The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Allahabad Regional Bench, set aside the Orders-in-Appeal passed by the Commissioner (Appeals) CGST, Noida, which had rejected the appellant’s appeals on the ground that the importer had accepted the enhanced value in writing. The Tribunal held that such acceptance does not operate as a waiver of the statutory right of appeal under Section 128 of the Customs Act, 1962, and that the Commissioner (Appeals) erred in relying on the Allahabad High Court judgment in S.S. Overseas, which dealt only with the narrow issue of mandamus for a speaking order. The judgment reinforces that Rule 12(2) of the Customs Valuation Rules, 2007 mandates communicating grounds for doubting the declared value, a requirement that cannot be bypassed by mere acceptance letters.
Background & Facts
The Dispute
The appellant, M/s A. R. Fabrics Private Limited, imported consignments of Polyester Knitted Fabrics from China during July - October 2019 and filed Bills of Entry declaring transaction value at USD 0.35 per Meter/1.77 per Kg. The Customs Authorities enhanced the assessable value, and the appellant, under protest, submitted letters of consent agreeing to the enhanced value. The Commissioner (Appeals) CGST, Noida, in Order-in-Appeal Nos. NOI-CUSTM-000-APP-248-to-267 & 268-to-272-20-21 dated 18.06.2020, upheld the enhancement, holding that the appellant had accepted the enhanced value in writing and therefore no speaking order was required under Section 17(5) of the Customs Act, 1962. The appellant filed Customs Appeal Nos. 70471-70482 of 2021 challenging these orders.
Key Facts
- The appellant is engaged in importing ‘Polyester Knitted Fabrics of Mixed Colour, Weight and Length’ from China.
- Import consignments were made at ICD, Dadri from 03.07.2019 to 03.10.2019.
- Bills of Entry for the said consignments are dated within the same period.
- Upon examination, the goods conformed to the declarations; no dispute on description, quantity or nature.
- The appellant claimed to have self-assessed duty correctly as per invoices but alleged that no ‘Out of Charge Orders’ were passed.
- The appellant made written requests to the Proper Officer for provisional clearance on payment of duty on enhanced value under protest to avoid demurrage and detention.
- Despite such requests, the appellant was allegedly coerced to submit letters of consent agreeing to assessment/valuation by the Customs Authorities.
- The acceptance letters stated that the ground for rejection of the declared value had been narrated and that details of contemporaneous import of similar/identical goods had been shown, but no actual comparable data were disclosed.
- The Commissioner (Appeals) relied on the judgment of the Hon’ble Allahabad High Court in M/s S. S. Overseas & Ors. v. Union of India, Writ Tax No. 881/2022 decided 03.08.2022.
- The appellant relied on the Delhi High Court judgment in Niraj Silk Mills vs. Commissioner of Customs (ICD) Patparganj, CUSAA 26/2022 decided 27.11.2024.
- The Tribunal also referred to Century Metal Recycling Pvt. Ltd. vs. UOI (Customs Appeal No. 61303 of 2019) decided 27.02.2025.
Procedural History
- 03.07.2019 - 03.10.2019: Import of consignments and filing of Bills of Entry.
- 18.06.2020: Order-in-Appeal passed by Commissioner (Appeals) CGST, Noida (Nos. NOI-CUSTM-000-APP-248-to-267 & 268-to-272-20-21).
- 2021: Filing of Customs Appeal Nos. 70471-70482 before CESTAT, Allahabad.
- 02.09.2026: Date of hearing.
- 10.09.2026: Date of decision (Final Order Nos. 70365-70376/2026).
The Parties' Positions
Appellant: Contended that the acceptance letters were not voluntary, obtained under coercion, and did not constitute a waiver of the right to challenge reassessment; argued that Rule 12(2) of CVR 2007 required the Proper Officer to communicate grounds for doubting the declared value, which was not done; relied on Niraj Silk Mills and Century Metal Recycling to assert that acceptance letters lacking actual comparable data cannot estop the statutory right of appeal under Section 128.
Respondent: Asserted that the acceptance letters showed voluntary and informed acceptance of the enhanced value, thus dispensing with the need for a speaking order under Section 17(5); relied on the Commissioner (Appeals)’s findings and the Allahabad High Court judgment in S.S. Overseas to contend that reassessment under Section 17(4) based on written consent was legal and binding.
Relief Sought
The appellant sought to set aside the impugned Orders-in-Appeal, obtain consequential relief as per law, and have the matter remanded for fresh assessment in accordance with Section 14 of the Customs Act, 1962 and Rule 12 of CVR 2007.
The Legal Issue
The central question was whether an importer’s written acceptance of enhanced assessable value operates as a waiver of the statutory right to appeal under Section 128 of the Customs Act, 1962, and whether the Commissioner (Appeals) was correct in holding that no speaking order was required under Section 17(5) merely on the basis of such acceptance.
