CESTAT Chandigarh Rejects Customs Valuation Based on DRI Alert

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Dated: 24.05.2025

CESTAT Chandigarh Rejects Customs Valuation Based on DRI Alert

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Chandigarh Bench quashed customs duty enhancements and denial of exemptions imposed on importers Garg Impex and Sedna Impex India Pvt. Ltd. The Tribunal held that the valuation enhancement solely based on a DRI alert and denial of exemption under multiple customs notifications was legally unsustainable.

Background of the Case

Appellants: M/s Garg Impex & M/s Sedna Impex India Pvt. Ltd.
Goods: Polyester Knitted Fabrics imported from China
Period: April 2012 to October 2013
Customs Actions:
- Enhanced declared value using DRI Alert (F.No. 23/13/2011-DZU dated 09.05.2011)
- Denied exemption under:
  - Notification No. 30/2004-CE (CVD exemption)
  - Notification No. 72/2005-Cus (as amended) (preferential duty)
  - Notification No. 151/1982-Cus (inland haulage cost rebate)

Tribunal’s Key Findings

1. Enhancement Based on DRI Alert Is Invalid

Tribunal reaffirmed that declared transaction value cannot be rejected merely on the basis of a DRI alert or NIDB data.
Referred to its own consistent rulings in:
- M/s Sedna Impex & Garg Impex [2016 (10) TMI 517]
- Artex Textiles, Soir International, Universal Traders
Held that valuation must comply with Rule 3 of Customs Valuation Rules, 2007 and Section 14 of the Customs Act, requiring transaction value to be the basis unless exceptions are proven.

2. Exemption Under Notification No. 30/2004-CE Is Valid

Tribunal accepted the argument that CVD exemption is available for imported fabric where no CENVAT credit is claimed—a condition that is inherently met for imports.
Cited Supreme Court ruling in SRF Ltd. v. CC, Chennai [2015 (318) ELT 607 (SC)], confirming that importers are entitled to CVD exemption if credit is not admissible.
Rejected the department’s claim that failure to raise the issue at the Bill of Entry stage forfeited the exemption, citing Share Medical Care v. UOI [2007 (209) ELT 321 (SC)].

3. Additional Exemptions Rightfully Claimable

Notification No. 72/2005-Cus (as amended): Entitled for preferential customs duty when imported from eligible countries – previously allowed in similar adjudications.
Notification No. 151/1982-Cus: Valid benefit for inland haulage rebate for goods imported to inland ports, already upheld in the Soir International case.

Final Verdict

Declared value upheld under Rule 3 of CVR, 2007
All exemption claims restored under the three cited notifications
Commissioner (Appeals) orders set aside
All 9 appeals allowed with consequential reliefs

Legal Significance

This ruling strengthens several legal principles crucial for importers:

Valuation cannot be enhanced based on alerts or database averages without tangible evidence or rule-based justification.
Importers can claim statutory exemptions even if not initially declared, as long as legal conditions are met.
Exemptions for CVD and other levies cannot be denied retrospectively where the statute or notification does not support such denial.

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Source: CESTAT Chandigarh

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