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Customs - Case Laws
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2025 (7) TMI 231
Levy of penalties u/s 114(iii) and 114AA of the Customs Act, 1962 - Penalty on freight forwarder for abetment - overvaluation to earn undue drawback - illegal export - HELD THAT:- The penalty under Section 114AA of the Customs Act is not imposable on the appellant no. 1 as the appellant was not involved with the goods in question. With regard to the penalty imposed under Section 114(iii) of the Act, it is a fact that at the time the statement of the appellant was recorded, it had been stated by the appellant that he had sent the containers for loading the subject goods and one Shri Ajay Sarawogi alias Vicky, another appellant before us, was present, to whom the containers had reported. Thus, we find that the goods were attempted to be illegally exported by the exporter with the connivance of the appellant no. 1. In these circumstances, penalty under Section 114(iii) of the Act is rightly imposable on the appellant no. 1.
In view of this, the penalty imposed on the appellant no. 1 under Section 114(iii) of the Act is confirmed and the penalty imposed on him under Section 114AA of the Act is dropped.
Penalties imposed on the appellant no. 2 - HELD THAT:- It is an admitted fact that the appellant no. 1 was aware of the activity of the exporter, who was the key person of the syndicate. It has been found that the appellant no. 2 was watching all the activities through WhatsApp messages, for illegal export of the goods in question. In these circumstances, the penalties under Sections 114AA and 114(iii) of the Act have been rightly imposed on the appellant no. 2 - there are no merit in the appeal filed by the appellant no. 2 and accordingly, the penalties imposed on him are confirmed.
Appeal disposed off.
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2025 (7) TMI 230
Denial of benefit of exemption under N/N. 84/97-Cus dated 11.11.1997 - Import of Asphalt Batch Mix Plant Model DG2000, 160TPJ (impugned goods) along with accessories from China for home consumption - Validity of project authority certificate on date of import and its purported cancellation post the import does not affect the exemption claimed by the appellant - Purported admission of the officers of the appellant cannot be the basis to deny the exemption, which is otherwise available in law - Entitlement to exemption under N/N. 84/97-Cus - Recovery of interest from the appellant under subsection 4 of Section 28 read with Section 28AA of the customs Act 1962 - invocation of extended period of limitation - levy of penalty.
Denial of benefit of exemption on the ground that the machinery was intended to be withdrawn from the project which was in violation of the condition of the Notification - HELD THAT:- N/N. 84/97-Cus dated 11.11.1997 exempts all the goods imported into India for execution of projects financed by the United Nations or an International Organisation and approved by the Government of India. These projects are time bound projects and do not run in perpetuity. The notification also does not state as to what should be done to the goods which have availed of the exemption after the completion of the project. There is also no requirement to re-export the goods after their use in the project. In the context of the situation the phrase “goods brought into the project are not withdrawn by the supplier or contractor” found in Explanation 2, has to be understood as not being withdrawn when the project is in operation. More so when it is followed by, “expression “goods are required for the execution of the project” shall be construed accordingly,” it further cements the meaning in the context of the goods being required for the execution of the project and not afterwards.
However, this conclusion is of not much importance to the issue here, since as pointed out by revenue, the appellant has admitted that the impugned goods were not supplied to the project and was not intended to be brought into the project on a permanent basis and accordingly the project certificate also came to be cancelled by the Project Authority, which is a sine qua non for availing the exemption - the matter needs to be examined accordingly.
Validity of project authority certificate on date of import and its purported cancellation post the import does not affect the exemption claimed by the appellant - HELD THAT:- While it is true that once a project authority certificate is produced at the time of the import the appellant is eligible for the exemption claimed, it is equally true that conditional exemptions cast a continuing obligation on the importer to fulfill the conditions of the exemption until the obligation is complete - merely because the project authority certificate was valid on date of import could not be the basis to hold that the duty has been discharged correctly, without following the conditions of the exemption notification. The cancellation of the certificate post the import would affect the duty benefit claimed by the appellant and could lead to the denial of exemption under the said notification. The judgments cited by the appellant above relate to a case where scrips / licenses were procured by the original allottee fraudulently and then sold to the appellant, which were subsequently cancelled. In such a situation it was held that the imports were made by the appellants on the bona fide belief of holding valid licenses hence the benefit was allowed.
Purported admission of the officers of the appellant cannot be the basis to deny the exemption, which is otherwise available in law - HELD THAT:- Section 58 of the Indian Evidence Act, 1872 as it stood at the relevant time, states that a fact does not need to be proved in any proceeding if the parties or their agents admit it, or if it is admitted by writing under their hands before the hearing, or if it is deemed to have been admitted by their pleadings under any rule of pleading in force at the time. The principle behind this section was that a court only decides disputed facts, so facts that are not in dispute need not be proved.
If the appellant was found having violated the notification conditions of using the imported goods in the project funded by World Bank and approved by the Project Authority, then not only did it violate the continuing obligation under the notification claimed but the intention showed that the attempt was to misuse the exemption and this fact was suppressed while claiming the exemption. This amounts to a fraud. It was clearly a suppression of fact from the department with the intention to fraudulently evade payment of duty - Hence due to the admission of the officers of the appellants company and the resultant cancellation of the project certificate by the Project Authority, the benefit of the exemption notification has to be denied. Revenue has no choice in the matter.
Entitlement to exemption under N/N. 84/97-Cus - HELD THAT:- Fraud vitiates all solemn acts. Any advantage obtained by practicing fraud is a nullity. At this stage one cannot claim the benefit of another notification to get over the problem they find themselves in. When fraud is involved the parameters of consideration of any request will be different. In Ram Chandra Singh Vs Savitri Devi and Ors. [2003 (10) TMI 610 - SUPREME COURT], the Apex Court held that fraud is anathema to all equitable principles and any affair tainted with fraud cannot be perpetuated or saved by the application of any equitable doctrine including res judicata.
Further Sr. No. 230 of Notification No. 21/2002-cus., is a conditional notification which requires certain action to be undertaken and verified before the exemption is granted and cannot be done at this stage. Exemptions are an exception to the general rule, hence if a notification requires a thing to be done in a particular manner, it should be done in that manner or not at all.
