COMMISSIONER OF CUSTOMS (IMPORTS), MUMBAI versus M/S GANPATI OVERSEAS THROUGH ITS PROPRIETOR SHRI YASHPAL SHARMA & ANR.
[2023] 13 S.C.R. 172, Supreme Court of India, 2023
Outcome: Dismissed (Dismissed)
Segment: Issues
[2023] 13 S.C.R. 172 : 2023 INSC 881
172
CASE DETAILS
COMMISSIONER OF CUSTOMS (IMPORTS), MUMBAI
v.
M/S GANPATI OVERSEAS THROUGH ITS PROPRIETOR SHRI 
YASHPAL SHARMA & ANR.
(Civil Appeal Nos. 4735-4736 of 2009)
OCTOBER 06, 2023
[B. V. NAGARATHNA AND UJJAL BHUYAN, JJ.]
HEADNOTES
Issue for consideration: Whether the tribunal was justiﬁ ed in holding 
that enhancement of value of the imported goods and the penalties imposed 
by the Commissioner of Customs on the noticee-respondents could not be 
sustained and consequently in setting aside the same.
Customs Act, 1962 – 14 – Customs Valuation (Determination of 
Price of Imported Goods) Rules, 1988 – r. 4, 8, 5, 6 and 7 – Transaction 
value of imported goods – Determination of – Allegations of under-
invoicing of price and thereby evasion of customs duty by the 
respondents – Initiation of proceedings on the basis of the price declared 
by the foreign supplier in the ﬁ rst set of export declarations ﬁ led before 
the Hong Kong customs authority – Discrepancies noticed in the price 
mentioned in the export declarations and the price of the goods as per 
the import invoices – Filing of second set of export declarations albeit 
imposition of penalty for mis-declaration of price at the initial stage, 
which stood paid by the foreign supplier – Department after rejecting 
the price declared as per the import invoices, invoked r. 8 straightaway 
instead of going through rr. 5, 6 and 7 thereof sequentially – Correctness:
Held: If
transaction value of imported goods cannot be determined, 
the value shall be determined by proceeding sequentially through rr. 5 to 
8 – Where the value of imported goods cannot be determined under the 
provisions of any of the rr 5 to 7A, the value shall be determined using 
reasonable means as provided in r. 8-the residual method – Furthermore, 
transaction value can be rejected if the invoice price is not found to be correct
173
but it is for the department to prove that the invoice price is incorrect – On 
facts, both the department as well as the adjudicating authority were not 
justiﬁ ed in rejecting the import invoice price of the goods as not correct 
and enhancing the price by straightaway invoking r. 8 when there was no 
evidence before them to do so – Thus, the tribunal was justiﬁ ed in setting 
aside the order passed by the adjudicating authority – No error or inﬁ rmity 
in the impugned judgment of passed by the tribunal. [Paras 34.1, 37, 40.2, 
41,42]
Customs Act, 1962 – Initiation of proceeding alleging under-
invoicing of price of goods imported from foreign country and thereby 
evading customs duty by the noticee – Reliance upon the unattested 
photocopies of the ﬁ rst set of export declarations ﬁ led by the foreign 
supplier before the customs authority showing great discrepancy in the 
price mentioned in the export declarations and the price of the goods 
as per the import invoices – Justiﬁ cation:
Held: Export declarations relied upon by the Department and earlier 
by the Directorate of Revenue Intelligence were unattested photocopies 
– Since those documents were used as a piece of evidence against the 
noticee, it was necessary that those documents were required to have been 
proved – Unattested photocopies of the relied upon documents without 
anyone proving or owning up the veracity of the same would not have any 
evidentiary value – Very substratum of these documents was
subsequently 
removed when the foreign supplier ﬁ led a second set of export declarations 
before the Hong Kong customs authority showing lower price matching 
the price of the goods declared in the import invoices – Foreign supplier 
had paid the penalty for mis declaration of price at the initial stage – There 
can be no justiﬁ able reason for the department to harp upon the price of 
the goods as per the initial export declarations by placing reliance on the 
unattested photocopies of the ﬁ rst set of export declarations to prove under-
invoicing for the purpose of evading customs duty – Tribunal rightly held 
that the value shown in the ﬁ rst set of export declarations could not form 
any reliable basis for enhancement of the value. [Paras 16, 17]
Customs Act, 1962 – s. 108 – Power to summon persons to give 
evidence and produce documents – Admissibility in evidence of the 
statement recorded u/s. 108:
COMMISSIONER OF CUSTOMS (IMPORTS), MUMBAI v. M/S GANPATI 
OVERSEAS THR. ITS PROP. SHRI YASHPAL SHARMA
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
174
Held: Customs officer is not a police officer, and the person 
summoned and who makes a statement u/s. 108 is not an accused – 
However, a statement made by a person u/s.108 before the concerned 
customs oﬃ  cer is admissible in evidence and can be used against such 
a person – Object underlying s. 108 is to elicit the truth from the person 
who is being examined regarding the incident of customs infringement, 
thus customs oﬃ  cer must ensure the truthfulness of the statement so 
recorded – If the statement recorded is not correct, then, the very utility 
of recording such a statement would get lost – It is axiomatic that when 
a statement is admissible as a piece of evidence, the same has to conform 
to minimum judicial standards – Statement recorded under duress or 
coercion cannot be used against the person making the statement and 
the  adjudicating authority is to ﬁ nd the same – On facts, statement of 
director of the supplier ﬁ rm and proprietor of the importer, recorded u/s. 
108 wherein both admitted under valuation – Tribunal noted the factum 
of retraction of the statement and thus, refused to give credence to such 
statement – Approach of the tribunal is justiﬁ ed. [Paras 18, 20, 28]
LIST OF CITATIONS AND OTHER REFERENCES
Commissioner of Customs, Calcutta v. South India Television (P) 
Ltd. (2007) 6 SCC 373 : [2007] 8 SCR 95; Rabindra Chandra Paul v. 
Commissioner of Customs, (2007) 3 SCC 93 : [2007] 3 SCR 319 – relied
on.
Surjit Singh Chhabra v. Union of India, 1997 (89) ELT-646; K.I. 
Pavunny v. Assistant Collector (1997) 3 SCC 721 : [1997] 1 SCR 797; 
State of Punjab v. Barkat Ram [1962] 3 SCR 338; Ramesh Chandra Mehta 
v. State of West Bengal, AIR 1970 SC 940 : [1969] SCR 461; Collector 
of Customs, Madras v. D. Bhoormall (1974) 2 SCC 544 : [1974] 3 SCR 
833; Naresh J. Sukhawani v. Union of India AIR 1996 SC 522 : [1995] 4 
Suppl. SCR 778; K.I. Pavunny v. Assistant Collector (1997) 3 SCC 721 : 
[1997] 1 SCR 797; Union of India v. Padam Narain Aggarwal, AIR 2009 
SC 254 : [2008] 14 SCR 179; Eicher Tractors Limited v. Commissioner 
of Customs (2001) 1 SCC 315 : [2000] 4 Suppl. SCR 597 – referred to.
175
OTHER CASE DETAILS INCLUDING IMPUGNED 
ORDER AND APPEARANCES
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 4735-4736 
of 2009.
From the Judgment and Order dated 27.06.2008 of the Customs, Excise 
& Service Tax Appellate Tribunal, West Zonal Bench at Mumbai in Appeal 
No.C/1347 & 1374 of 2002.
Appearances:
Balbir Singh, ASG, Arijit Prasad, Sr. Adv., Rupesh Kumar, Mukesh 
Kumar Maroria, Ms. Rukmini Bobde, Aniruddh Sharma II, Ishaan Sharma, 
Advs. for the Appellant.
V. Lakshmikumaran, Ms. Apeksha Mehta, Ms. Neha Choudhary, Ms. 
Charanya Lakshmikumaran, Ms. Falguni Gupta, Ms. Umang Motiyani, M. 
P. Devanath, Advs. for the Respondents.
JUDGMENT / ORDER OF THE SUPREME COURT
JUDGMENT
UJJAL BHUYAN, J.
1. Since both the appeals arise out of the common judgment and ﬁ nal 
order dated 27.06.2008 passed by the Customs, Excise and Service Tax 
Appellate Tribunal, West Zonal Bench at Mumbai with parties also being 
the same, the two appeals were heard together and are being disposed of 
by this common judgment and order.
2. The appeals have been ﬁ led by the Commissioner of Customs 
(Imports), Mumbai under Section 130-E of the Customs Act, 1962 against 
the common judgment and ﬁ nal order dated 27.06.2008 passed by the 
Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench 
at Mumbai (brieﬂ y the ‘CESTAT’ or ‘the Tribunal’ hereinafter) in Appeal 
Nos. C/1347 and 1374 of 2002.
3. The issue that arises in the two appeals is whether the CESTAT was 
justiﬁ ed in holding
that enhancement of value of the imported goods and 
the penalties imposed by the Commissioner of Customs (Adjudication-1), 
COMMISSIONER OF CUSTOMS (IMPORTS), MUMBAI v. M/S GANPATI 
OVERSEAS THR. ITS PROP. SHRI YASHPAL SHARMA
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
176
Mumbai on the respondents could not be sustained and consequently in 
setting aside the same? 
4. A brief recital of facts would be in order. 
4.1. Show cause notice dated 17.12.1999 was issued to the respondents 
by the Additional Director General, Directorate of Revenue Intelligence, 
New Delhi. It was mentioned therein that secret information was received 
by the Directorate of Revenue Intelligence that M/s Ganpati Overseas had 
imported tuners from Hong Kong at grossly under invoiced prices, thereby 
evading huge customs duty. The information revealed that the ﬁ rm M/s 
Ganpati Overseas was owned by one Mr. Yashpal Sharma; the Hong Kong 
based supplier M/s Arise Enterprises was owned by his relative Mr. Suresh 
Chandra Sharma; the imported goods were cleared from Air Cargo Complex, 
Sahar, Mumbai and that M/s National Shipping Agency, Mumbai had acted 
as the Customs House Agent.
