CESTAT Chennai Sets Aside Customs Duty Demand on HDFC Bank's Gold Imports

Tribunal rules in favor of HDFC Bank, rejecting Revenue's demand for differential duty on consignment-based gold imports.

In a significant ruling, the Customs Excise and Service Tax Appellate Tribunal (CESTAT) Chennai Regional Bench has overturned the decision of lower authorities demanding differential customs duty from HDFC Bank Ltd. The Tribunal, comprising Mr. P. Dinesha, Member (Judicial), and Mr. Vasa Seshagiri Rao, Member (Technical), delivered the judgment on December 11, 2025, allowing the appeal filed by HDFC Bank against the Commissioner of Customs.

The case revolved around the importation of gold bars by HDFC Bank on a consignment basis. The crux of the dispute was whether subsequent remittances made to the foreign supplier should affect the transaction value declared at the time of importation. The Revenue had issued a Show Cause Notice to HDFC Bank, proposing a demand for differential duty, citing that the actual remittances were higher than the declared value in the Bills of Entry.

In its judgment, the Tribunal emphasized that the transaction value declared at the time of importation should be the basis for customs duty assessment. It ruled that subsequent remittances cannot be the sole reason for rejecting the declared transaction value, particularly when goods were imported on a consignment basis and no sale occurred at the time of import. The Tribunal highlighted the importance of adhering to the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, which require proper evidence for rejecting declared transaction values.

The Tribunal also rejected the Revenue's interpretation of Section 14 of the Customs Act, 1962, which pertains to the valuation of goods. It pointed out that the valuation should be based on the transaction value at the time of import, and any subsequent sale or price alterations should not influence the customs duty already assessed.

HDFC Bank had contended that the gold bars were imported without a sale occurring at the time, as ownership remained with the foreign supplier until the actual sale in India. This argument was supported by the Reserve Bank of India's guidelines on consignment-based imports for nominated banks.

The Tribunal's decision to set aside the impugned order and allow HDFC Bank's appeal comes as a relief to the banking sector, which often engages in consignment-based imports. The ruling reinforces the principle that customs duty should be assessed based on the declared transaction value unless proven otherwise with substantial evidence.

Bottom Line:

Customs Valuation - Transaction value declared at the time of importation cannot be rejected merely based on subsequent remittances made to the foreign supplier, particularly when goods were imported on a consignment basis and no sale took place at the time of import.

Statutory provision(s): Customs Act, 1962 Section 14, Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 Rules 3 and 12

M/s.HDFC Bank Ltd. v. Commissioner of Customs, (CESTAT)(Chennai Regional Bench) : Law Finder Doc Id # 2821304