Recovery of interest from the appellant under subsection 4 of Section 28 read with Section 28AA of the customs Act 1962 - HELD THAT:- Once the appellant is not eligible for the exemption notification, duty not paid needs to be paid with interest. We find that interest is necessarily linked to the duty payable, such liability arises automatically by operation of law.
As per the Hon’ble Supreme Court's judgment in Commissioner of Central Excise, Pune Vs M/s SKF India [2009 (7) TMI 6 - SUPREME COURT] interest is leviable on delayed or deferred payment of duty for whatever reasons.
The same legal positions prevails under the Customs Act, 1962 also. The appellant have voluntarily paid duty at the stage of investigation itself after accepting the non-eligibility of the impugned goods for exemption. The non-eligibility for exemption was also established by the cancellation of the project certificate and hence interest for the amount is also payable.
Invocartion of extended period of limitation - Suppression of facts at the time of filing of the BE - Copliance with all the condition of the notification at the time of clearance of the goods for home consumption or not - applicability of section 28(4) of Customs Act, 1962 - HELD THAT:- The present case, at the highest, be covered by Section 28(1) of the Act. There was no suppression of facts at the time of filing of the BE and the case if at all is premature. The Appellant had admittedly complied with all the condition of the notification at the time of clearance of the goods for home consumption - The department was fully aware or deemed to fully aware of the fact that the imported goods were not to be permanently remain in the Project in view of its allegation that the nature of imported machinery is such that it would be removed from the project on completion of the project. The invocation of extended period is otherwise clearly not applicable in facts of the present case, which involves interpretation of exemption notification and interpretation of the Appellants is in consonance with the orders of this Tribunal.
The statements of company officials and the cancellation of project certificate disclosed the issue to be a case of deliberate deception with the design of securing something by taking unfair advantage, which is a fraud. Hence the matter cannot be treated as premature and the extended period of time was correctly invocable.
Imposition of penalty on the appellant - HELD THAT:- The appellant has stated that the entire case is based on the interpretation of notification and understanding and belief of the Appellants. Further, in the facts of the present case, there can be no intent to evade the duty as not only the claim for exemption under notification 84/97-Cus was correct, but the Appellants were also entitled to complete exemption under sr. no. 230 of notification no. 21/2002-Cus dated 01.03.2002 - the fact of having been involved in a blameworthy conduct has been admitted by the appellant and has resulted in their project certificate being cancelled by the Project Authority. Any breach of a civil obligation under the Act is a blameworthy conduct by the assessee. In this case mens rea is also established amounting to fraud - In the light of the admission made by the appellant company’s officials it is clear that their actions were not guided by good faith. Hence no ground has been made out for setting aside the penalty.
There are no de-merit in the impugned order, and it merits to be upheld - appeal dismissed.
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2025 (7) TMI 229
Classification of imported goods - lithium-ion batteries - imported and used in the manufacture of mobile phones - chargeable to ad valorem Integrated Goods and Service Tax [IGST] @ 12% under Serial No. 203 of Schedule II of the Notification No. 01/2017-IT (Rate) dated 28.06.2017 [IGST Rate Notification] as claimed by the manufacturers of mobile phones, or @ 28% under Serial No. 139 of Schedule IV to the IGST Rate Notification for the period from 01.04.2018 to 26.07.2018, and @ 18% under Serial No. 376AA of Schedule III to the IGST Rate Notification w.e.f. 27.07.2018?
HELD THAT:- The lithium-ion batteries when used for manufacture of mobile phones would attract 12% IGST upto 31.03.2020, whereafter on the omission of Serial No. 203, lithium-ion batteries for the manufacture of mobile phones would attract IGST @ 18%. However, if lithium-ion batteries were not used in the manufacture of mobile phones, they would attract IGST @ 28% in terms of Serial No. 139 upto 26.07.2018 and @ 18% under Serial No. 376AA from 27.07.2018 to 31.03.2020.
It is also important to note that Customs Tariff provides for 8 digit classification for various products which is ex-facie different from the Schedules to the IGST Rate Notification. The IGST Rate Notification covers entire Chapters of Customs Tariff, 4 digits classification and even 8 digits classification in the various Schedules. In fact, goods falling under Chapter 85 in the IGST Rate Notification itself have been classified in different Schedules with the different descriptions when compared with Customs Tariff during the relevant period - In such situation when the Customs Tariff and the IGST Rate Notification are not completely aligned, the use of the phrase ‘so far as may be’ in Explanation (iv) to the IGST Rate Notification assumes importance.
It may be pertinent to refer to the decision of the Tribunal in LG Electronics India Pvt. Ltd. vs. Commissioner of Cus. (I), Mumbai [2006 (8) TMI 361 - CESTAT, MUMBAI]. LG Electronics had imported parts and accessories of mobile phones and claimed benefit of exemption under Notification dated 01.03.2002, which exempts parts, components and accessories of mobile handsets, including cellular phones falling under CTI 8529 90 90. The Tribunal observed 'We have considered the submissions. We find that what has been imported by the appellant were parts and accessories of mobile phones and even though they may be classifiable as a whole under Chapter Heading 852520.17, the benefit of exemption Notification No. 320 cannot be denied as the benefit is available to parts and components of mobile hand sets falling under Chapter Heading 852990.90 or any other chapter. Thus it is available to parts and components irrespective of the fact under which chapter heading they fall.'
The Supreme Court in Camlin Ltd. vs. Commissioner of Central Excise, Mumbai [2008 (9) TMI 1 - SUPREME COURT] excluded the applicability of HSN Explanatory Notes to interpret tariff in a situation where entries in HSN and tariff were not aligned.
It, therefore, follows that lithium-ion batteries imported for manufacture of mobile phones would fall under Serial No. 203 of Schedule II to IGST Rate Notification.
The order passed by the Principal Commissioner also holds that since the end use of the lithium-ion batteries cannot be ascertained at the stage of import, entry at Serial No. 203 of Schedule II to the IGST Rate Notification would not be applicable.
