CESTAT Sets Aside ₹55 Cr Penalty: No Customs Violation as Overvaluation Led to Higher Duty

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside a hefty penalty of Rs 55 crore, ruling that there was no customs violation as the alleged overvaluation of exported goods had actually led to the payment of higher duty. The case involved a company that was accused of overvaluing its exports. However, the tribunal noted that the company had paid export duty based on this higher value. It held that overvaluation could only be a violation if it resulted in an undue benefit, such as a higher duty drawback claim or the evasion of duty. In this case, since the overvaluation led to a higher payment of tax to the government, there was no loss to the exchequer. The CESTAT concluded that in the absence of any revenue loss or undue benefit, there was no customs violation, and therefore, the penalty could not be sustained.