CESTAT Chandigarh Sets Aside Penalties for Alleged Illegal Import of Chinese Fire Crackers

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

Date: 21.07.2026

CESTAT Chandigarh Sets Aside Penalties for Alleged Illegal Import of Chinese Fire Crackers

A significant legal development unfolded at the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chandigarh, where M/s Amit Kumar Bansal, proprietor of M/s AR Trading Co., successfully appealed against heavy penalties imposed for the alleged illegal import of Chinese fire crackers. This article provides a detailed overview of the case, the arguments presented, and the Tribunal’s final decision.

Background of the Case

On September 9, 2015, officers from the Directorate of Revenue Intelligence (DRI), Ludhiana, conducted a search at the business premises of M/s Amit Kumar Bansal. During the search, a stock of fire crackers and various imported goods such as toy guns, PVC film, mosquito killer packets, and kite balloons were found. The DRI alleged that the fire crackers were of Chinese origin—a banned import item in India.

The DRI recorded a statement from Mr. Amit Kumar Bansal, which, according to the appellant, was obtained under coercion and threat. Mr. Bansal asserted that no Chinese fire crackers were present on the premises and that all fire crackers were of Indian origin, purchased from M/s Naresh Trading Co., Delhi. He provided purchase bills and supporting documents to substantiate his claim.

Proceedings and Penalties

Despite the evidence provided, the original adjudicating authority imposed penalties under Section 112(a) and 112(b) (Rs. 2,00,000) and Section 114AA (Rs. 10,00,000) of the Customs Act. The Commissioner (Appeals), Jammu, upheld these penalties, leading to the present appeal before CESTAT Chandigarh.

Key Arguments by the Appellant

1. Coerced Statement: The appellant argued that the only evidence against him was a statement obtained under duress, which he later retracted.
2. No Physical Evidence: No Chinese fire crackers were actually recovered from the premises.
3. Legitimate Purchases: All fire crackers were purchased from a legitimate Indian supplier, with invoices and verification from the Excise and Taxation Department.
4. Lack of Proper Investigation: The authorities did not conduct any further investigation beyond the coerced statement.

Tribunal’s Observations and Decision

After hearing both parties and reviewing the evidence, the Tribunal made several critical observations:

• The entire case was built solely on the appellant’s statement, which was later retracted and not corroborated by any physical evidence.
• The authorities failed to consider the retraction and the supporting purchase documents provided by the appellant.
• There was a complete lack of investigation beyond the initial statement.

Final Order: The Tribunal concluded that the penalties imposed under Sections 112(a), 112(b), and 114AA were unsustainable in law. The appeal was allowed, and all penalties were set aside, granting consequential relief to the appellant.

Implications of the Judgment

This case underscores the importance of thorough investigation and the need for corroborative evidence in customs-related offenses. It also highlights the legal safeguards available to individuals against coerced confessions and arbitrary penalties.

Conclusion

The CESTAT Chandigarh’s decision in favor of M/s Amit Kumar Bansal sets a precedent for similar cases where penalties are imposed without substantial evidence. It reinforces the principle that justice must be based on facts and due process, not on uncorroborated statements or procedural lapses.

This outcome not only brings relief to the appellant but also serves as a reminder to enforcement agencies to adhere strictly to legal standards in their investigations and adjudications.

Source: CESTAT Chandigarh

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