a later stage nor could it have operated as estoppel or debarred it from pursuing a statutory remedy which the Act itself conferred.
The harassment faced by importers as a result of declared value being mechanically and invariably rejected was an aspect which had fallen for adverse comment of the Supreme Court itself in Century Metal Recycling.
The court relied on the decision of Supreme Court in the case of Commissioner of Customs vs. South India Television (P) Ltd. in which it was held that once the Department provides evidence of contemporaneous imports at higher prices the burden shifts to the importer to validate the declared invoice. The Supreme Court thus highlighted that without adequate evidence or comparable import data, the declared invoice value must be accepted and the benefit of doubt should favour the importer.
The court allowed the appeal of the importers and set aside the order of the CESTAT as well as the order of the Commissioner (Appeals). The appeal as instituted by that appellant before the Commissioner (Appeals) shall stand restored to be heard and considered afresh and in light of the legal position as enunciated in the judgment.
Case Details
Case Title: Niraj Silk Mills Versus Commissioner Of Customs (ICD)
Case No.: CUSAA 26/2022 & CM APPL 22868/2022
Date: 27 November 2024
Counsel For Appellant: Yogendra Aldak
Counsel For Respondent: Aditya Singla