4.2. Upon receipt of such information, Directorate of Revenue 
Intelligence carried out investigation wherefrom it could be gathered that 
M/s Ganpati Overseas had imported twenty consignments during the years 
1997-98 and 1998-99. It was found that M/s Ganpati Overseas had imported 
mainly tuners from M/s Arise Enterprises, Hong Kong and had also imported 
about three-four consignments of saw ﬁ lters alongwith the tuners. Directorate 
of Revenue Intelligence obtained information from the Consulate General 
of India at Hong Kong that M/s Arise
Enterprises, Hong Kong belonged 
to one Mr. Suresh Chandra Sharma who alongwith his wife Mrs. Kusum 
Sharma were the directors. When Mr. Suresh Chandra Sharma visited India 
in March, 1999, his statement was recorded on 08.03.1999 under Section 108 
of the Customs Act, 1962 (referred to as the ‘Customs Act’ hereinafter). In 
his statement, Mr. Suresh Chandra Sharma stated that M/s Ganpati Overseas 
belonged to Mr. Yashpal Sharma who was his co-brother. He stated that M/s 
Ganpati Overseas was in the business of importing electronic goods since 
1997-98. He had supplied tuners and saw ﬁ lters to M/s Ganpati Overseas 
through his ﬁ rm M/s Arise Enterprises from Hong Kong.
4.3. Mr. Suresh Chandra Sharma admitted that the rate of tuners per 
piece as shown in the invoices by M/s Arise Enterprises did not reﬂ ect the 
actual price. He had deliberately mentioned lower price with the intention 
of saving customs duty in respect of the goods imported by his co-brother,
177
Mr. Yashpal Sharma. The actual price of the tuners was quite high. The 
diﬀ erential amount i.e. the diﬀ erence between the actual price and the 
declared price was retained in India which he used to collect from Mr. 
Yashpal Sharma.
4.4. Mr. Yashpal Sharma was also summoned whereafter his statement 
was recorded under Section 108 of the Customs Act on 15.03.1999. Apart 
from narrating the factum of importing the goods by showing prices much 
lesser than the actual price meant to evade customs duty, he stated that the 
amount of payment disclosed in the import documents were sent by him 
to Mr. Suresh Chandra Sharma through the banking channel, whereas, the 
balance diﬀ erential amount used to be handed over to Mr. Suresh Chandra 
Sharma on his visits to India.
4.5. It was mentioned that price of tuners so imported as per the sales 
vouchers was in the range of Rs. 40-60 per piece but the actual market value 
of these tuners was in the range of Rs. 200-325 per piece. In this manner, 
the respondents had evaded customs duty amounting to a total of around 
rupees twenty ﬁ ve to thirty lakhs approximately.
4.6. Mr. Yashpal Sharma was arrested on 15.03.1999 under Section 135 
of the Customs Act. He was enlarged on bail on 30.03.1999 by the Additional 
Sessions Judge, Patiala House, New Delhi subject to the condition that a 
sum of rupees ten lakhs should be deposited in the oﬃ  ce of the Directorate 
of Revenue Intelligence on 30.03.1999 and a further sum of rupees twenty
lakhs should be so deposited within a period of forty-ﬁ ve days. Both the 
amounts were accordingly deposited.
4.7. From a scrutiny of the relevant materials including export 
declarations, it was found that the price of tuner as per the export declarations 
ﬁ led by the exporter before the Hong Kong Customs and Excise Department 
was Hong Kong $67.67 per piece which was much higher as compared to 
the price declared in the invoice by M/s Ganpati Overseas before the Indian 
customs authority at the time of importation of the goods. In this connection, 
the Directorate of Revenue Intelligence prepared two charts; as per chart-I, 
M/s Ganpati Overseas had evaded customs duty to the extent of Rs. 
1,07,41,419.00 on import of nineteen consignments. Likewise, Directorate 
of Revenue Intelligence prepared chart-II which dealt with importation of 
3200 pieces of tuners which were made in Taiwan. It was noted that the 
COMMISSIONER OF CUSTOMS (IMPORTS), MUMBAI v. M/S GANPATI 
OVERSEAS THR. ITS PROP. SHRI YASHPAL SHARMA [UJJAL BHUYAN, J.]
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
178
value of the goods declared before the customs authority was Hong Kong 
$19200 whereas the actual value was Hong Kong $211468.07 as per export 
declaration before the Hong Kong Customs and Excise Department. Thus, 
according to the Directorate of Revenue Intelligence, M/s Ganpati Overseas 
had evaded customs duty to the tune of Rs. 8,67,762.00. The price of goods 
as shown in the import documents by M/s Ganpati Overseas was found to 
be much less than the real price of the goods,  i.e., at the price at which 
those were supplied from Hong Kong. Therefore, the import valuation 
was rejected in terms of Section 14 of the Customs Act and the Customs 
Valuation (Determination of Price of Imported Goods) Rules, 1988 (brieﬂ y, 
the ‘Customs Valuation Rules’ hereinafter). 
4.8. The show cause notice proposed that the value of imported goods 
should be determined under Rule 8 of the Customs Valuation Rules on the 
basis of the value given in the export declarations obtained from the Hong 
Kong Customs and Excise Department. Alleging that respondents had 
wilfully misdeclared and suppressed the correct value of the imported goods 
with an intent to evade duties of customs, Directorate of Revenue Intelligence 
invoked the extended period of limitation as per the proviso to Section 
28(1) of the Customs Act. It was mentioned that M/s Ganpati Overseas was 
liable to pay the diﬀ erential customs duty of Rs. 1,07,41,419.00 leviable on 
the
import of tuners, saw ﬁ lters etc. as per chart-I and Rs. 8,67,762.00 as 
per chart-II, the total amount being Rs. 1,16,09,181.00. Respondents were 
therefore called upon to show cause as to why the aforesaid amount of 
customs duty should not be demanded and recovered from them and also as 
to why the imported goods should not be conﬁ scated under Sections 111(d) 
and 111(m) of the Customs Act, besides appropriation of the amount of Rs. 
30 lakhs already deposited. Respondents were further called upon to show 
cause as to why penalty under Section 112(a) of the Customs Act should 
not be imposed upon them and as to why interest should not be levied on 
the evaded customs duty.
4.9. The noticees were directed to submit their reply to the 
Commissioner of Customs, Air Cargo Complex, Sahar Airport, Mumbai 
within the stipulated time. It was mentioned that the show cause notice 
was issued under Section 124 of the Customs Act read with the proviso to 
Section 28(1) of the aforesaid Act.
179
5. M/s Ganpati Overseas through its lawyer replied to the aforesaid 
show cause notice on 20.05.2000. While denying all the allegations in 
totality, it was mentioned that the Commissioner of Customs vide his letter 
dated 07.04.2000 had rejected the request of M/s Ganpati Overseas for 
supply of certain documents sought for, on the ground that those documents 
were not relied upon. It was submitted that those documents might have 
relevance while preparing the defence and that absence of those documents 
would handicap the noticees in putting forth a proper defence. While 
reiterating the request for such documents, the noticees submitted what 
they called an interim reply.
5.1. It was mentioned that Mr. Yashpal Sharma was the proprietor of 
the noticee ﬁ rm which was engaged in the business of import of tuners etc. 
during the years 1997-98 and 1998-99. The imports were made from M/s. 
Arise Enterprises, Hong Kong. At the time of clearance, the bills of entry 
were ﬁ led through the Customs House Agent and the imported goods were 
cleared after proper assessment by the customs authority on payment of due 
customs duty. Those goods were subsequently sold in the local market. In 
all, twenty consignments were imported. The noticees thereafter described 
and furnished the details of two types of tuners which were imported over 
a period of about nine months consisting of twenty consignments.
5.2. The noticees adverted to the allegations made in the show cause 
notice that
the price declared by the noticees was not correct and was on 
the lower side, as proved by the statements of Mr. Suresh Chandra Sharma 
and Mr. Yashpal Sharma recorded under Section 108 of the Customs Act 
as well as by the export declarations ﬁ led by M/s Arise Enterprises before 
the Hong Kong Customs and Excise Department. It was pointed out 
that the two statements of Mr. Suresh Chandra Sharma and Mr. Yashpal 
Sharma could not be termed as voluntary under any circumstances. Those 
inculpatory statements were obtained through coercion and under duress. It 
was pointed out that the statement of Mr. Yashpal Sharma was structured in 
such a manner as to tally entirely with the statement of Mr. Suresh Chandra 
Sharma. That apart, statement of Mr. Yashpal Sharma was contradictory to 
his own statement made before the Additional Sessions Judge where he had 
stated that there was no under valuation or under invoicing of the goods 
imported. Therefore, it was contended that both the statements were not at 
COMMISSIONER OF CUSTOMS (IMPORTS), MUMBAI v. M/S GANPATI 
OVERSEAS THR. ITS PROP. SHRI YASHPAL SHARMA [UJJAL BHUYAN, J.]
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
180
all reliable. Further, Mr. Yashpal Sharma vide letter dated 25.08.1999 had 
retracted the statement made by him under Section 108 of the Customs Act.
5.3. Regarding the export declarations ﬁ led by M/s Arise Enterprises 
before the Hong Kong customs authority, it was submitted that it was not 
known as to when these declarations were forwarded by the Consulate 
General of India, Hong Kong to the Directorate of Revenue Intelligence, 
New Delhi. The copies relied upon by the department were unattested and 
photocopies, thus unreliable. That apart, when the noticees contacted M/s 
Arise Enterprises, Hong Kong, it was acknowledged that due to error on 
the part of the staﬀ , value of the goods was incorrectly shown in the export 
declarations. The mistake was subsequently rectiﬁ ed whereafter M/s Arise 
Enterprises lodged a second set of declarations before the Hong Kong 
customs authority and paid the penalty which was levied.
5.4. It was stated that the noticees were informed by the Hong Kong 
supplier that the tuners, saw ﬁ lters etc. were being oﬀ ered to them on stock 
clearance basis at lower prices. It was for this reason that the goods were 
sold to the noticees at lower prices, details of which were mentioned in 
paragraph 11 of the reply.
5.5. After saying so, it was pointed out that diﬀ erent prices in export 
declarations and in import invoices did not necessarily mean that the price 
shown in the export declarations was
correct and that the one declared in 
the import invoices was incorrect.
