ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 11.12.2025
CESTAT Bangalore Sets Aside Penalty and Dismisses Revenue Appeal in Boric Acid Import
This Article has been written by Shri Ravi Shekhar Jha, Advocate based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.comor on his Mobile +91-9999005379.
In a significant legal development, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Bangalore, has delivered its final verdict on two appeals concerning the import of boric acid by M/s. Maliakkal Industrial Enterprises. โ The judgment, pronounced on December 5, 2025, by Honโble Member (Technical), marks a crucial milestone in the ongoing legal battle between the appellant and the Commissioner of Customs, Cochin. โ
Background of the Case
The case revolves around the import of 29 consignments of boric acid/boric acid anhydrate by M/s. โ Maliakkal Industrial Enterprises between October 2005 and June 2013. โ As per Notification No. 2 (RE 06)/2004-2009 dated April 7, 2006, the import of boric acid for non-insecticidal purposes required an Import Permit issued by the Central Insecticide Board and Registration Committee under the Ministry of Agriculture. โ However, the appellant did not furnish the requisite permit at the time of import, leading to the goods being withheld by customs authorities. โ
The appellant challenged this requirement in the Honโble High Court of Kerala, which initially ruled in their favor, stating that the condition to obtain a registration certificate under the Insecticides Act, 1968, was arbitrary and unsustainable. โ However, this decision was later overturned by the Division Bench of the High Court, which upheld the necessity of the registration certificate for such imports. โ
The Appeals
Following the Division Bench’s decision, the Revenue issued a show-cause notice alleging that the imported goods were liable for confiscation under Section 111(d) of the Customs Act, 1962, and imposed a penalty of Rs. โ 4,00,000 under Section 112(a). โ The appellant contested this decision, arguing that the goods were provisionally cleared based on the High Court’s directions and were used solely for industrial purposes, as required by the bond executed under Section 18 of the Customs Act, 1962. โ
The Revenue also filed a separate appeal, challenging the Commissionerโs decision to set aside the redemption fine and impose a lower penalty. โ
The Tribunalโs Decision โ
After hearing both sides, the Tribunal ruled in favor of M/s. Maliakkal Industrial Enterprises, setting aside the penalty imposed under Section 112(a) of the Customs Act, 1962. โ The Tribunal noted that the goods were cleared provisionally under the directions of the Honโble High Court of Kerala, and the appellant had complied with the condition that the boric acid would be used solely for industrial purposes. โ Furthermore, the Tribunal observed that the show-cause notice issued under Section 124 and 143 of the Customs Act was not in accordance with the provisions of Section 18, under which the bond was executed. โ
The Tribunal also dismissed the Revenueโs appeal, stating that there was no basis for imposing redemption fines or additional penalties, as the goods were cleared under judicial directions and the appellant had adhered to the stipulated conditions. โ
Key Takeaways
- Judicial Precedence: The case highlights the importance of judicial directions in customs matters, especially when there is ambiguity in the interpretation of import policies. โ
- Compliance Matters: The Tribunal emphasized that the appellantโs adherence to the condition of using the imported goods for industrial purposes was a critical factor in the decision to set aside the penalty. โ
- Legal Framework: The judgment underscores the significance of following the correct legal provisions when issuing show-cause notices and imposing penalties.
Conclusion
The decision by CESTAT Bangalore is a landmark ruling that reinforces the importance of judicial oversight in customs disputes. It also serves as a reminder to importers and authorities alike to ensure compliance with legal provisions and conditions while dealing with imports. โ For M/s. Maliakkal Industrial Enterprises, this judgment is a vindication of their stance and a testament to the power of legal recourse in resolving complex regulatory issues.
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Source: CESTAT Bangalore
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