The lithium-ion batteries imported for manufacture of mobile phones are covered by entry at Serial No. 203 of Schedule II to IGST Rate Notification and would be subjected to IGST @ 12% from 01.04.2018 upto 31.03.2020. The manufacturers of mobile phones have discharged IGST @ 12% under Serial No. 203. The demand of short paid customs duty @ 28% by taking resort to the entry at Serial No. 139 of Schedule IV upto 26.07.2018 and thereafter @ 18% under Serial No. 376AA of Schedule III to the IGST Rate Notification is not justified.
Thus, neither the demand of short paid customs duty under section 28(1) of the Customs Act with interest under section 28AA of the Customs Act can be sustained nor imposition of redemption fine in lieu of confiscation or penalty under section 112(a)(ii) of the Customs Act can be sustained - the finding recorded by the Commissioner (Appeals) does not suffer from any error - appeal allowed.
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2025 (7) TMI 228
Classification of imported goods - levy of duty of customs at the rate corresponding to tariff item 8502 3990 of First Schedule to Customs Tariff Act, 1975 - denial of benefit of exemption under N/N. 12/2012-Central Excise dated 17th March 2012 at (serial no. 332) - HELD THAT:- The impugned exemption notification permits ‘additional duty of customs’ to be exempted subject to goods of any chapter being ‘non-conventional energy devices or systems’ enumerated in list 8 which, inter alia incorporates ‘bio-gas plant and bio-gas engine’ at serial no. 15 therein. The appellant had classified goods as aptly conforming to description corresponding to tariff item 8501 6410 of First Schedule to Customs Tariff Act, 1975 while customs authorities preferred classification under residuary category of ‘generating sets and rotary convertors other than those with spark ignition and compression-ignition internal combustion piston engines’ to be more appropriate description.
There is nothing on record either in the N/N. 12 / 2012 - Central Excise dated 17th March 2012 or anywhere else that goods within 8502 of First Schedule to Customs Tariff Act, 1975 or 8501 of First Schedule to Customs Tariff Act, 1975 would not get the benefit of exemption. Even if the goods were covered by the re-determined tariff item and, more especially, as these were, admittedly, not ‘internal combustion piston engines’, it was necessary to examine the characteristics of the imported goods to determine if these be non-conventional energy devices or systems.
In the absence of such finding, the re-classification and consequent denial of benefit of exemption, as well as detriments under section 111 and section 112 of Customs Act, 1962 does not find favour. In view of the deficiency in the adjudication, the impugned order set aside and the matter remanded back to the original authority for a fresh decision after hearing the appellant herein on coverage by the impugned notification.
Appeal allowed by way of remand.
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2025 (7) TMI 227
EOU - Classification of imported goods - Exemption (Concessional rate of duty) Subject to Actual user condition for Manufacture of Goods - Import of 'bus bars’ - Appellant claims that goods were not ‘bars’ but parts required for manufacture of ‘switch gears’ and, hence, covered within chapter 85 of First Schedule to Customs Tariff Act, 1975 and not against tariff item 7407 1030 of First Schedule to Customs Tariff Act, 1975 as claimed - Jurisdiction for recovery of duty from non-eligibility for any reason - power to proper officer or not
HELD THAT:- It is found from the impugned order that reference has been made to N/N. 78/2017-Cus dated 13th October 2017 which amended the governing notification ibid and also the operationalizing of Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 vide N/N. 68/2017-Cus (NT) dated 30th June 2017.
The customs authorities were required to examine eligibility, in terms of enumerated conditions, for exemption and the classification of the goods, which, from the intent of N/N. 52/2003-Cus dated 31st March 2003, being assessment neutral and of no consequence, warranted interference only upon proven diversion instead of actual use in manufacture. Assessment to duty, whether at the rate prescribed for tariff item 7407 1030 or tariff item 8538 9000 of First Schedule to Customs Tariff Act, 1975, was immaterial to exempting ‘export oriented units (EOU)’ from payment of duty as the goods manufactured were, in any case, to be exported and, to the extent permitted by the scheme in the Foreign Trade Policy (FTP), cleared domestically in form that it was not at the time of import.
As far as the 169 bills entry for the period from July 2018 are concerned, there is no allegation that the goods imported had been used other than as intended in the exemption notification. In the absence of breach of such condition, there was no scope for recovery of any duties foregone at the time of import. There is no allegation of the goods having been cleared, as such, into the domestic market nor that the impugned goods were not utilized in the manufacture of goods exported by the appellant. The classification accepted at the time of import was interred for all time to come with deployment of goods for production.
As far as the live consignment is concerned, the provision in the exemption notification enables consequence for failure to meet post-importation conditions leaving scope neither for levy of duty nor for confiscation thereof at the threshold of Indian territory. Presumption of eventual violation of the conditions specified in N/N. 52/2003-Cus dated 31st March 2003 is not acknowledged in law and hinges on personal perception which is anathema. Neither is there any allegation that the impugned goods are not permitted for import in terms of the ‘letter of permission (LoP)’ issued by the jurisdictional Development Commissioner and which is the touchstone for denial of exemption with consequent relevance to assessment to duty at the threshold - The impugned Rules are merely facilitative as are the procedures therein for claiming exemption and to be deployed, if at all, for detriment within the scope and extent of the Rules. The authority adjudicating the impugned notice had no jurisdiction in proceedings to revisit assessment in relation to alleged procedural disputation over Rules for operationalizing a scheme of manufacture and export by which an assessee was permitted, subject to requirement for manufacture of permitted goods, to import without any restriction on quantity or description.
The charging of differential duty as well as the other detriments amounts to excess of jurisdiction and based on premises and suppositions which have neither authority of law to support nor judicial pronouncements to prop up. This is clearly a case of excess of jurisdiction by authorities vested with the empowerment to charge duties on goods imported into the country in accordance with law, namely, section 12 and section 14 of Customs Act, 1962 and, on non-conformity with threshold conditions imposed in any notification issued under section 25 of Customs Act, 1962.