5.6. The reply also touched upon the method of valuation as well as 
the valuation of the goods by the customs authority in India. After adverting 
to various provisions of the Customs Valuation Rules, it was asserted that 
the price at which the goods of the respondents were assessed and cleared 
was more or less correct. It was pointed out that the department could not 
adduce any single piece of evidence to arrive at the so called correct value 
of the goods. No value of identical or similar goods could be produced. No 
evidence of market value was adduced. No attempt to ﬁ nd out the price per 
unit was made for a comparison. That apart, no incriminating document or 
material was produced to establish under valuation. There was no evidence 
as to how remittances over and above the invoice price were made. One 
and only ‘evidence’ relied upon by the department was the initial value 
shown in the export declarations which was declared to be incorrect by the
181
supplier itself and later on rectiﬁ ed. Thus, there was no mis-declaration either 
in respect of description of the goods or value of the goods. No question 
of conﬁ scation under Sections 111(d) and 111(m) of the Customs Act was 
made out. That apart, the goods were not prohibited ones, the import of 
which would warrant conﬁ scation. In any view of the matter, the goods 
on being cleared by the customs authority were sold by the noticees much 
before the issuance of the show cause notice. Therefore, there cannot be any 
conﬁ scation of such goods. In so far deposit of Rs. 30 lakhs by Mr. Yashpal 
Sharma is concerned, the same was to fulﬁ l the bail condition imposed by 
the Additional Sessions Judge. Since there was no short payment of customs 
duty, question of appropriation of the aforesaid amount did not arise; neither 
any penalty was imposable nor interest leviable. M/s Ganpati Overseas, 
therefore, requested the Commissioner to drop the proceedings.
6.  Reply of the respondents was found to be not acceptable. Therefore, 
the case was taken up for adjudication. Accordingly, the case was transferred 
to Commissioner of Customs (Adjudication-1), New Customs House, 
Mumbai for the purpose of adjudication. During the adjudication process, 
personal hearing was aﬀ orded to the respondents.
6.1. Adjudicating authority noted that the customs department had 
alleged under valuation of the goods in question resulting in evasion of 
customs duty to the tune of Rs.
1,16,09,181.00. To prove under valuation, 
the department had relied upon the price mentioned in the export declarations 
ﬁ led by the supplier before the Hong Kong customs authority in respect 
of nineteen consignments. The price so declared was considered as the 
correct transaction value. In respect of one more consignment where export 
declaration was not available, department had proposed enhancement of the 
price of the goods on the basis of the other export declarations. Adjudicating 
authority did not accept the contention of the respondents that the price 
mentioned in the export declarations ﬁ led before the Hong Kong customs 
authority could not be accepted. Distinguishing the facts of the two cases 
relied upon by the respondents, the adjudicating authority took the view that 
even if the copies of the export declarations available with the Directorate 
of Revenue Intelligence were not attested or were xerox copies, it would 
not make those copies unreliable or unauthentic. Therefore, taking into 
account the fact that the supplier M/s Arise Enterprises had acknowledged 
COMMISSIONER OF CUSTOMS (IMPORTS), MUMBAI v. M/S GANPATI 
OVERSEAS THR. ITS PROP. SHRI YASHPAL SHARMA [UJJAL BHUYAN, J.]
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
182
that those declarations were ﬁ led by them, which was not denied by the 
respondents, the adjudicating authority held that there was no reason to 
doubt the veracity of the export declarations even if those were unattested 
and were mainly xerox copies. Accordingly, the adjudicating authority held 
that the information obtained was correct and genuine.
6.2. On the contention that statements of Mr. Yashpal Sharma and 
Mr. Suresh Chandra Sharma were not voluntary and therefore could not be 
relied upon, adjudicating authority held that both of them in their statements 
recorded under Section 108 of the Customs Act had admitted to having 
under-invoiced the price of the goods and had voluntarily paid Rs. 30 lakhs 
towards payment of evaded customs duty during the investigation. They had 
also explained in their statements the modus operandi adopted by them and 
the manner of transfer of the diﬀ erential amount. Therefore, the adjudicating 
authority opined that he had no reason to accept the plea of the respondents 
that the statements of Mr. Yashpal Sharma and Mr. Suresh Chandra Sharma 
were not voluntary and should not be relied upon. This plea was taken only 
as an afterthought.
6.3. Contention of the respondents that the declared price was correct 
when compared with contemporaneous imports was also not accepted by 
the adjudicating authority as the invoices of the contemporaneous imports 
did not reveal the speciﬁ cation, quality
etc., of the products.
6.4. Adjudicating authority also rejected the contention of the 
respondents that the supplier M/s Arise Enterprises had purchased the goods 
in question on stock clearance basis at a lower price and for this reason it 
could sell the goods to M/s Ganpati Overseas at a lower price. According 
to the adjudicating authority, this was again an afterthought and an invented 
argument as the noticees had not declared that the goods were purchased 
in stock lot. Neither invoices nor export declarations as well as the bills of 
entry or any other document on record suggested that the subject goods 
were purchased in stock lot at a price lower than the normal one. Rather, 
such a plea would support the allegation of the department that the invoice 
price was not a normal price and coupled with the fact that the parties were 
relatives, had rendered the invoice price unacceptable for assessment in terms 
of Section 14(1) of the Customs Act read with Rule 2(2) of the Customs 
Valuation Rules. Since neither the transaction value of similar goods nor
183
contemporary prices etc. were available, resort to Rules 5, 6 and 7 for 
determining the assessable value of the goods was not possible. Therefore, 
Rule 8 of the Customs Valuation Rules was correctly applied.
6.5. Holding that the export declarations reﬂ ected the true transaction 
value which was misdeclared by the importer to evade customs duty, the 
adjudicating authority vide the order-in-original dated 17.06.2002 held that 
the proviso to Section 28(1) of the Customs Act was applicable. Consequently, 
M/s Ganpati Overseas was held liable to pay the diﬀ erential customs duty 
of Rs. 1,16,09,181.00 alongwith interest forthwith. For misdeclaration and 
under valuation, the goods in question were held liable for conﬁ scation 
under Sections 111(d) and 111(m) of the Customs Act. However, as the 
said goods were not available having been cleared no order for conﬁ scation 
was passed. Further, equivalent amount of diﬀ erential customs duty was 
imposed on M/s Ganpati Overseas as a penalty under Section 114A of the 
Customs Act and in addition, penalty of rupees ﬁ ve lakhs was imposed on 
Mr. Yashpal Sharma under Section 112(a) of the Customs Act.
7. Aggrieved by the aforesaid order-in-original of the adjudicating 
authority, respondents preferred appeals before the CESTAT which were 
registered as Appeal Nos. C/1347 and 1374 of 2002.
7.1. CESTAT opined that export declarations ﬁ led by the foreign 
supplier before the Hong Kong customs authority could not be relied upon
for the purpose of enhancement of value. This was for more than one reason. 
Firstly, those declarations were unattested photocopies. Secondly, the 
supplier had ﬁ led another set of declarations indicating the price as shown 
in the invoices of the imports. Thirdly, for ﬁ ling incorrect declarations which 
had to be subsequently replaced by another set of declarations, the foreign 
supplier had paid penalty before the Hong Kong customs authority. Fourthly, 
no investigation was carried out by the customs authority with the Hong 
Kong customs authority revealing anything to the contrary. On that basis, 
CESTAT held that the price shown in the initial export declarations could 
not form the basis for enhancing the value of the goods. 
7.2. CESTAT noted that nothing incriminating was recovered from 
the importers in the form of text messages etc. CESTAT also recorded that 
there was no evidence of contemporary imports which had higher value. 
COMMISSIONER OF CUSTOMS (IMPORTS), MUMBAI v. M/S GANPATI 
OVERSEAS THR. ITS PROP. SHRI YASHPAL SHARMA [UJJAL BHUYAN, J.]
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
184
The foreign supplier had given explanation in respect of the price initially 
declared in the export declarations, which explanation was not discarded.
7.3. According to CESTAT, value in the export declaration may 
be relied upon for ascertainment of assessable value under the Customs 
Valuation Rules and not for determining the price at which the goods are 
ordinarily sold at the time and place of importation. CESTAT referred to 
and relied upon the decision of this Court in Commissioner of Customs, 
Calcutta Vs. South India Television (P) Ltd., (2007) 6 SCC 373 wherein this 
court held that the burden lies upon the department to prove under valuation 
by evidence or information about comparable  imports and if the charge 
of under valuation is not supported by such evidence or information, the 
beneﬁ t of doubt has to be given to the importer. On the basis of the aforesaid 
decision, CESTAT recorded that there was not only no contrary evidence 
of contemporaneous import but even the foreign supplier had satisfactorily 
explained that the price initially shown in the export declarations was 
incorrect which was subsequently amended and accepted by the Hong Kong 
customs authority.
7.4. As regards the statements of Mr. Yashpal Sharma and Mr. Suresh 
Chandra Sharma, the Tribunal observed that these statements were retracted 
at the earliest available opportunity. Decisions relied upon by the appellant, 
viz., Surjit Singh Chhabra
Vs. Union of India, 1997 (89) ELT-646 and in K.I. 
Pavunny Vs. Assistant Collector, (1997) 3 SCC 721 did not advance the case 
of the department. Tribunal observed that in the said decisions, this court 
has held that the inculpatory portion of confessional statement of accused, 
even if retracted, could be relied upon to base conviction if it is found to be 
voluntary and truthful; however, this Court sounded a note of caution that 
prudence and practice would require that such confessional statement should 
be corroborated by other evidence adduced by the prosecution. Statement 
of Mr. Yashpal Sharma that the actual market value of the tuners was in the 
range of Rs.200.00 and Rs.325.00 per piece which would make the market 
price thereof in excess of Rs.700.00 after adding normal proﬁ t could not 
be taken to be voluntary and true for the reason that tuners were supplied 
to the respondents at negotiated price of four diﬀ erent rates i.e. HK$ 4.00, 
4.50, 5.50 and 6.00. In that view of the matter, Tribunal was of the view that 
the loaded value proposed by the department would not be correct since the
185
proposed Free on Board (FoB) price would be about Rs.372.00 per piece and 
CIF (Cost, Insurance and Freight) value would be Rs. 454.00 per piece and 
the landing cost would be Rs.660.00 per piece after adding customs duty.
7.5. CESTAT also noted that the importers i.e. respondents had 
produced invoices of contemporaneous imports by M/s Bharat Electronics 
and M/s K.S. International to show price comparable with the price declared 
by them in respect of the goods in question.
7.6. In the above backdrop, CESTAT vide the judgment and order 
dated 27.06.2008 held that enhancement of the value of the imported goods 
as well as the penalties imposed could not be sustained. Accordingly, those 
were set aside and appeals ﬁ led by the respondents were allowed.
8. It is this order of CESTAT which has been impugned in the two 
appeals before us. 
9. This court vide the order dated 24.07.2009 had issued notice. 
Thereafter, the appeals were admitted on 10.12.2010.
10. Respondents have ﬁ led counter aﬃ  davit through Mr. Yashpal 
Sharma. After narrating the facts, respondents have supported the judgment 
and order passed by the CESTAT while controverting all the contentions 
raised by the appellant. Respondents have, therefore, sought for dismissal 
of the appeals. 
