Custom, Excise & Service Tax Tribunal
Viresh Kothari vs Commissioner Of Customs -Ii Chennai on 13 March, 2026
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH - COURT No. III
Customs Appeal No. 41070 of 2016
(Arising out of Order-in-Original No. 45540/2016 dated 29.02.2016 passed by Commissioner of Customs,
No. 60, Custom House, Rajaji Salai, Chennai - 600 001)
M/s. Sleek Corporation ...Appellant
No. 14, K.V. Temple Street,
Valli Complex,
1st Floor, Sutanpet Cross,
Bangalore - 560 053.
Versus
Commissioner of Customs ...Respondent
Chennai II Commissionerate, No. 60, Custom House, Rajaji Salai, Chennai - 600 001.
With Customs Appeal No. 41071 of 2016 (Arising out of Order-in-Original No. 45540/2016 dated 29.02.2016 passed by Commissioner of Customs, No. 60, Custom House, Rajaji Salai, Chennai - 600 001) Mr. Mahesh Agarwal Partner ...Appellant M/s. Sleek Corporation, No. 14, K.V. Temple Street, Valli Complex, 1st Floor, Sutanpet Cross, Bangalore - 560 053.
Versus Commissioner of Customs ...Respondent Chennai II Commissionerate, No. 60, Custom House, Rajaji Salai, Chennai - 600 001.
And Customs Appeal No. 41072 of 2016 (Arising out of Order-in-Original No. 45540/2016 dated 29.02.2016 passed by Commissioner of Customs, No. 60, Custom House, Rajaji Salai, Chennai - 600 001) Mr. Viresh Kothari ...Appellant M/s. Sleek Corporation, No. 14, K.V. Temple Street, Valli Complex, 1st Floor, Sutanpet Cross, Bangalore - 560 053.
Versus 2 Commissioner of Customs ...Respondent Chennai II Commissionerate, No. 60, Custom House, Rajaji Salai, Chennai - 600 001.
APPEARANCE:
For the Appellants : Mr. L.S. Karthikeyan, Advocate For the Respondent : Ms. Anandalakshmi Ganeshram, Authorised Representative CORAM:
HON'BLE MR. P. DINESHA, MEMBER (JUDICIAL) HON'BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL) FINAL ORDER Nos. 40361-40363 / 2026 DATE OF HEARING : 29.09.2025 DATE OF DECISION : 13.03.2026 Per Mr. VASA SESHAGIRI RAO The present proceedings comprise of three appeals filed before this Tribunal, one by M/s. Sleek Corporation (the importer-appellant) and two by its partners, Shri Mahesh Agarwal and Shri Viresh Kothari, upon whom personal penalties have been imposed. All the three appeals arise out of the same Order-in-Original No. 45540/2016 dated 09.03.2016 passed by the Commissioner of Customs- II, Chennai (hereinafter referred to as the impugned order). As the issues involved, facts, evidence, and findings are common and interlinked, all the appeals as tabulated below are being taken up together and are being disposed of by this common order.
3
Sl. No. Appeal No. Appellant Name Capacity as Duty/Penalty Involved
₹1,71,26,244/- Duty
Importer-
1 C/41070/2016 M/s. Sleek Corporation ₹1,71,26,244/- (Section 114A)
Firm
RF ₹6,50,000/-
₹25,00,000/- (Section 114AA /
2 C/41071/2016 Shri Mahesh Agarwal Partner
112(a))
₹25,00,000/- (Section 114AA /
3 C/41072/2016 Shri Viresh Kothari Partner
112(a))
2.1 The Appellant-Importer is a partnership firm
engaged in the import of industrial sewing machines, their parts and accessories, and rotary hooks, during the period from 01.06.2010 to 30.11.2014, through Chennai Seaport. The firm is represented by its partners Shri Mahesh Agarwal and Shri Viresh Kothari, who are also co-appellants as shown in the Table above.
