CESTAT Kolkata Upholds Late Fine Waiver for Importer Amid COVID-19 and System Errors

ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 17.11.2025

CESTAT Kolkata Upholds Late Fine Waiver for Importer Amid COVID-19 and System Errors

In a significant decision, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Eastern Zonal Bench, Kolkata, has upheld the order of the Commissioner of Customs (Appeals) to waive late fines imposed on M/s. Shalimar Wires Industries Limited. ​ This ruling comes as a relief to the respondent, who faced challenges due to systemic errors and the unprecedented disruptions caused by the COVID-19 pandemic. ​

Background of the Case

M/s. Shalimar Wires Industries Limited, engaged in the importation of Polyester Monofilament Yarn and Polyamide (Nylon) Monofilament Yarn, filed four advance Bills of Entry on December 1, 2021, for consignments imported from the United Kingdom. However, due to the global pandemic and financial constraints, the company was unable to pay the duty on time. ​ When they attempted to regularize the Bills of Entry in January 2022, they discovered that the entries were no longer available in the ICEGATE system due to a systemic error.

The Customs House Agent (CHA) was advised by ICEGATE to re-assess the Bills of Entry and file fresh ones. ​ Consequently, new Bills of Entry were filed on January 19, 2022, but the system automatically imposed a late fine of ₹4,65,000/- for each case. ​ The respondent requested a waiver of the late fine, citing the Supreme Court’s order in RE: COGNIZANCE FOR EXTENSION OF LIMITATION, which extended the limitation period due to the pandemic. ​ Despite this, the Deputy Commissioner of Customs rejected the request for a full waiver, reducing the fine to the duty amount instead.

Decision by the Commissioner of Customs (Appeals) ​

On appeal, the Commissioner of Customs (Appeals) ruled in favor of the respondent, setting aside the late fine. ​ The Commissioner noted that the delay was caused by a systemic error in the ICEGATE system and the challenges posed by the COVID-19 pandemic. ​ The Commissioner also highlighted the Supreme Court’s decision to extend the limitation period during the pandemic, which supported the respondent’s case. ​

Revenue’s Appeal to CESTAT ​

The Revenue challenged the Commissioner’s decision, arguing that the late fine was automatically calculated by the EDI system and that the delay was due to the respondent’s inaction in regularizing the Bills of Entry within the stipulated 30-day period. ​ They contended that the late fine was justified and should not have been waived entirely. ​

CESTAT’s Final Ruling

After hearing both sides, the Tribunal upheld the Commissioner of Customs (Appeals)’ decision to waive the late fine. The Tribunal observed that the disappearance of the advance Bills of Entry from the ICEGATE system was due to a systemic error, and the respondent could not be held accountable for this issue. ​ Furthermore, the Tribunal acknowledged the challenges posed by the COVID-19 pandemic, referencing the Supreme Court’s ruling that extended the limitation period from March 15, 2020, to February 28, 2022. ​

The Tribunal concluded that the delay in filing the Bills of Entry was not due to any fault of the respondent and that the Commissioner (Appeals) had rightly set aside the late fine. ​ Consequently, the appeals filed by the Revenue were rejected. ​

Key Takeaways

1. Systemic Errors and Accountability: The Tribunal emphasized that importers cannot be penalized for delays caused by errors in the customs system, such as the unavailability of advance Bills of Entry in the ICEGATE system. ​
2. Impact of COVID-19: The decision highlights the importance of considering the challenges posed by the pandemic, including financial constraints and operational disruptions, when assessing compliance with regulatory timelines. ​
3. Judicial Precedent: The Tribunal relied on the Supreme Court’s ruling on the extension of limitation periods during the pandemic, reinforcing the principle of fairness in extraordinary circumstances. ​
4. Role of Proper Officers: The Tribunal clarified that proper officers have the authority to waive late fines in cases where delays are not willful and are caused by genuine reasons. ​

Conclusion

This ruling by the CESTAT serves as a reminder of the importance of considering systemic errors and external factors, such as the COVID-19 pandemic, when enforcing regulatory compliance. It underscores the need for fairness and flexibility in addressing cases where delays are beyond the control of importers. ​ The decision is a significant step in ensuring that businesses are not unduly penalized for circumstances outside their control, fostering a more equitable and supportive environment for trade and commerce. ​

Source: CESTAT Kolkata

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