CESTAT Kolkata Ruled on Customs Confiscation and Penalties in Soybean Oil Import

Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 12.06.2026

CESTAT Kolkata Ruled on Customs Confiscation and Penalties in Soybean Oil Import

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata, recently delivered a significant judgment in the case involving M/s. Vinayak Oil & Fat Private Limited and M/s. Aegis Logistics Limited. The case revolved around the alleged excess import and clearance of crude degummed soybean oil (CDSBO), the subsequent confiscation of goods, and the imposition of penalties under the Customs Act, 1962.

Background of the Case

Parties Involved:

• Appellant 1: M/s. Vinayak Oil & Fat Pvt. Ltd., importer of CDSBO.
• Appellant 2: M/s. Aegis Logistics Ltd., custodian of the imported cargo.
• Respondent: Commissioner of Customs (Port), Kolkata.
• Goods in Question: 45.189 MTs of crude degummed soybean oil, valued at Rs. 22,85,958.

Key Events:

• Vinayak Oil & Fat Pvt. Ltd. imported 1,453.650 MT of CDSBO, which was stored at Aegis Logistics’ facility.
• Upon discharge, an excess quantity of 49.330 MT was found in the tank.
• The importer immediately instructed the custodian not to release the excess oil until customs duty was paid.
• Customs authorities detained the goods, and the importer executed a bond and bank guarantee for the differential duty.
• A show cause notice was issued, proposing confiscation and penalties.

Legal Proceedings and Arguments
Orders Passed
Order-in-Original (2019):

• Confiscated the excess goods under Sections 111(j), 111(i), and 111(m) of the Customs Act.
• Imposed a redemption fine of Rs. 6,00,000 and penalties of Rs. 10,38,396 each on both appellants under Section 114A.

Order-in-Appeal (2021):

• Upheld the confiscation and penalties for Vinayak Oil & Fat Pvt. Ltd.
• Set aside the penalty for Aegis Logistics but remanded the matter for reconsideration of penalties under other sections.

Appellants’ Contentions

• Vinayak Oil & Fat Pvt. Ltd.:
• No attempt was made to clear excess goods without duty payment.
• Promptly informed the custodian not to release the goods until duty was paid.
• Penalty under Section 114A was not justified as there was no intent to evade duty.
• Aegis Logistics Ltd.:
• Acted only as custodian and did not remove goods without duty payment.
• No duty was demanded from them, so penalty under Section 114A was not applicable.
• The remand by the appellate authority was beyond the scope of the appeal.

Tribunal’s Findings

• The Tribunal found no evidence of collusion or intent to evade duty by either appellant.
• The importer’s bona fides were established by their immediate communication to the custodian and customs authorities.
• The excess goods were cleared only after payment of the applicable customs duty.

The Tribunal held that:

1. The goods were not liable for confiscation.
2. The redemption fine and penalties under Section 114A were unsustainable.
3. The remand order for reconsideration of penalties on Aegis Logistics was not warranted.

Final Order and Impact

• The CESTAT set aside the confiscation, redemption fine, and penalties imposed on both appellants.
• Both appeals were allowed, granting consequential relief as per law.

Key Takeaways

1. Prompt Compliance Matters: Immediate action by importers to address excess goods and pay duties can demonstrate bona fide conduct and protect against harsh penalties.
2. Custodian’s Role: Mere custodianship, without evidence of collusion or intent to evade, does not attract penalties under Section 114A.
3. Scope of Appellate Authority: Remand orders must be within the legal framework and justified by the facts of the case.

Conclusion

This judgment reinforces the importance of transparency and prompt compliance in customs operations. It also clarifies the legal standards for confiscation and penalties, providing valuable guidance for importers, custodians, and customs practitioners.

Source: CESTAT Kolkata

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