February 18, 2026 : The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has ruled that customs duty cannot be demanded “jointly or severally” from multiple individuals unless it is established that the goods were imported jointly. The decision came in a batch of 26 appeals arising out of a high-value confectionery import dispute titled M/s. Mukesh Kumar Versus Commissioner of Customs (Customs Appeal No. 41655 of 2019).
The matter was decided by a Bench comprising Vasa Seshagiri Rao (Technical Member) and Ajayan T.V. (Judicial Member), who delivered Final Order Nos. 40223–40248/2026 on 17 February 2026.
Background of the Case
The principal appellant, M/s Nakshatra International Food Company (NIFCO), a sole proprietorship of Mukesh Kumar, was accused of under-invoicing confectionery imports including jellies, chocolates, wafers, juices and coffee between 2008 and 2013. The Directorate of Revenue Intelligence (DRI) scrutinised 566 Bills of Entry, of which 388 were filed directly in NIFCO’s name and 178 were made under four other Import Export Codes (IECs).
During investigation, goods worth approximately ₹1.46 crore were seized from NIFCO’s premises. Two hard disks containing proforma invoices were also recovered and analysed. Statements of Mukesh Kumar and his brothers were recorded under Section 108 of the Customs Act, 1962, wherein under-invoicing of 30–50% was allegedly admitted.
Joint and Several Liability Rejected
On the core issue of joint and several liability, the Tribunal held that NIFCO is a sole proprietorship and that Mukesh Kumar, as proprietor, had filed the Bills of Entry and made statutory declarations under Section 46(4) of the Customs Act. Referring to Sections 2(26), 46 and 47 of the Act, the Bench held that liability to pay duty rests with the importer who files the Bill of Entry.
Relying on its earlier ruling in Commissioner of Customs vs Unik Traders, the Tribunal reiterated that customs duty cannot be demanded jointly or severally unless goods are shown to have been imported jointly. Accordingly, the demand confirmed jointly against Mukesh Kumar and his brothers in respect of NIFCO’s imports was set aside as legally unsustainable.
With regard to the 178 imports under four other IEC holders, the Tribunal noted that the IEC holders were genuine entities and that the concept of “beneficial owner” was introduced in the Customs Act only in 2017, whereas the disputed imports took place between 2008 and 2013. In the absence of any prohibition at the relevant time against use of another valid IEC, the Bench held that imports could not be clubbed for joint liability.
Valuation Exercise Held Unsustainable
On valuation, the Tribunal examined the rejection of declared transaction value under Rule 12 of the Customs Valuation Rules, 2007. Relying on the Supreme Court’s decision in Century Metal Recycling Pvt. Ltd., the Bench emphasised that Rule 12 mandates a two-step procedure: the proper officer must communicate the grounds for doubting the declared value and provide an opportunity of hearing before proceeding under Rules 4 to 9.
The Tribunal found that this mandatory procedure was not followed, rendering the rejection of transaction value legally unsustainable. It further held that Rule 9, the residual method, cannot be applied on arbitrary or fictional bases and must rely, as far as possible, on previously determined customs values.
The Department had disowned contemporaneous NIDB data as unreliable, yet proceeded to enhance value without credible comparable data. Such redetermination was struck down.
Proforma Invoices and Electronic Evidence
In respect of proforma invoices recovered from hard disks, the Tribunal held that a proforma invoice is merely a tentative offer and cannot constitute proof of actual transaction value unless supported by evidence of additional consideration. No evidence of flow-back of consideration was found.
The Bench also noted discrepancies in serial numbers of seized hard disks and examined compliance with Section 138C governing admissibility of electronic records. These procedural lapses were treated as serious infirmities. The Tribunal further held that retracted statements recorded under Section 108 cannot form the sole basis for redetermination of value unless corroborated by independent evidence.
RSP Enhancement and Corrigendum Questioned
On enhancement of Retail Sale Price (RSP), the Tribunal expressed reservations over the formula-based application of 2.42 times the enhanced landed value without credible retail invoices or authenticated market data. Such enhancement was held unsustainable.
The Tribunal also examined the corrigendum issued after the original order imposing penalties under Sections 112(b) and 114AA on Customs Brokers. The legality of introducing fresh penal consequences through a corrigendum, without specific findings in the original order, was questioned.
Conclusion
In conclusion, the Tribunal held that customs duty liability flows strictly from the statutory definition of “importer” and cannot be imposed jointly or severally unless goods are shown to have been imported jointly. It confined liability to respective importers in accordance with law and found significant infirmities in the valuation exercise and evidentiary basis adopted by the Revenue.
The appeals were disposed of by restructuring and setting aside demands and penalties to the extent found unsustainable in law.
