𝐒 𝐉 𝐄𝐗𝐈𝐌 𝐒𝐞𝐫𝐯𝐢𝐜𝐞𝐬

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Dated: 08.02.2025

CESTAT Delhi Quashes undervaluation charges in case of Bentley Imports, Upholds Declared Transaction Value

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled in favor of Exclusive Motors Pvt. Ltd., overturning a ₹71.74 crore customs duty demand on imported Bentley cars. The tribunal found that the customs authorities failed to prove undervaluation, dismissing penalties and confirming the declared import value as valid.

Key Issues:

1. Alleged Underpayment of Customs Duty

• Customs authorities imposed a differential duty of ₹ 71.74 crores under Section 28 of the Customs Act, 1962, along with interest and penalties, for alleged undervaluation of imported Bentley cars.
• They claimed that the declared value did not include freight and insurance costs, which should have been added as per customs valuation rules.

2. Mode of Transportation & Pricing Dispute

• The cars were imported both by air and sea between August 2018 and July 2023.
• The customs authority alleged that the import price declared in India was the same as the FOB (Free on Board) price declared in the UK, meaning that the importers did not add freight and insurance to determine the CIF (Cost, Insurance, and Freight) value.
• The customs department relied on supplementary invoices and export declarations from UK freight forwarders to justify their claim.

3. Appellants’ Defense:

• Exclusive Motors argued that the declared price was already CIP/DAP (Carriage and Insurance Paid / Delivered at Place) under INCOTERMS, meaning freight and insurance were included in the purchase price.
• They contended that the customs department misinterpreted contractual terms and valuation rules.
• The supplementary invoices relied upon by the customs department were unverified, and there was no proof that Exclusive Motors had made additional payments to Bentley.
• There was no evidence that Exclusive Motors had engaged in fraudulent misdeclaration or non-disclosure.

4. Tribunal’s Decision:

• The tribunal ruled in favor of Exclusive Motors, stating that the customs authorities failed to prove under reporting of import value.
• The supplementary invoices and export declarations from UK authorities were found to be unreliable, as they were not properly authenticated.
• The declared import price was upheld as the transaction value, meaning there was no basis for additional duty or penalties.
• All penalties and charges were dismissed, and the appeal was allowed in favor of the importer.

Conclusion: This case highlights the importance of proper valuation under customs law, particularly for high-value imports. The ruling reinforces that customs authorities must provide concrete evidence before rejecting declared transaction values and imposing additional duties and penalties.

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Source: CESTAT Delhi

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