Case Details: Modak Dyeing & Printing Co. Pvt. Ltd. vs. Commissioner of Customs, ICD, Tughlakabad (2026) 42 Centax 480 (Tri.-Del)
Judiciary and Counsel Details
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- Dr Ms. Rachna Gupta, Member (J) & Shri P.V. Subba Rao, Member (T)
- Shri R.K. Hasija, Advocate, for the Appellant.
- Shri Rajesh Singh, Authorised Representative, for the Respondent.
Facts of the Case
The appellant exported Girls’ Woven Frocks through two shipping bills dated 31.08.2018, declaring an FOB value of ₹4.10 crore, equivalent to ₹274.13 per piece. The Department alleged that the goods were overvalued to avail excess export incentives, including duty drawback, ROSL, MEIS and IGST refund. Based on a market enquiry indicating a domestic market value of ₹45–₹65 per piece, the Department rejected the declared FOB value under Rule 8 of the Customs Valuation (Determination of Value of Export Goods) Rules, 2007 and re-determined the value at ₹50 per piece under Rule 6. The adjudicating authority confiscated the goods under section 113(i) of the Customs Act, imposed a redemption fine and penalties, and the Commissioner (Appeals) upheld the order. The appellant challenged the re-determination of value, confiscation and penalties before the Tribunal.
CESTAT Held
The Tribunal held that the FOB value of export goods is the transaction value agreed between the buyer and seller and cannot be altered by Customs authorities merely on the basis of domestic market value. Rejection of transaction value under the Export Valuation Rules only permits re-determination of assessable value and does not change the contractual FOB value. Since drawback and MEIS benefits are linked to FOB value and not assessable value, re-determination of FOB value was unsustainable. The Tribunal further held that under section 76(1)(b) of the Customs Act, drawback can be denied only where the amount of drawback exceeds the market value of the goods; otherwise, the declared transaction value cannot be substituted with market value. As the value declared in the shipping bills was the transaction value and there was no allegation that it differed from the actual contractual value, confiscation under section 113(i), redemption fine, and penalties were not sustainable. Accordingly, the impugned order was set aside, and the appeal was allowed.
List of Cases Cited
Om Prakash Bhatia v. Commissioner — 2003 (155) E.L.T. 423 (S.C.) — Referred [Paras 18, 19]