2.2 Acting on specific intelligence regarding large- scale undervaluation and mis-declaration, officers of the Directorate of Revenue Intelligence (DRI), Bangalore, conducted searches on 01.12.2014 at the business and residential premises of the appellants. Various documents were seized, including proforma invoices, email correspondence, blank signed letterheads of overseas suppliers, a diary containing pricing details, and electronic records.
2.3 Statements of both the partners were recorded under Section 108 of the Customs Act, 1962, wherein they admitted, inter alia, that the imports were systematically 4 undervalued, that two sets of invoices were prepared one reflecting the actual value and another for customs clearance and that differential amounts were paid through non-banking channels.
2.4 A Show Cause Notice dated 28.05.2015 was issued proposing rejection of declared transaction value under Rule 12 of the Customs Valuation Rules, 2007, re- determination of assessable value at ₹22,06,28,290/- against declared value of ₹11,20,05,936/-, demand of differential duty of ₹1,71,26,244/- with interest, confiscation of seized and already cleared goods under Sections 111(d) and 111(m), and imposition of penalties under Sections 114A and 114AA.
2.5 The Commissioner of Customs-II, Chennai, vide Order-in-Original No. 45540/2016 dated 09.03.2016, confirmed the proposals. Aggrieved, the appellants are before this Tribunal.
3. The Ld. Advocate Mr. L.S. Karthikeyan appeared on behalf of the Appellant and made the following submissions which are summarized as below: - 5
3.1 The impugned order is mechanical, non-
speaking, and merely reproduces the Show Cause Notice without independent analysis of the defence's submissions. 3.2 He has contended that the declared transaction value could not have been rejected without first establishing that the conditions of Rule 3(2) of CVR, 2007 were attracted, as held by the Supreme Court in Eicher Tractors Ltd. v. CC [2000 (122) ELT 321 (SC)].
3.3 Unsigned proforma invoices have no evidentiary value and cannot be relied upon to enhance assessable value unless actual imports at such prices are demonstrated. 3.4 Reliance on alleged confessional statements is misplaced as the statements were obtained under coercion, were vague, and were not corroborated by independent evidence.
3.5 Valuation rules were not applied sequentially; Rule 9 was resorted to arbitrarily without exhausting Rules 4 to 8.
3.6 No contemporaneous imports at higher prices were cited despite imports over a four-year period. 6 3.7 For rotary hooks, reliance on imports by M/s. Singer India Ltd. was improper as the appellants were traders importing low-quality stock lots, operating at a different commercial level.
3.8 Extended limitation under Section 28(4) was not invocable as all these Bills of Entry had been assessed and cleared after scrutiny.
3.9 Past assessments were not challenged, and in view of ITC Ltd. v. CC [2019 (368) ELT 216 (SC)], demand of duty without reassessment is impermissible. 3.10 Penalties under Sections 114A and 114AA are unsustainable in the absence of proof of wilful suppression and fabrication of documents.
3.11 The following case Laws were relied upon by the appellant to challenge rejection of transaction value, re- determination of assessable value, invocation of extended limitation, confiscation, and imposition of penalties. a. Eicher Tractors Ltd. v. Commissioner of Customs, Mumbai 2000 (122) E.L.T. 321 (S.C.) - Transaction value must be accepted unless it is shown to be hit by any of the contingencies enumerated in Rule 3(2) of the Customs Valuation Rules; sequential valuation cannot be bypassed.
7b. Forbo Siegling Movement Systems India Pvt. Ltd. v. Union of India 2013 (296) E.L.T. 443 (Bom.) - Before rejecting the declared value, the importer must be put on notice and given an opportunity to explain the correctness of the declared price.
c. Ramana International v. Commissioner of Customs, Nhava Sheva 2005 (180) E.L.T. 368 (Tri.-Mumbai) - Transaction value cannot be rejected merely on the basis of quotations or proforma invoices; actual imports at higher prices must be shown.
d. G.K. Mercantile Pvt. Ltd. v. Commissioner of Customs, New Delhi 2004 (170) E.L.T. 550 (Tri.-Del.) - Proforma invoices are only offer prices and do not represent concluded transactions; they cannot form the sole basis for enhancement of value.
