Written Consent to Enhanced Customs Valuation Does Not Extinguish Statutory Right of Appeal: CESTAT Allahabad

Overview

A significant ruling has emerged from the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Allahabad, in the matter of Maruti Fabric Impex Vs Commissioner of Customs (Customs Appeal No. 70412 of 2020, decided on 07.09.2026), wherein the Tribunal allowed a batch of 26 connected customs appeals and set aside orders passed by the Commissioner (Appeals). The core question before the Tribunal was whether a written consent letter given by an importer at the time of clearance of goods, accepting enhanced assessable value, could permanently foreclose that importer's statutory right to challenge the reassessment through an appeal.

The Tribunal answered this question firmly in favour of the assessee, holding that written acceptance of reassessment for the limited purpose of obtaining clearance of goods, and the consequent waiver of a speaking order under Section 17(5) of the Customs Act, 1962, cannot be equated with an abandonment of the independent right of appeal conferred by Section 128 of the Customs Act, 1962.

Background and Factual Matrix

Nature of the Imports

Maruti Fabric Impex is engaged in importing 'Polyester Knitted Fabrics of Mixed Colour, Weight and Length' from China. During the period from 07.06.2019 to 07.08.2019, the assessee filed 26 Bills of Entry at ICD, Dadri, declaring a transaction value of USD 1.35 per kg, based on commercial invoices issued by the foreign supplier.

Upon examination of the imported goods, customs authorities found them to be fully in conformity with the declarations made in the Bills of Entry. There was no dispute raised regarding the description, quantity, or nature of the goods.

The Clearance Problem

Despite correct self-assessment and goods conforming to declarations, Out of Charge Orders were not issued. The assessee, facing mounting demurrage and detention costs, made repeated written requests to the proper officer for provisional or final clearance of the consignments on payment of duty at the enhanced value under protest.

According to the assessee's submissions before the Tribunal, these requests were consistently ignored. Ultimately, the assessee was compelled to submit written consent letters agreeing to the valuation adopted by the Customs authorities. These letters stated that contemporaneous import data of similar or identical goods had been explained to the assessee, and that the assessee agreed to the enhanced value without requiring a show cause notice or speaking order.

Rejection by Commissioner (Appeals)

When the assessee subsequently filed appeals before the Commissioner (Appeals) against the reassessment in all 26 Bills of Entry, the Appellate Authority rejected the appeals on a singular ground: since the assessee had accepted the enhancement of value in writing, there was no requirement for a speaking order under Section 17(5) of the Customs Act, 1962, and accordingly the reassessed value was binding on the assessee.

The Commissioner (Appeals) did not consider the earlier letters written by the assessee requesting provisional or final clearance under protest, nor did the impugned order examine whether the reassessment complied with the substantive requirements of Section 14 of the Customs Act, 1962 read with the Customs Valuation Rules, 2007.

The Tribunal identified the following principal questions for consideration:

  1. Whether written acceptance of reassessment under Section 17(5) of the Customs Act, 1962 extinguishes the statutory right of appeal under Section 128 of the Customs Act, 1962.
  2. Whether rejection of a declared transaction value without disclosing actual contemporaneous import data satisfies the requirements of Section 14 of the Customs Act, 1962 and the Customs Valuation Rules, 2007.
  3. Whether the doctrine of estoppel or acquiescence can operate to defeat a right conferred by statute in taxation matters.
  4. Whether the Department's reliance on M/s S.S. Overseas & Ors. v. Union of India, Writ Tax No. 881 of 2022 (Allahabad High Court, decided 03.08.2022), was applicable to bar the assessee's appeals on merits.

Submissions of the Assessee

The assessee's counsel advanced the following arguments: