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Dated: 12.04.2025

CESTAT Allahabad Sets aside Overvaluation Allegation on Exported goods

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Allahabad Bench has allowed the appeals filed by M/s Shree Venkateswara Exports and M/s Surya Jyoti Global Logistics, quashing the charges of over-invoicing and related penalties imposed under Sections 113, 114, and 114AA of the Customs Act, 1962.

Background of the Case

• Exporter: M/s Shree Venkateswara Exports
• Customs Broker: M/s Surya Jyoti Global Logistics
• Location: ICD Pantnagar
• Period: March 2017
• Goods: 3.25 lakh pcs of readymade garments under 35 shipping bills
• Claimed Drawback: ₹1.84 crore on declared FOB value of ₹19.93 crore

The DRI alleged that the exporter inflated the value of low-quality garments to claim inadmissible drawback. Based on statements and cost analysis by local manufacturers, the customs department re-determined the value at ₹4.44 crore and imposed redemption fine and penalties.

Key Grounds of Appeal

• The order was passed ex-parte without affording proper personal hearings, especially during COVID-19 lockdown.
• No drawback was claimed on the shipments; request was made to convert them into free shipping bills.
• Market enquiry by ICD officials supported the declared value; the DRI’s cost-based analysis lacked chartered certification.
• Foreign remittance received matched the declared FOB value, confirming the genuineness of transactions.
• Alleged typographical error in one shipping bill misquoting quantity (123000 pcs instead of 12300 pcs) was supported by matching invoice and packing list.

CESTAT Observations

• Department ignored the ICD’s market report, which supported the exporter’s declared FOB values.
• Reliance on costing by two Noida manufacturers without cost auditor certification had no evidentiary value.
• The department did not prove any flowback of foreign currency or sham transactions.
• Bank realization of full FOB value supports the genuineness of exports as per SC rulings in Siddachalam Exports Pvt. Ltd. and Vishal Exports.
• Customs Broker’s role was limited to document filing based on exporter’s inputs; no evidence of connivance or misstatement.

Final Verdict

• Redemption fine and penalties under Sections 114 and 114AA – Set aside.
• Allegation of overvaluation – Held unsubstantiated.
• Customs broker absolved – No deliberate or negligent act proved.
• Both appeals allowed – With consequential relief.

Conclusion

This ruling is a precedent-setting judgment for Indian exporters and CHAs. It reiterates that:

• Foreign remittance at declared FOB value negates overvaluation claims.
• DRI must present concrete evidence to allege over-invoicing.
• Personal hearing and natural justice are essential in customs adjudication.

The case underscores the importance of factual accuracy, fair hearings, and lawful classification in India’s export compliance framework.

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Source: CESTAT Allahabad

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