e. Swarna Fabrics Ltd. v. Commissioner of Customs, Nhava Sheva 2004 (170) E.L.T. 380 (Tri.-Mumbai) - Proforma invoice is merely an invitation to offer and cannot be relied upon to load the assessable value. f. Deepak Enterprises v. Commissioner of Customs 2003 (159) E.L.T. 851 (Tri.-Kol.) - Unsigned documents and tentative papers have no evidentiary value for enhancement of customs value.
g. Truewoods Pvt. Ltd. v. Commissioner of Customs 2005 (186) E.L.T. 135 (Tri.-Del.), affirmed by the Supreme Court - Unsigned and uncorroborated documents cannot be relied upon to reject the declared transaction value.
h. Commissioner of Customs v. Bussa Overseas Pvt. Ltd. 2007 (216) E.L.T. 659 (S.C.) - Transaction value cannot be rejected on the basis of unproved or unsigned documents.
i. Pushpanjali Silk Pvt. Ltd. v. Commissioner of Customs 2009 (238) E.L.T. 135 (Tri.-Chennai) - Ratio of Eicher Tractors applies equally to valuation under the Customs Valuation Rules, 2007.
j. ITC Ltd. v. Commissioner of Central Excise 2019 (368) E.L.T. 216 (S.C.) - Where Bills of Entry have been finally assessed and not challenged, duty demand for past imports is not sustainable without first setting aside the assessments.
k. Junaid Kudia v. Commissioner of Customs (2024) 16 Centax 503 (Tri.-Mumbai), affirmed by the Supreme Court - Demand of duty cannot be raised for past assessed Bills of Entry in the absence of challenge to the assessments.
l. B.N. Exports v. Commissioner of Customs (Port), West Bengal 2002 (144) E.L.T. 619 (Tri.-Kol.) - Valuation must take into account quality, stock-lot nature, and 8 commercial level; arbitrary enhancement is impermissible.
m. Kelvin Infotech Pvt. Ltd. v. Commissioner of Customs, Meerut 2015 (316) E.L.T. 146 (Tri.-Del.) - Comparability of goods must be established on parameters of quality, quantity, time, and commercial level before rejecting declared value.
n. RSH Distribution India Pvt. Ltd. v. Commissioner of Customs 2007 (216) E.L.T. 560 (Tri.-Del.) - Market enquiries or third-party prices cannot be relied upon without establishing identity or similarity of goods. o. Sonal Enterprises v. Commissioner of Customs, New Delhi 2015 (316) E.L.T. 144 (Tri.-Del.) - Declared value cannot be rejected without reliable contemporaneous import data.
p. Shri Maruthi Nandan Impex v. Commissioner of Customs 2014 (302) E.L.T. 406 (Tri.-Mumbai) - Enhancement of value without proper sequential application of valuation rules is unsustainable.
4. The Ld. Authorized Representative Ms. Anandalakshmi Ganeshram supported the findings of the impugned order and submitted that the case is based on overwhelming documentary and oral evidence unearthed during the investigations conducted. It was further submitted that: -
i. Proforma invoices recovered during the search showed substantially higher prices for identical goods. ii. Email correspondence between Shri Mahesh Agarwal and Shri Sanjay Mehta (Sunny Sales, Kolkata) clearly indicated knowledge of undervaluation and exchange of price information.
iii. Blank signed letterheads of foreign suppliers demonstrate fabrication of invoices. 9 iv. Both partners categorically admitted undervaluation and dual invoicing in their Section 108 statements recorded.
v. Differential consideration was agreed to have been paid through non-banking channels, establishing extra- commercial consideration.
vi. Declared value failed the test of Section 14(1) and was rightly rejected under Rule 12.
vii. Re-determination was done following the sequential valuation rules.
viii. Reliance was placed on recent judicial precedents including: -
a. which uphold rejection of declared value and invocation of extended period in Shivam Marketing & Gaurav Kushwaha [2025 (6) TMI 1898 - CESTAT New Delhi (LB)] b. T.N. Malhotra & S.R. Bristle Products [2024 (6) TMI 202 - CESTAT New Delhi] c. AG Impex [2024 (9) TMI 1257 - CESTAT New Delhi] which support extended period in cases involving parallel invoices and admissions.
