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  • Writer's pictureRajesh Audithyan

Online trade Portal like Flipkart, Amazon sale price can’t be the basis for Customs valuation !!!

Sunglass online sale price was offered on the flip cart/Amazon/ Snapdeal websites before discount Rs.1899 per piece. But customs assessable value declared is Rs.466 per piece. The customs has enhanced value and demanded difference in duty and redemption fine. Initially importer has agreed to pay difference in duty without show cause notice and personal hearing. Later being aggrieved, the importer preferred appeal before the Commissioner (Appeals) challenging the adjudication order that the confiscation of the goods and imposition of penalty is bad and uncalled for. He further argued that without transaction value being rejected as required under Section 14 of the Act, the revaluation undertaken by Revenue is ab initio void. Further, the MRP of Retailer (third party) like Flipkart, Amazon etc., cannot form the basis of valuation under the Valuation Rules. Further, there is no case of any misdeclaration, and hence rejection of transaction value is hit by the provision of Section 14 of the Customs Act. Learned Commissioner ( Appeals) rejected the appeal by upholding the adjudication order. Hence importer preferred appeal to CESTAT.

Let us see CESTAT observations as follows ;

Neither there is any data of contemporaneous import of higher values, nor there is any evidence of extra payment made to the foreign supplier, other than the recognised banking channel.

It is further urged that the Hon‟ble Supreme Court held in Eicher Tractors Limited –2000 (122) ELT 321 (SC) that where there is no evidence to any extra payment to foreign supplier, the transaction value is to be accepted.

Further, there is no evidence of any relationship, or any payment made by the importer indirectly to the seller. Declared transaction value can only be rejected with cogent reason, by undertaking the exercise as to on what basis the paid price was not the sale consideration or the transaction value, as has been held by Hon‟ble Supreme Court in Century Non Ferro Castings case.

It is urged that the reopening of the assessed Bill of Entry under Section 28 is bad, without resorting to process of appeal under Section 128 of the Act. It is further urged that the payment of differential customs duty as demanded, does not mean that the enhancement in the transaction value has been accepted by the importer, in view of the appeal filed soon thereafter.

Section 14 of the Customs Act provides that for the purpose of valuation the value of imported goods shall be the transaction value of such goods, i.e. to say, the price actually paid or payable for the goods when sold for export to India for delivery at the time of place of importation, or as the case may be for export from India, where the buyer and seller of the goods are not related and price is the sole consideration for the sale, subject to such other conditions as may be specified in the rules made in this behalf.

It is further provided that rules made in this behalf may provide for the manner and acceptance or rejection of value declared by the importer or exporter, where the proper officer has reason to doubt the truth or accuracy of such value and determine value for the purposes of this Section.

There are no reasons recorded for rejection of transaction value before taking the exercise of revaluation and enhancement of transaction value. In this view of the matter, the impugned order is bad in law and also on facts. Accordingly CESTAT has set aside the impugned order of enhancement of declared value, redemption fine and penalty.


Take away to readers : Online trade portal sale price can not be the basis of Customs valuation and Customs should record the reasons for rejection of transaction value and should strictly adhere Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.

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