Custom, Excise & Service Tax Tribunal
Standard Cartons Pvt Ltd vs Commissioner Of Customs Export Icd ... on 2 April, 2026
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI.
PRINCIPAL BENCH,
COURT NO. I
CUSTOMS APPEAL NO. 51729 OF 2025
[Arising out of the Order-in-Appeal No. D-II/TKDE/660/2024-25 dated
30.03.2025/21.04.2025 passed by The Commissioner of Customs
(Appeals), New Delhi-110037.]
M/s Standard Cartons Private Limited ......Appellant
690, Devil Village Extension, Nai Basti,
New Delhi - 110 062.
Versus
The Commissioner of Customs, ....Respondent
ICD, TKD (Export),
New Delhi - 110 037
APPEARANCE:
Shri A.K. Prasad and Ms. Surbhi Sinha, Advocates for the
appellant.
Shri Shrimali Sadashiv, Authorized Representative for the
Department
CORAM:
HON'BLE JUSTICE MR. DILIP GUPTA, PRESIDENT
HON'BLE MR. P.V. SUBBA RAO, MEMBER (TECHNICAL)
FINAL ORDER NO. 50651/2026
DATE OF HEARING : 08.01.2026
DATE OF DECISION: 02.04.2026
P.V. SUBBA RAO
M/s Standard Cartons Pvt. Ltd.1 has filed this appeal
to assail the order-in-appeal dated 30.3.20252 passed by the
Commissioner (Appeals) upholding the order-in-original dated
1. the appellant
2. impugned order
2 C/51729 OF 2025
21.3.20233 passed by the Additional Commissioner and
rejecting the appellant‟s appeal.
2. The appellant claims to be engaged in the business of
printing books and periodicals and manufacturing corrugated
boxes/cartons. It also exports various goods and for this
purpose, it obtained Importer Exporter Code4 0598069879.
3. It filed a shipping bill dated 27.3.2019 at the Inland
Container Depot5, Tughlakabad to export 48,000 pairs of ladies
slippers to UAE at a price of US$ 5.95 (Rs.406.68) per pair
claiming the benefit of Merchandise Exports from India
Scheme6 under the Foreign Trade Policy7 implemented by the
Directorate General of Foreign Trade8 and also claiming
drawback. The proper officer at ICD Tughlakabad gave a „Let
Export Order‟9. The container was then transported by rail by
the custodian to Mundra Port, Gujarat from where it was to be
shipped to the destination.
4. When the container was at Mundra Port, officers of the
Directorate General of Revenue Intelligence10 stopped the
container and examined the goods on 22.9.2019 and found
them as declared. However, they felt that the goods were
3. OIO
4. IEC
5. ICD
6. MEIS
7. FTP
8. DGFT
9. LEO
10. DRI
3 C/51729 OF 2025
overvalued and so detained them, drew samples and on
1.10.2019, seized them.
5. On 15.10.2019, the Additional Commissioner permitted
provisional release of the goods subject to three conditions:
(i) Submission of bond for Rs. 1,95,20,760/-
(ii) Submission of Bank Guarantee of 10% of the above
value
(iii) Submission of an undertaking that the exporter
will not contest the description and quality of
goods covered under the shipping bill.
6. The appellant did not agree to submit the undertaking
that it will not contest the description and quality of the goods
and therefore, the goods were not provisionally released.
7. Thereafter, DRI engaged Shri B G Bhatt, Chartered
Engineer, to conduct a market survey who gave his report
dated 21.2.2020 stating that the value of the slippers was Rs.
21/- per pair against the declared value of Rs.406.68 per pair
in the invoice.
8. Thereafter, officers of DRI recorded statements of Shri
Vijay Bhasker, Director of the appellant firm, Shri Sher Singh,
G Card holder of the Customs Broker and Shri Rajiv Soni,
proprietor of the Customs Broker firm under section 108 of the
Customs Act, 196211, completed the investigation and issued
show cause notice dated 23.3.202012.
11. Act
12. SCN
4 C/51729 OF 2025
9. The SCN was based on 12 relied upon documents 13 of
which the significant ones are the three statements recorded
(RUD 9, 10 &11), the market enquiry report of the Chartered
Engineer (RUD 8), two panchnamas (RUD 2 & 7) and the
seizure memo (RUD 3). The rest are letters (RUD 1, 4, 5, & 6)
and the Shipping Bill (RUD 12). The proposals in this SCN
were:
(i) To reject the FOB value of export goods declared (Rs.