11. Mr. Rupesh Kumar, learned counsel for the appellant has assailed 
the judgment and order of CESTAT. He has asserted that the appellant 
was justiﬁ ed in determining the value of the imported goods under Rule 8 
of
the Customs Valuation Rules on the basis of the declared value of the 
goods mentioned in the export declarations ﬁ led by the supplier which were 
obtained from the Hong Kong customs authority. The invoices presented 
by the respondents before the customs authority did not represent genuine 
and actual transaction.
11.1. The price declared in the invoice was much lower than the value 
declared in the export declarations ﬁ led in Hong Kong. Since it did not reﬂ ect 
the correct transaction value, the value appearing in the import invoices did 
not fulﬁ l the criteria of Section 14(1) of the Customs Act and Rule 4 of the 
Customs Valuation Rules as per which the transaction value of the imported 
goods is the price actually paid or payable when sold for export to India.
COMMISSIONER OF CUSTOMS (IMPORTS), MUMBAI v. M/S GANPATI 
OVERSEAS THR. ITS PROP. SHRI YASHPAL SHARMA [UJJAL BHUYAN, J.]
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
186
11.2. He submits that the export declarations ﬁ led by the foreign 
supplier before the Hong Kong customs authority was not the sole basis for 
increasing the value of the subject goods. There were suﬃ  cient materials on 
record to prove under valuation. Both Mr. Suresh Chandra Sharma, director 
of the supplier ﬁ rm and Mr. Yashpal Sharma, proprietor of the importer, in 
their statements under Section 108 of the Customs Act had admitted under 
valuation. In his statement, Mr. Yashpal Sharma had stated that the supplier 
M/s Arise Enterprises, Hong Kong belonged to his co-brother Mr. Suresh 
Chandra Sharma. Mr. Suresh Chandra Sharma used to send the goods on 
his own and that he had never sent any written or oral order for supply. 
As and when M/s Arise Enterprises would dispatch the goods, Mr. Suresh 
Chandra Sharma would inform Mr. Yashpal Sharma over telephone to whom 
the goods were to be sold, in what quantity and at what price. Thereafter, 
he used to sell the goods at the settled price and receive the payments. He 
had stated that he was not aware of the actual price of the goods imported 
from Hong Kong. The amount of payment as per the import documents 
were sent by him to Mr. Suresh Chandra Sharma through banking channel 
and the balance amount he used to handover to Mr. Suresh Chandra Sharma 
whenever he visited India.
11.3. Learned counsel has highlighted the fact that the supplier in Hong 
Kong and the importer in
India were related parties. Therefore, the contention 
that the foreign supplier had ﬁ led another set of export declarations wherein 
the price shown in the invoices matched with that shown in the import 
documents in India was an afterthought to frustrate the proceedings initiated 
by the customs authority.
11.4. He further submits that where the importer like the respondents 
had not laid any basis for acceptance of the invoice price as transaction 
value, then the authorities would be legally justiﬁ ed to initiate ﬁ xation of 
price under Rule 5 onwards under the Customs Valuation Rules. According 
to him, the department had to take recourse to Rule 8 of the aforesaid Rules 
straightaway instead of proceeding through Rules 5, 6 and 7 as neither 
transaction value of similar goods nor contemporary prices were available. 
Therefore, the adjudicating authority had rightly invoked Rule 8 while 
assessing the transaction value to determine the short levy of customs duty 
and for imposing penalty. CESTAT was not at all justiﬁ ed in interfering with
187
such a reasoned order of the adjudicating authority. In these circumstances, 
he seeks setting aside of the order of the CESTAT dated 27.06.2008.
12. Per contra, Mr. V. Lakshmikumaran, learned counsel for the 
respondents has supported the order of CESTAT and submits that the appeals 
of the department wholly lacks merit and therefore should be dismissed.
12.1. He submits that the Tribunal was fully justiﬁ ed in holding that the 
price declared in the import invoice was correct. The foreign supplier had 
withdrawn the original export declarations earlier submitted before the Hong 
Kong customs authority and thereafter had ﬁ led another set of declarations 
where the declared price matched the price shown by the respondents in the 
import invoices. The subsequent declarations were accepted by the Hong 
Kong customs authority following which penalty was levied which was 
paid by the supplier.
12.2. Mr. Lakshmikumaran, learned counsel submits that the export 
declarations relied upon by the appellant were only photocopies which were 
neither signed nor attested. As such, those export declarations did not have 
any evidentiary value. He has asserted that the price reﬂ ected in the import 
invoices was the sole consideration for sale which satisﬁ ed the deﬁ nition of 
transaction value as per Rule 4 of the Customs Valuation Rules.
12.3. According to Mr. V. Lakshmikumaran, there were no evidence 
before the customs authority to prove under valuation. Statements of Mr. 
Suresh
Chandra Sharma and Mr. Yashpal Sharma could not be relied upon 
to prove under valuation for more than one reason. Firstly, when the two 
statements were recorded there was no evidence available with the customs 
department to prove under valuation. Secondly, both the statements were 
almost identical and matched each other which would indicate that those 
were dictated ones. Therefore, it is clearly evident that those were obtained 
under coercion and undue pressure. Thirdly, the two statements were 
retracted at the ﬁ rst available opportunity. Fourthly, the Additional Sessions 
Judge, New Delhi while granting bail to Mr. Yashpal Sharma had recorded 
in his order dated 26.05.1999 that the statement made was under coercion 
and pressure and therefore, the same could not be termed as a voluntary 
statement. In the circumstances, Tribunal was fully justiﬁ ed in not giving 
any credence to the above two statements.
COMMISSIONER OF CUSTOMS (IMPORTS), MUMBAI v. M/S GANPATI 
OVERSEAS THR. ITS PROP. SHRI YASHPAL SHARMA [UJJAL BHUYAN, J.]
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
188
12.4. He further submits that though the appellant had placed much 
emphasis on the fact that the parties are related and that ﬁ ling of the second 
set of export declarations was an afterthought, the same is totally irrelevant. 
On the contrary, it is on record that the second set of export declarations 
were accepted by the Hong Kong customs authority by imposing penalty 
which was paid by the Hong Kong supplier.
12.5. Asserting that there was no under valuation of the imported goods, 
learned counsel submits that valuation of imported goods is governed by the 
Customs Valuation Rules and not by price declaration made by the supplier 
in another country. Appellant was not justiﬁ ed in by-passing Rules 5, 6 and 
7 of the Customs Valuation Rules while determining the transaction value 
and straightaway invoking Rule 8. Customs department had not made any 
eﬀ ort to gather evidence to determine transaction value of identical or similar 
goods imported contemporaneously. In this connection, learned counsel 
has relied upon the decision of this court in Rabindra Chandra Paul Vs. 
Commissioner of Customs, (2007) 3 SCC 93 and in the case of South India 
Television (P) Ltd. (supra). He, therefore, submits that there was no error 
or inﬁ rmity in the view taken by CESTAT. Consequently, the appeals are 
liable to the dismissed.
13. Submissions made by learned counsel for the parties have received 
the due consideration of the court.
14.
Before we deal with the rival contentions, it would be relevant to 
have a brief recap of the factual narrative. Based on an intelligence input 
received by the Directorate of Revenue Intelligence that M/s Ganpati 
Overseas had imported tuners etc. from Hong Kong at grossly under 
invoiced prices thereby evading huge customs duty, a show cause notice 
dated 17.12.1999 was issued to the respondents. As per the show cause 
notice, M/s Ganpati Overseas had imported twenty consignments of tuners 
and saw ﬁ lters from M/s Arise Enterprises, Hong Kong during the years 
1997-1998 and 1998-1999. Mr. Suresh Chandra Sharma and his wife Mrs. 
Kusum Sharma were the directors of M/s Arise Enterprises, whereas, Mr. 
Yashpal Sharma was the proprietor of M/s Ganpati Overseas. Mr. Yashpal 
Sharma and Mr. Suresh Chandra Sharma were co-brothers. 
14.1. Statements of Mr. Suresh Chandra Sharma and Mr. Yashpal 
Sharma were recorded under Section 108 of the Customs Act. In their
189
respective statements which virtually complimented each other, they 
admitted that the price of goods as per the export declarations ﬁ led by the 
foreign supplier before the Hong Kong customs authority reﬂ ected the actual 
price. On import, the price was kept intentionally low to avoid paying due 
customs duty. Actual price of the goods was quite high. The diﬀ erence 
between the actual price and the declared price was retained in India, which 
Mr. Suresh Chandra Sharma used to collect from Mr. Yashpal Sharma 
whenever he visited India. However, the two statements were subsequently 
retracted on the ground that those were obtained under coercion and duress. 
14.2. Mr. Yashpal Sharma was arrested on 15.03.1999 under Section 
135 of the Customs Act. He was enlarged on bail on 30.03.1999 by the 
Additional Sessions Judge, Patiala House, New Delhi conditional upon 
depositing Rs.30 lakhs, which he deposited. In his bail order, the Additional 
Sessions Judge recorded that the statement made by Mr. Yashpal Sharma 
under Section 108 of the Customs Act was forcibly taken, and, therefore, 
could not be relied upon. 
14.3. It has come on record that the foreign supplier had admitted before 
the Hong Kong customs authority that price of the goods declared in the 
initial export declarations was not correct because of mistake committed by 
the staﬀ . It thereafter submitted a second set of export declarations where 
the price of the goods declared matched the price of the goods at
the time 
of import in India. This was accepted by the Hong Kong customs authority 
but on payment of penalty which was paid by the supplier.
14.4. Be that as it may, the show cause notice proposed levy of 
higher customs duty with interest; conﬁ scation of the imported goods; and 
imposition of penalty. 
14.5. Respondents submitted their reply denying all the allegations. The 
show cause notice was adjudicated upon by the Commissioner of Customs 
(Adjudication-1), Mumbai. In his order-in-original dated 17.06.2002 the 
adjudicating authority accepted the price mentioned in the initial export 
declarations ﬁ led by the supplier before the Hong Kong customs authority 
in respect of nineteen consignments. In respect of one consignment where 
export declaration was not available, adjudicating authority accepted the 
price mentioned in respect of the nineteen consignments. Adjudicating 
authority brushed aside the objection raised by the respondents that copies of 
COMMISSIONER OF CUSTOMS (IMPORTS), MUMBAI v. M/S GANPATI 
OVERSEAS THR. ITS PROP. SHRI YASHPAL SHARMA [UJJAL BHUYAN, J.]
