The transaction value of exported goods is presumed correct under Section 14 of the Customs Act, 1962; the Revenue must sequentially apply the Customs Valuation Rules, 2007, to reject it, and cannot arbitrarily rely on retail market surveys to determine export value.

PER R. MURALIDHAR

1. The appellant sought to export Mend Cow Leather Wallets. For this, they have filed 9 Shipping Bills during the period 16/2/2023 to 17/2/2023. On the ground that the value adopted per piece of leather wallet was higher than the market price of such goods and this has resulted in over-valuation which will also allow the appellant to claim more drawback, the consignments were stopped from being exported. A Show Cause Notice was issued on 18/07/2024. Against the FOB value of Rs. 6,61,02,740/- adopted by the appellant, the Show Cause Notice fixed the same on Rs. 4,72,30,000/-. For arriving at this value, the Department claimed that market survey was taken up. In the course of adjudication, the adjudicating authority has modified this value to Rs. 5,22,87,600/-. After this modification, the adjudicating authority has confiscated the goods, granting option to the exporter to redeem the same on payment of Redemption Fine of Rs. 50,00,000/-. He has also imposed penalty on the exporter and on Mr. Dhurv Agarwal. Being aggrieved, the exporter and Dhurv Agarwal have filed their appeals before the Commissioner (Appeals). Vide impugned order dated 07/4/2025, the Commissioner (Appeals) has set aside the Order-in-Original and allowed the appeals filed by the appellants. Being aggrieved, the Revenue has filed their appeals before the Tribunal.

2. The Learned AR appearing on behalf of the Revenue submits that the value adopted by the appellant for the wallets proposed to be exported by the appellant, were very high showing the total FOB value as 6,61,02,740/-. Market Survey was undertaken to gather the correct value of such leather wallets. At the time of market survey even the representative of the appellant exporter was also included in the team visiting the market to gather information. All the data gathering was done in a fair manner. He further submits that the adjudicating authority has also considered certain pleadings of the appellant and has enhanced the value to Rs. 5,22,87,600/- as against the proposed value of Rs. 4,72,30,000/- in the SCN. This shows that principles of natural justice were followed and the department has come to a fair conclusion about the value of the goods proposed to be exported. In view of the overvaluation adopted by the appellant, it is clear that they were seeking to get additional drawback benefits. In view of these submissions, he justifies the value adopted by the Adjudicating Authority and the Redemption Fine imposed and penalties imposed on the appellants. He prays that the appeal may be allowed.

3. The Learned Counsel appearing on behalf of the Respondents submits that the department did not follow the procedure specified under Section 14 of the Customs Act for arriving at the valuation. He submits that the appellant has been regularly exporting to the same overseas importer for the past many years and the value adopted in the disputed nine Shipping Bills are very much similar to the value adopted in the past. He further submits that the market survey was not conducted correctly. The details were taken from the manufacturers of the product whereas the appellant was procuring the goods from traders wherein the margin of profit is also required to be considered. Even as the Department had relied on the market survey valuation to issue the Show Cause Notice, the Adjudicating Authority has gone beyond the