CESTAT Chandigarh reaffirmed that transaction values must be assessed based on proper evidence and not arbitrary guidelines

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Chandigarh Bench delivered a significant ruling in the case of Century Metal Recycling Ltd. vs. Commissioner of Customs, Faridabad, addressing customs duty valuation disputes on aluminum scrap imports. The case involved 105 appeals challenging the enhanced valuation of imported goods by customs authorities at ICD Piyala, Faridabad.

1️. Background of the Case

Century Metal Recycling Ltd. imported aluminum scrap between July and September 2018 and filed 105 bills-of-entry at ICD Piyala, Faridabad.
Customs authorities rejected the declared transaction value, citing it as undervalued based on the Directorate General of Valuation (DGoV) circulars.
The importers agreed to the revised valuation under duress to avoid demurrage and warehousing costs.
Appeals were filed after the Commissioner (Appeals) upheld the reassessment, leading to a legal challenge before CESTAT.

2️. Legal Issues Raised

Validity of transaction value under Section 14 of the Customs Act, 1962 and Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.
Whether price enhancement based solely on DG Valuation (DGOV) circulars and alleged related-party transactions was legally justified.
Whether importers who accepted the enhanced valuation under economic duress can later challenge the reassessment.

3️. Findings of the Tribunal

Rejection of Declared Value Was Arbitrary
- The Assessing Officer failed to provide valid reasons for rejecting the declared value.
- DGOV circulars and London Metal Exchange (LME) prices alone cannot be the basis for value enhancement without contemporaneous import data.
Related-Party Transactions Not a Valid Ground
- The Commissioner (Appeals) wrongly introduced a related-party valuation argument that was not even raised by the customs department.
- 82 out of 105 transactions were with independent third parties, further negating this argument.
Consent Letters Were Given Under Coercion
- The Tribunal noted that importers paid the enhanced value under protest to avoid financial losses from delayed clearance.
- Such coerced consent does not preclude the right to appeal against the reassessment.

4️. Judgment and Final Decision

CESTAT set aside the order of the Commissioner (Appeals) and ruled in favor of Century Metal Recycling Ltd.
The Tribunal reaffirmed that transaction values must be assessed based on proper evidence and not arbitrary guidelines.
The importers were granted relief, with orders to restore the original declared values and provide any consequential refunds as per law.

Conclusion

This ruling strengthens protections for importers against arbitrary valuation enhancements by customs authorities. CESTAT upheld the principle that declared transaction values cannot be disregarded without solid evidence and DGOV circulars alone cannot be the basis for reassessment. The decision ensures greater transparency and adherence to valuation rules in customs assessments.

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Source: CESTAT Chandigarh

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