1,95,13,925/-) under Section 14 (1) of the Act read
with Rule 8 of the Customs Valuation (Determination
of Value of Export Goods) Rules, 200714 and re-
determine them as Rs. 10,08,000/- under Export
Valuation Rule 6;
(ii) To confiscate the goods under Section 113(i) of the
Act read with sub-section 1 of section 11 of the
Foreign Trade (Development & Regulation) Act, 1992
and Rule 11 of the Foreign Trade (Regulation) Rules,
1993;
(iii) To impose penalties on the appellant under sections
114 (iii) and 114AA of the Act separately; and
(iv) To impose penalties on Shri Vijay Bhasker, Director
of the appellant, M/s. Triveni Cargo, the Customs
Broker and Shri Sher Singh, G Card holder of the
Customs broker.
10. The appellant resisted the proposals in the SCN through
a detailed reply which were, however, confirmed by the
Additional Commissioner in the OIO. Thereafter, the Additional
Commissioner issued a corrigendum to his OIO on 21.3.2023
in which he added the sentence „It is further ordered that
all the export benefits/ incentives will stand reduced
accordingly at the time of disbursal'. The OIO and the
13. RUD
14. Export Valuation Rules
5 C/51729 OF 2025
corrigendum passed by the Additional Commissioner were
upheld by the Commissioner (Appeals) in the impugned order.
Submissions of the appellant
11. Learned counsel for the appellant made the following
submissions:
(i) The impugned order is a non-speaking order and the
Commissioner (Appeals) neither discussed nor
addressed the grounds taken in the appeal before
her.
(ii) The Commissioner (Appeals) accepted the credibility
of the report of Shri Bhatt, the Chartered Engineered
and his market enquiry report without giving any
findings on the appellant‟s submissions on the report.
(iii) The Commissioner (Appeals) relied on the statement
of Shri Bhaskar, Director of the appellant made
during the investigation which was subsequently
retracted. The statement of Shri Bhaskar made under
section 108 of the Act could not have been admitted
in evidence without following the procedure
prescribed under section 138B of the Act. Reliance is
placed on this Tribunal‟s decision on Surya Wires
Pvt. Ltd. versus Principal Commissioner of GST,
Raipur15.
(iv) The entire case of the department that the goods
were overvalued is based on the statement and the
market enquiry report.
(v) Further, the FOB value of the goods cannot be re-
determined by the officers because it is part of the
contract between the exporter and its overseas
buyer. The officers can, if they reject the FOB value,
determine the value for the purpose of Customs
under section 14 and the Export Valuation Rules.
Both benefits claimed by the appellant viz., the
drawback and MEIS are based on the FOB value and
not based on the assessable value determined under
the Customs Act.
(vi) Once the overvaluation of the goods is not
established, confiscation under section 113(i) and
consequential penalties cannot be sustained.
15. 2025-TIOL-736-CESTAT-DEL
6 C/51729 OF 2025
(vii) The appeal may be allowed and the impugned order
may be set aside.
Submissions on behalf of Revenue
12. Learned authorized representative vehemently supported
the impugned order and prayed that the impugned order may
be upheld and the appeal may be dismissed.
Findings
13. We have considered the submissions advanced by both
sides and perused the records.
14. The facts of the case are not in dispute. The appellant
obtained an IEC and filed the Shipping Bill to export women‟s
slippers to UAE through ICD Tughlakabad and the goods were
cleared. After the container reached Mundra, DRI intercepted
it, examined the contents of the goods and found them as
declared. However, DRI felt that the goods were overvalued,
seized them and issued the SCN which ultimately culminated in
the impugned order.
15. Before we go into the question of valuation, we must
point out that one of the conditions imposed by the Additional
Commissioner to allow provisional release of the goods for
export was that the appellant undertakes to not contest the
nature, quantity and quality of the export goods.
16. There was no dispute regarding the nature and quantity
of the goods. The difference of opinion was only the quality of
7 C/51729 OF 2025
the slippers and their price. The appellant had declared its FOB
value. While DRI felt that they were overvalued, at the time
the Additional Commissioner imposed the conditions for
provisional release, DRI had not even re-determined the value.