Arguments Presented
For the Appellant/Petitioner
The appellant argued that the acceptance letters were procured under duress and did not reflect a voluntary surrender of rights; that Rule 12(2) of the Customs Valuation Rules, 2007 mandates the Proper Officer to intimate the importer in writing the grounds for doubting the declared value, a step that was omitted; that the letters merely recited that contemporaneous import data had been ‘gone through and understood’ without disclosing actual comparable data, thus failing to satisfy Rule 5 of CVR 2007; and that reliance on S.S. Overseas was misplaced as that judgment dealt only with the narrow issue of mandamus for a speaking order, not with the substantive right of appeal under Section 128. The appellant further contended that no estoppel can operate against a statutory right, citing Dunlop India Ltd. & Madras Rubber Factory Ltd. v. Union of India and Shri Vallabh Glass Works Ltd. v. Union of India.
For the Respondent/State
The respondent maintained that the acceptance letters evidenced the appellant’s informed and voluntary agreement to the enhanced value, thereby fulfilling the condition under Section 17(5) that obviates the requirement of a speaking order; that the reassessment had been conducted under Section 17(4) of the Customs Act, 1962 on the basis of such written consent, rendering the assessable value legal and binding; and that the Allahabad High Court judgment in S.S. Overseas provided binding precedent that once acceptance is given in writing, no speaking order is required, a principle that should apply to the present facts.
The Court's Analysis
The Tribunal first examined the statutory scheme. It noted that Section 14 of the Customs Act, 1962 requires the Proper Officer, when doubting the truth or accuracy of the declared value, to intimate the importer in writing the grounds for such doubt before proceeding to reassessment under Rules 4 to 9 of CVR 2007. The Tribunal found that in the present case, the Proper Officer did not communicate any such grounds in writing, despite the appellant’s repeated requests for provisional clearance under protest. Consequently, the reassessment lacked the mandatory foundation.
Turning to the effect of acceptance letters, the Tribunal held that an acceptance letter which merely states that the ground for rejection has been narrated and that contemporaneous import data has been ‘gone through and understood’, without disclosing the actual comparable data (quantity, quality, contemporaneity), cannot be read as an unconditional and voluntary surrender of the right to contest valuation. Such letters do not meet the requirements of Rule 12(2) or Rule 5 of CVR 2007.
The Tribunal then distinguished the Allahabad High Court judgment in S.S. Overseas, observing that it addressed only the limited question of whether a writ of mandamus lies for issuance of a speaking order once acceptance has been given, and did not adjudicate upon or foreclose the independent statutory right of appeal under Section 128. The Tribunal emphasized that the right to question the correctness of the Proper Officer’s decision, whether on the formation of opinion or on merits, is protected by statute and cannot be defeated by acquiescence or consent.
Furthermore, the Tribunal rejected the doctrine of estoppel in taxation matters, relying on Dunlop India and Shri Vallabh Glass Works, and held that consent given by an assessee cannot take away a right otherwise available under law. It concluded that the impugned Orders-in-Appeal, which proceeded solely on the footing that acceptance of enhanced value in writing dispensed with the need for a speaking order, were unsustainable in law.
Finally, the Tribunal directed that the matter be remanded for fresh assessment in strict compliance with Section 14 of the Customs Act, 1962 and Rule 12 of CVR 2007, ensuring that the Proper Officer communicates the grounds for doubting the declared value in writing before any reassessment.
The Verdict
The Appeals are allowed. The impugned Orders-in-Appeal dated 18.06.2020 are set aside. The matter is remanded to the Commissioner (Appeals) CGST, Noida for fresh assessment of the consignments in accordance with Section 14 of the Customs Act, 1962 and Rule 12 of the Customs Valuation Rules, 2007. No costs or interest were awarded.
What This Means For Similar Cases
Acceptance Letters Do Not Constitute Waiver
- An acceptance letter that merely recites that the ground for rejection has been narrated and that contemporaneous import data has been ‘gone through and understood’ does not amount to a voluntary surrender of the right to challenge reassessment.
- For such a letter to operate as a waiver, it must disclose actual comparable data (quantity, quality, contemporaneity) sufficient to satisfy Rule 5 of CVR 2007.
- Tribunals and Courts will scrutinize the substance of acceptance letters; boilerplate language will not suffice to estop the statutory right of appeal under Section 128.
Rule 12(2) of CVR 2007 Is Mandatory
- The Proper Officer must communicate in writing the grounds for doubting the declared value before initiating reassessment under Section 14 of the Customs Act, 1962.
- Failure to do so renders any subsequent reassessment legally unsustainable, regardless of any later acceptance by the importer.
- Practitioners should demand such written grounds at the outset and challenge reassessment proceedings where this step is omitted.
No Estoppel Against Statutory Rights
- Acquiescence or consent by an importer cannot defeat the right of appeal conferred by Section 128 of the Customs Act, 1962.
- Judgments dealing with the narrow issue of mandamus for a speaking order (e.g., S.S. Overseas) cannot be extrapolated to deny the substantive right to contest valuation.
- The principle that there is no estoppel in taxation matters, particularly against a party asserting a statutory right, is firmly reaffirmed.
