TaxTMI 
TaxTMI 
2026 (9) TMI 831
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....lting in confirmation of differential customs duty together with interest, confiscation of goods u/s. 111(m) of the Customs Act, 1962 with redemption fine, and penalties u/Ss 112(a), 112(b) and 114A ibid. 2. The facts leading to the filing of the instant Appeal are stated in brief as follows. The Appellant, M/s IG International Private Limited is engaged in the business of import, export and trading of fresh fruits and has been a regular importer for several years. During the period March, 2020 to May, 2023, the Appellant imported fresh apples of the Royal Gala variety originating in Brazil and classifiable under CTH 08081000 of Customs Tariff Act, 1975, under an annual commercial agreement with its overseas supplier, M/s Blue Whale SAS, France, on Cost, Insurance and Freight (hereinafter referred to as 'CIF') terms, destination Nhava Sheva. Under the said agreement, the entire responsibility for arranging and bearing the cost of freight and insurance rested exclusively with Blue Whale, France whereas the Appellant paid the agreed CIF invoice value. 3. Blue Whale, France, in turn sourced the apples from M/s Agropecuaria Schio LTDA, Brazil (hereinafter referred to as 'the Braz....
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....March, 2021 to December, 2022) and Period-III (January, 2023 to May, 2023). 6. The re-determination also proceeded on the premise that the FOB value appearing on Non-GMO certificates issued by Brazilian authorities (an ancillary FSSAI-compliance document) was the "true" value, to which actual freight, as per shipping-line invoices, payable by Blue Whale and notional insurance at 1.125% of FOB were required to be added under Rule 10(2) of CVR, 2007. 7. The Appellant filed a detailed reply dated 21.07.2025 and further Additional Written Submissions dated 18.02.2026, denying the allegations and demonstrating that the transactions were bona fide, conducted on CIF terms under a genuine commercial contract, and that the declared transaction value was the correct assessable value in terms of Section 14 ibid. Vide impugned Order-in-Original dated 17.03.2026, the Adjudicating Authority confirmed the proposals in the Show Cause Notice substantially in full, holding, inter alia, that the invoices were "incorrect" within the meaning of Rule 11 of CVR, 2007, and rejected the Appellant's transaction value. Aggrieved, the Appellant filed the instant appeal before this Tribunal. 8. Le....
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....le SAS France" and by freight invoices raised by Mediterranean Shipping Company France S.A.S. on Blue Whale. There is neither any finding nor any evidence, that the Appellant made any payment of freight to any carrier. • That the issue is squarely covered by an order dated 11.5.2023 of this Tribunal in CJ Shah And Co. v. Commissioner of Customs, Mumbai (Customs Appeal No. 85789/2022) and also by Final Order No. 77872/KOL/2024 dated 18.12.2024 passed by a coordinate Bench in Microgen Hygiene Pvt. Ltd. v. Commissioner of Customs, Kolkata (Final Order No. 77872/KOL/2024 in Appeal No. C/77844/2018, dated 18.12.2024), holding that where invoices are issued on CIF terms and freight/insurance are shown to have been arranged and paid by the foreign supplier, no addition under Rule 10 is warranted. Reliance has also been placed on the law laid down by the Hon'ble Supreme Court in Union of India v. Mohit Minerals P. Ltd. [2022 (61) GSTL 257 (SC)] for the proposition that where freight and insurance are the responsibility of the foreign supplier, the contract is CIF. • The Hon'ble Supreme Court in Wipro Ltd. v. Assistant Collector of Customs [(2015) 319 ELT 177 (SC)]....
