CESTAT Delhi Sets Aside Penalties in Marble blocks Imports

ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 08.01.2026

CESTAT Delhi Sets Aside Penalties in Marble blocks Imports

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, recently delivered a significant judgment in the case of M/s Marble City India Limited & Others vs. Principal Commissioner of Customs, Inland Container Depot (Import), Tughlakabad, New Delhi. ​ The judgment, pronounced on January 7, 2026, addressed six appeals challenging the penalties imposed by the Principal Commissioner of Customs in connection with the import of rough marble blocks/slabs without adequate Special Import Licences (SILs).

Background of the Case

The appeals arose from two impugned orders dated September 30, 2024, and October 8, 2024, passed by the Principal Commissioner of Customs. ​ These orders were based on a show cause notice (SCN) issued by the Directorate General of Revenue Intelligence (DRI) on January 17, 2014. ​ The SCN alleged that M/s Marble City India Limited and its associated entities had imported rough marble blocks between December 2003 and April 2008 without valid SILs, which were mandatory under the Foreign Trade Policy at the time. The SCN proposed confiscation of goods and imposition of penalties under Sections 111, 112, and 114AA of the Customs Act, 1962.

Marble City India Limited was formed through the amalgamation of M/s P G Industries Ltd and M/s Priceless Overseas Limited, both of which were engaged in importing, processing, and selling rough marble blocks during the relevant period. ​ The DRI investigation revealed discrepancies between the quantity of marble imported and the SILs issued by the Directorate General of Foreign Trade (DGFT). ​ The department alleged that the imports exceeded the permissible limits or were conducted without valid licences. ​

Key Issues Raised

The appellants, including Marble City India Limited, its director, and other associated entities, challenged the penalties imposed on them, raising several key issues:

1. Compliance with Licensing Requirements: The appellants argued that they had obtained SILs for importing rough marble and, in cases where the quantity exceeded the licence limits, they either obtained amendments from the DGFT or paid redemption fines and penalties after adjudication by Customs officers. ​
2. Incomplete Records: The appellants contended that the DRI failed to provide complete records, including copies of the assessed Bills of Entry, adjudication orders, and SILs, despite a Delhi High Court order dated August 29, 2016, directing the Customs authorities to provide these documents.
3. Violation of High Court Directions: The appellants argued that the impugned orders were passed in violation of the Delhi High Court’s directions to provide the necessary records before proceeding with the SCN. ​
4. Lack of Evidence: The appellants asserted that the impugned orders were based on assumptions and lacked documentary evidence to support the allegations. ​
5. Limitation Period: The appellants contended that the SCN was barred by limitation, citing judicial precedents that established a reasonable period of five years for issuing SCNs under Section 124 of the Customs Act. ​

Submissions by the Revenue ​

The Revenue argued that the appellants had imported restricted goods in excess of the quantities permitted under the SILs and, in some cases, even before obtaining the licences. ​ They contended that the SCN was not time-barred, as Section 124 of the Customs Act does not prescribe a limitation period. ​ The Revenue maintained that the impugned orders were valid and proper, as the appellants failed to reconcile the discrepancies in the data. ​

Findings of the Tribunal

After considering the submissions, the Tribunal made the following observations:

1. Lack of Evidence: The Tribunal noted that the DRI failed to provide evidence to support its allegations that the goods were cleared without licences or adjudication. ​ The department’s inability to produce adjudication orders, fine payment records, or complete Bills of Entry undermined its case. ​
2. Presumption of Regularity: The Tribunal emphasized that the clearance of goods from the Customs area involves multiple checks by at least five officers, including the Appraiser, Assistant Commissioner, examining officer, and the ‘Out of Charge’ officer. ​ It is highly unlikely that all these officers would have colluded or been negligent in processing the disputed Bills of Entry. ​
3. Violation of High Court Order: The Tribunal found that the department failed to comply with the Delhi High Court’s order to provide complete records to the appellants, which hindered their ability to respond to the SCN effectively. ​
4. Adjudication Practice: The Tribunal accepted the appellants’ explanation that the goods were cleared after adjudication and payment of fines and penalties, as confirmed by statements from Customs officers and the appellants’ Custom House Agent. ​
5. Limitation Period: Although the Tribunal did not delve deeply into the limitation issue, it acknowledged the appellants’ argument that the SCN was issued after an unreasonable delay.

Final Order

Based on the findings, the Tribunal set aside the impugned orders and allowed all six appeals. ​ The penalties imposed on Marble City India Limited, its director, and other associated entities were quashed.

Key Takeaways

This judgment highlights several important aspects of customs law and adjudication:

1. Burden of Proof: The department must provide concrete evidence to support allegations of non-compliance with import regulations. Assumptions and incomplete records cannot form the basis of penalties. ​
2. Presumption of Regularity: The Tribunal underscored the importance of trusting the integrity of Customs officers and the established processes for clearing goods. ​
3. Compliance with Judicial Orders: The judgment reiterates the importance of adhering to court directions, emphasizing that failure to do so can render subsequent proceedings invalid.
4. Reasonable Limitation Period: While Section 124 of the Customs Act does not specify a limitation period, the Tribunal acknowledged judicial precedents that prescribe a reasonable period of five years for issuing SCNs. ​

Conclusion

The CESTAT’s decision in the Marble City case is a landmark judgment that underscores the importance of due process, evidence-based adjudication, and adherence to judicial directions. It serves as a reminder to both importers and the Revenue authorities about the need for transparency, accountability, and compliance with established legal principles in customs matters.

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Source: CESTAT Delhi

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