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
190
the export declarations available with the Directorate of Revenue Intelligence 
were not attested and were simply xerox copies. Adjudicating authority 
took the view that merely because the copies of the export declarations 
were not attested or were xerox copies, those would not become unreliable 
or unauthentic. According to the adjudicating authority, the supplier had 
acknowledged those export declarations. Therefore, he held that information 
obtained by the Directorate of Revenue Intelligence based on the export 
declarations was correct and genuine. 
14.6. He also rejected the objection of the respondents that statements 
of Mr. Yashpal Sharma and Mr. Suresh Chandra Sharma were not voluntary 
and therefore could not be relied upon. According to the adjudicating 
authority, both the two persons had admitted to under invoicing of the price 
and this was buttressed by the fact that Mr. Yashpal Sharma had voluntarily 
paid Rs.30 lakhs towards the evaded customs duty during the investigation 
stage. Such objection was therefore held to be only an afterthought. 
14.7. Further contention of the respondents that the declared price is 
correct when compared with the contemporaneous imports was not accepted 
by the adjudicating authority on the ground that invoices of contemporaneous 
imports did not reveal the speciﬁ cation, quality, etc. of the products. 
14.8. Adjudicating authority also rejected the contention of the 
respondents
that the supplier had purchased the goods on stock clearance 
basis at a lower price for which reason it could sell the goods to M/s Ganpati 
Overseas at lower price. Such a contention was held to be an afterthought as 
M/s Ganpati Overseas did not produce any invoice etc. of purchase of goods 
on stock clearance basis. Since neither transaction value of similar goods nor 
price of contemporaneous imports etc. were available, adjudicating authority 
held that the department had rightly invoked Rule 8 of the Customs Valuation 
Rules instead of going through Rules 5, 6 and 7 sequentially.
14.9. The order-in-original was assailed by the respondents in appeals 
before the CESTAT. Vide the judgment and order dated 27.06.2008, CESTAT 
set aside the order-in-original passed by the adjudicating authority. CESTAT 
recorded that the initial export declarations ﬁ led by the foreign supplier 
before the Hong Kong customs authority could not be relied upon for 
enhancing the declared value of the imported goods. Copies of those export 
declarations available with the department were unattested photocopies.
191
That apart, the foreign supplier had ﬁ led a second set of export declarations 
before the Hong Kong customs authority declaring the price as shown in 
the invoices of the imports. This was accepted by the Hong Kong customs 
authority but on imposition of penalty on the supplier which was paid by 
the supplier. CESTAT noted that no investigation was carried out by the 
customs authority with the Hong Kong customs authority to support their 
allegation. Therefore, CESTAT held that the value of the goods shown in 
the initial export declarations could not form the basis for enhancing the 
value. Nothing incriminating was recovered from the importers. There was 
no evidence before the customs department of any contemporaneous import 
having higher value. Thus, the department could not prove under-valuation 
by adducing evidence.
14.10. As regards statements of Mr. Yashpal Sharma and Mr. Suresh 
Chandra Sharma, CESTAT observed that those statements were retracted 
at the earliest available opportunity. In the absence of any corroborative 
material or evidence, CESTAT declined to give much credence to the two 
statements. 
14.11. Further, it was observed that while respondents had produced 
invoices of contemporaneous imports by M/s Bharat Electronics and 
M/s K.S. International at price comparable with the price declared by the 
respondents, those were summarily rejected by the adjudicating authority 
without the department discharging the burden to prove the contrary.
14.12. In such circumstances, CESTAT vide the judgment and order 
dated 27.06.2008 set aside the order-in-original and allowed the appeals of 
the respondents.
15. As we have seen, both the department and the adjudicating authority 
had relied upon the initial export declarations ﬁ led by the foreign supplier 
before the Hong Kong customs authority for the purpose of enhancing the 
value of the goods. CESTAT had interfered with the same. We believe, 
CESTAT was justiﬁ ed in doing so.
16. Proceeding alleging under-invoicing of price and thereby evading 
customs duty by the respondents was initiated by the Directorate of Revenue 
Intelligence and carried forward by the customs department primarily on 
the basis of the price declared by the foreign supplier in the ﬁ rst set of 
COMMISSIONER OF CUSTOMS (IMPORTS), MUMBAI v. M/S GANPATI 
OVERSEAS THR. ITS PROP. SHRI YASHPAL SHARMA [UJJAL BHUYAN, J.]
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
192
export declarations ﬁ led before the Hong Kong customs authority. It was 
noticed that there was great discrepancy in the price mentioned in the export 
declarations and the price of the goods as per the import invoices. To support 
the above allegations, the department relied upon copies of those export 
declarations. Adjudicating authority brushed aside the objections raised by 
the respondents that the copies of the export declarations relied upon by the 
Directorate of Revenue Intelligence and the department were not attested 
and were just xerox copies. Adjudicating authority took the view that merely 
because the copies of the export declarations were just xerox copies and 
were not attested, the said fact did not make those documents unreliable or 
unauthentic. It was held that the foreign supplier had accepted the factum 
of ﬁ ling those declarations which the noticees did not deny. This ﬁ nding 
of the adjudicating authority was negatived by the CESTAT. The Tribunal, 
while accepting the objections of the respondents that those declarations 
could not be relied upon for the purpose of enhancement of value not only 
because those were unattested photocopies but also for the reason that 
the foreign supplier had explained that incorrect price was erroneously 
mentioned in the ﬁ rst set of export declarations for which it ﬁ led a second 
set of export declarations showing the price of goods in question matching 
with the
price as declared in the import invoices. The second set of export 
declarations was accepted by the Hong Kong customs authority but for 
showing incorrect price initially, imposed penalty which was paid by the 
foreign supplier. CESTAT also noted that no investigation was carried out 
by the customs authority with the Hong Kong customs authority indicating 
anything incriminating against the respondents. Therefore, CESTAT held 
that the value shown in the ﬁ rst set of export declarations could not form 
any reliable basis for enhancement of the value.
17. We concur with the view taken by CESTAT. First and foremost, 
the export declarations relied upon by the appellant and earlier by the 
Directorate of Revenue Intelligence were unattested photocopies. Since 
those documents were used as a piece of evidence against the respondents, 
it was necessary that those documents were required to have been proved as 
is understood in law. Unattested photocopies of the relied upon documents 
without anyone proving or owning up the veracity of the same would not 
have any evidentiary value. It is another matter that the very substratum 
of these documents was subsequently removed when the foreign supplier
193
ﬁ led a second set of export declarations before the Hong Kong customs 
authority showing lower price matching the price of the goods declared in 
the import invoices. We need not go into the reasons necessitating ﬁ ling 
of the second set of export declarations simply because, the Hong Kong 
customs authority had accepted the second set of export declarations albeit 
imposition of penalty for mis-declaration of price at the initial stage. It has 
also come on record that the foreign supplier had paid the penalty. If this 
be the position, there can be no justiﬁ able reason for the appellant to harp 
upon the price of the goods as per the initial export declarations by placing 
reliance on the unattested photocopies of the ﬁ rst set of export declarations 
to prove under-invoicing for the purpose of evading customs duty.
18. This brings us to the statements of Mr. Suresh Chandra Sharma 
and Mr. Yashpal Sharma recorded under Section 108 of the Customs Act. 
Statement of Mr. Suresh Chandra Sharma was recorded on 08.03.1999 
whereas the statement of Mr. Yashpal Sharma was recorded on 15.03.1999. 
Reference to the full details of the two statements so made may not be 
relevant. Suﬃ  ce it to say, according to Mr. Suresh Chandra Sharma, Mr. 
Yashpal Sharma, who was his co-brother, was the proprietor of the importer 
M/s Ganpati Overseas. He had supplied tuners and saw ﬁ lters to M/s Ganpati 
Overseas through his ﬁ rm M/s Arise Enterprises, Hong Kong. He stated that 
the price
of the goods shown in the import invoices did not reﬂ ect the actual 
price. Price of the goods in the import invoices was deliberately declared 
low with the intention of saving customs duty. Actual price of the goods was 
quite high. While the invoice amount after sale upon import used to be sent 
to him by Mr. Yashpal Sharma through the banking channel, the diﬀ erential 
amount was retained in India by Mr. Yashpal Sharma who paid the same to 
Mr. Suresh Chandra Sharma whenever he visited India. 
18.1. Mr. Yashpal Sharma in his statement also stated more or less 
the same thing as stated by Mr. Suresh Chandra Sharma. He was arrested 
on 15.03.1999 itself under Section 135 of the Customs Act. However, he 
was enlarged on bail on 30.03.1999 by the Additional Sessions Judge, 
Delhi subject to deposit of Rs. 30 lakhs within a speciﬁ ed period, which he 
paid. It has come on record that the Additional Sessions Judge in his bail 
order dated 26.05.1999 had mentioned that the statement of Mr. Yashpal 
Sharma recorded under Section 108 of the Customs Act may not have been a 
COMMISSIONER OF CUSTOMS (IMPORTS), MUMBAI v. M/S GANPATI 
OVERSEAS THR. ITS PROP. SHRI YASHPAL SHARMA [UJJAL BHUYAN, J.]
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
194
voluntary one. It may be mentioned that Mr. Yashpal Sharma vide his letter 
dated 25.08.1999 had retracted the statement made by him under Section 108 
of the Customs Act. CESTAT noted the factum of retraction of the statement 
and therefore, refused to give credence to such confessional statement. In 
our view, no fault can be found with the approach of the CESTAT.
19. Section 108 of the Customs Act deals with the power to summon 
persons to give evidence and produce documents. Section 108 of the Customs 
Act as it stood at the relevant time is extracted as under:- 
108. Power to summon persons to give evidence and produce 
documents.- 
(1) Any gazetted oﬃ  cer of customs duly empowered by the Central 
Government in this behalf shall have power to summon any person 
whose attendance he considers necessary either to give evidence or 
to produce a document or any other thing in any inquiry which such 
oﬃ  cer is making in connection with the smuggling of any goods.
(2) A summons to produce documents or other things may be for 
the production of certain speciﬁ ed documents or things or for the 
production of all documents or things of a certain description in the 
possession or under control of the person summoned.
(3) All persons so summoned shall be bound to attend either in person 
or by an authorised agent, as such oﬃ  cer may direct; and all persons 
so summoned shall be bound to state the truth upon any subject 
respecting
which they are examined or make statements and produce 
such documents and other things as may be required: 
Provided that the exemption under section 132 of the Code of Civil 
Procedure, 1908 (5 of 1908), shall be applicable to any requisition for 
attendance under this section.