The condition imposed by the Additional Commissioner was , in
effect, that the appellant would accept whatever may be
determined to be the quality of the goods by the DRI and it
would NOT CONTEST and totally surrender to whatever may be
decided by the DRI officers investigating the matter.
17. Effectively, the Additional Commissioner, held the
appellant hostage and said that unless the appellant
waived its right to contest whatever DRI may decide
after investigation, the goods will not be provisionally
released. It is like arresting a person and telling him
that he will be released on bail only if he agrees to
confess to whatever crimes the prosecution may decide
to charge him with and that he would not even defend
against the charges.
What is FOB Value?
18. We now proceed to decide the question of valuation. The
term „Free on Board‟ (FOB) value is not defined or used in the
Customs Act but it is a commonly understood INCOTERM (the
terms used in international commerce). It is the price paid or
payable by the buyer to the seller for the goods on the
understanding that the seller is free once the goods are put
8 C/51729 OF 2025
onboard the vessel or aircraft. All risks and costs associated
with the goods thereafter such as cost of transport, transit
insurance, etc. are on the buyer‟s account.
19. There are also other INCOTERMS such as C&F (in which
the price includes the FOB value and the cost of transport) and
CIF (in which the price includes the FOB value and the cost of
transport and transit insurance). All these are effectively the
prices agreed to between the buyer and the seller on the terms
indicated (FOB, C&F, CIF, etc.) that is, these are transaction
values. No stranger to the contract including any customs or
DRI officer can modify the FOB value of the goods.
20. However, the proper officer of customs can determine
the value under the Customs Act based on which the duty is
charged.
Value determined under section 14 of the Act and the
Export Valuation Rules
21. Section 14 of the Act provides for determination of
value. Value has been defined in section 2(41) of the Act as
follows:
(41) "value", in relation to any goods, means the value
thereof determined in accordance with the provisions of
sub-section (1) or sub-section (2) of Section 14 ;
22. Duties of customs are charged as per the schedules to
the Customs Tariff Act. These duties can be based on quantity
(specific rate of duty) or value (ad valorem rate of duty) or a
combination of the two depending on the good. For vast
9 C/51729 OF 2025
majority of the goods, the duty is based on the value and it is
necessary to determine the value for this purpose.
23. Section 14 of the Act and the Export Valuation Rules
(and the Import Valuation Rules) determine the value for this
purpose. Sub-section (1) of Section 14 stipulates that the
value shall be the transaction value, that is, the price paid or
payable for delivery of the goods for sale at the time and place
of importation or exportation. However, it has a proviso which
enables framing Rules under which the transaction value can
be rejected and the value can be re-determined through some
other method.
24. Sub-section (2) of section 14 is a non-obstante provision
which empowers the Central Board of Indirect Taxes and
Customs (Board) to fix tariff values for any goods. So, if the
Board fixes a tariff value that shall be the value and if there is
no tariff value, the transaction value shall be the value except
where the proper officer rejects the transaction value under
the Valuation Rules and re-determines value under some other
method.
25. Neither the tariff value nor the determination of value by
the proper officer can alter the transaction value between the
buyer and seller. The buyer will still be liable to pay the
transaction value and the seller will still be entitled to the
transaction value. Only the duty will be determined as per the
10 C/51729 OF 2025
value (tariff value or transaction value or some other value
determined by the proper officer).
Drawback and export incentives
26. Drawback is a scheme under the Customs Act which
reimburses duties and taxes incurred in the exported goods.
Usually, drawback is given as per the drawback schedule
notified by the Central Government.
27. Other incentive schemes such as MEIS are part of the
Foreign Trade Policy by the Government and implemented by
the DGFT.
28. Drawback, MEIS and most other incentive schemes are
given as a percentage of FOB value of the goods and NOT as
per the value determined by the proper officer under section
14. These schemes come with an obligation to obtain
remittance of the foreign exchange as per the FOB value. For
instance, if the FOB value of the export goods is US$ 1,000/-
and the proper officer determines the value as US$ 800/- or
US$ 1,200/- under section 14 and the Customs Valuation
Rules, export duty, if any, has to be paid on the value
determined by the proper officer, i.e., US$ 800/- or US $
1,200/- but drawback and other export incentives will be
payable as per the FOB value (US$ 1,000/-) and the obligation
on the exporter is also to obtain remittance of US$ 1,000/-.
