CESTAT Dismisses Customs Department Appeals Against Adani Group Firms in Alleged Overvaluation Case

June 5, 2026 :In a significant ruling involving long-running customs valuation disputes, the Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has dismissed six appeals filed by the Customs Department against several Adani Group companies, upholding an earlier order that had dropped allegations of overvaluation of imported equipment and machinery. The Tribunal held that the issues raised by the Department had already been conclusively decided in earlier proceedings arising from the same Directorate of Revenue Intelligence (DRI) investigation and that those findings had attained finality after being upheld by the Supreme Court.

The appeals were filed by the Commissioner of Customs (Import-I), Mumbai, challenging an Order-in-Original dated December 21, 2023, passed by the Principal Commissioner of Customs (Adjudication), Mumbai. The respondents included Adani Enterprises Limited, Adani Renewable Energy LLP, Adani Hazira Port Private Limited, Adani Ports and Special Economic Zone Limited, Adani International Container Terminal Private Limited, and Adani Vizag Coal Terminal Private Limited.

The dispute originated from a common DRI investigation into imports made by various Adani Group entities through Electrogen Infra FZE (EIF), a UAE-based supplier. The Department alleged that imported goods had been overvalued and sought rejection of the declared transaction values under the Customs Valuation Rules. Three separate show cause notices were issued as part of the investigation, including the notice dated August 31, 2016, which formed the basis of the present proceedings.

According to the records, the earlier two show cause notices issued in May 2014 had already been adjudicated in favour of the concerned Adani entities. Those proceedings were dropped by the DRI Adjudicating Authority, and subsequent appeals filed by the Department were dismissed by CESTAT. The Supreme Court later dismissed the Department’s civil appeals and review petitions, effectively affirming the findings recorded in those matters.

Before the Tribunal, the Adani companies argued that the third show cause notice was based on the same investigation, the same set of documents, and identical allegations that had already been rejected in earlier proceedings. The Principal Commissioner had also recorded findings that all three show cause notices stemmed from a common investigation and relied on substantially similar evidence. The Tribunal noted that these findings were never disputed by the Department.

The Tribunal emphasized that once the earlier proceedings had attained finality, the Department could not seek a different outcome on the basis of the same evidentiary material. Referring to the Supreme Court’s order dismissing the civil appeals, the Tribunal highlighted the apex court’s observation that, “the matters are concluded by the findings of fact recorded by the authorities below and the impugned order(s) does not require any interference at our behest.”

A major issue before the adjudicating authority concerned the valuation of imported solar equipment, cranes, port machinery, tugs and related infrastructure imported under engineering, procurement and construction (EPC) contracts. The Department had alleged that the declared values should be rejected under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, read with Section 14 of the Customs Act, 1962. However, the Principal Commissioner found that although certain parties were related, there was no evidence that the relationship had influenced pricing. The contracts had been awarded through international competitive bidding processes and the prices were discovered transparently through market competition.

The adjudicating authority further concluded that the transaction values declared by the importers were required to be accepted under Rule 3 of the Valuation Rules. It was observed that the Department’s attempt to rely on original equipment manufacturer (OEM) invoices was legally unsustainable because the contracts between the importers and EIF included extensive services, warranties, performance guarantees, installation obligations and commercial risks that materially differed from the OEM transactions.

Another critical aspect of the case involved documentary evidence obtained from overseas banks. The Principal Commissioner held that the documents relied upon by the DRI lacked the certification required under Section 138C(4) of the Customs Act and therefore could not be treated as admissible evidence. Since identical evidentiary issues had already been decided against the Department in earlier cases arising from the same investigation, those findings were considered binding in the present matter as well.

The Tribunal also upheld the finding that the imported goods were not liable for confiscation under Section 111(m) of the Customs Act. Since there was no proven misdeclaration of value and the declared transaction value was found to be genuine, the foundation for confiscation collapsed. Consequently, penalties proposed under Sections 112(a) and 114AA of the Customs Act were also held to be unsustainable. The adjudicating authority had specifically found that there was no false declaration in import documentation and no evidence of over-invoicing.

Explaining the legal significance of the dispute, the Tribunal reinforced the principle that customs authorities cannot repeatedly litigate identical issues once findings based on the same investigation and evidence have attained finality through the appellate process. The decision also underscores the importance of compliance with evidentiary requirements under Section 138C of the Customs Act when electronic or computer-generated documents are relied upon in customs proceedings.

The ruling is likely to have broader implications for customs valuation disputes involving complex EPC contracts, related-party transactions and allegations of over-invoicing. It provides clarity that international competitive bidding, coupled with commercially justified contractual obligations and transparent pricing mechanisms, can be significant factors in establishing the legitimacy of declared transaction values.

Dismissing all six appeals, the Tribunal concluded that the Principal Commissioner’s order suffered from no legal infirmity and that the Department had failed to demonstrate any error warranting interference. The order effectively brings another chapter of the decade-long customs dispute arising from the DRI investigation to a close.

Case Reference : Commissioner of Customs (Import-I), Mumbai v. Adani Enterprises Ltd. & Ors.