5. We have carefully heard the submissions advanced by both the sides, examined the appeal records in detail, considered the statutory provisions, statements recorded under Section 108 of the Customs Act, 1962, 10 documentary evidence recovered during investigation, and the written submissions filed by both sides and the case Laws cited.
6. Upon such comprehensive consideration, the following issues arise for our determination in this appeal as to: -
i. Whether the declared transaction value was liable to rejection under Rule 12 of CVR, 2007.
ii. Whether re-determination of value under CVR, 2007 is legally sustainable.
iii. Whether demand of differential duty and interest is maintainable.
iv. Whether invocation of extended period under Section 28(4) is justified.
v. Whether the imported goods were liable to confiscation under Sections 111(d) and 111(m) and, vi. Whether penalties under Sections 114A and 114AA are sustainable.
Issue (i): Rejection of the Declared Transaction Value under Rule 12 of the Customs Valuation Rules, 2007 read with Section 14 of the Customs Act, 1962
7.1 We have carefully examined the rival submissions and the materials available on record. Section 14 of the Customs Act mandates that customs duty is 11 chargeable on the value of imported goods based on the price actually paid or payable for the goods when sold for export to India. The statutory scheme under the Customs Valuation Rules, 2007 proceeds on the premise that the declared invoice value represents the full and truthful consideration for the import, subject to the conditions stipulated in Rule 3(2). Rule 12 empowers the proper officer to reject the declared value where there exists a reasonable doubt as to the truth or accuracy of such value. 7.2 In the present case, the rejection of the declared transaction value is not founded on mere suspicion or conjecture, but on a body of cogent and corroborative evidence unearthed during investigation. The investigation revealed the existence of proforma invoices recovered from the importer's premises indicating prices substantially higher than those declared to Customs, e-mail correspondence showing consultation with another importer regarding the value to be declared, blank letterheads and seals of foreign suppliers facilitating fabrication of documents, and private records reflecting pricing details meant for customs declaration. These documentary evidences were recovered from the appellant's own custody and control and cannot be brushed aside as third-party or unreliable evidence. More importantly, the partners of the appellant firm, in their 12 statements recorded under Section 108 of the Customs Act, admitted their acts of systematic undervaluation, the practice of dual invoicing, and the payment of differential consideration through non-banking channels. 7.3 We find that the adjudicating authority has recorded a clear and reasoned finding that the declared invoice value did not represent the full consideration actually paid for the imported goods. In paragraphs 26.2 and 26.3 of the Order-in-Original, reliance has been placed on the voluntary statements of the partners recorded under Section 108 of the Customs Act, admitting generation of parallel invoices and deliberate under-declaration of value. Further, in paragraph 26.5, while rejecting the declared value and re- determining the assessable value under Rule 9 of the Customs Valuation Rules, 2007, it has been specifically recorded that the differential consideration was paid outside authorised banking channels and consciously kept outside the import documents. This finding is reiterated in paragraphs 29 and 30 while invoking the extended period under Section 28(4) and imposing penalty under Section 114A. We note that these conclusions are based on admissions, contemporaneous documents, and corroborative records seized during the investigation, which cumulatively establish that the declared value was only a partial disclosure 13 of the price actually paid or payable under Section 14 of the Customs Act. We find no infirmity in this approach. 