29. There are in-built mechanisms in these schemes to
ensure that the remittance is received after export. While
11 C/51729 OF 2025
drawback is paid as soon as goods are exported, if the
remittance is not received within the stipulated time, it can be
recovered. Rule 18 of the Drawback Rules, 2017, for instance,
reads as follows:
18. Recovery of amount of Drawback where export
proceeds not realized. - (1) Where an amount of
drawback has been paid to an exporter or a person
authorized by him (hereinafter referred to as the
claimant) but the sale proceeds in respect of such
export goods have not been realized by or on behalf
of the exporter in India within the period allowed under
the Foreign Exchange Management Act, 1999 (42 of
1999), including any extension of such period, such
drawback shall, except under circumstances or
conditions specified in sub-rule (5), be recovered in
the manner specified below:
******
30. It must be noted that what is required to be remitted is the sale proceeds, i.e., the amount as per the transaction value and not some amount determined by the Customs officer. Similar provisions existed in the erstwhile Drawback Rules 1995.
31. MEIS scheme provides for issue of scrips only after the remittance has been received. Thus, both the drawback and the MEIS and also other export incentive schemes are based on FOB value (the transaction value) and they come with an obligation to obtain remittance of this amount and have nothing to do with any value determined by the proper officer under section 14 or the Export Valuation Rules.
32. The Additional Commissioner committed a grave illegality in issuing the corrigendum to his OIO stating „It is 12 C/51729 OF 2025 further ordered that all the export benefits/ incentives will stand reduced accordingly at the time of disbursal'. In his OIO he rejected the transaction value and re-determined the value under the Export Valuation Rules. This re- determination was not of much consequence because there was no export duty on the goods. However, the order in his corrigendum that the export benefits/incentives will stand reduced has been issued without any authority of law.
33. The Additional Commissioner is an officer of customs as per Section 3 of the Act and can exercise powers as per section 5 of the Act the relevant portion of which reads as follows:
"Section 5. Powers of officers of customs. -
(1) Subject to such conditions and limitations as the Board may impose, an officer of customs may exercise the powers and discharge the duties conferred or imposed on him under this Act.
(1A) Without prejudice to the provisions contained in sub-section (1), the Board may, by notification, assign such functions as it may deem fit, to an officer of customs, who shall be the proper officer in relation to such functions.
(1B) Within their jurisdiction assigned by the Board, the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, may, by order, assign such functions, as he may deem fit, to an officer of customs, who shall be the proper officer in relation to such functions.
(2) An officer of customs may exercise the powers and discharge the duties conferred or imposed under this Act on any other officer of customs who is subordinate to him.
Xxxxx"
13 C/51729 OF 2025
34. Thus, the Additional Commissioner can exercise powers conferred on him by the Act or exercise powers conferred on his subordinates. No power has been conferred on any officer of customs in the Act to order restriction of export benefits/incentives. Adjudication orders can be passed under section 28 of the Act (to order recovery of duty not paid, short paid or erroneously refunded) or section 122 of the Act (to adjudge confiscation of goods and imposition of penalties). Speaking orders passed under section 17 when Bills of Entry or Shipping Bills are re-assessed are also in the nature of adjudication orders. None of these three sections nor any other section in the Act empowers the Additional Commissioner to restrict the export benefits/incentives.
35. The incentives claimed in this case are the drawback and MEIS. The power to allow drawback and to frame Rules lies with the Central Government under section 75 of the Act. The Central Government framed the drawback Rules and it notifies from time to time the drawback schedule. It is a delegated legislation by the Central Government.
36. If the Drawback Schedule states that drawback shall be paid as a percentage of FOB value, the Additional Commissioner cannot override the schedule notified by the Central Government and order that the drawback shall instead, be paid as per the value determined by him. Needless to say that the FOB value cannot be changed by the Additional 14 C/51729 OF 2025 Commissioner and in this case, he had not changed it. He only rejected the FOB value as the value under section 14 of the Act and the Export Valuation Rules and re-determined the value following some other method.