(4) Every such inquiry as aforesaid shall be deemed to be a judicial 
proceeding within the meaning of section 193 and section 228 of the 
Indian Penal Code, 1860 (45 of 1860).
20. From a reading of the provisions of Section 108 of the Customs 
Act, as it stood at the relevant point of time, we ﬁ nd that any gazetted oﬃ  cer 
of customs duly empowered by the Central Government had the authority
195
to summon a person whose attendance be considered necessary either to 
give evidence or to produce a document or any other thing in any inquiry 
which such oﬃ  cer was making with respect to the smuggling of any goods. 
A person so summoned was bound to make a statement as regards the subject 
which was being examined. Such an enquiry by the customs oﬃ  cer would 
be deemed to be a judicial proceeding within the meaning of Sections 193 
and 228 of the Indian Penal Code.
21. While we are on Section 108 of the Customs Act, we may also 
advert to Section 24 of the Evidence Act, 1882 which deals with admissibility 
of a confession. Section 24 of the Evidence Act reads as under:
24. Confession caused by inducement, threat or promise, when 
irrelevant in criminal proceeding.––A confession made by an 
accused person is irrelevant in a criminal proceeding, if the making 
of the confession appears to the Court to have been caused by 
any inducement, threat or promise, having reference to the charge 
against the accused person, proceeding from a person in authority 
and suﬃ  cient, in the opinion of the Court, to give the accused person 
grounds which would appear to him reasonable, for supposing that by 
making it he would gain any advantage or avoid any evil of a temporal 
nature in reference to the proceedings against him.
22. From a reading of Section 24 of the Evidence Act what is clear 
is that a confession made by an accused due to any inducement, threat 
or promise having
reference to the charge against the accused person 
would be irrelevant in a criminal proceeding. This court held in State of 
Punjab Vs. Barkat Ram 1962 (3) SCR 338 that customs oﬃ  cers are not 
police oﬃ  cers for the purpose of Section 25 of the Evidence Act which 
says that no confession made before a police oﬃ  cer shall be proved as 
against a person accused of any oﬀ ence. A constitution bench of this 
court in Ramesh Chandra Mehta Vs. State of West Bengal, AIR 1970 SC 
940 held that customs oﬃ  cers are entrusted with the powers speciﬁ cally 
relating to collection of customs duty and prevention of smuggling. For 
that purpose, they are invested with the power to search any person on 
reasonable suspicion, to summon a person to give evidence, to arrest such 
a person if there is a reasonable suspicion that such a person is guilty of 
an oﬀ ence under the Customs Act etc. 
COMMISSIONER OF CUSTOMS (IMPORTS), MUMBAI v. M/S GANPATI 
OVERSEAS THR. ITS PROP. SHRI YASHPAL SHARMA [UJJAL BHUYAN, J.]
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
196
23. For collecting evidence, the customs oﬃ  cer is entitled to serve 
summons upon a person to produce a document or other thing or to 
give evidence etc. However, he has no power to investigate a customs 
infringement as an oﬀ ence nor has he the power to submit a report under the 
Code of Criminal Procedure. A customs oﬃ  cer is not a police oﬃ  cer. Dealing 
with Sections 167(8) and 178(A) of the Sea Customs Act, 1878, this court 
in Collector of Customs, Madras Vs. D. Bhoormall, (1974) 2 SCC 544 held 
that provisions of the Evidence Act and the Code of Criminal Procedure did 
not govern the onus of proof under Section 167(8) of the Sea Customs Act. 
In such proceedings, the customs oﬃ  cer was guided by the basic principles 
of criminal jurisprudence and natural justice. The burden of proving that the 
goods were smuggled goods was on the department. The cardinal principle 
having an important bearing on the incidence of burden of proof was that 
suﬃ  ciency and weight of the evidence was to be considered according to 
the proof which it was in the power of one side to prove and in the power 
of the other side to have contradicted.
24. In Ramesh Chandra Mehta (supra), the objections as to 
admissibility of a confessional statement under Section 25 of the Evidence 
Act were rejected, holding that such a statement was admissible in evidence 
in customs proceedings since customs oﬃ  cers are not police oﬃ  cers.
25. This court in
Naresh J. Sukhawani Vs. Union of India, AIR 1996 
SC 522 clariﬁ ed that a statement made before the customs oﬃ  cer is not 
a statement recorded under Section 161 of the Criminal Procedure Code, 
1973. It is material piece of evidence collected by the customs oﬃ  cer under 
Section 108 of the Customs Act. 
26. A three-judge bench of this court in K.I. Pavunny Vs. Assistant 
Collector, (1997) 3 SCC 721 considered the question as to whether a retracted 
confessional statement would be inadmissible in evidence in the context 
of the Customs Act. After holding that a statement recorded under Section 
108 of the Customs Act is admissible in evidence, this court considered 
the next question as to whether such a statement can form the sole basis 
for conviction. The further question was whether a retracted confessional 
statement requires corroboration from any other evidence. After referring 
to various judicial pronouncements this court observed that there is no 
prohibition under the Evidence Act to rely upon a retracted confession to
197
prove the prosecution case or to make the same the basis for conviction of 
the accused. But practice and prudence would require that the court would 
seek assurance by getting corroboration from other evidence adduced by 
the prosecution.
27. Again, in Union of India Vs. Padam Narain Aggarwal, AIR 2009 
SC 254, this court considered the provision of Section 108 of the Customs 
Act in great detail and thereafter observed that the said section obliges the 
person summoned to state the truth upon any subject in respect of which he 
is being examined. He is not absolved from speaking the truth on the ground 
that such a statement is admissible in evidence and could be used against 
him. The provision thus enables the custom oﬃ  cer to elicit the truth from 
the person examined. The underlying object of Section 108 is to ensure that 
the oﬃ  cer questioning the person gets all the truth concerning the incident. 
However, a person called upon to make a statement before the customs 
authorities is not an accused. The entire idea behind Section 108 is that the 
customs oﬃ  cer questioning the person must gather all the truth concerning 
the episode. If the statement so extracted is untrue, its utility for the oﬃ  cer 
gets lost. Therefore, statements recorded under Section 108 of the Customs 
Act are distinct and diﬀ erent from statements recorded by a police oﬃ  cer 
during the course of investigation under the Criminal Procedure Code. 
28. Thus, what is deducible from an
analysis of the relevant legal 
provisions and the corresponding judicial pronouncements is that a customs 
oﬃ  cer is not a police oﬃ  cer. Further, the person summoned and who makes 
a statement under Section 108 is not an accused. However, a statement made 
by a person under Section 108 of the Customs Act before the concerned 
customs oﬃ  cer is admissible in evidence and can be used against such a 
person. Object underlying Section 108 is to elicit the truth from the person 
who is being examined regarding the incident of customs infringement. 
Since the objective is to ascertain the truth, the customs oﬃ  cer must ensure 
the truthfulness of the statement so recorded. If the statement recorded is 
not correct, then, the very utility of recording such a statement would get 
lost. It is in this context that the customs oﬃ  cer who is empowered under 
Section 108 to record statement etc. has the onerous responsibility to see to 
it that the statement is recorded in a fair and judicious manner providing for 
procedural safeguards to the concerned person to ensure that the statement 
COMMISSIONER OF CUSTOMS (IMPORTS), MUMBAI v. M/S GANPATI 
OVERSEAS THR. ITS PROP. SHRI YASHPAL SHARMA [UJJAL BHUYAN, J.]
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
198
so recorded, which is admissible in evidence, can meet the standard of 
basic judicial principles and natural justice. It is axiomatic that when a 
statement is admissible as a piece of evidence, the same has to conform to 
minimum judicial standards. Certainly a statement recorded under duress 
or coercion cannot be used against the person making the statement. It is 
for the adjudicating authority to ﬁ nd out whether there was any duress or 
coercion in the recording of such a statement since the adjudicating authority 
exercises quasi-judicial powers.
29. Proceeding ahead, we ﬁ nd that the department, after rejecting the 
price declared as per the import invoices, had invoked Rule 8 of the Customs 
Valuation Rules straightaway instead of going through Rules 5, 6 and 7 
thereof sequentially. This was approved by the adjudicating authority after 
rejecting the submission of the respondents that contemporaneous imports 
of similar goods by M/s Bharat Electronics and M/s K.S. International had 
prices comparable with the prices declared by the respondents in the import 
invoices. 
30. Before we deal with this aspect, we may advert to the relevant legal 
provisions. Section 2 (41) of the Customs Act deﬁ nes the expression ‘value’. 
It says ‘value’ in relation to any goods means the value thereof determined 
in accordance with the provisions of sub-Section (1) of Section 14 (w.e.f. 
10.10.2007 this deﬁ nition has been amended to
include sub-Section (2) of 
Section 14 as well). 
31. Section 14 of the Customs Act provides for valuation of goods. 
Before the amendment in 2007, Section 14 read as under:
14. Valuation of goods for purposes of assessment- (1) For the 
purposes of the Customs Tariﬀ  Act, 1975 (51 of 1975), or any other law 
for the time being in force whereunder a duty of customs is chargeable 
on any goods by reference to their value, the value of such goods shall 
be deemed to be-
the price at which such or like goods are ordinarily sold, or oﬀ ered for 
sale, for delivery at the time and place of importation or exportation, 
as the case may be, in the course or international trade, where-
(a) the seller and the buyer have no interest in the business of each 
other; or

199
(b) one of them has no interest in the business of the other,
and the price is the sole consideration for the sale or oﬀ er for sale:
Provided that such price shall be calculated with reference to the rate 
of exchange as in force on the date on which a bill of entry is presented 
under Section 46, or a shipping bill or bill of export, as the case may 
be, is presented under section 50;
(1A) Subject to the provisions of sub-section (1), the price referred to 
in that sub-section in respect of imported goods shall be determined 
in accordance with the rules made in this behalf.
(2) Notwithstanding anything contained in sub-section (1) or sub-
section (1A) if the Board is satisﬁ ed that it is necessary or expedient 
so to do, it may, by notiﬁ cation in the Oﬃ  cial Gazette, ﬁ x tariﬀ  values 
for any class of imported goods or export goods, having regard to the 
trend of value of such or like goods, and where any such tariﬀ  values are 
ﬁ xed, the duty shall be chargeable with reference to such tariﬀ  value.