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.... found a finding of fraud. In the absence of any finding of excess payment, the declared transaction value cannot be rejected. • Invocation of the extended period of limitation is also not sustainable as there is no wilful misstatement or suppression of facts. No document has been suppressed from the department. All import documents viz. commercial invoices, Bills of Lading, packing lists, certificates of origin and phytosanitary certificates, were submitted at the time of assessment and nothing was withheld. Mere error or difference of opinion on valuation methodology does not amount to "collusion", "wilful mis-statement" or "suppression of facts", which connote a positive act with deliberate intent to evade duty. There is no positive act of fraud or intentional mis-declaration and the department's own position rests on a contestable valuation theory premised on upstream supply chain comparison. In the absence of the statutory ingredients of Section 28(4), the ordinary two-year period under Section 28(1) alone would apply, rendering the demand for periods beyond two years as time-barred. In support reliance was placed on Pushpam Pharmaceuticals Co. v. CCE, Bombay [199....
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....freight and insurance, thereby suppressing the correct assessable value. Reliance was placed on the statements recorded u/s.108 ibid, including that of Shri Tarun Arora, Director of the Appellant company and of Shri Yuvraj Chavan, Shipping Manager. Reliance was also placed on the Non-GMO certificates said to disclose the "true" FOB value, and on freight invoices obtained from shipping lines, to contend that the re-determination under Rule 10(2) of CVR, 2007 was justified and that the extended period of limitation was rightly invoked on account of wilful suppression. 10. We have heard learned Counsel for the Appellant and learned Authorised Representative for the Revenue, and perused the case record including the written submissions/synopsis placed on record. It is well settled that Section 14(1) of the Customs Act, 1962 read with Rule 3(1) of CVR, 2007 makes the transaction value, the price actually paid or payable for the goods when sold for export to India, the primary and preferred basis of customs valuation and resort to any other method is permissible only where one of the grounds specifically enumerated in Rule 12 of CVR, 2007 is made out. The law on this point is settled ....
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....transaction with the French entity is identical to the CIF price declared by the French entity in its invoices to the appellant. The Department's reliance upon the Brazilian FOB document does not advance its case. The said document establishes, at the highest, the price at which the Brazilian supplier sold the goods to the French entity. It does not establish that the appellant paid, or was liable to pay, any amount in addition to the CIF price invoiced by the Blue Whale France. On the contrary, the fact that the CIF price charged by the Blue Whale France is identical to the upstream FOB price makes it impossible to infer, merely from a comparison of the two documents, that any additional amount towards freight or insurance was recovered from the appellant. 15. Rule 10(2) requires inclusion of the cost of transportation and insurance to the place of importation in the value of the imported goods. However, the provision cannot be applied on the basis of a hypothetical or assumed freight and insurance liability. Where the declared transaction value is a CIF price, the Department has to establish, by cogent and objective material, that the freight and insurance attributable to the ....
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....eclared value. The exercise of determining such amount cannot be undertaken by resorting to conjecture or by treating the Brazilian FOB price as an alternative measure of the value of the goods. 20. We are, therefore, of the considered view that the Brazilian FOB price cannot be employed as a basis for rejecting the CIF transaction value declared by the appellant or for making an addition towards freight and insurance under Rule 10(2), particularly when there is no evidence of any additional payment by the appellant. The Department has failed to establish either that the declared CIF price was not the price actually paid or payable or that any identifiable freight or insurance amount, otherwise includible under Rule 10(2), was omitted from the declared value. Accordingly, the declared transaction value is liable to be accepted and the consequential enhancement of assessable value cannot be sustained. 21. In a decision on an identical issue by a co-ordinate Bench of this Tribunal in M/s CJ Shah And Co.(supra), where, in similar facts involving CIF/CFR invoices from a trading intermediary, it was held that invoices raised on CIF terms, having freight cost separately embedded th....
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....ed or notional freight component. The burden lies on the department to establish that the invoice price does not represent the price actually paid or payable for a particular transaction. Had the Department produced any evidence that the appellant was contractually liable to reimburse that freight/ insurance, then Rule 10(2) could have potentially require its inclusion even though the invoice is described as CIF. The Brazilian FOB document is merely an unrelated third-party document which do not establish the price actually paid or payable by the appellant to the Blue Whales, France. 26. The mere availability of an upstream FOB price in a document pertaining to a transaction between third parties cannot, by itself, constitute a valid basis for discarding the CIF transaction value declared by the importer. The transaction value contemplated u/s. 14 ibid r/w Rule 3 of CVR, 2007 is the price actually paid or payable for the goods when sold for export to India. An upstream transaction between the foreign exporter and another foreign supplier is a distinct commercial transaction and cannot automatically be substituted for the price agreed between the Appellant and its overseas seller....