7.4 Further, the digital evidence recovered during search, including emails exchanged with overseas suppliers and with Shri Sanjay Mehta of M/s. Sunny Sales, Kolkata, contained specific price details, instructions regarding declaration of lower values, and model-wise valuation, which was seized from the appellants' own custody and control under the valid mahazar. The admissibility of such electronic evidence stands fully supported by Section 138C of the Customs Act, and by the settled law laid down by the Hon'ble Supreme Court in the Constitution Bench decision in Arjun Panditrao Khotkar v. Kailash Kushanrao Gorantyal 2020 (7) SCC 1 (SC), which collectively recognize that electronic records, when authenticated through surrounding circumstances and corroborated by independent evidence or admissions, are legally reliable and cannot be discarded on hyper-technical grounds. We further find that the diary extracts and private records recovered from the importer's premises contained contemporaneous notings of actual negotiated prices and differential amounts, which were not reflected in the Bills of Entry, and which were duly confronted to and explained by the partners during investigation. The evidentiary value of such private records is 14 well recognized in customs law, as held by the Hon'ble Supreme Court in Collector of Customs v. D. Bhoormull 1983 (13) ELT 1546 (SC), wherein it was held that in economic offences, findings may legitimately rest on circumstantial evidence, conduct of parties and private records, judged on the standard of preponderance of probability. In the present case, the electronic records and diary entries are not standalone or ambiguous documents, but form part of an inter-locking evidentiary chain, fully corroborated by repeated and voluntary admissions under Section 108 regarding dual invoicing, suppression of actual consideration and payment of differential amounts through non-banking channels. The appellants have failed to offer any plausible alternative explanation for these records, and a mere general retraction, unsupported by proof of coercion, does not dilute their evidentiary value. Viewed cumulatively, the evidence establishes a deliberate and systematic modus operandi of undervaluation, and we therefore hold that the reliance placed by the adjudicating authority on digital evidence and diary extracts is lawful, sustainable and free from infirmity, fully justifying rejection of the declared transaction value, invocation of the extended period, and imposition of penalties.
157.5 The appellant's reliance on the judgment of the Hon'ble Supreme Court in Eicher Tractors Ltd. v. Commissioner of Customs [2000 (122) ELT 321 (SC)] is misplaced. In that case, the Supreme Court held that transaction value must be accepted unless the conditions enumerated in Rule 4(2) of the erstwhile Customs Valuation Rules, 1988 (pari materia to Rule 3(2) of the 2007 Rules) are attracted. However, the Court itself recognized that where the price is influenced by extra-commercial considerations or where material facts are suppressed, the transaction value ceases to be acceptable. In the present case, the admitted payment of consideration outside the banking channels and the use of fabricated or manipulated documents directly attract Rule 3(2)(b), namely that the sale or price is subject to conditions or considerations for which a value cannot be determined. Therefore, the ratio of Eicher Tractors would not advance the appellant's case.
7.6 Similarly, reliance placed on ITC Ltd. v. Commissioner [2019 (368) ELT 216 (SC)] is misconceived. The said judgment dealt with situations where duty demand was sought to be raised by re-opening assessments without invoking the machinery of Section 28 and without alleging fraud or suppression. The Supreme Court itself carved out a clear exception for cases involving mis-declaration, 16 suppression, or fraud, holding that such cases stand on a different footing. The present proceedings are squarely based on allegations of deliberate undervaluation and suppression, supported by documentary evidence and admissions, and therefore the bar discussed in ITC Ltd. has no application.
7.7 On the other hand, the Larger Bench decision of the Tribunal in Shivam Marketing & Gaurav Kushwaha [2025 (6) TMI 1898 CESTAT (LB)] relied upon by the Respondent is squarely applicable. The Larger Bench held that where two invoices for the same consignment are found--one declared to Customs and another recovered from the importer's private records or electronic data the transaction value can be determined on the basis of the latter. In the present case, the evidence is even stronger, involving not only parallel invoices but also admissions of the importer and corroborative records. We therefore hold that the declared transaction value was rightly rejected under Rule 12 of the Customs Valuation Rules, 2007.
7.8 We further rely on the decisions rendered in the case of Eastern Silk Industries Ltd Vs. Commissioner of Customs (Airport/Admn), Kolkata and CC, Kandla Vs Essar Oil Ltd reported in 2004 (172) ELT 433 (SC), that: - 17
"A Fraud in common parlance means dishonest dealing, deceit or cheating, etc.