(3) For the purposes of this section-
(a) “rate of exchange” means the rate of exchange-
(i) determined by the Board, or
(ii) ascertained in such manner as the Board may direct, 
for the conversion of Indian currency into foreign currency or foreign 
currency into Indian currency;
(b) “foreign currency” and “Indian currency” have the meanings 
respectively assigned to them in clause (m) and clause (q) of section 
2 of the Foreign Exchange Management Act, 1999 (42 of 1999).”
32. Section 156 of the Customs Act confers general power
upon the 
Central Government to make rules consistent with the Customs Act to carry 
out its purposes. 
33. In exercise of the powers conferred by Section 156 of the Customs 
Act read with Section 22 of the General Clauses Act, 1897 and in supersession 
of the Customs Valuation Rules, 1963 except in respect of things done or 
omitted to be done before such supersession,  the Central Government has 
COMMISSIONER OF CUSTOMS (IMPORTS), MUMBAI v. M/S GANPATI 
OVERSEAS THR. ITS PROP. SHRI YASHPAL SHARMA [UJJAL BHUYAN, J.]
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
200
made the Customs Valuation (Determination of Price of Imported Goods) 
Rules, 1988 (already referred to as the ‘Customs Valuation Rules’). 
33.1. Rule 2(1)(c) deﬁ nes “identical goods”. It means imported 
goods- 
(i) which are same in all respects including physical characteristics, 
quality and reputation as the goods being valued except for minor 
diﬀ erences in appearance that do not aﬀ ect the value of the goods; 
(ii) produced in the country in which the goods being valued were 
produced; and
(iii) produced by the same person who produced the goods or where 
no such goods are available, goods produced by a diﬀ erent person. 
However, such goods shall not include imported goods where 
engineering, development work, art work, design work, plan or 
sketch undertaken in India were completed directly or indirectly by 
the buyer on these imported goods free of charge or at a reduced 
cost for use in connection with the production and sale for export of 
these imported goods. 
33.2. Likewise, Section 2(1)(e) deﬁ nes “similar goods” to mean 
imported goods-
(i) which although not alike in all aspects, have like characteristics 
and like component materials which enable them to perform the 
same functions and to be commercially interchangeable with the 
goods being valued having regard to the quality, reputation and the 
existence of trademark; 
(ii) produced in the country in which the goods being valued were 
produced; and 
(iii)
produced by the same person who produce the goods being 
valued, or where no such goods are available, goods produced by a 
diﬀ erent person;
But it shall not include imported goods where engineering, 
development work, art work, design work, plan or sketch undertaken 
in India were completed directly or indirectly by the buyer of
201
these imported goods free of charge or at a reduced cost for use in 
connection with the production and sale for export of these imported 
goods.
33.3. Rule 2(1)(f) deﬁ nes “transaction value” to mean the value 
determined in accordance with Rule 4 of the Customs Valuation Rules.
33.4. Rule 2(2) mentions the instances where persons shall be deemed 
to be “related”. In the context of the facts of the present case, what may be 
of relevance is Rule 2(2)(viii) which says that persons shall be deemed to 
be “related” only if they are members of the same family. Therefore, the 
question is whether co-brothers can be construed to be members of the same 
family? However, this aspect may not require much deliberation in view of 
our discussions in respect of the other issues.
34. Rule 3 of the Customs Valuation Rules reads as under:
3. Determination of the method of valuation––For the purpose of 
these rules, -
(i) the value of imported goods shall be the transaction value;
(ii) if the value cannot be determined under the provisions of clause 
(i) above, the value shall be determined by proceeding sequentially 
through Rules 5 to 8 of these rules. 
34.1. Thus, as per Rule 3, the valuation of imported goods shall be the 
transaction value. However, if that value cannot be determined, the value 
shall be determined by proceeding sequentially through Rules 5 to 8 of the 
Customs Valuation Rules.
35. This brings us to transaction value dealt with in Rule 4 which is 
as under:
4.
Transaction value. —(1) The transaction value of imported goods 
shall be the price actually paid or payable for the goods when sold for 
export to India, adjusted in accordance with the provisions of Rule 9 
of these rules.
(2) The transaction value of imported goods under sub-rule (1) above 
shall be accepted:
Provided that –

COMMISSIONER OF CUSTOMS (IMPORTS), MUMBAI v. M/S GANPATI 
OVERSEAS THR. ITS PROP. SHRI YASHPAL SHARMA [UJJAL BHUYAN, J.]
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
202
(a) there are no restrictions as to the disposition or use of the goods 
by the buyer other than restrictions which–
(i) are imposed or required by law or by the public authorities in 
India; or
(ii) limit the geographical area in which the goods may be resold; or
(iii) do not substantially aﬀ ect the value of the goods;
(b) the sale or price is not subject to same condition or consideration 
for which a value cannot be determined in respect of the goods being 
valued;
(c) no part of the proceeds of any subsequent resale, disposal or use of 
the goods by the buyer will accrue directly or indirectly to the seller, 
unless an appropriate adjustment can be made in accordance with the 
provisions of Rule 9 of these rules; and
(d)  the buyer and seller are not related, or where the buyer and seller 
are related, that transaction value is acceptable for customs purposes 
under the provisions of sub-rule (3) below.
(3)(a) Where the buyer and seller are related, the transaction value 
shall be accepted provided that the examination of the circumstances 
of the sale of the imported goods indicate that the relationship did not 
inﬂ uence the price.
(b)  In a sale between related persons, the transaction value shall be 
accepted, whenever the importer demonstrates that the declared value 
of the goods being valued, closely approximates to one of the following 
values ascertained at or about the same time-
(i) the transaction value of
identical goods, or of similar goods, in sales 
to unrelated buyers in India;
(ii) the deductive value for identical goods or similar goods;
(iii) the computed value for identical goods or similar goods.
Provided that in applying the values used for comparison, due account 
shall be taken of demonstrated diﬀ erence in commercial levels, 
quantity levels, adjustments in accordance with the provisions of Rule
203
9 of these rules and cost incurred by the seller in sales in which he and 
the buyer are not related;
(c) substitute values shall not be established under the provisions of 
clause (b) of this sub-rule.
36. To complete the narrative, we may mention that while Rule 5 deals 
with transaction value of identical goods, Rule 6 deals with transaction value 
of similar goods. On the other hand, Rule 6A provides for determination 
of value when transaction value is not available. Rule 7 which comes after 
Rule 6A provides for determination of deductive value and Rule 7A provides 
for computed value.
37. Where the value of imported goods cannot be determined under 
the provisions of any of the aforesaid rules, the value shall be determined 
using reasonable means as provided in Rule 8 i.e. the residual method.
38. In Rabindra Chandra Paul (supra), this court referred to its earlier 
decision in Eicher Tractors Limited Vs. Commissioner of Customs, (2001) 
1 SCC 315, and held as follows-
6. In Eicher Tractors Ltd. Vs. Commr. Of Customs, this Court held 
that the principle for valuation of imported goods is found in Section 
14(1) of the Customs Act, 1962 which provides for the determination 
of the assessable value on the basis of the international sale price. 
Under the said Act, customs duty is chargeable on goods. According 
to Section 14(1), the assessment of duty is to be made on the value of 
the goods. The value may be ﬁ xed by the Central Government under 
Section 14(2).
Where the value is not so ﬁ xed it has to be decided 
under Section 14(1). The value, according to Section 14(1), shall be 
deemed to be the price at which such or like goods are ordinarily sold 
or oﬀ ered for sale, for delivery at the time and place and importation 
in the course of international trade. The word “ordinarily” implies 
the exclusion of special circumstances. This position is clariﬁ ed by 
the last sentence in Section 14(1) which describes an “ordinary” sale 
as one where the seller or the buyer have no interest in the business 
of each other and the price is the sole consideration for the sale or 
oﬀ er for sale. Therefore, when the above conditions regarding time, 
place and absence of special circumstances stand fulﬁ lled, the price of 
COMMISSIONER OF CUSTOMS (IMPORTS), MUMBAI v. M/S GANPATI 
OVERSEAS THR. ITS PROP. SHRI YASHPAL SHARMA [UJJAL BHUYAN, J.]
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
204
imported goods shall be decided under Section 14(1-A) read with the 
Rules framed thereunder. The said Rules are the Customs Valuation 
Rules, 1988. It was further held that in cases where the circumstances 
mentioned in Rules 4(2)(c) to (h) are not applicable, the Department 
is bound to assess the duty under transaction value. Therefore, unless 
the price actually paid for the particular transaction falls within the 
exceptions mentioned in Rules 4(2)(c) to (h), the Department is 
bound to assess the duty on the transaction value. It was further held 
that Rule 4 is directly relatable to Section 14(1) of the Customs Act, 
1962. Section 14(1) read with Rule 4 provides that the price paid by 
the importer in the ordinary course of commerce shall be taken to be 
the value in the absence of any special circumstances indicated in 
Section 14(1). Therefore, what should be accepted as the value for 
the purpose of assessment is the price actually paid for the particular 
transaction, unless the price is unacceptable for the reasons set out in 
Rule 4(2). It was further held that the word “payable” in Rule 4(1) 
must be read as referring to the “particular transaction” and payability 
in respect of the transaction contemplates as situation where payment 
of price stands deferred. Therefore, Rule 4 is limited to the transaction 
in question. It was further held that Rule 5 allows the transaction value 
to be determined on the basis of
identical goods imported into India 
about the same time; Rule 6 allows ﬁ xation of transaction value on 
the basis of the value of similar goods imported into India about the 
same time. Where there are no contemporaneous imports into India, 
the value is to be decided under Rule 7 by a process of deduction in 
the manner provided therein. If this is not possible, then the value shall 
be computed under Rule 7-A. It was further held that it is only when 
the transaction value under Rule 4 is rejected, only then under Rule 
3(ii) the value shall be determined by proceeding sequentially through 
Rules 5 to 8. Conversely, if the transaction value can be decided under 
Rule 4(1) and does not fall under any of the circumstances given in 
Rule 4(2), there is no question of determining the value under the 
subsequent rules. It was further held that discount is a recognised 
feature of international trade and as long as those discounts are 
uniformly available and as long as they are based on commercial 
considerations, they cannot be denied under Section 14.