37. Likewise, MEIS is a scheme under the Foreign Trade Policy framed by the Central Government under the Foreign Trade (Development & Regulation) Act, 199216 as per which MEIS benefits are to be given based on the FOB value of the goods. The Additional Commissioner cannot override the FTP framed by the Central Government and say that it shall instead of the FOB value, be paid as per on the value determined by him.
38. The Additional Commissioner committed an illegality in assuming and exercising powers which neither the Customs Act, nor the FTDR Act nor the FTP confers on him; through his corrigendum he has overridden the drawback schedule notified and the FTP framed by the Central Government. The Commissioner (Appeals) committed a serious error in not setting aside such an order passed by the Additional Commissioner without any authority of law.
39. We now proceed to examine if the value was correctly re-determined by the Additional Commissioner and upheld by the Commissioner (Appeals) in the impugned order although
16. FTDR Act 15 C/51729 OF 2025 the re-determination is inconsequential because there is no export duty on the goods.
40. The transaction value was rejected under Rule 8 and re- determined under Rule 6 of the Export Valuation Rules in pursuance of the SCN issued by DRI. The SCN was issued relying on 12 RUDs of which the ones relevant to the re- determination of value are the market enquiry report (RUD 8) and three statements recorded under section 108 (RUD 9,10 and 11). Other RUDs have been included for the sake of completeness.
41. Statements recorded under section 108 of the Act are relevant to prove the facts contained in them if they are admitted as evidence after following the procedure prescribed under section 138B of the Act which reads as follows:
Section 138B. Relevancy of statements under certain circumstances. -
(1) A statement made and signed by a person before any gazetted officer of customs during the course of any inquiry or proceeding under this Act shall be relevant, for the purpose of proving, in any prosecution for an offence under this Act, the truth of the facts which it contains, -
(a) when the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the court considers unreasonable; or
(b) when the person who made the statement is examined as a witness in the case before the court and the court is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice.
16 C/51729 OF 2025 (2) The provisions of sub-section (1) shall, so far as may be, apply in relation to any proceeding under this Act, other than a proceeding before a court, as they apply in relation to a proceeding before a court.
42. There is no finding in the order of the Additional Commissioner that any of the conditions under sub-section (1) of section 138B were present. The Additional Commissioner could have examined the persons as witnesses and admitted their statements as evidence and could have allowed cross- examination by the appellant but he had not done so. Therefore, the three statements cannot be used as evidence.
43. The other piece of evidence is the market enquiry conducted by the Shri B G Bhatt, Chartered Engineer and his report dated 21 February 2020. As per his letterhead on which he gave his report(page 89 of the appeal) he is a chartered engineer, government approved valuer and surveyor and loss assessor for „Category VII Plant and Machinery‟. Clearly, his expertise was not ladies chappals or any other form of footwear. He listed various "Assumptions and Presumptions" of his report and also how he approached the analysis. His „APPROACH OF ANALYSIS‟ and CONCLUSION were as follows:
"To arrive at estimated fair value of the detained goods, I have visited local shops dealing in similar items. I also searched for such export goods/items through internet/ electronic media and printouts of such export goods/items were taken and enclosed with the report to the best possible extent.‟ 17 C/51729 OF 2025 CONCLUSION The fair value of the items to be exported 21/pair for ladies slippers (Rs. 35 is adjusted to Rs. 21/ pair after considering quality, quantity, taxes packing and handling charges)
44. The report starts with determination of „estimated FOB value‟ as chartered engineer but since his expertise lay elsewhere, he went to the market enquired about prices of similar goods in the market, searched on internet and came to the conclusion that the market price was about Rs. 35/- per pair, adjusted it to Rs. 21/- per pair after accounting for some charges. He concluded that Rs.21/- per pair to be a fair value.
45. Needless to say, that there is no procedure for determining FOB value or fair value in either section 14 of the Act or under the Export Valuation Rules. The transaction value (FOB) shall be the value under section 14 unless the proper officer rejects it under Rule 8 of the Export Valuation Rules and if it is rejected, the value should be redetermined sequentially by comparison (Rule 4), computation (Rule 5) and only if neither is possible can the residual method (Rule 6) can be resorted to. Fair Value or estimated FOB values do not find any place either in the Export Valuation Rules or under section 14.
