Same lamps from Spain and China cleared at invoice price: CESTAT quashes Rs 84 lakh duty on Diyas UK imports

After a Supreme Court remand ordering sequential valuation, the Principal Commissioner accepted the declared prices of identical and similar decorative lights from unrelated suppliers in Spain and China yet re-valued the UK consignments by the deductive method. The Tribunal found no attempt to show that the related-party link had affected the price, and set aside duty, confiscation and penalties.

The Principal Bench of the Customs, Excise and Service Tax Appellate Tribunal has set aside a differential duty demand of ₹84,38,336 on imports of Diyas and mAntra brand decorative lighting by Diyas Mantra Lighting Pvt Ltd from its related UK supplier. Redemption fines of ₹99 lakh and penalties on the company and its two directors went with it.

The order of 29 October 2026 was written by Member (Technical) Sanjiv Srivastava for a bench that included Member (Judicial) Somesh Arora. It turns on one inconsistency: the adjudicating authority accepted the declared value of the same goods from unrelated suppliers in Spain and China, yet never examined whether the UK relationship had actually moved the price.

The imports

Diyas Mantra Lighting imported electric decorative lighting, mainly pendants, chandeliers, ceiling, wall and floor lamps, under the Diyas and mAntra brands. On 21 January 2015 it filed Bill of Entry No. 8059523 at ICD Tughlakabad for a consignment from Inspired Lighting Ltd, Heywood, UK.

Customs Preventive officers found the two brand names on the goods and manuals but not on the bill of entry, invoice or packing list. The consignment was detained under Section 110 and seized on 2 February 2015. Goods in the importer's godown were seized on 5 February 2015. Both lots were later released provisionally.

Investigators treated the UK supplier as a related person. Anil Kumar Anand was managing director and sole shareholder of Inspired Lighting, and a director holding 50 per cent of the importer, where he looked after finance. He is a cousin of co-director Rahul Mehta.

Anand had advanced an interest-free unsecured loan of ₹1.37 crore to the importer in 2013-14, and the importer paid him ₹1 crore on 23 February 2015. The department read this as a financial flow-back.

Other imports of the same brands came directly from Global Manufacturing and Trading Company SL, Spain, owner of the mAntra brand, and from Homemax, China. Nobody alleged that either was related to the importer.

Show cause, two rounds, and a remand

A show cause notice of 29 January 2016 proposed to reject the declared value of ₹19,01,175 for the live consignment and the declared value of 20 past bills of entry under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. Redetermination was proposed at ₹52,22,305 and ₹6,43,95,379 under Rules 6, 7 and 9.

The differential duty came to ₹9,53,073 and ₹1,23,26,237, demanded under the extended period in Section 28(4). The Principal Commissioner confirmed the whole demand on 31 March 2017.

The Tribunal dismissed the appeals on 6 November 2017, accepting backward calculation from sale prices because different brands could not be compared.

On 22 April 2019 the Supreme Court set aside both orders in Civil Appeal Nos. 3138-3140 of 2018. It noted that decorative lighting is not normally a highly branded product and that data existed for identical or similar goods.

If the authority treated the trademark as significant, the Court said, it could not ignore imports under the same trademark from unrelated suppliers in other countries. Rule 3(4) demands sequential application, so “Rules 3 to 5 would have to be exhausted first”. All other pleas were left open.

The de novo order

In the de novo order of 31 March 2021 the Principal Commissioner held the UK supplier related under Rule 2(2) and found that the relationship had influenced the price. Goods routed from China through the UK should have cost more, not the same or less, once freight and the UK margin were added, he reasoned.

A draft waybill issued in place of a bill of lading was read as a sign of common interest.

He then walked through Rules 4 and 5 and found them inapplicable. The importer was the sole distributor of both brands, so no other importer's prices for identical or similar goods existed.

Value was fixed under Rule 7 read with Rule 9. From the importer's sale invoices he deducted a 15 per cent profit margin, 5 per cent for post-importation costs and duties of 28.85 per cent. Where no sale price existed, three times the declared value was taken.