205
7. The primary base for customs valuation is the transaction value i.e. 
the price actually paid or payable for the goods when sold for export 
to the country of importation, subject to adjustment. The said price 
should not be subject to any condition or consideration that could 
prevent the value from being determined under Rule 4(1). Where the 
Department has reason to doubt the truth or accuracy of a declared 
value, it may ask the importer to provide further explanation to the 
eﬀ ect that the declared value represents the total amount actually paid 
or payable for the imported goods. If the declared value is lower than 
the declared value of similar goods imported by other buyers at or 
about the same time, it can constitute “reason to doubt” the truth or 
accuracy of the declared value indicated in the commercial invoice (see 
Rule 10-A). Under Rule 8(2)(i) no value shall be determined based on 
the selling price of the goods produced in India. In cases where the 
Department fails to establish circumstances mentioned in Rule 4(2), 
the transaction value declared by the assessee cannot be rejected and 
the price mentioned in the invoice should be held to represent the 
transaction value.
39. The dispute involved in South India Television (P) Ltd. (supra), was 
as regards the assessable value of ceramic capacitors and diodes imported 
by the importer from the foreign supplier at Hongkong. The price declared 
by the importer was not accepted by the customs authority
on the basis of 
overseas investigation report whereafter Rule 8 of the Customs Valuation 
Rules was invoked. This court examined and analysed Section 2(41) and 
Section 14(1) of the Customs Act in the following manner:
10. We do not ﬁ nd any merit in this civil appeal for the following 
reasons. Value is derived from the price. Value is the function of the 
price. This is the conceptual meaning of value. Under Section 2(41), 
“value” is deﬁ ned to mean value determined in accordance with Section 
14(1) of the Act. Section 14 of the Customs Act, 1962 is the sole 
repository of law governing valuation of goods. The Customs Valuation 
Rules, 1988 have been framed only in respect of imported goods. There 
are no rules governing the valuation of export goods. That must be 
done based on Section 14 itself. In the present case, the Department 
has charged the respondent importer alleging misdeclaration regarding 
COMMISSIONER OF CUSTOMS (IMPORTS), MUMBAI v. M/S GANPATI 
OVERSEAS THR. ITS PROP. SHRI YASHPAL SHARMA [UJJAL BHUYAN, J.]
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
206
the price. There is no allegation of misdeclaration in the context of 
the description of the goods. In the present case, the allegation is of 
under invoicing. The charge of under invoicing has to be supported 
by evidence of prices of contemporaneous imports of like goods. It 
is for the Department to prove that the apparent is not the real. Under 
Section 2(41) of the Customs Act, the word “value” is deﬁ ned in 
relation to any goods to mean the value determined in accordance with 
the provisions of Section 14(1). The value to be declared in the bill of 
entry is the value referred to above and not merely the invoice price.
11. On a plain reading of Section 14(1) and Section 14(1-A), it 
envisages that the value of any goods chargeable to ad valorem duty 
has to be the deemed price as referred to in Section 14(1). Therefore, 
determination of such price has to be in accordance with the relevant 
rules and subject to the provisions of Section 14(1). It is made clear 
that Section 14(1) and Section 14(1-A) are not mutually exclusive. 
Therefore, the transaction value under Rule 4 must be the price paid 
or payable on such goods at the time and place of importation in the 
course of international trade. Section 14 is the deeming provision. It 
talks of deemed value. The value is deemed to be the price at which 
such goods are ordinarily sold or oﬀ ered for sale, for delivery at the 
time and place of importation in the course of
international trade where 
the seller and the buyer have no interest in the business of each other 
and the price is the sole consideration for the sale or for oﬀ er for sale. 
Therefore, what has to be seen by the Department is the value or cost 
of the imported goods at the time of importation i.e. at the time when 
the goods reach the customs barrier. Therefore, the invoice price is 
not sacrosanct. 
39.1. This court held that before rejecting the invoice price, the 
department has to give cogent reasons for such rejection. This is because 
the invoice price forms the basis of the transaction value. In this regard, this 
court held that under valuation has to be proved. If the department wants to 
allege under valuation, it must make detailed inquiries, collect material and 
also adequate evidence. If the charge of under valuation cannot be supported 
either by evidence or information about comparable imports, the beneﬁ t 
of doubt must go to the importer. The charge of under invoicing has to be
207
supported by evidence of prices of contemporaneous imports of like goods. 
It has been held as follows:
12. However, before rejecting the invoice price the Department has to 
give cogent reasons for such rejection. This is because the invoice price 
forms the basis of the transaction value. Therefore, before rejecting 
the transaction value as incorrect or unacceptable, the Department has 
to ﬁ nd out whether there are any imports of identical goods or similar 
goods at a higher price at around the same time. Unless the evidence 
is gathered in that regard, the question of importing Section 14(1-A) 
does not arise. In the absence of such evidence, invoice price has to 
be accepted as the transaction value. Invoice is the evidence of value. 
Casting suspicion on invoice produced by the importer is not suﬃ  cient 
to reject it as evidence of value of imported goods. Undervaluation 
has to be proved. If the charge of undervaluation cannot be supported 
either by evidence or information about comparable imports, the 
beneﬁ t of doubt must go to the importer. If the Department wants 
to allege undervaluation, it must make detailed inquiries, collect 
material and also adequate evidence. When undervaluation is alleged, 
the Department has to prove it by evidence or information about 
comparable imports. For proving undervaluation, if the Department 
relies on declaration made in the exporting country, it has to show 
how such declaration was procured. We may clarify that
strict rules of 
evidence do not apply to adjudication proceedings. They apply strictly 
to the courts’ proceedings. However, even in adjudication proceedings, 
the AO has to examine the probative value of the documents on which 
reliance is placed by the Department in support of its allegation of 
undervaluation. Once the Department discharges the burden of proof to 
the above extent by producing evidence of contemporaneous imports at 
higher price, the onus shifts to the importer to establish that the invoice 
relied on by him is valid. Therefore, the charge of under invoicing has 
to be supported by evidence of prices of contemporaneous imports of 
like goods.
39.2. Reverting to Section 14(1) of the Customs Act, this court held 
that it is for the department to prove that the invoice price is incorrect. 
When there is no evidence of contemporaneous imports at a higher price, 
the invoice price is liable to be accepted. This is what this court has said:
COMMISSIONER OF CUSTOMS (IMPORTS), MUMBAI v. M/S GANPATI 
OVERSEAS THR. ITS PROP. SHRI YASHPAL SHARMA [UJJAL BHUYAN, J.]
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
208
13. Section 14(1) speaks of “deemed value”. Therefore, invoice 
price can be disputed. However, it is for the Department to prove 
that the invoice price is incorrect. When there is no evidence of 
contemporaneous imports at a higher price, the invoice price is liable 
to be accepted. The value in the export declaration may be relied upon 
for ascertainment of the assessable value under the Customs Valuation 
Rules and not for determining the price at which goods are ordinarily 
sold at the time and place of importation. This is where the conceptual 
diﬀ erence between value and price comes into discussion.
40. Section 14 of the Customs Act and Rules 3 and 4 of the Customs 
Valuation Rules again came up for consideration before this court in Varsha 
Plastics Private Limited (supra). As regards Section 14(1) of the Customs 
Act, this court analysed the said provision in the following manner:
19. Section 14(1) of the Act prescribes a method for determination 
of the value of the goods. It is a deeming provision. By legal ﬁ ction 
incorporated in this section, the value of the imported goods is the 
deemed price at which such or like goods are ordinarily sold or oﬀ ered 
for sale for delivery at the time and place of importation in the course 
of international trade.
20. The word “ordinarily” in Section 14(1) is a word of signiﬁ cance. 
The ordinary meaning of the word “ordinarily” in Section 14(1) is 
“non-exceptional” or “usual”. It
does not mean “universally”. In the 
context of Section 14(1) for the purpose of “valuation” of goods, 
however, by use of the word “ordinarily” the indication is that the 
ordinary value of the goods is what it would have been in the course of 
international trade at the time of import. Section 14(1), thus, provides 
that the value has to be assessed on the basis of price attached to such 
or like goods ordinarily sold or oﬀ ered for sale in the ordinary course 
of events in international trade at the time and place of transportation.
40.1. After adverting to the procedural aspects provided in the Customs 
Valuation Rules, more particularly in Rules 3 and 4 thereof, this court 
referred to its earlier decision in Eicher Tractors Limited (supra) and held 
that the price paid by the importer to the vendor in the ordinary course of 
commerce shall be deemed to be the value in the absence of any special 
circumstances indicated in Section 14(1) and particularised in Rule 4(2).
209
However, when the transaction value under Rule 4 is rejected, the value 
shall be determined by proceeding sequentially through Rules 5 to 8 of the 
Customs Valuation Rules. This court held as follows:
23. In Eicher Tractors this Court held that the value, according to 
Section 14, shall be deemed to be the price at which such or like goods 
are ordinarily sold or oﬀ ered for sale, for delivery at the time and place 
of importation in the course of international trade. It was further held 
that by Rule 4(1) mandate has been cast on the authorities to accept 
the price actually paid or payable for the goods in respect of the goods 
under assessment as the transaction value but this mandate is subject 
to certain exceptions speciﬁ ed in Rule 4(2). It was also held by this 
Court in Eicher Tractors [(2001) 1 SCC 315] that both Section 14(1) 
of the Act and Rule 4 provide that the price paid by the importer to 
the vendor in the ordinary course of commerce shall be deemed to be 
the value in the absence of any of the special circumstances indicated 
in Section 14(1) and particularised in Rule 4(2). However, when the 
transaction value under Rule 4 is rejected, the value shall be determined 
by proceeding sequentially through Rules 5 to 8 of the Rules.
40.2. This court also referred to the decisions in Rabindra Chandra 
Paul (supra) and South India Television (P) Ltd. (supra) to reiterate the 
recognised legal position that transaction value can be rejected if the invoice
price is not found to be correct but it is for the department to prove that the 
invoice price is incorrect.
41. Thus, on a cumulative analysis of the facts and the legal position as 
alluded to hereinabove, we have no hesitation in coming to the conclusion 
that both the department as well as the adjudicating authority were not 
justiﬁ ed in rejecting the import invoice price of the goods as not correct 
and enhancing the price by straightaway invoking Rule 8 of the Customs 
Valuation Rules when there was no evidence before them to do so. In these 
circumstances, CESTAT was justiﬁ ed in setting aside the order in original.
42. We, therefore, do not ﬁ nd any error or inﬁ rmity in the impugned 
judgment and order of CESTAT. The appeals ﬁ led by the department are 
devoid of merit and those are accordingly, dismissed. No costs.
Headnotes prepared by: 
Appeals dismissed.
Nidhi Jain
COMMISSIONER OF CUSTOMS (IMPORTS), MUMBAI v. M/S GANPATI 
OVERSEAS THR. ITS PROP. SHRI YASHPAL SHARMA [UJJAL BHUYAN, J.]