CESTAT Mumbai- Marginal Excess in Marble Slab Measurement Attributed to Methodology, Not Mis-declaration

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

Date: 02.07.2026

CESTAT Mumbai- Marginal Excess in Marble Slab Measurement Attributed to Methodology, Not Mis-declaration

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) Mumbai recently delivered a significant order in the case of Bajrang Marble Co., addressing key issues related to the measurement, valuation, and penal consequences for imported marble slabs. This article provides a detailed overview of the case, the legal reasoning, and its implications for importers and the marble industry.

Background of the Case

Bajrang Marble Co., based in Navi Mumbai, imported honed polished marble slabs through the Nhava Sheva port. The consignments, declared under specific Bills of Entry, were subjected to a 100% physical examination by Customs.

The measurement of the slabs was conducted using the method of taking the maximum length and breadth of each slab, which resulted in a reported excess surface area of approximately 13%—slightly above the 10% tolerance limit prescribed by Standing Order No. 22/2010.

Customs Proceedings and Dispute

1. Valuation and Duty Demand:
   • Customs authorities rejected the declared transaction value and re-determined it, demanding a differential customs duty of Rs. 4,90,570, along with interest.
   • Additionally, a redemption fine of Rs. 25 lakhs and a penalty of Rs. 12.5 lakhs were imposed in the original orders.
2. Appellant’s Response:
   • Bajrang Marble Co. initially accepted the measurement report and agreed to pay the differential duty to avoid delays, but later clarified that this acceptance was not a concession on merits.
   • The company contested the imposition of fine and penalty, arguing that the excess was due to the measurement method and not due to any fraudulent intent or mis-declaration.
3. Appeal and Modification:
   • The Commissioner (Appeals) reduced the fine and penalty but did not eliminate them, prompting Bajrang Marble Co. to appeal further to CESTAT.

Key Legal Issues

The central question before CESTAT was whether the imposition of redemption fine and penalty was justified when the excess surface area was marginal and attributable to the measurement methodology, especially since the importer was willing to pay the differential duty from the outset.

Tribunal’s Analysis and Findings

1. Measurement Methodology:
   • The Tribunal acknowledged that measuring irregular or broken marble slabs by maximum length and breadth overstates the actual surface area.
   • The 10% tolerance limit in the Standing Order recognizes inherent measurement variations in the marble industry.
2. Intent and Mens Rea:
   • Penal provisions under Sections 111(l), 111(m), and 114A of the Customs Act require evidence of deliberate mis-declaration, suppression, or fraudulent intent.
   • The Tribunal found no evidence of dishonest conduct or intent to evade duty by Bajrang Marble Co.
3. Acceptance of Duty Liability:
   • The company’s willingness to pay the differential duty from the beginning indicated good faith.
   • The absence of a contemporaneous protest did not, in this context, amount to an admission of guilt or mis-declaration.
4. Marginal Excess Not Sufficient for Penalty:
   • The marginal excess (3% above the tolerance limit) was attributed to the measurement method, not to any attempt to evade customs duty.

Final Order and Implications

CESTAT set aside the redemption fine and penalty, holding that:

• The excess surface area was due to measurement methodology, not mis-declaration.
• No penal liability arises when the importer acts in good faith and promptly accepts duty liability.
• The appeal was allowed, and the orders imposing fine and penalty were quashed.

Conclusion

This decision underscores the importance of context and intent in customs enforcement. For importers, it highlights the need for transparent communication and prompt acceptance of legitimate duty liabilities. For authorities, it reinforces that penal provisions should be invoked only in cases of deliberate wrongdoing, not for marginal or technical discrepancies inherent to the industry.

Source: CESTAT Mumbai

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