- It makes no difference whether fraud is committed by outrightly forging of documents or by wilful mis- declaration/misrepresentation - Fraud is fraud and there is no categories in mild frauds and severe frauds in taxation matters. Demand not time barred"
We find that the Hon'ble Supreme Court in the case of CC Kandla vs Essar Oil Ltd reported in 2004 (172) E.L.T. 433 (S.C) held that: -
"Fraud as is well known vitiates every solemn act. Fraud and justice never dwell together. Fraud is a conduct either by letter or words, which includes the other person or authority to take a definite determinative stand as a response to the conduct of the former either by words or letter. It is also well settled that misrepresentation itself amounts to fraud. Indeed, innocent misrepresentation may also give reason to claim relief against fraud. A fraudulent misrepresentation is called deceit and consists in leading a man into damage by wilfully or recklessly causing him to believe and act on falsehood. It is a fraud in law if a party makes representations, which he knows to be false, and injury enures therefrom although the motive from which the representations proceeded may not have been bad. An act of fraud on court is always viewed seriously. A collusion or conspiracy with a view to be deprive the rights of the others in relation to a property would render the transaction void ab initio. Fraud and deception are synonymous. Although in a given case a deception may not amount to fraud, fraud is anathema to all equitable principles and any affair tainted with fraud cannot be perpetuated or saved by the application of any equitable doctrine including res judicata. (See Ram Chandra Singh v. Savitri Devi and Ors. (2003 (8) SCC 319)."
In the present context, it is factually found to be correct that the appellant was in possession of blank signed letterheads of foreign suppliers which clearly demonstrate fabrication of invoices to be submitted to the Customs. The 18 correspondence between the partners clearly indicates their deliberate plan of undervaluation and the way the fabricated invoices are prepared and submitted to the Customs to evade payment of duty is enough proof for the fraudulent activities committed by the appellant. As fraud vitiates everything, no credence can be given to the contentions of the appellants.
Issue (ii): Legality of Re-determination of Assessable Value under the Customs Valuation Rules, 2007 8.1 We find that the Customs Valuation Rules prescribe a sequential application of valuation methods. However, it is well settled that this sequence is not to be applied mechanically or ritualistically, divorced from the factual realities of a given case. The appellant has contended that since contemporaneous imports of identical or similar goods existed, valuation ought to have been done under Rules 4 or 5. We are unable to accept this contention. The investigation itself revealed that several importers dealing in the same goods were under scrutiny for similar undervaluation practices. In such circumstances, contemporaneous import data becomes inherently unreliable, as tainted transactions cannot be used as valid comparables. Courts and Tribunals have consistently held that valuation based on contemporaneous imports presupposes the 19 genuineness and reliability of such imports, which is absent here.
8.2 The applicability of Rules 7 and 8 was also rightly ruled out. Deductive and computed value methods require reliable data relating to resale prices, costs of production, and related elements. In a case involving admitted suppression, fabrication of invoices, and clandestine payment mechanisms, such data is neither available nor reliable. Consequently, recourse to the residual method under Rule 9 was not only permissible but inevitable. 8.3 Under Rule 9, value is to be determined using reasonable means consistent with the principles of Section 14 and the Valuation Rules, based on data available in India. In the present case, the assessable value was determined based on proforma invoices recovered from the importer, admissions as to the extent of undervaluation, and corroborative documentary and electronic evidence. The Tribunal's decisions relied upon by the Respondent in T.N. Malhotra & S.R. Bristle Products [2024 (6) TMI 202 CESTAT] and AG Impex [2024 (9) TMI 1257 CESTAT] fully support this approach. In both cases, it was held that where parallel invoices and private records are recovered from the importer's own premises or electronic devices, and are supported by admissions, valuation under the residual 20 method is legally sustainable. The appellant's reliance on decisions holding that bare proforma invoices cannot be the sole basis for enhancement is distinguishable, as in the present case such invoices are not standalone evidence but part of a larger evidentiary mosaic. We therefore uphold the re-determination of assessable value.
