BIS not required for Spare Parts Import, CESTAT Delhi sets aside confiscation & penalty

ALO Law Office- IDT Tax I Arbitration I Litigation

Date:19.02.2026

BIS not required for Spare Parts Import, CESTAT Delhi sets aside confiscation & penalty

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), New Delhi, recently delivered its judgment on Customs Appeal No. ​ 50356 of 2025, filed by Criticallog India Private Limited against the order passed by the Commissioner of Customs (Appeals). ​ This case sheds light on the complexities of customs regulations, import declarations, and the interpretation of laws governing the import of goods into India. ​ Below, we delve into the details of the case, the arguments presented, and the final verdict.

Background of the Case

Criticallog India Private Limited, a technology-driven logistics company specializing in end-to-end logistics solutions, filed an appeal against the order dated September 25, 2024, issued by the Commissioner of Customs (Appeals). ​ The appeal was in response to an earlier order dated May 24, 2024, passed by the Deputy Commissioner of Customs. ​ The case revolved around the import of goods, specifically ‘Memory’ and ‘Power Supply’ items, under a Bill of Entry filed dated March 8, 2024, Under CTH 85423200, 85044090.

The appellant imports spares for warranty replacement under delivered duty paid items, exclusively for specific end customers. ​ These goods are controlled by the US Government and are authorized for export only to the country of ultimate destination for use by the identified end users. ​

Key Issues in the Case

The dispute primarily revolved around two categories of imported goods: ‘Memory’ and ‘Power Supply.’ The Deputy Commissioner had alleged misdeclaration of the quantity and classification of the imported goods, leading to confiscation orders, penalties, and duty demands. ​ The Commissioner (Appeals) partly allowed the appellant’s appeal, reducing the redemption fine and releasing certain goods, but upheld the confiscation and penalties for others. ​

Memory

The department alleged that the appellant had misdeclared the quantity of ‘Memory’ items, stating that 21 items were imported, whereas the actual quantity was 59. ​ The appellant argued that the Chartered Engineer’s report was erroneous, as it counted individual components instead of considering them as parts of a single unit. ​ The appellant provided a detailed explanation supported by a letter from the supplier and photographs of the imported goods, which clarified the correct method of counting the components. ​

Power Supply

The dispute regarding the ‘Power Supply’ items centered on the requirement of a Bureau of Indian Standards (BIS) license. ​ The Deputy Commissioner had ordered the absolute confiscation of one ‘Power Supply’ item, citing the absence of a valid BIS license. ​ The appellant contended that the item was a spare part for warranty replacement and, as per the Ministry of Electronics and Information Technology’s FAQ, spare parts are not subject to the Compulsory Registration Order unless notified separately as independent products. ​

Arguments Presented

Appellant’s Submissions

1. Misdeclaration of Quantity: The appellant argued that the Chartered Engineer had miscalculated the quantity of ‘Memory’ items by counting individual components instead of considering them as parts of a single unit. ​ The appellant provided evidence from the supplier, including photographs and a detailed explanation, to support their claim. ​
2. Misclassification: The appellant contended that the alleged misclassification of ‘Memory’ items was irrelevant, as the rate of duty remained unchanged, making the charge of misdeclaration inconsequential. ​
3. BIS License for Power Supply: The appellant argued that the ‘Power Supply’ items were spare parts for warranty replacement and, as per the Ministry’s guidelines, did not require a BIS license. ​

Department’s Submissions

1. Quantity Misdeclaration: The department argued that the appellant had previously admitted to a valuation mistake, making the supplier’s letter unreliable. ​
2. Misclassification: The department maintained that misdeclaration is punishable, even if it does not impact the rate of duty. ​
3. BIS License Requirement: The department asserted that the appellant failed to prove that the ‘Power Supply’ items were spares and not standalone units, which would require a valid BIS license. ​

Final Judgment

After considering the submissions from both parties, the Tribunal delivered its judgment on February 18, 2026. ​ The key points of the judgment are as follows:

1. Memory: The Tribunal found merit in the appellant’s explanation regarding the miscalculation of the quantity of ‘Memory’ items. ​ The communication from the supplier, supported by photographs, clearly demonstrated that the Chartered Engineer had erroneously counted individual components instead of considering them as parts of a single unit. ​ The Tribunal set aside the Commissioner (Appeals)’ order upholding the Deputy Commissioner’s decision on misdeclaration, duty demand, and confiscation of goods.
2. Power Supply: The Tribunal held that the Commissioner (Appeals) erred in ordering the confiscation of one ‘Power Supply’ item and imposing a penalty. ​ It was clarified that spare parts for warranty replacement are not subject to the Compulsory Registration Order, as per the Ministry’s guidelines. ​ The Tribunal set aside the confiscation and penalty imposed on the ‘Power Supply’ item. ​

Conclusion

The judgment in Customs Appeal No. ​ 50356 of 2025 highlights the importance of accurate documentation and clear communication in import transactions. It also underscores the need for authorities to thoroughly examine evidence and explanations provided by appellants before arriving at conclusions. ​ The Tribunal’s decision to set aside the orders of the Commissioner (Appeals) and the Deputy Commissioner serves as a reminder of the importance of fairness and due diligence in adjudicating customs disputes.

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Source: CESTAT Delhi

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