CESTAT Chandigarh Quashes Customs Valuation Enhancement Based on Forced Consent and External Circulars

In a significant ruling that reinforces the sanctity of the declared transaction value in customs assessments, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chandigarh, has delivered a comprehensive judgment in the case of Century Metal Recycling Ltd Vs Commissioner of Customs (CESTAT Chandigarh). The Tribunal, via its order dated 27/02/2025, systematically dismantled the revenue department's practice of artificially enhancing the assessable value of imported goods based on external circulars, uncorroborated international pricing data, and consent letters obtained under the duress of commercial exigencies.

This ruling, which disposed of a massive batch of 105 interconnected appeals, serves as a critical precedent for the importing community. It underscores that an assessee's written acceptance of enhanced valuation, when driven by the immediate need to clear goods and avoid mounting demurrage charges, does not extinguish their statutory right to challenge the reassessment at a later stage.

Factual Matrix of the Dispute

The genesis of the dispute traces back to the period between July and September 2018. During this timeframe, the assessee, Century Metal Recycling Ltd., engaged in the importation of aluminium scrap. These consignments were routed through ICD Piyala, situated in Faridabad, Haryana. To facilitate the clearance of these goods, the assessee filed a total of 105 Bills of Entry, wherein the assessment was sought strictly on the basis of the actual import price, declaring it as the transaction value.

However, the customs authorities stationed at the port harbored apprehensions regarding the authenticity of the declared prices, suspecting them to be artificially suppressed. Consequently, the Assessing Officer refused to accept the transaction value declared by the assessee. The primary basis for this rejection was not any contemporaneous import data or specific intelligence regarding the shipments, but rather a reliance on generalized administrative guidelines. Specifically, the department invoked the DGoV Circular F.No. VAL/TECH/36/2016 (Al Scrap) dated 01.12.2016 and the DGoV Alert Circular No.14/2005 dated 16.12.2005 to justify the enhancement of the assessable value.

Faced with the grim prospect of exorbitant demurrage charges, severe delay penalties, accumulating ground rent, warehousing costs, and the broader commercial ramifications of stalled raw materials, the assessee succumbed to the pressure. To secure the immediate release of their consignments, the assessee furnished letters accepting the enhanced valuation proposed by the department. Following this, the customs authorities reassessed the 105 Bills of Entry at the elevated value.

The Procedural Anomaly at the Appellate Stage

Aggrieved by the reassessment, the assessee escalated the matter by filing an appeal before the Commissioner (Appeals). The first appellate authority, however, rejected the assessee's challenge. Interestingly, while upholding the enhancement, the Commissioner (Appeals) introduced an entirely novel dimension to the dispute: the concept of a related-party transaction.

The appellate authority theorized that the declared value was influenced by a relationship between the assessee and the overseas supplier, CMR America LLC, USA, citing common directors and overlapping shareholding. To substantiate this new ground, the Commissioner (Appeals) leaned heavily on an older Order-in-Original dated 14.12.2017.