Issue (iii): Demand of Differential Duty and Interest 9.1 Once the rejection of the declared transaction value and re-determination of assessable value are upheld, the demand of differential customs duty follows as a necessary consequence. The duty demand is not an independent or discretionary action, but flows directly from the valuation findings. As regards interest, it is settled law that interest under Sections 28AA/28AB of the Customs Act is compensatory in nature and arises automatically once duty is found to have been short-levied or not levied. No separate finding regarding mens rea is required for levy of interest. We therefore hold that the demand of differential duty along with applicable interest is legally sustainable. Issue (iv): Invocation of Extended Period of Limitation under Section 28(4) 10.1 The appellant has contended that the dispute pertains merely to valuation and that all imports were made openly under assessed Bills of Entry, thereby excluding invocation of the extended period.
2110.2 We find that this argument overlooks the settled legal position that suppression in valuation matters does not depend upon secrecy of import or physical concealment of goods, but upon non-disclosure of material facts having a direct bearing on assessment. The statutory obligation under Section 46 read with Section 14 is to declare the true and complete consideration paid or payable. 10.3 We also find that in the present case the evidence establishes that the appellant deliberately declared only a part of the actual consideration and suppressed the payment of differential amounts made through non-banking channels. Such facts were never disclosed to Customs and have been unearthed only through investigation. The appellant was in possession of letter pads of exporters used for preparation of invoices undervaluing the imported goods which were submitted to the customs.
We therefore hold that the extended period under Section 28(4) was rightly invoked.
Issue (v): Confiscation under Sections 111(d) and 111(m)
11. We find that deliberate mis-declaration of value in the Bills of Entry renders the imported goods liable to confiscation under Section 111(m) of the Customs Act, 1962. 22 The mis-declaration in the present case is not technical or inadvertent but conscious, deliberate and systematic, as established through documentary evidence and admissions recorded under Section 108 of the Act. While certain goods are no longer physically available for confiscation, the liability to confiscation nonetheless survives such non-availability, in respect of the seized goods having a re-determined value of ₹27,92,020/-, which were available for confiscation, the adjudicating authority has rightly ordered confiscation and extended the statutory option of redemption under Section
125. The redemption fine, being compensatory in nature and intended to neutralize the economic advantage arising from deliberate undervaluation, bears a reasonable nexus to the gravity of the offence and the duty sought to be evaded, and remains well within the statutory limits. We therefore find no infirmity in the finding of confiscation under Section 111(m) or in the redemption fine imposed on the seized goods. Issue (vi): Imposition of Penalties under Sections 114A and 114AA 12.1 Having upheld the invocation of the extended period under Section 28(4) of the Customs Act, 1962 on account of deliberate undervaluation, suppression of actual consideration, and conscious use of false documentation, the imposition of penalty under Section 114A follows as a statutory and inevitable consequence. Section 114A is 23 integrally linked to the proviso to Section 28(4), and once duty is found to have been short-levied by reason of fraud, wilful misstatement, or suppression of facts, penalty equal to the duty determined is mandatory in nature. In the present case, the conscious mis-declaration of value, non-disclosure of the full consideration actually paid, and deliberate presentation of undervalued documents establish the requisite mens rea inherent in Section 28(4), thereby fully attracting Section 114A. Further, the personal penalties of ₹25,00,000/- each imposed on the two partners under Section 114AA are equally sustainable, as the evidence on record including admissible statements recorded under Section 108 of the Customs Act and corroborative documentary material clearly demonstrates their knowledge and active involvement in the use of false and fabricated documents during customs clearance. Mere retraction of statements, unsupported by proof of coercion, does not dilute their evidentiary value.
12.2 We therefore find no infirmity in the imposition of penalties under Sections 114A and 114AA of the Customs Act, 1962.