The impugned order is set aside - Appeal allowed.
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2025 (7) TMI 226
Valuation - Scope of SCN - Absolute confiscation - imported intra ocular lens - mis-declaration of goods - contravention of licence requirements - short payment of duty - section 28 of Customs Act, 1962 - HELD THAT:- The appellant had applied for renewal of licence and imports were effected between then and receipt of renewed licence. As at the time of adjudication, licence was available, seizure on that ground should have been vacated. Insofar as earlier imports are concerned, the adjudicating authority has tied itself up in knots. On the one hand, it is enunciated that absolute confiscation was warranted while, on the other, additional resource mobilization for the exchequer was accepted as adequate fiscal restitution. Thus, prohibitions, by that logic, are amenable to fiscal deprivation for overcoming even legislated bar. Leaving that aside, the authority has been drawn from Drugs & Cosmetics Act, 1940; while the impugned goods may be covered by ‘lens’ and, as established by the notification, was indeed so, the enforcement jurisdiction is restricted to the place of import. Any breach detected thereafter is breach of law in municipal jurisdiction and for authorities under the relevant statute to handle.
Further, by insisting on licence from Central Drugs Standard Control Organisation (CDSCO) as condition for permitting clearance of ‘lens’ upon import, it is implicitly acknowledged that not only is there an appropriate regulatory body and non-intervention by such regulatory body in further marketing of the impugned product but also that the goods are not lacking in quality that is prescribed for transacting locally. It is thus stated that goods, once cleared for home consumption, may be proceeded against, insofar as restrictions imposed by statute or policy connected with agencies other than trade licencing authorities is concerned, only at the time of clearance for home consumption under section 47 of Customs Act, 1962.
The value adopted for assessment is that of the same appellant and undertaken through Air Cargo Complex (ACC), Mumbai at a time before the impugned goods had been imported. There is a substantial distinction between imports effected of goods and that of post parcels – both by description and process. There is no declaration of value by recipient of post parcels; such declaration under section 46 of Customs Act, 1962 for goods places the onus on the importer, as buyer and fully cognizant with the transaction entered into by them with seller, to declare the correct price for deployment as assessable value - the goods used for comparison were entered for assessment by the appellant herein from the terms of the contract negotiated by them with the suppliers. Those may have been subjected to the test of rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 and in accordance with the scheme of valuation resting on declaration of price by the importer. In the case of the impugned goods, the price is the price charged from the recipient of the goods and which is declared by the supplier. There is no allegation, let alone evidence, of any collusive arrangement between the supplier and the appellant.
Patently, the provisions of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 were not intended to operate for assessment of post parcels and, unless specifically adapted for circumstances as set in the Rules for adjustments, the adoption of value of goods imported through Air Cargo Complex (ACC) is not acceptable.
Both the pillars for confiscation, penalties and differential duty, viz., lack of licence and comparison with imports at Air Cargo Complex (ACC), the consequences of adjudication is without authority of law. The impugned order is set aside to allow the appeal - Appeal of Revenue dismissed.
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2025 (7) TMI 166
Confiscation of Gold - failure to appreciate scope and ambit of section 111(b), 111(d), 123, 112(a), 112(b) and 114AA of the Customs Act, 1962 - burden of proof under section 123 of the Customs Act, 1962 is upon the respondent to establish with cogent evidence that the seized gold in question are not smuggled goods or not - violation of the principles of natural justice by not considering the outcome of the investigation of DRI Authority - validity of statements recorded under section 108 of the Customs Act, 1962 - levy of penalties - HELD THAT:- The Court orally made an observation to the learned senior Advocate appearing for the respondent that the application need not be pressed for the time being since this Court is inclined to take up the appeal on an early date. This broad understanding was not recorded as the Court was of the earnest belief that the same will be conveyed to the learned Advocate/authorized representative who will appear for the respondent before the learned Tribunal. However, we are surprised to note that the authorized representative of the respondent had made submissions on merits before the learned Tribunal when the application was heard on 30th June, 2025 and a direction has been issued to the concerned Officer of the Revenue to remain present on 2nd July, 2025 to apprise the Tribunal as to whether they have obtained any stay order against the order passed by the Tribunal or complied with the order passed by the Tribunal till date or not.
Considering the fact that the appeal is admitted, the order impugned in this appeal passed by the learned Tribunal as well as the order passed by the learned Tribunal in Customs Miscellaneous Application No. 75363 of 2025, dated 30th June, 2025, shall remain stayed until further orders.
Let the appeal be listed for hearing on 15th July, 2025.
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2025 (7) TMI 165
Seeking provisional release of imported goods - Dry Dates - reliability of Circular No. 35 of 2017- Customs dated 16 August 2017, containing Guidelines for provisional release of seized imported goods pending adjudication under Section 110A of the Customs Act, 1962 - HELD THAT:- Permitting the perishable goods [dry dates] to decay would not benefit the Respondents and would cause severe prejudice to the Petitioner. If, following the proposed investigations and adjudication, no fault is found with the imports, the goods would most likely have perished. Therefore, a balanced approach was necessary to ensure that neither party's interests or concerns suffered disproportionately. The circular dated August 16, 2017, is a step in that direction.
It is not intended to address the issue of waiver of Detention-cum-Demurrage charges at this stage. However, if the Petitioner submits a request for waiver, it is directed that it be disposed of in accordance with the law within three months of receipt.
Petition disposed off.
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2025 (7) TMI 164
Seizure of 17085 Kgs of Betel Nuts and truck - alleged violation of Section 7, 11, 46 and 47 of the Customs Act, 1962 read with Section 3(2) of the Foreign Trade (Development and Regulation) Act, 1992 and Government of India, Ministry of Finance N/N 9/96 (NT) – CUS dated 22.01.1996 issued u/s 110 of the Customs Act, 1962 - HELD THAT:- This writ application is being disposed of in similar terms as has been done by this Court in the case of M/s Ashoke Das [2025 (2) TMI 1123 - PATNA HIGH COURT] where it was held that 'The proper officer has to record his reasons to believe that the goods that he proposes to seize are liable to confiscation. The said reasons for exercise of the power have to be recorded prior to the seizure. The subsequent instruction issued by the Department clearly says that in addition to panchnama reason to believe should be indicated in the seizure memo/order.'