46. The market enquiry was not conducted by either the officers nor was the exporter involved. It was outsourced to a Chartered Engineer with a completely different background. He simply went to market and enquired and checked on the 18 C/51729 OF 2025 internet and he determined what according to him was the „fair value‟.
47. We, therefore, find that neither the rejection of the transaction value under Export Valuation Rule 8 nor its re- determination under Rule 6 can be sustained.
48. At any rate, the re-determination of value was only an academic exercise because there was no export duty on the export goods.
Confiscation, Redemption fine and penalties
49. The Additional Commissioner has, in his order, confiscated the goods under section 113 (i) of the Act read with section 11(1) of the FTDR Act and Rule 11 of the Foreign Trade (Regulation) Rules, 1993 and allowed them to be redeemed on payment of a fine of Rs. 10,08, 000/- under section 125 of the Act. These provisions read as follows:
SECTION 113. Confiscation of goods attempted to be improperly exported, etc. -
The following export goods shall be liable to confiscation:-
(i) any goods entered for exportation which do not correspond in respect of value or in any material particular with the entry made under this Act or in the case of baggage with the declaration made under section 77 ;
Section 11 of the FTDR Act
11. Contravention of provisions of this Act, rules, orders and foreign trade policy.-(1) No export or import shall be made by any person except in accordance with the provisions of this Act, the rules and orders made 19 C/51729 OF 2025 thereunder and the foreign trade policy for the time being in force.
(2) Where any person makes or abets or attempts to make any export or import in contravention of any provision of this Act or any rules or orders made thereunder or the foreign trade policy, he shall be liable to a penalty of not less than ten thousand rupees and not more than five times the value of the goods or services or technology in respect of which any contravention is made or attempted to be made, whichever is more. (3) Where any person signs or uses, or causes to be made, signed or used, any declaration, statement or document submitted to the Director General or any officer authorised by him under this Act, knowing or having reason to believe that such declaration, statement or document is forged or tampered with or false in any material particular, he shall be liable to a penalty of not less than ten thousand rupees or more than five times the value of the goods or services or technology in respect of which such declaration, statement or document had been submitted, whichever is more.
(4) Where any person, on a notice to him by the Adjudicating Authority, admits any contravention, the Adjudicating Authority may, in such class or classes or cases and in such manner as may be prescribed, determine, by way of settlement, an amount to be paid by that person.
(5) A penalty imposed under this Act may, if it is not paid by any person, be recovered by any one or more of the following modes, namely:--
(a) the Director General may deduct or require any officer subordinate to him to deduct the amount payable under this Act from any money owing to such person which may be under the control of such officer; or
(b) the Director General may require any officer of customs to deduct the amount payable under this Act from any money owing to such person which may be under the control of such officer of customs, as if the said amount is payable under the Customs Act, 1962 (52 of 1962); or I the Director General may require the Assistant Commissioner of Customs or Deputy Commissioner of Customs or any other officer of Customs to recover the amount so payable by detaining or selling any goods (including the goods connected with services or
20 C/51729 OF 2025 technology) belonging to such person which are under the control of the Assistant Commissioner of Customs or Deputy Commissioner or Customs or any other officer of Customs, as if the said amount is payable under the Customs Act, 1962 (52 of 1962); or
(d) if the amount cannot be recovered from such person in the manner provided in clauses (a), (b) and (c),--
(i) the Director General or any officer authorised by him may prepare a certificate signed by him specifying the amount due from such person and send it to the Collector of the District in which such person owns any property or resides or carries on business and the said Collector on receipt of such certificate shall proceed to recover from such person the amount specified thereunder as if it were an arrear of land revenue; or
(ii) the Director General or any officer authorised by him (including an officer of Customs who shall then exercise his powers under the Customs Act, 1962 (52 of 1962) ) and in accordance with the rules made in this behalf, detain any movable or immovable property belonging to or under the control of such person, and detain the same until the amount payable is paid, as if the said amount is payable under the Customs Act, 1962; and in case, any part of the said amount payable or of the cost of the distress or keeping of the property, remains unpaid for a period of thirty days next after any such distress, may cause the said property to be sold and with the proceeds of such sale, may satisfy the amount payable and costs including cost of sale remaining unpaid and shall render the surplus, if any to such person.