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....d that although the invoice price is not sacrosanct, before rejecting the same the Department is required to give cogent reasons and bring material on record to establish that the declared price does not represent the real transaction value. The burden is thus on the Department to establish that the apparent price is not the real price. The relevant paragraph of the said decision is as under:- "6. .......In the present case, the Department has charged the respondent-importer alleging mis-declaration regarding the price. There is no allegation of misdeclaration in the context of the description of the goods. In the present case, the allegation is of under-invoicing. The charge of under-invoicing has to be supported by evidence of prices of contemporaneous imports of like goods. It is for the Department to prove that the apparent is not the real. Under Section 2(41) of the Customs Act, the word "value" is defined in relation to any goods to mean the value determined in accordance with the provisions of Section 14(1). The value to be declared in the Bill of Entry is the value referred to above and not merely the invoice price. On a plain reading of Section 14(1) and Section 1....
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....s on declaration made in the exporting country, it has to show how such declaration was procured. We may clarify that strict rules of evidence do not apply to adjudication proceedings. They apply strictly to the courts' proceedings. However, even in adjudication proceedings, the AO has to examine the probative value of the documents on which reliance is placed by the Department in support of its allegation of under-valuation. Once the Department discharges the burden of proof to the above extent by producing evidence of contemporaneous imports at higher price, the onus shifts to the importer to establish that the invoice relied on by him is valid. Therefore, the charge of underinvoicing has to be supported by evidence of prices of contemporaneous imports of like goods. Section 14(1) speaks of "deemed value". Therefore, invoice price can be disputed. However, it is for the Department to prove that the invoice price is incorrect. When there is no evidence of contemporaneous imports at a higher price, the invoice price is liable to be accepted. The value in the export declaration may be relied upon for ascertainment of the assessable value under the Customs Valuation Rules and not for....
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.... conspicuously absent here, that the upstream price influenced or was reflected in the price actually paid by the Appellant. 32. A Non-GMO certificate establishes, at most, that the particular consignment has been certified as non-genetically modified, however, it does not state: • the market price of Non-GMO goods; • the premium attributable to Non-GMO status; • the price at which comparable Non-GMO goods were • sold for export to India; • the price actually paid or payable by the importer; • the commercial level or quantity adjustment; or • any other quantifiable element contemplated by the Valuation Rules. 33. Indeed, the official Non-GMO certification scheme of the Export Inspection Council itself treats the certificate as a certification document identifying the product, invoice, quantity, shipment etc. It is not prescribed as a valuation document. Elevating an ancillary regulatory compliance document over the primary commercial invoice, and treating incidental figures appearing on it as determinative of assessable value, is not warranted either u/s. 14 ibid or under CVR, 2007. ....
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....d transaction value can be rejected. The standard is one enunciated by the Hon'ble Supreme Court in D. Bhoormull (supra) proof on a preponderance of probabilities but resting on a consistent, interlocking chain of evidence and not merely on assumption or conjecture. On the facts before us, the chain is broken at its most critical link as there is no finding supported by evidence, that the Appellant paid, or that Blue Whale received, any sum beyond the declared CIF invoice value. 37. In the present case, the statements relied upon by the Department do not find corroboration from any independent evidence establishing the actual payment or flow of the alleged differential amount. There is no documentary or financial evidence connecting the appellant with any payment over and above the CIF consideration disclosed in the import documents. The statements, therefore, cannot, in the facts of the present case, bridge the fundamental evidentiary gap between the Brazilian upstream transaction and the appellant's downstream import transaction. 38. Section 28(4) of the Customs Act, 1962 can be invoked only upon a positive finding of collusion, wilful mis-statement, or suppressio....