13.1 We have perused the decision of the Hon'ble CESTAT Kolkota in Sunny Sales 2024 (10) TMI 514 - CESTAT 24 KOLKATA cited by the Appellant and find that the reliance placed by the appellants on the decision is misplaced and the said decision is clearly distinguishable on facts. In Sunny Sales, rejection of transaction value was declined as the Revenue's case rested on uncorroborated documents whose authenticity and nexus with the imports were not established, and there were no admissions or reliable evidence showing that the declared price was not the actual consideration. In the present case, rejection of declared value is founded on overwhelming and corroborative evidence, including repeated voluntary admissions of both partners recorded under Section 108 of the Customs Act, recovery of parallel invoices and private records indicating higher negotiated prices, seizure of blank signed letterheads evidencing fabrication of invoices, electronic records correlating with specific consignments, and payment of differential consideration through non-banking channels. The evidentiary deficiencies noted in Sunny Sales are wholly absent here.
13.2 The other decisions relied upon by the appellants, including Eicher Tractors Ltd., Forbo Siegling, Ramana International, G.K. Mercantile, Swarna Fabrics and ITC Ltd., were rendered in the contexts where rejection of transaction value was attempted on suspicion, 25 uncorroborated quotations, or unsigned documents, or without proof that the declared price was not the price actually paid or payable. Once suppression of actual consideration and extra-commercial payments is established, as in the present case, the ratio of those decisions ceases to apply. The embargo on reopening past assessments discussed in ITC Ltd. also does not apply where duty is demanded under Section 28 on detection of fraud and wilful suppression not discoverable at the time of assessment. 13.3 Conversely, the decisions relied upon by the Revenue in Shivam Marketing & Gaurav Kushwaha, T.N. Malhotra & S.R. Bristle Products and AG Impex directly apply. These decisions hold that where higher-value documents or parallel records are recovered from the importer's own possession and corroborated by voluntary admissions under Section 108, the declared value can be rejected, extended limitation invoked, and penalties imposed, as fraud and suppression vitiate self-assessment. The facts of the present case squarely attract this ratio.
14. In view of the detailed findings recorded hereinabove on facts and law, and having found no infirmity in the impugned order, we pass the following order: -
i. The rejection of the declared transaction value and re-
determination of the assessable value under Section 14 of 26 the Customs Act, 1962 read with the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 is upheld.
ii. The demand of differential customs duty confirmed under Section 28(4) of the Customs Act, 1962, along with applicable interest under Sections 28AA/28AB, being a direct and automatic consequence of the sustained valuation findings, is confirmed.
iii. The invocation of the extended period of limitation under the proviso to Section 28(4) of the Customs Act, 1962 is held to be legal and proper, having regard to the established facts of deliberate undervaluation, suppression of actual consideration, and conscious mis- declaration.
iv. Consequent upon the sustenance of the demand under Section 28(4), the imposition of penalty under Section 114A of the Customs Act, 1962 is upheld, the same being mandatory in nature once the ingredients of fraud, wilful misstatement, or suppression of facts are established, subject to the statutory option of reduced penalty, where admissible in accordance with law.
v. The imposition of penalty under Section 114AA of the Customs Act, 1962 is also upheld, as the evidence on record establishes knowingly usage of false and fabricated documents in the course of customs clearance. 27 vi. The imported goods are held liable to confiscation under Section 111(m) of the Customs Act, 1962 on account of mis-declaration of value; however, as the goods are no longer available for physical confiscation, the order of confiscation is sustained only to that extent as permissible in law.
vii. The confiscation of the seized goods valued at ₹27,92,020/- under Section 111(m) of the Customs Act, 1962 is upheld, and the option for redemption of the said goods on payment of redemption fine imposed under Section 125 of the Customs Act, 1962 is affirmed. viii. The penalties imposed on the noticees under Section 114AA of the Customs Act, 1962 for acts and omissions rendering the goods liable to confiscation are also affirmed.
15. Accordingly, all the three appeals, namely, the appeal filed by M/s. Sleek Corporation and the appeals filed by Shri Mahesh Agarwal and Shri Viresh Kothari, are dismissed, and the impugned Order-in-Original No. 45540/2016 dated 29.02.2016 is upheld in toto.
(Order pronounced in open court on 13.03.2026) Sd/- Sd/-
(VASA SESHAGIRI RAO) (P. DINESHA) MEMBER (TECHNICAL) MEMBER (JUDICIAL) MK