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Commissioner of Customs (Sea), Chennai v. M/s. National Lamination Industries & Anr.

Civil Appeal · Neutral citation not assigned (Civil Appeal Nos. 3748-3751 of 2007)Decided 7 Oct 2015
Civil Appeal Nos. 3748-3751 of 2007
Justice A.K. Sikri · Justice Rohinton Fali Nariman

Background

The importer brought secondary CRGO electrical steel into India through Chennai port, declaring prices of about US$250-300 per tonne. Similar goods cleared through Mumbai and Nhava Sheva were declared at about US$485-750 per tonne. After a DRI investigation, the Customs Commissioner reassessed the Chennai goods at the higher Mumbai-level values and demanded the differential duty, but the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) set aside that order.

Decision Breakdown

The Supreme Court allowed the Department's appeals, set aside the Tribunal's decision and restored the Commissioner's Order-in-Original. It found that the Tribunal had misread the partners' statements, which contained a clear admission that Chennai declarations were much lower than Mumbai values. The importer's defence that the Chennai goods were inferior failed because it produced no contracts, quality documents or reliable evidence, and photographs did not prove the point. The Court also noted the importer gave no satisfactory reason for using the more distant Chennai port, and held the Commissioner validly used the importer's own Mumbai clearances as the valuation basis under Rule 8 of the Valuation Rules.

Lesson Learnt

An importer that declares a low value must support any explanation, such as "the goods were inferior," with documents, because customs authorities can rely on comparable prices and the importer's own admissions. Declaring very different values for similar goods at different ports invites close scrutiny.

Official source (sci.gov.in)View Judgment (PDF)

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