This writ application is being disposed of in similar terms as has been done by this Court in the case of M/s Ashoke Das.
The Seizure Memo as contained in Annexure ‘5’ is quashed, however, in terms of the observations in paragraphs ‘44’ and ‘45’ in the case of M/s Ashoke Das, it is once again held that quashing of Seizure Memo would not mean that the Department cannot investigate and proceed in accordance with law under the provisions of the Customs Act, 1962. Other observations shall also apply in the present case - the application disposed off.
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2025 (7) TMI 163
Classification of goods - 26 Mixtures of Odoriferous (MOS) compound flavoured preparation - to be classified under heading 3302.10 of the Customs Tariff Act or under heading 3302.90.90 of the Customs Tariff Act? - HELD THAT:- In the decision of the Bangalore Bench in GIAVUDAN INDIAN PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS, BANGALORE [2009 (12) TMI 786 - CESTAT BANGALORE] which has been relied on by the appellate authority as well as the adjudicating authority, it has been held that 'The imported flavours impugned in the show cause notice are compound alcoholic preparations and the same are not entitled to concessional rate of duty as provided in Notification No. 21/2002-Cus., dated 1-3-2002 and accordingly, M/s GIPL are liable to pay the differential duty in respect of those flavours.'
Thus, even as per the above decision of the Bangalore Bench of the Tribunal, it was necessary to determine whether the imported flavours were of a kind used for the manufacture of beverages. The Tribunal, finding that as regards the flavours not sold to manufacturers of beverages, it is not established in the order that they are of a kind used for the manufacture of beverages, found it necessary that the Commissioner therefore has to examine and categorically find if these compounds are also of a kind used for the manufacture of beverages. Therefore, the tribunal remanded the dispute relating to the remaining flavour compounds to the Commissioner for a fresh decision.
Given the fact that both parties are ad idem that the matter requires examination and reconsideration by the Original authority afresh, we are of the view that the interest of justice will be served if the matter is remitted back for decision afresh. Accordingly, without expressing any opinion on the merits of the matter, we set aside the impugned order and remit the matter back to the jurisdictional Adjudicating Authority for denovo adjudication with specific directions to give a reasoned order on the contention on facts that the appellant had raised, and render a categorical finding as to whether or not the goods imported by the appellant in the present case are of a kind used for the manufacture of beverages. Needless to say, the adjudicating authority has to adhere to the principles of natural justice.
The appeals are allowed by way of remand.
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2025 (7) TMI 162
Valuation of imported goods - Investigation by SVB - the invoice prices of the foreign supplier can be accepted in the absence of higher contemporaneous import prices or not - reliability of LME prices alone for determination of value of imported goods between related parties in the absence of noticing any flowback in the form of royalty/technical knowhow fees - HELD THAT:- It is observed that there is no evidence of higher contemporaneous import prices recorded either in the OIO or the impugned order. Further we find that LME prices cannot be the sacrosanct evidence to substantiate the charge of undervaluation, especially when contemporaneous import of almost same price was available during the material time. The law is well settled in the following cases, that transaction value cannot be rejected, unless there is contemporaneous import prices as evidence to reject the invoice value.
The impugned Order- in-Appeal for mechanically remanding without cogent reasons could not be sustained and the value declared by the Indian Importer cannot be rejected in view of the detailed examination carried out by the SVB not once but twice that after examining all the invoices and documents as relevant.
Further, on going through the impugned order, it is found that the objections raised by the appellants are justified. The OIA is very cryptic and does not give any cogent reasons for rejecting the declared assessable value. In the absence of any evidence of contemporaneous import or any other factors that rendered the invoice unacceptable, it is not possible to say that the transaction value was not the correct value acceptable under Section 14 of Customs Act. It would have been a different matter if the Department was able to show by reference to contemporaneous imports, or other evidence that the goods were undervalued. There is however no such evidence placed. It is to be noted that the importer has filed his questionnaire, all the invoices and related documents before the SVB - the Appellate Authority did not discuss any problem in the methodology to arrive at the import price having rejected the declared value. No directions are given to the lower authorities about the manner in which the valuation is to be arrived at and the rules thereunder to be applied. Such an order cannot be implemented.
Further, it is noted that the submissions of the Ld. Counsel for the Appellant who has averred that in the absence of any evaluation by the assessing group or any allegation even to state that the contemporaneous import prices of aluminium ingots during the relevant period were higher than the price declared by the appellant, there is no requirement to probe the documents pertaining to the transactions between the foreign related supplier and their unrelated suppliers (LME Registered Suppliers). Therefore, there is no justification or any compelling reason to interfere with order of the Lower Adjudicating Authority and the impugned order of the Commissioner (Appeals) setting aside the Order-in-Original No.20495/2013 dated 21.03.2013 is not legally sustainable.
Appeal allowed.
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2025 (7) TMI 161
Interest on delayed refund - refunded revenue deposit in provisional assessment not contemplated for allowing interest under section 27A of Customs Act, 1962 - Enhancement of value prompted by alleged relationship of seller and buyer - HELD THAT:- There is no doubt that the order of the Tribunal entitling the respondent herein to refund of ₹ 74,72,348 was entailed as consequential relief. That interest may be thus entailed is an assertion perfectly within the empowerment of the Tribunal and, not being amendment of order of the Tribunal issued under section 129B of Customs Act, 1962, which, as fresh cause of action, could have been challenged appropriately or clarifications sought from the Tribunal by appropriate statutory instrument, was to be implemented. A lower authority may contrarily be obdurate at its own peril and it was inconceivable that they should have been expected to do otherwise. There was no option but to dismiss the appeal, founded solely on non-applicability of interest liability to refund of revenue deposit, as ‘point of no return’ was crossed by failure to challenge the clarification by the Tribunal.