(6) Where the terms of any bond or other instrument executed under this Act or any rules made thereunder provide that any amount due under such instrument may be recovered in the manner laid down in sub-section (5), the amount may, without prejudice to any other mode of recovery, be recovered in accordance with the provisions of that sub-section.
(7) Without prejudice to the provisions contained in this section, the Importer-Exporter Code Number of any person who fails to pay any penalty imposed under this Act, may be suspended by the Adjudicating Authority till the penalty is paid or recovered, as the case may be. (8) Where any contravention of any provision of this Act or any rules or orders made thereunder or the foreign trade policy has been, is being, or is attempted to be, made, the goods (including the goods connected with 21 C/51729 OF 2025 services or technology) together with any package, covering or receptacle and any conveyances shall, subject to such conditions and requirement as may be prescribed, be liable to confiscation by the Adjudicating Authority. (9) The goods (including the goods connected with services or technology) or the conveyance confiscated under sub-section (8) may be released by the Adjudicating Authority, in such manner and subject to such conditions as may be prescribed, on payment by the person concerned of the redemption charges equivalent to the market value of the goods or conveyance, as the case may be.
Rule 11 of Foreign Trade (Regulation) Rules 1993
11. Declaration as to value and quality of imported goods. -On the importation into, or exportation out of, any customs ports of any goods, whether liable to duty or not, the owner of such goods shall in the Bill of Entry or the Shipping Bill or any other documents prescribed under the Customs Act, 1962 (52 of 1962), state the value, quality and description of such goods to the best of his knowledge and belief and in case of exportation of goods, certify that the quality and specification of the goods as stated in those documents, are in accordance with the terms of the export contract entered into with the buyer or consignee in pursuance of which the goods are being exported and shall subscribe a declaration of the truth of such statement at the foot of such Bill of Entry or Shipping Bill or any other documents.
Section 125 of the Customs Act. Option to pay fine in lieu of confiscation. -
(1) Whenever confiscation of any goods is authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods or, where such owner is not known, the person from whose possession or custody such goods have been seized, an option to pay in lieu of confiscation such fine as the said officer thinks fit:
50. Section 113 (i) of the Act renders goods which do not correspond in value or in any material particular with the entry 22 C/51729 OF 2025 made under the Act, i.e., the Shipping Bill, liable to confiscation. Section 11 of the FTDR Act prohibits exports except as per the provisions of that Act. Rule 11 of the Foreign Trade Rules requires the exporter to declare the correct description, quality and value of the goods to the best of his knowledge as per the contract.
51. In this case, on examination, the goods were found as per the declaration in the shipping bill and the only dispute is regarding the value.
52. The appellant declared values as per its transaction value as per the documents. The order of the Additional Commissioner which is upheld in the impugned order rejected the transaction value and determined the value based on the market survey report. The declaration in the shipping bill by the appellant was as per Rule 11 of the Foreign Trade Rules and there was other violation of the FTDR Act.
53. The next question is whether as per section 113(i) goods will be liable to confiscation if the value declared in the shipping bill did not correspond to the transaction value as per the documents or they will also be liable to confiscation to any value which the officer may determine. Clearly, it will be possible for any exporter to declare only the transaction value in the Shipping Bill. It is impossible for the exporter to anticipate if the officer would reject his transaction value and if so, what value he would fix and indicate such anticipated value 23 C/51729 OF 2025 in the shipping bill. Therefore, goods will not be liable to confiscation if the officer rejects the transaction value and fixes some other value. Therefore, even if the re-determined value is upheld, the goods were not liable to confiscation under section 113 (i) of the Act. The confiscation of the goods therefore, needs to be set aside. The option of redemption on payment of fine under section 125 becomes is irrelevant.
54. Therefore, the consequential penalty under section 114(iii) of the Act also needs to be set aside. As for the penalty under section 114AA of the Act, it is imposable for knowingly and intentionally making false declarations. The appellant declared the goods and value as per its agreement. Hence, penalty under section 114AA also cannot be sustained.
55. In view of the above, the appeal is allowed and the impugned order is set aside. The appellant will be entitled to consequential relief.
(Order pronounced in open court on 02/04/2026.) (JUSTICE DILIP GUPTA) PRESIDENT (P.V. SUBBA RAO) MEMBER (TECHNICAL) PK