CESTAT Kolkata- valuation enhancement was arbitrary and unsupported

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Dated: 22.05.2025

CESTAT Kolkata- valuation enhancement was arbitrary and unsupported

The Eastern Zonal Bench of CESTAT, Kolkata upheld the decision of the Commissioner (Appeals) in favor of Aahana Commerce Pvt. Ltd., rejecting the Revenue’s appeal challenging the classification and assessable value of imported goods, namely motor controllers and electric tricycle spare parts.

The Tribunal confirmed that the goods were correctly classified under CTH 8503 0090 and also held that the transaction value declared by the importer was valid, striking down the enhancement made by the assessing officer.

Background of the Case

Importer: Aahana Commerce Pvt. Ltd., Kolkata
Goods Imported: Motor controllers and electric tricycle spare parts
Department’s Actions:
- Rejected declared value and enhanced the CIF value
- Reclassified motor controllers from CTH 8503 0090 to CTH 8708 9900
- Importer paid enhanced duty under protest to avoid demurrage
Commissioner (Appeals):
- Accepted the declared transaction value
- Restored classification to CTH 8503 0090

Key Issues Before the Tribunal

Whether the enhanced valuation based on NIDB data was valid
Whether the motor controller was correctly classified under CTH 8503 or should fall under CTH 8708 as per Revenue’s contention

CESTAT’s Observations and Findings

1. On Transaction Value and Valuation Enhancement:

NIDB data used by the assessing officer was flawed—it reflected only assessed value, not actual declared transaction values.
The valuation lacked comparability with respect to country of origin, quantity, and product quality, violating Rule 5 of the Customs Valuation Rules, 2007.
The Department failed to provide any evidence of contemporaneous imports or prove that the declared value was not genuine.
No expert panel or technical examination of goods was conducted.
The Tribunal cited precedents including:
- Prayas Woollens Pvt. Ltd. vs. CC Mumbai
- Sanjivani Non-Ferrous Trading Pvt. Ltd.
- Aakash Enterprises vs. CC New Delhi

Conclusion:

The enhancement was arbitrary and without legal backing. The transaction value was to be accepted.

2. On Classification of Motor Controller:

Motor controllers are parts used principally with electric motors, not specific to e-rickshaws.
CTH 8503 specifically includes parts suitable for use with machines of Heading 8501 or 8502, covering electric motors.
Revenue’s claim under CTH 8708 was unfounded as:
- There was no declaration that controllers were exclusively for e-rickshaws
- Explanatory notes to Chapter 87 exclude such controllers
- No technical or evidential justification was provided

Conclusion:

Controllers are correctly classified under CTH 8503 0090, as they primarily serve to control electric motor functions.

Final Verdict by CESTAT Kolkata

Revenue’s Appeal Dismissed
Classification under CTH 8503 0090 Upheld
Transaction Value Accepted
No infirmity found in the Commissioner (Appeals)’ Order

Legal Significance

This decision reinforces key principles of customs law:

Declared transaction value must be respected unless explicitly disproved with valid evidence.
Classification must be based on principal usage and not speculative end-use assumptions.
NIDB data cannot replace Rule-based valuation processes and must be used judiciously.

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Source: CESTAT Kolkata

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