With ‘revenue deposits’, proffered by importer as consequence of direction of the ‘special valuation branch (SVB)’, held as unauthorized by law and entitled to refund, subsequent cause of action that led to the doors of the Tribunal, was entitlement to secure refund for themselves. That it was not a refund of duties, to which section 27A of Customs Act, 1962 was indubitably applicable, had ceased to be lis and, if refund was due, operation of section 27(3) of Customs Act, 1962 precluded assigning any other hue to the collection for any purpose whatsoever - The order of the Tribunal had no pretence to be the law; it proceeded to direct that which was within the law and the composition of the direction assumed legality from lack of challenge. All that the lower authorities could do was to work the law. The claim of the appellant-Commissioner is that excess allowed by the first appellate authority has not been tested against provisions of law.
The challenge to order of the first appellate authority rejecting the ground of disentitlement for interest is found to be without merit. As far as the appeal against the order enhancing interest liability, there is no examination of the facts to which the provisions of section 27A of Customs Act, 1962 should have been applied.
Matter remanded back to the original authority for a fresh decision on the appeal of M/s Borsara Machines against the order limiting sanction - Appeal disposed off by way of remand.
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2025 (7) TMI 93
Seeking a direction on the 1st Respondent i.e., Commissioner of Customs (Appeals), to admit the Petitioners’ appeal without insisting on a pre-deposit as stipulated in Section 129E of the Customs Act, 1962 - direction to restore the appeal which is already dismissed for want of pre-deposit - it was held by High Court that 'The Petitioners never challenged the order but chose to institute an appeal without the pre-deposit. After such appeal was not entertained, this Petition was filed, and the relief contrary to the statutory provisions was sought from this Court. Such relief cannot be granted in exercising our discretionary jurisdiction under Article 226 of the Constitution of India.'
HELD THAT:- It is not inclined to interfere with the impugned judgments and orders passed by the High Court - SLP dismissed.
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2025 (7) TMI 92
Levy of penalty u/s 114 (i) of the Customs Act, 1962 - Smuggling - attempt to export red sanders wood in the guise of Ragi - reliability of statement recorded u/s 108 of the Customs Act, 1962 - HELD THAT:- The penalty imposed on the appellant is under Section 114(i), i.e. in case of goods in respect of which any prohibition is in force. Thus, when the offending goods here is Red Sanders Logs, it is the act or omission of the appellant in relation to Red Sanders Logs or abetment of such act or omission in relation to Red Sanders Logs, which act or omission would render such Red Sanders Logs liable to confiscation under Section 113, that would make the appellant liable to penalty under Section 114 (i).
It is also apposite to notice that, the Honourable Supreme Court has, in Union of India v Mustafa & Najibai Trading Co [1998 (7) TMI 90 - SUPREME COURT], held that the distinction between penalty in rem and penalty in personam has been maintained in the Customs Act 1962.
When the act of abetment has a prerequisite of mens rea, it cannot be a harmonious construction of Section 114 that the person who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation, can be visited with a penalty even in the absence of proof of mens rea. Abetment thus means a positive act on the part of the appellant and as can be seen from the facts and circumstances, there is no evidence forthcoming to show that the appellant had intentionally given any assistance in the attempted export of red sanders.
Thus, it can be seen that Section 114 has a penal character of being a penalty in personam, and therefore necessarily the burden of proof is on the Customs authorities to bring home the guilt with respect to a person alleged to have done or omitted to do an act or abetted the doing or omission of doing an act, in relation to the goods liable to confiscation, by adducing satisfactory evidence. Establishing mens-rea is also a prerequisite to attribute attempt. In this case, there has been no evidence let in of any intentional act or omission of the appellant in relation to the Red Sanders Logs that has been confiscated. The exculpatory statement of the appellant remained uncontroverted.
The Department has also failed to adduce evidence to show that the appellant had actually assisted in loading red sanders or in tampering with the container or was even aware that red sanders is being loaded in the container. In these facts and circumstances, to my mind, preponderance of probability weighs in the appellant’s favour.
The penalty imposed on the appellant in the impugned order in original cannot sustain and is required to be set aside - Appeal allowed.
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2025 (7) TMI 91
Absolute confiscation of goods - Light Melting Steel Scrap - Pre-Shipment Inspection Certificate (PSIC) in terms of para 2.51 of the Handbook of Procedure prescribed under Foreign Trade Policy, 2023 has not been furnished in compliance to Board Circular No. 48/2016 read with DGFT Trade Notice No. 19/2017 - HELD THAT:- The articles are kept with Customs Authorities possibilities of any explosion that would cause more hazard affecting officials and staff of Customs cannot be ruled out. Examination of the goods imported with adequate precaution would not only provide safety, in the absence of which it would otherwise endanger life. but it would also help the proper officer to take a decision on the fate of imported goods if fit for home consumption or required to be re-exported.
The order passed by the Commissioner of Customs (Appeals), JNCH, Nhava Sheva, Mumbai-II is hereby set aside - appeal allowed.
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2025 (7) TMI 90
Redetermination of value of imported goods - Enhancement of value - metal scrap - rejection of value under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 read with Section 14 of the Customs Act, 1962.
HELD THAT:- It is found that in the grounds of present appeals, the department has relied upon the decision of the Tribunal in the case of Commissioner of Customs, Patparganj vs. Hanuman Prasad & Sons and Niraj Silk Mills [2020 (12) TMI 1092 - CESTAT NEW DELHI]. It is found that the said decision of the Tribunal has recently been overruled by the Hon’ble High Court of Delhi vide its order dated 27.11.2024 passed in the case of Niraj Silk Mills and Hanuman Prasad & Sons Vs. Commr of Customs (ICD) Patparganj [2024 (11) TMI 1361 - DELHI HIGH COURT], wherein the Hon’ble High Court of Delhi, in a bunch of appeals, has considered the identical issue in detail and after considering the various judgments of the Tribunal as well as of the Hon’ble Supreme Court, has decided the issue in favour of the importer/assessee.
