€1 Million Cancelled Invoice for Post-Contract Services Not Dutiable as Additional Consideration for Imports: CESTAT

The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has ruled that a payment made against a cancelled invoice for post-contract services is not dutiable as additional consideration for imported goods. The case involved a $1 million payment made by an importer to a foreign entity, which the customs department alleged was a part of the transaction value of previously imported goods and therefore subject to customs duty. However, the importer successfully demonstrated that the payment was intended for post-importation services and that the corresponding invoice was subsequently cancelled, with no service ever being rendered. The tribunal found that since the payment was related to a cancelled contract for services to be provided after the importation was complete, it could not be treated as an additional consideration for the goods themselves, thereby deleting the demand for customs duty.