The Mumbai Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that where multiple show cause notices arise out of a common investigation and rest on the same set of documents, and the earlier proceedings based on that same evidentiary foundation have already been adjudicated in favour of the noticees with such adjudication attaining finality up to the Supreme Court, the subsequent proceedings must meet the same fate absent any distinguishing material.
The CESTAT affirmed that where the transaction value is established through transparent international competitive bidding, the relationship between importer and supplier, by itself, is insufficient unless it is shown to have influenced the price; and where the evidence relied upon for alleged overvaluation is inadmissible for want of compliance with section 138C(4), the declared value cannot be rejected, nor can confiscation or penalty provisions founded on alleged misdeclaration be sustained.
The Division Bench comprising Justice Dilip Gupta (President) and P. Anjani Kumar (Technical Member) accepted the respondents’ submission that the present appeals were squarely covered by the earlier adjudications because all three show cause notices arose from the same investigation and the same set of documents, a position also reflected in the show cause notice dated 31.08.2016 and in the findings of the Principal Commissioner. It specifically noted that the department did not dispute the Principal Commissioner’s findings on the commonality of the investigation, methodology, and evidentiary basis across the three cases.
On merits, the Tribunal noted the Principal Commissioner’s finding that although the importers and EIF were related, the relationship had not influenced the price, since the contracts were awarded through an international competitive bidding process and the pricing decision-making process was transparent and independent. The Tribunal also noted the finding that the contracts between the importers and EIF materially differed from those between EIF and OEMs, and therefore OEM prices could not be adopted as assessable value; accordingly, the declared transaction value had to be accepted under Rule 3 read with section 14 of the Customs Act.
The Tribunal further observed that the documentary evidence relied on by the department, including overseas bankers’ letters and related computer printouts, lacked the certificate required under section 138C(4) of the Customs Act and therefore lost evidentiary value, as had already been held in the earlier connected cases that had attained finality. It therefore found no error in the Principal Commissioner’s conclusion that there was no basis to reject the declared transaction value and, consequently, no basis for confiscation under section 111(m) or penalties under sections 112(a) and 114AA.
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Briefly, the appeals were filed challenging the Order-in-Original by which the Principal Commissioner of Customs (Adjudication), Mumbai dropped proceedings arising from the show cause notice issued against Adani group entities including Adani Enterprises Limited, Adani Renewable Energy LLP, Adani Hazira Port Private Limited, Adani Ports and Special Economic Zone Limited, Adani International Container Terminal (P) Limited, and Adani Vizag Coal Terminal Private Limited. The impugned show cause notice was the third in a series arising from a common DRI investigation, as the first two show cause notices have already been adjudicated in favour of the notices.
The imports were made by the respondent entities, including procurement of solar photovoltaic modules, inverters, cranes, tugs, and related equipment under EPC contracts awarded to Electrogen Infra FZE through competitive international bidding processes, with the contracts involving not only supply of goods but also extended warranties, guarantees, training, commissioning, performance obligations, and associated services. The imports were made under multiple Bills of Entry and the assessments had been finalized between 2011 and 2013, depending on the project concerned.