The result was a redetermined value of ₹52,22,305 for the live consignment and ₹4,46,72,712 for 13 past UK bills against a declared ₹2,16,95,404. Differential duty of ₹9,53,073 and ₹74,85,263 was confirmed.

Goods were confiscated under Section 111(m), with fines of ₹10 lakh and ₹89 lakh in lieu under Section 125. The company was penalised under Section 114A equal to the duty, and each director ₹10 lakh under Section 112(b).

The same order dropped ₹48,40,974 of duty on seven bills of entry from Spain and China. The declared value was accepted because no related-party case had been made out against those suppliers.

The legal question

Prem Ranjan, for the appellants, argued that the transaction value was not influenced by the relationship and had to be accepted under Rule 3(3)(a), relying on Sanjivani Non Ferrous Trading Pvt Ltd, 2019 (365) ELT 3 (SC), and Impex Steel and Bearing Co, 2014 (302) ELT 464 (Tri-Del).

Even otherwise, he said, value had to be fixed under Rule 3 from the same goods imported from China, so resort to Rules 7 and 9 was wrong.

Nikhil Mohan Goyal, for the department, said related-person status was proved as a fact and the loan showed a flow-back. The onus under Rule 3(3)(b) shifted to the importer, whose own comparison chart showed UK prices at par with or above Chinese prices.

He relied on East African Traders, 2000 (115) ELT 613 (SC), on piercing the corporate veil, and on the Delhi High Court in Himanshu Gupta and the Chennai bench in Xiaomi Technology India.

The Tribunal read the Supreme Court order as a direction to apply Rules 3 to 9 sequentially. It noted that the brand under which the goods sold in India belonged to the Spanish supplier, held unrelated, and that demands on identical and similar goods from Spain and China had been dropped.

Non-mention of the brand on import documents had been the department's ground both for the extended period and for the related-person finding.

Even assuming the UK supplier was related, the Rules require proof that the relationship affected the declared transaction value. The bench put it in a sentence:

We do not find any attempt made to determine the impact of the relationship (para 4.6)

On the contrary, the impugned order had accepted the prices of the same or similar goods from Spain and China as the transaction value. The bench recalled Impex Steel, where a declared price was upheld because the department had shown no additional consideration flowing back and had itself accepted the same goods at the same price at another port.

It also set out the Supreme Court's reasoning in Sanjivani Non Ferrous, which traced through Eicher Tractors and South India Television. The assessing officer is bound to accept the price actually paid unless an exception in the Rules applies, must give reasons supported by material for rejecting it, and must prove undervaluation by evidence of contemporaneous imports.

The department's authorities did not help. Himanshu Gupta concerned cross-examination in a central excise demand. Xiaomi concerned adding royalty and licence fees under Rule 10(c), an issue absent here. A Tribunal decision, the bench said, is an authority only for the issues it decides.

Since the Spanish and Chinese prices were accepted and no price effect of the UK relationship was shown, the arguments on piercing the corporate veil became irrelevant. Rule 3(3)(a) had to be applied in letter and spirit.

In any case, the bench held, the assessable value of the UK goods could not be higher than the value accepted for identical and similar goods from Spain and China.

Order

The Tribunal found no merit in the confirmation of duty on the past UK bills of entry listed in paragraph 59 of the impugned order, or in the redetermination of value for Bill of Entry No. 8059523 of 21 January 2015, which rested on the same logic without separate findings.

With the charge of mis-declaration set aside and the declared value accepted, the confiscation of the live consignment and of the goods seized at the godown on 5 February 2015 was set aside. The penalty on the importer under Section 114A and the penalties on directors Rahul Mehta and Anil Kumar Anand under Section 112(b) fell with the demand.

Customs Appeal Nos. 50079, 50080 and 51166 of 2022 were allowed. Final Order Nos. 51642-51644 of 2026 were pronounced in open court on 29 October 2026.