Thus, there is no infirmity in the impugned order passed by the learned Commissioner (Appeals) - appeal of Revenue dismissed.
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2025 (7) TMI 89
Seeking to challenge the Provisional Release Order - detention and seizure of goods - imported betel nuts - Section 110A of the Customs Act, 1962 - HELD THAT:- The present case is a case of seizure which comes under Section 110A of the Customs Act. Also, it is an admitted and undisputed fact that the SCN dated 28.05.2025 having been issued after filing of the present appeal is still pending for adjudication. In such an event, it cannot be said that the stage of confiscation has arrived in the present case. There are force in the argument of the learned Counsel for the Appellant that Section 110A mandates provisional release of seized goods pending adjudication. Therefore, the subject seized goods are liable for provisional release to the Appellant.
As regards the arbitrary condition for furnishing Bank Guarantees, as ordered in the impugned order, it is observed that this condition has been struck down by the Hon’ble Delhi High Court in the case of Its My Name Pvt. Ltd [2020 (6) TMI 72 - DELHI HIGH COURT] and Shanu Impex case [2023 (12) TMI 597 - DELHI HIGH COURT]. It is also found that the Appellant, admittedly and undisputed, is 1 Star Export House and for the goods meant to be exported by such Star Export House, irrespective of the category (i), (ii), (iii), (iv) or (v) for Star Houses, the condition for furnishing Bank Guarantees has been relaxed by the specific Circular No. 32/2009-Cus dated 25.11.2009. Further the Hon'ble Delhi High Court in the cases cited supra have been pleased to struck down the condition of furnishing Bank Guarantees as required by Circular No. 35/2017-Cus dated 16.08.2017.
It is also found that the DRI itself has in its letter dated 25.09.2024 given its no objection for provisionally releasing the subject seized goods of both the categories. The DRI in its said letter has stated that, "the request may be considered for provisional release and dealt with in terms of Para 2.2 of the Board Circular No. 35/2017-Cus dated 16.08.2017"
Thus, it is clear that the only condition in accordance with law which is sustainable is furnishing of PD Bond of the value of the imported goods and goods meant to be exported. Reliance placed by the learned Counsel on Circular 32/2009-Cus dated 25.11.2009 is justified inasmuch as this does not require furnishing of bank Guarantee for any category for Star Export Houses.
Circular No. 01/2011-Cus dated 04.01.2011 being general in nature has been wrongly applied in the present case inasmuch as the present case is governed by Circular No. 32/2009-Cus dated 25.11.2009 where there is no requirement of furnishing of Bank Guarantee.
The Commissioner has not given its independent findings and analysis on the relevant provisions and relevant circulars pertaining to the issues in the present case, except to rely upon the averments made by the Department in Panchanama and seizure memo thereby, evidencing total non-application of mind while passing the impugned order. The impunged order is liable to be quashed and set aside to the extent it orders for furnishing of Bank Guarantees for provisionally releasing the seized imported goods as well as seized goods meant to be exported.
The Appellant is directed to furnish the PD bond for value of the goods in respect of imported goods as well as goods meant to be exported. Upon furnishing PD bond to the above effect, the learned Commissioner is directed to provisionally release both the category of seized goods forthwith - appeal allowed.
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2025 (7) TMI 88
Levy of penalty upon the appellant u/s 112(a)(i),112(b)(i) and 114AA of the Customs Act, 1962 - operating as a syndicate and facilitated clearance of mis-declared/undervalued goods - Confiscation - penalties - HELD THAT:- Although the allegation of the Department is that the appellant facilitated the clearance of the mis declared goods, there is no evidence on record to substantiate this allegation. It has also been alleged that the appellant has allowed Nasiruddin to use their office and computer. In this regard, it is found that allowing usage of office premises and computer cannot be construed as connivance in the alleged offence. The appellant’s submission in this regard also noted that he has no objection with regard to the confiscation of the goods and the order for destruction of the cigarettes seized.
Also, there is no evidence available on record to establish that the appellant is the owner of the goods or he imported the goods or he was in any way connected with subject goods.
Regarding the penalties imposed on the appellant, the investigation has not brought in any evidence against the appellant to establish that the conditions laid down for invoking the provisions of Section 112 of the Customs Act, 1962 have been satisfied in this case. It is also found that no evidence available on record to establish that the appellant had contravened or violated any of the provisions of the Customs Act. The ld. adjudicating authority has arrived at a speculative finding that the appellant was providing necessary assistance in the clearance of mis-declared and contraband goods, without any evidence - Although it has been alleged that the appellant has conspired with the importer to bring in mis-declared/contraband goods which are liable to confiscation under the Customs Act,1962, there are no evidence to establish that the conditions laid down for invoking the provisions of Section 114AA of the Customs Act, 1962 have been satisfied in this case - the penalties cannot be imposed on the appellant under Sections 112 (a), 112(b) and 114AA of the Customs Act, 1962.
The penalties imposed on the appellant in the present case under the Sections 112(a), 112(b) and 114AA of the Customs Act, 1962 are not sustainable and hence the same are set aside.
Appeal allowed.
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2025 (7) TMI 87
Seeking grant of bail - Smuggling - recovery of 112 I-Phones, 102 refurbished laptops, 6 Google Pixel phones, 216 pieces of cosmetics and 94,951 grams of tobacco - existence of documentary evidence on record to show that applicant is involved in smuggling of seized goods alongwith others or not - HELD THAT:- The nature and seriousness of the offence alleged, the context of the events likely to lead to the making of the charges, a reasonable apprehension that witnesses will be tampered with are some of the considerations which the court has to keep in mind while deciding an application for anticipatory bail.
Appreciating the prayer for grant of anticipatory bail, a balance has to be struck between two factors namely, no prejudice should be caused to the free, fair and full investigation and there should be prevention of harassment, humiliation and unjustified detention of the accused. The discretion is to be exercised on the basis of the available material and the facts of particular case. Evaluating the entire available material carefully, rulings cited by the respondent are not helpful to them. Consequently, appreciating the relevant considerations for grant of anticipatory bail with the present set of circumstances prima-facie case is made out by the applicant/accused for grant of anticipatory bail.
In the event of arrest of the applicant registered with Directorate of Revenue Intelligence, Mumbai Zonal Unit, for the offence punishable under Section 135(1)(a)(i)(A), 135(1)(a)(i)(B), 135(1)(b)(i)(A), 135(1)(b)(i)(B) of the Customs Act, 1962 on fulfilment of conditions imposed - bail application allowed.
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2025 (7) TMI 12
Revocation of petitioner’s registration (courier license)- forefeiture of security deposit - failure to fulfil obligation under Regulation 13(a), 13(c), 13(g), 13(i) and 13(j) of the Courier Imports And Exports (Clearance) Regulations, 1998 - principles of disproportionality.
Regulation 13(a) - HELD THAT:- Regulation 13 (a) provides that the Authorised Courier is obliged to obtain an authorisation, from each of the consignees of the import goods for whom such courier has imported such goods and such authorisation should be to the effect that the Authorised Courier acts as an agent of such consignee for clearance of such imported goods.
In the courier Bill of Entry, an authorised courier must declare that they have obtained authorisation from the importer. One such Bill of Entry is at page 118 of the petition. In the instant case, the said declaration given is false because no such authorisation has been obtained. On a reading of the statements of Shri Dhanak and Shri Mohan Naik, it is clear that petitioner had no contact with Shri Mansukhlal Dhanak but the work of clearing given by Mansukhlal Dhanak was sub-contracted by Shri Naik to the petitioner. Therefore, clearly there is serious violation of Regulation 13(a). The consignment detained pertained to Airway Bill 971733473 and 9717334738 which as per pages 77, 78 and 91 of the petition pertains to Chamunda Trading and Regent Engineering whereas page 76 which the petitioner claims to be authorisation is on a letter head of Balaji Engineering. Therefore, even on this count petitioner’s submission is found to be incorrect.
The submission of the petitioner that document complies with Regulation 13(a) is to be rejected. There are no infirmity in the orders of respondent Nos.2 and 3 in concluding that the petitioner has violated its obligation cast under Regulation 13(a).
Regulation 13 (i) - HELD THAT:- Regulation 13 (i) obliges an Authorized Courier to verify the antecedent, correctness of Importer Exporter Code (IEC) Number, identity of his client and the functioning of his client in the declared address by using reliable, independent, authentic documents, data or information.
In the absence of any material, the submission of the petitioner that the obligation cast under Regulation 13(i) has been discharged, cannot be accepted . It is also important to note that in a period of six months around 250 consignments were cleared on behalf of the entities owned by Shri Mansukhlal Dhanak. That means on an average more than one consignment a day was cleared. If this is the magnitude of the business obtained by the petitioner, it was obligatory on its part to have verified the antecedents, identity and functioning of such a person at the declared address. The statements recorded of Shri Dhanak, Shri Naik and Shri Menezes clearly evidences that the petitioner did not know anything about the entities of Shri Dhanak which clearly violates Regulation 13(i).
The findings arrived by both the authorities cannot be said to be vitiated - the petitioner has not discharged its obligation cast under Regulation 13(i) of the 1998 Regulation.
Regulation 13(g) - HELD THAT:- Regulation 13(g) requires an Authorized Courier to maintain records and accounts in such form and manner as may be directed from time to time and submit them for inspection whenever required - The order in O-I-O categorically states that the petitioner could not produce any authentic records of the entities controlled by Shri Mansukhlal Dhanak. None of the documents of these entities were produced before us. The said findings in the O-I-O have been confirmed by respondent No.3. Except for making a bald statement, we have also not been shown what records the petitioner has maintained with respect to the entities of Shri Mansukhlal Dhanak. Therefore, there is violation of Regulation 13(g) by the petitioner. In the absence of any perversity shown in the impugned orders and the failure of the petitioner to produce any records, the contention of the petitioner not agreed upon that there has been compliance of Regulation 13(g).
Regulation 13(j) - HELD THAT:- The petitioner is not agreed upon that it is not the case of the respondents that the petitioner has sub-contracted its functions to any other persons. Rather, the case of the respondents appears to be that because Shri Mohan Naik had sub-contracted his work to the petitioner, Regulation 13(j) was attracted. Since the petitioner has not subcontracted its functions, Regulation 13(j) cannot be said to have been violated. Therefore, the findings of both authorities, insofar as this regulation is concerned, are vulnerable.
Both the Authorities are justified in recording adverse findings regarding the petitioner’s noncompliance with the obligations under Regulations 13(a), 13(i), and 13(g). Given these serious violations, the finding regarding Regulation 13(j) of the 1998 Regulations, even if excluded, will not affect the impugned orders in the least.
Disproportionality - it is contended that revocation of the licence and forfeiture deposit is disproportionate and, therefore, this Court should interfere in the impugned orders insofar as revocation is concerned - HELD THAT:- Keeping Regulation 13 analysed and cited above would certainly show that by a legal fiction the Petitioner steps into the shoes of the importer and has a legal responsibility which crystallises into legal liability to answer any contravention or fraud or for that matter any criminality in conduct. In the instant case, it is noticed that two consignments were found which smuggled gold of 4879.9 grams which indicates criminality. The Petitioner, if not directly, vicariously becomes liable for such act on account of his non-discharge of the obligations cast under the Regulations.
The issue also arose before the Hon’ble Delhi High Court in the case of M/s. Bombino Express Pvt. Ltd. v. The Chief Commissioner of Customs (Delhi Zone) & Anr. [2014 (11) TMI 381 - DELHI HIGH COURT] where on very similar regulations and facts, the Delhi High Court upheld the revocation of licence under Regulation 14 for violation of Regulations 13(a) and 13(g) of the 1998 Regulations.
The authorities appointed under the Act are the best judges based on ground reality to revoke the license and unless it shocks the conscience of the Court or it is so perverse that a reasonable person could not have imposed such a punishment, the Court will not exercise its equity jurisdiction.
Petition dismissed.
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