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Tag: #CESTAT

CESTAT Hyderabad Ruled on Alleged Customs Duty Evasion and Misdeclared MRP
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 09.04.2026

CESTAT Hyderabad Ruled on Alleged Customs Duty Evasion and Misdeclared MRP

Adv Ravi Shekhar Jha

This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.

The legal case involving Celkon Impex Pvt Ltd and the Commissioner of Customs, Hyderabad, revolves around allegations of customs duty evasion through the misdeclaration of the Maximum Retail Price (MRP) on imported mobile phones. This case, adjudicated by the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Regional Bench at Hyderabad, highlights critical issues related to customs valuation, excise duty, and the legal interpretation of related entities.

Background of the Case

M/s Celkon Impex Pvt Ltd, along with its distributor M/s Big C Mobiles Pvt Ltd and individual directors, faced allegations of evading customs duty by declaring a lower Retail Sale Price (RSP) for imported mobile phones. The Customs Department alleged that the appellants declared an RSP below ₹2,000 at the time of import to pay a lower Countervailing Duty (CVD). Subsequently, the MRP labels on the mobile phones were allegedly altered to reflect a higher price after customs clearance.

The case involved multiple appeals:
1. Customs Appeal No. 30111 of 2016: Filed by M/s Celkon Impex Pvt Ltd.
2. Customs Appeal No. 30112 of 2016: Filed by Y. Guruswamy Naidu, Managing Director of Celkon Impex Pvt Ltd.
3. Customs Appeal No. 30113 of 2016: Filed by M. Balachandrudu, Director of Big C Mobiles Pvt Ltd.
4. Customs Appeal No. 30114 of 2016: Filed by M/s Big C Mobiles Pvt Ltd.
5. Customs Appeal No. 30115 of 2016: Filed by K. Krishnapavan, Director of Big C Mobiles Pvt Ltd.
Key Allegations

The Customs Department alleged that:
- Celkon Impex Pvt Ltd intentionally declared a lower MRP for six models of mobile phones during import to evade higher CVD.
- M/s Big C Mobiles Pvt Ltd altered the MRP labels on the mobile phones after customs clearance, increasing the price above ₹2,000.
- Celkon Impex Pvt Ltd and M/s Big C Mobiles Pvt Ltd were related entities, and the alteration of MRP was a joint conspiracy.
Defense Arguments

The appellants contested the allegations on several grounds:
1. No Evidence of Relationship Between Celkon Impex and Big C Mobiles: The appellants argued that M/s Big C was merely a distributor and not a related entity. They cited the lack of evidence to prove mutual interest or flow-back of benefits between the two companies.
2. Improper Interpretation of Statements: The appellants claimed that the statements of individuals, including directors and managers, were misinterpreted by the Customs Department.
3. Inapplicability of Rule 5 of Central Excise Rules, 2008: The appellants argued that Rule 5 does not apply to them as they are neither manufacturers nor involved in altering the MRP.
4. Insufficient Evidence from Market Surveys: The appellants contended that the market survey conducted by the Customs Department lacked tangible evidence and relied on assumptions and photographs.
5. Legal Precedents: The appellants cited several judgments to support their case, including ITC Ltd vs. CCE, Hindustan Coca Cola Beverages Pvt Ltd vs. CCE, and others, emphasizing the lack of legal provisions for redetermining RSP under the Customs Act.
CESTAT’s Observations and Final Decision

The tribunal examined the evidence and legal arguments presented by both parties. Key observations included:
- Relationship Between Entities: The tribunal found that while there were common directors between Celkon Impex and Big C Mobiles, this alone was insufficient to establish that the two entities were related for customs valuation purposes. The corporate veil could not be pierced as there was no evidence of flow-back or mutual interest.
- Market Survey Evidence: The tribunal noted that the market survey conducted by the Customs Department lacked proper documentation and relied on photographs, which were not sufficient to prove the allegations.
- Legal Provisions: The tribunal emphasized that Rule 5 of the Central Excise Rules, 2008, was not applicable to the appellants as they were not manufacturers. Furthermore, the tribunal highlighted that any post-importation alteration of MRP should be addressed under the Central Excise Act, not the Customs Act.
- Judicial Precedents: The tribunal referred to several judgments that supported the appellants’ arguments, including cases that established the lack of machinery provisions for redetermining RSP under the Customs Act.
Based on these findings, the tribunal concluded that the evidence was insufficient to prove intentional misdeclaration of RSP by the appellants. The demand for differential CVD, penalties, and confiscation was deemed unsustainable. The tribunal allowed the appeals and set aside the impugned order.

Key Takeaways
1. Importance of Evidence: The case underscores the necessity of tangible and substantial evidence in establishing allegations of customs duty evasion.
2. Legal Interpretation of Related Entities: Common directors or cross-shareholding alone do not establish a relationship between entities for customs valuation purposes.
3. Applicability of Legal Provisions: The case highlights the importance of applying the correct legal provisions, as post-importation alterations may fall under the purview of the Central Excise Act rather than the Customs Act.
4. Judicial Precedents: Previous judgments play a crucial role in shaping the outcome of legal cases, especially in complex matters involving customs and excise laws.
Conclusion

The Celkon Impex case serves as a significant example of the complexities involved in customs and excise law. It highlights the need for clear evidence, proper application of legal provisions, and consideration of judicial precedents in resolving disputes. The CESTAT’s decision to allow the appeals and set aside the impugned order reinforces the principle that allegations must be substantiated with concrete evidence and legal justification.

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Source: CESTAT Hyderabad

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April 9, 2026
CESTAT Ahmedabad Sets Aside Penalty on Technical Grade Urea Imports
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 08.04.2026

CESTAT Ahmedabad Sets Aside Penalty on Technical Grade Urea Imports

Adv Ravi Shekhar Jha

This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.

In the realm of international trade, compliance with import regulations is crucial for businesses to avoid penalties and ensure smooth operations. This article delves into the case of Deep Traders, a Gujarat-based company, and its legal battle with the Commissioner of Customs regarding the import of Technical Grade Urea (TGU) without proper licensing. The case highlights the complexities of import policies, the role of State Trading Enterprises (STEs), and the interpretation of legal provisions under the Customs Act, 1962.

Background of the Case

Deep Traders imported Technical Grade Urea (TGU) under Customs Tariff Heading (CTH) 31021000 on a high sea sales basis from State Trading Enterprises (MMTC) during the period April 2012 to April 2015. However, the company did not possess the requisite license from the Directorate General of Foreign Trade (DGFT) for importing urea, which led to investigations by the Directorate of Revenue Intelligence (DRI).

Key Allegations
1. Violation of Foreign Trade Policy: The import policy for urea under ITC(HS) 31021000 was amended in 2015, allowing imports by STEs and industrial users under specific conditions. Deep Traders was accused of contravening these provisions.
2. Confiscation and Penalty: Two show-cause notices were issued in 2018 and 2019, proposing confiscation of the imported goods valued at over ₹53 lakh and imposing penalties under Sections 111(d) and 112(a)(i) of the Customs Act, 1962.
Legal Proceedings

The case went through multiple levels of adjudication:

Adjudication by Additional Commissioner of Customs

The Additional Commissioner of Customs ordered the confiscation of the goods under Section 111(d) of the Customs Act, 1962, but did not impose redemption fines as the goods were not available for confiscation. Penalties of ₹2,25,000 and ₹1,31,912 were imposed on Deep Traders.

Appeal to Commissioner (Appeals)

Deep Traders challenged the adjudication orders, arguing that:
- They had obtained permission from the Ministry of Chemicals and Fertilizers to import 1500 MT of TGU for industrial use.
- The agreement with MMTC did not prohibit high sea sales.
- As traders, they were not required to provide input-output ratios for TGU consumption.
- The goods were cleared by Customs after payment of appropriate duties, implying no revenue loss.
The Commissioner (Appeals) rejected their arguments and upheld the confiscation and penalties.

Appeal to the Customs, Excise & Service Tax Appellate Tribunal (CESTAT)

Deep Traders further appealed to the CESTAT, presenting the following arguments:
- The term “through” in the ITC(HS) policy allows imports via STEs, not necessarily by STEs.
- High sea sales are a recognized practice in international trade and are not prohibited under the policy.
- The confiscation and penalties were unjustified as the imports were made in compliance with the policy.
Tribunal’s Decision

The Tribunal analyzed similar cases, including:
- Shiv Krupa Ispat Pvt. Ltd. vs. CCE, Nasik
- Asoj Soft Caps Pvt. Ltd. vs. Commissioner of Customs, Ahmedabad
- Sunita Commercials Pvt. Ltd. vs. Commissioner of Customs, Mundra
Key Findings
1. Interpretation of “Through” vs. “By”: The Tribunal clarified that the term “through” in the ITC(HS) policy means that imports can be facilitated by STEs, not necessarily conducted directly by them.
2. High Sea Sales: The Tribunal noted that high sea sales are a standard practice and are permissible under the policy.
3. No Revenue Loss: Since the goods were cleared by Customs after payment of duties, there was no revenue loss to the government.
4. No Grounds for Confiscation or Penalty: The Tribunal found no evidence of policy violation or grounds for imposing penalties under Sections 111(d) and 112(a)(i) of the Customs Act, 1962.
Final Order

The Tribunal set aside the impugned orders, revoked the penalties, and allowed the appeals filed by Deep Traders.

Implications of the Case

This case serves as a precedent for similar disputes involving import policies and high sea sales. It underscores the importance of:
- Clear Policy Interpretation: Ambiguities in policy language, such as the distinction between “through” and “by,” can lead to legal disputes.
- Documentation and Compliance: Importers must ensure they have the necessary permissions and comply with all conditions to avoid penalties.
- Legal Recourse: Businesses should not hesitate to challenge decisions that they believe are unjust, especially when supported by precedents.
Conclusion

The Deep Traders case highlights the intricate nature of import regulations and the importance of understanding and adhering to them. It also demonstrates the role of legal systems in resolving disputes and ensuring fair treatment for businesses. As international trade continues to grow, cases like these emphasize the need for clarity in policy and the significance of legal advocacy in protecting business interests.

Source: CESTAT Ahmedabad

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April 8, 2026
CESTAT Kolkata Sets Aside Vehicle Confiscation and Penalty
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 07.04.2026

CESTAT Kolkata Sets Aside Vehicle Confiscation and Penalty

Adv Ravi Shekhar Jha

This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.

In a significant ruling, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Eastern Zonal Bench, Kolkata, has set aside the confiscation of a vehicle and the imposition of a penalty on its owner, Appellant, in a case involving the alleged transportation of foreign-origin goods. The judgment, delivered by Hon’ble Member Judicial, highlights the importance of evidence in proving the foreign origin of goods under the Customs Act, 1962.

Background of the Case

The case originated on October 5, 2020, when a vehicle bearing registration number BR01GH-9594 was intercepted near Maithi Toll Plaza on Darbhanga Road, Bihar. The driver, informed authorities that the vehicle was loaded with goods described as “Khesari Packet 100×50” on an invoice issued by M/s. Gupta Gaila Bhandar and General Store. However, upon further inspection, 100 jute bags containing green peas and yellow peas, weighing 4,300 kilograms, were discovered in the vehicle. Two traders present during the inspection opined that the peas appeared to be of foreign origin, with a retail price of Rs. 60-70 per kilogram.

The driver admitted during interrogation that he was transporting the goods without valid documentation and was using his elder brother’s driving license. He also revealed that the vehicle belonged to the appellant, and that the business activities of the vehicle were managed by his brother. The driver further confessed to transporting Nepali peas for extra money.

Following the seizure of the vehicle under Section 110 of the Customs Act, 1962, a Show Cause Notice was issued to the appellant, proposing the confiscation of the vehicle and the imposition of a penalty under Section 112(b) of the Act. The adjudicating authority imposed a redemption fine of Rs. 2,45,073/- and a penalty of Rs. 25,000/- on the appellant. The Commissioner (Appeals) upheld this decision, prompting the appellant to challenge the order before the CESTAT.

Tribunal’s Observations and Final Order 

The case was heard on April 6, 2026, with no representation from the appellant. Despite this, the tribunal proceeded to examine the matter, noting that the issue at hand was limited to the confiscation of the vehicle and the imposition of the penalty.

The tribunal observed that the sole allegation against the appellant was the transportation of goods allegedly of foreign origin. However, upon reviewing the records, the tribunal found no evidence to substantiate the claim that the goods were of foreign origin. It emphasized that under Section 123 of the Customs Act, 1962, the burden of proof lies with the Revenue to establish the foreign origin of goods that are not notified under the Act. In this case, the Revenue failed to provide any such evidence.

In light of the lack of proof, the tribunal held that the confiscation of the vehicle and the imposition of the redemption fine and penalty were unwarranted. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief.

Key Takeaways
1. Burden of Proof Under Section 123: The judgment underscores the principle that the onus of proving the foreign origin of goods lies with the Revenue, especially when the goods are not notified under Section 123 of the Customs Act, 1962.
2. Importance of Evidence: The tribunal highlighted the necessity of concrete evidence to support allegations of foreign origin, emphasizing that mere suspicion or opinion is insufficient.
3. Protection of Rights: The ruling serves as a reminder of the importance of safeguarding the rights of individuals and businesses against unwarranted penalties and confiscations.
Conclusion

The CESTAT’s decision in this case is a significant development in customs law, reinforcing the importance of evidence-based adjudication. It provides clarity on the application of Section 123 of the Customs Act, 1962, and serves as a precedent for similar cases in the future. The judgment not only upholds the principles of justice but also ensures that individuals are not penalized without proper evidence.

Source: CESTAT Kolkata

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April 7, 2026
CESTAT Bangalore Sets Aside Penalty on Customs Broker
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 06.04.2026

CESTAT Bangalore Sets Aside Penalty on Customs Broker

Adv Ravi Shekhar Jha

This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Bangalore, recently delivered a significant judgment in the case of M/s. Cargo Links vs. Commissioner of Customs, Mangaluru. The case revolved around allegations of misconduct and non-compliance with the Customs Broker Licensing Regulations (CBLR), 2018, leading to the imposition of a penalty of Rs. 10,000 on the customs broker. However, the tribunal ultimately set aside the penalty, providing relief to the appellant. This article delves into the details of the case, the arguments presented, and the tribunal’s reasoning behind its decision.

Background of the Case

M/s. Cargo Links, a licensed customs broker, was engaged by M/s. Reliable Cashew Company Pvt. Ltd. (RCCPL) for the import of 27.670 MT of cashew kernels from Ivory Coast. The consignment arrived at New Mangalore Port on June 26, 2019, under a bill of lading dated May 22, 2019. However, due to changes in the import policy under DGFT Notification No. 8/2015-2020 dated June 12, 2019, the customs duty on cashew kernels was significantly increased, making the import economically unviable for RCCPL.

RCCPL decided to cancel the original sale contract and sought to re-export the goods to Dubai without clearing them. The customs broker, M/s. Cargo Links, facilitated the process by assisting RCCPL in obtaining a No Objection Certificate (NOC) from customs authorities, citing delays in shipment as the reason for the re-export request.

Allegations Against the Customs Broker 

The customs broker was issued a show-cause notice on June 25, 2020, under Regulation 17 of CBLR, 2018, alleging violations of multiple regulations, including 10(d), 10(e), 10(i), 10(m), 10(q), and 13(2). The inquiry officer found the customs broker guilty of all charges, but the Commissioner of Customs dropped most of them, except for Regulation 10(m). A penalty of Rs. 10,000 was imposed under Regulation 18 of CBLR, 2018, for allegedly failing to exercise due diligence in verifying the correctness of the information provided to the importer.

Arguments Presented by the Appellant 

The appellant challenged the penalty on several grounds:
1. Contradictory Findings: The appellant argued that the Commissioner had dropped the charge under Regulation 10(d) but still upheld the charge under Regulation 10(m), which was based on the same findings. This inconsistency indicated a lack of application of mind and rendered the order self-contradictory.
2. Bona Fide Actions: The appellant contended that they acted in good faith based on the import documents provided by RCCPL. They had no reason to suspect any illegality or non-compliance on the part of the importer.
3. No Evidence of Malafide Intent: The appellant emphasized that there was no evidence to suggest any malafide intent or culpable mental state on their part. They argued that their duty as a customs broker was limited to disclosing primary facts, as established by Supreme Court judgments in Calcutta Discount Co. v. ITO and Parashuram Pottery Works Co. Ltd v. ITO.
4. Precedents: The appellant cited several tribunal decisions, including Advent Shipping Agency vs. Principal Commissioner of Customs (A&A), Kolkata and Perfect Cargo & Logistics vs. C.A. (Airport & General), New Delhi, to support their case.
Tribunal’s Observations and Decision

After hearing both sides and reviewing the records, the tribunal made the following observations:
1. Leniency in Importer’s Case: The tribunal noted that the adjudicating authority had taken a lenient view in the proceedings against the importer, allowing the re-export of goods despite evidence of misrepresentation. The tribunal emphasized that the importer’s decision to cancel the contract was based on economic reasons, and the customs broker had acted on the importer’s instructions.
2. Contradictory Charges: The tribunal agreed with the appellant that the Commissioner’s decision to drop the charge under Regulation 10(d) but uphold the charge under Regulation 10(m) was contradictory. Since both charges were based on the same findings, dropping one should have automatically led to the dropping of the other.
3. Bona Fide Belief: The tribunal accepted the appellant’s argument that they had acted in good faith and were under a bona fide belief that the importer’s actions were legally permissible. There was no evidence to suggest that the customs broker had acted with malafide intent.
4. Precedents: The tribunal referred to previous judgments, including ZTE Corporation vs. Commissioner and Al-Fretlmim Engineering vs. Commissioner, which supported the principle that re-export requests should not be denied if the importer does not wish to proceed with the import due to economic reasons.
Final Order

In light of the above observations, the tribunal concluded that the imposition of a penalty on M/s. Cargo Links for violating Regulation 10(m) of CBLR, 2018, was not sustainable. The impugned order was set aside, and the appeal was allowed with consequential relief as per the law.

Key Takeaways
1. Importance of Consistency in Adjudication: The tribunal highlighted the need for consistency in adjudication, emphasizing that contradictory findings undermine the credibility of the decision-making process.
2. Bona Fide Actions of Customs Brokers: The judgment underscores the principle that customs brokers should not be penalized for acting in good faith based on the information provided by importers, as long as there is no evidence of malafide intent.
3. Relevance of Precedents: The tribunal’s reliance on previous judgments demonstrates the importance of established legal principles in ensuring fair and just outcomes.
4. Economic Considerations in Import Decisions: The tribunal recognized that importers should not be forced to proceed with transactions that are economically unviable, provided they comply with legal requirements.
Conclusion

The CESTAT’s decision in this case serves as a reminder of the importance of fairness and consistency in adjudication under the Customs Act and CBLR, 2018. It also highlights the critical role of customs brokers in facilitating international trade and the need to protect them from unwarranted penalties when they act in good faith. This judgment is likely to serve as a precedent for similar cases in the future, ensuring that customs brokers are not held liable for actions taken without malafide intent.

Source: CESTAT Bangalore

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April 6, 2026
CESTAT Delhi Sets Aside Revocation of Customs Broker License
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 04.04.2026

CESTAT Delhi Sets Aside Revocation of Customs Broker License

Adv Ravi Shekhar Jha

This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, recently delivered a significant judgment in the case of M/s Vogue Logistics Pvt. Ltd. vs. Commissioner of Customs (Airport & General), New Delhi. The Tribunal set aside the revocation of the customs broker license of Vogue Logistics Pvt. Ltd., citing the vagueness of the show cause notice issued under the Customs Brokers Licensing Regulations, 2018 (CBLR, 2018). This decision, delivered on March 19, 2026, has important implications for the enforcement of customs regulations and the rights of customs brokers.

Background of the Case

The case arose from an Order-in-Original dated September 24, 2024, issued by the Commissioner of Customs (Airport & General), New Delhi. The order revoked the customs broker license of M/s Vogue Logistics Pvt. Ltd., forfeited its security deposit, and imposed penalties for alleged violations of Regulations 10(d), 10(e), and 10(q) of the CBLR, 2018. These regulations require customs brokers to advise clients on compliance with customs laws, exercise due diligence in verifying information, and cooperate with customs authorities during investigations.

The appellant challenged the order, arguing that the show cause notice issued on April 8, 2024, was vague and failed to provide specific reasons for the alleged violations. The appellant contended that the notice merely reproduced facts from an earlier show cause notice issued under the Customs Act, 1962, without clearly explaining how the alleged violations were attributable to the customs broker.

Tribunal’s Observations

The Tribunal, comprising Hon’ble Justice President and Hon’ble Member Technical, carefully examined the show cause notice and the submissions made by both parties. The Tribunal noted that the notice was indeed vague, as it failed to specify the allegations against the appellant concerning the alleged violations of the CBLR, 2018. Paragraph 3 of the notice merely reproduced facts from the earlier show cause notice issued under the Customs Act, 1962, while paragraphs 4 and 5 broadly alleged violations without providing detailed reasoning.

The Tribunal referred to its earlier decision in M/s Entire Logistics Pvt. Ltd. vs. Commissioner of Customs (Airport & General), New Delhi, where a similar issue was raised. In that case, the Tribunal had set aside the impugned order, stating that the show cause notice was the foundation of the case and must clearly spell out the allegations. The Delhi High Court had subsequently upheld the Tribunal’s decision, emphasizing that vague show cause notices violate the principles of natural justice.

Key Takeaways from the Judgment
1. Vagueness of Show Cause Notices: The Tribunal reiterated that a show cause notice must clearly specify the allegations and the reasons for alleged violations. A vague notice that fails to provide sufficient details deprives the noticee of a fair opportunity to defend themselves.
2. Principles of Natural Justice: The judgment emphasized that orders based on vague show cause notices violate the principles of natural justice. The Tribunal and the Delhi High Court both highlighted the importance of providing specific allegations in the notice to ensure a fair adjudication process.
3. Precedent from Similar Cases: The Tribunal relied heavily on its previous decision in the M/s Entire Logistics Pvt. Ltd. case, which was upheld by the Delhi High Court. This demonstrates the importance of consistency in judicial decisions and the binding nature of precedents.
4. Implications for Customs Brokers: The judgment underscores the need for customs authorities to adhere to procedural fairness when initiating action against customs brokers. It also provides a strong precedent for customs brokers to challenge vague or insufficiently detailed show cause notices.
Final Decision

In light of the above observations, the Tribunal concluded that the impugned order dated September 24, 2024, deserved to be set aside. The appeal filed by M/s Vogue Logistics Pvt. Ltd. was allowed, and the revocation of its customs broker license was overturned.

Conclusion

The CESTAT’s decision in the Vogue Logistics case is a landmark judgment that reinforces the importance of procedural fairness in regulatory enforcement. It serves as a reminder to customs authorities to ensure that show cause notices are clear, specific, and adequately detailed to uphold the principles of natural justice. For customs brokers, this judgment provides a strong precedent to challenge any arbitrary or vague actions taken against them. As the regulatory landscape continues to evolve, this case highlights the critical role of judicial oversight in ensuring fairness and transparency in administrative processes.

Source: CESTAT Delhi

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April 4, 2026
CESTAT Kolkata Overturns Customs Duty Demand in Valuation and Limitation Dispute
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 03.04.2026

CESTAT Kolkata Overturns Customs Duty Demand in Valuation and Limitation Dispute

Adv Ravi Shekhar Jha

This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Kolkata, recently delivered a significant judgment in the case of M/s Rimjhim Ispat Ltd. vs. Commissioner of Customs (Preventive), Kolkata. The case revolved around the inclusion of freight and insurance charges in the assessable value of imported goods under Rule 10(2) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. The tribunal’s decision, pronounced on March 25, 2026, has clarified key aspects of customs valuation and the application of extended periods of limitation under the Customs Act, 1962.

Case Background

M/s Rimjhim Ispat Ltd., a manufacturer of iron and steel products based in Uttar Pradesh, imports Ferro Silicon from Bhutan for its production processes. These imports are made through the Land Customs Station (LCS) at Jaigaon, located at the Indo-Bhutan border. The goods are invoiced on a Free on Board (FOB) basis, which the appellant argued was equivalent to the Cost, Insurance, and Freight (CIF) value due to the unique geographical proximity of the Bhutanese export point (Phuentsholing Customs Station) and the Indian import point (Jaigaon Customs Station).

The dispute arose when the Commissioner of Customs (Preventive), Kolkata, issued an Order-in-Original (No. 10/Cus/CC(P)/WB/2023-24 dated October 31, 2023), directing the reassessment of the imported goods. The order mandated the inclusion of 20% of the FOB value as freight charges and 1.125% of the FOB value as insurance charges in the assessable value. This resulted in a demand for Rs. 1,08,49,409/- in differential Integrated Goods and Services Tax (IGST), along with interest and an equal amount of penalty under Section 114A of the Customs Act.

Key Issues in the Case

The case revolved around two primary issues:

1. Inclusion of Freight and Insurance Charges in Assessable Value 

The Revenue argued that the inclusion of freight and insurance charges was mandatory under Rule 10(2) of the Customs Valuation Rules, 2007. The appellant contended that the FOB value was effectively the CIF value due to the absence of a no-man’s land between the Bhutanese and Indian borders. They argued that no additional transportation or insurance costs were incurred during the import process.

2. Invocation of Extended Period of Limitation 

The Revenue issued a show-cause notice on June 7, 2022, alleging suppression and willful misstatement by the appellant regarding the assessable value of the imported goods. The appellant argued that the extended period of limitation was not applicable, as they had disclosed all relevant information in the invoice and Bill of Entry. They claimed the case was based on a difference in interpretation rather than deliberate suppression.

Arguments Presented

Appellant’s Arguments
1. FOB vs. CIF Value: The appellant argued that the FOB value was effectively the CIF value due to the geographical proximity of the export and import points. They claimed that no transportation or insurance costs were incurred between the Phuentsholing Customs Station in Bhutan and the Jaigaon LCS in India.
2. No-Man’s Land: The appellant emphasized that there was no no-man’s land between the two borders, and the goods were directly transported from the Bhutanese exporter to the Indian importer without any transit time or additional costs.
3. Extended Limitation Period: The appellant contended that the extended period of limitation was not applicable, as they had disclosed all relevant information in the invoice and Bill of Entry. They argued that the case was based on a difference in interpretation rather than suppression or willful misstatement.
4. Revenue Neutrality: The appellant highlighted that the case was revenue-neutral, as they were eligible to claim credit for any duty paid on transportation and insurance costs.
Revenue’s Arguments
1. Mandatory Inclusion of Freight and Insurance: The Revenue argued that the inclusion of freight and insurance charges was legally mandated under Rule 10(2) of the Customs Valuation Rules, 2007. They contended that the appellant failed to add 20% of the FOB value as freight charges and 1.125% as insurance charges.
2. Suppression and Misstatement: The Revenue alleged that the appellant had deliberately misdeclared the assessable value by not including transportation and insurance costs, thereby evading IGST.
Tribunal’s Observations

The tribunal carefully analyzed the arguments and evidence presented by both parties. The key observations were:
1. FOB vs. CIF Value: The tribunal acknowledged the appellant’s argument that the FOB value was equivalent to the CIF value due to the geographical proximity of the export and import points. However, it noted that the appellant failed to provide sufficient documentary evidence to substantiate this claim. The tribunal emphasized that oral arguments and assumptions were insufficient to meet legal requirements.
2. Extended Limitation Period: The tribunal held that the extended period of limitation under Section 28(4) of the Customs Act could only be invoked in cases of deliberate default. It found that the appellant had disclosed all relevant information in the invoice and Bill of Entry, including the FOB value and the mention of NIL freight charges. The tribunal concluded that the Revenue failed to establish suppression or willful misstatement on the part of the appellant.
3. Revenue Neutrality: The tribunal noted that the case was revenue-neutral, as the appellant was eligible to claim credit for any duty paid on transportation and insurance costs. This further weakened the Revenue’s claim of suppression or willful misstatement.
Final Decision

The tribunal allowed the appeal filed by M/s Rimjhim Ispat Ltd. and set aside the order of the lower authority. It concluded that the extended period of limitation was not applicable and that the inclusion of freight and insurance charges in the assessable value was not justified in the absence of concrete documentary evidence.

Implications of the Ruling

This landmark judgment has significant implications for importers and the customs authorities:
1. Clarity on Customs Valuation Rules: The ruling provides clarity on the application of Rule 10(2) of the Customs Valuation Rules, particularly regarding the inclusion of freight and insurance charges in the assessable value.
2. Strict Interpretation of Suppression: The tribunal’s emphasis on the need for concrete evidence to establish suppression or willful misstatement sets a precedent for future cases.
3. Revenue Neutrality Considerations: The judgment highlights the importance of considering revenue neutrality in cases involving alleged duty evasion.
Conclusion

The CESTAT’s decision in the case of M/s Rimjhim Ispat Ltd. underscores the importance of transparency, proper documentation, and adherence to customs valuation rules. It also serves as a reminder to customs authorities to exercise caution when invoking extended periods of limitation and alleging suppression or willful misstatement.

Source: CESTAT Kolkata

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April 3, 2026
CESTAT Chennai- Imported Rutile Sand Classified as “Ores,” Exemption and Penalties Set Aside
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 03.04.2026

CESTAT Chennai- Imported Rutile Sand Classified as “Ores,” Exemption and Penalties Set Aside

Adv Ravi Shekhar Jha

This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Chennai, recently delivered a significant judgment in the case of M/s. Sri Ragavendra Minerals v. Commissioner of Customs, Chennai II Commissionerate (Customs Appeal No. 41582 of 2016). The case revolved around the classification of imported goods—whether they were “ores” or “concentrates”—and the eligibility for exemption from Additional Duty of Customs under Notification No. 4/2006-CE and Notification No. 12/2012-CE. The Tribunal’s decision has set a precedent for similar disputes in the future.

Background of the Case

M/s. Sri Ragavendra Minerals, a company engaged in the import and trading of mineral products such as rutile ore/rutile sand, imported consignments of rutile sand from suppliers in Malaysia, Sri Lanka, and Australia during the period January 2011 to October 2012. The goods were declared in the Bills of Entry as “Rutile Ore / Rutile Sand / Titanium Ore (Rutile 92)” under Chapter Heading 2614, claiming exemption from Central Excise Duty and Additional Duty of Customs on the basis that the goods were “ores.”

The imports were initially assessed and cleared by Customs authorities, granting the exemption. However, subsequent investigations by the Directorate of Revenue Intelligence (DRI) led to the issuance of a Show Cause Notice on December 21, 2015, alleging that the imported goods were “titanium concentrates” rather than “ores.” The DRI claimed that the appellant had misdeclared the goods to avail ineligible exemptions, and demanded differential duty of ₹1,32,91,695/- along with interest, confiscation of goods under Section 111(m) of the Customs Act, 1962, and a penalty equal to the duty under Section 114A of the Act.

The Commissioner of Customs, Chennai, upheld the DRI’s allegations in Order-in-Original No. 46984/2016 dated April 29, 2016. Aggrieved by this decision, M/s. Sri Ragavendra Minerals filed an appeal before the CESTAT.

Key Issues in the Case 

The Tribunal identified the following key issues for determination:
1. Classification of Goods: Whether the imported goods were “ores” or “concentrates” under Chapter 26 of the Customs Tariff.
2. Eligibility for Exemption: Whether the goods qualified for exemption under Notification No. 4/2006-CE and Notification No. 12/2012-CE.
3. Extended Period of Limitation: Whether the extended period of limitation under Section 28 of the Customs Act was applicable.
4. Confiscation and Penalty: Whether the goods were liable for confiscation and whether penalties under Section 114A were justified.
Arguments Presented

Appellant’s Arguments 

The appellant, represented by Advocate, argued that the goods were naturally occurring rutile sand separated from beach sand through physical processes such as gravity separation, which are normal to the metallurgical industry. The appellant contended that these processes do not alter the essential character of the mineral and cannot transform an ore into a concentrate.

The appellant also presented evidence, including load-port documents, commercial invoices, certificates of origin, and chemical analysis/test certificates, all of which consistently described the goods as “rutile ore,” “rutile sand,” or “titanium ore (rutile 92).” Furthermore, the appellant highlighted that Customs authorities had tested one consignment and accepted the goods as “rutile ore,” which contradicted the Department’s subsequent claim that the goods were “concentrates.”

Respondent’s Arguments 

The Department, represented by Authorized Representative, argued that the high titanium dioxide (TiO₂) content of the imported rutile indicated that the goods were upgraded mineral concentrates. The Department relied on technical literature, including USGS reports, which described rutile as a titanium mineral concentrate. It was also argued that exemption notifications must be strictly construed, and the appellant was not entitled to the exemption if the goods were found to be concentrates.

Tribunal’s Findings

After hearing both sides and reviewing the evidence, the Tribunal made the following observations:
1. Classification of Goods: The Tribunal analyzed Chapter Notes to Chapter 26 of the Customs Tariff and the HSN Explanatory Notes. It concluded that the imported goods were “ores” and not “concentrates.” The HSN Notes clearly state that ores may undergo physical or mechanical processes such as washing, screening, and gravity separation without losing their character as ores. Concentrates, on the other hand, require special treatments like roasting, acid leaching, or chemical beneficiation, none of which were proven in this case.
2. Exemption Eligibility: Since the goods were classified as “ores,” the appellant was entitled to the exemption under Notification No. 4/2006-CE and Notification No. 12/2012-CE. The Tribunal held that the denial of exemption by the adjudicating authority was unsustainable.
3. Extended Period of Limitation: The Tribunal found no evidence of wilful misstatement or suppression of facts by the appellant. The goods were declared truthfully based on supplier documents and test certificates, which were scrutinized by Customs at the time of assessment. The extended period of limitation under Section 28 of the Customs Act was therefore not applicable.
4. Confiscation and Penalty: The Tribunal held that the charge of misdeclaration under Section 111(m) was not established, and the goods were not liable for confiscation. Furthermore, the absence of wilful misstatement or suppression meant that the penalty under Section 114A could not be sustained.
Final Decision

The Tribunal set aside the impugned Order-in-Original in its entirety, allowing the appeal with consequential relief to the appellant. The judgment clarified that the goods imported by M/s. Sri Ragavendra Minerals were “ores” and not “concentrates,” and the appellant was entitled to the exemption under the relevant notifications.

Significance of the Judgment

This landmark decision has far-reaching implications for the classification of mineral imports under the Customs Tariff. It reinforces the principle that classification must be based on the actual nature of the imported goods, supported by consignment-specific evidence, rather than generalized technical literature or assumptions. The judgment also underscores the importance of adhering to statutory provisions and HSN Explanatory Notes in determining the classification of goods.

Furthermore, the Tribunal’s observations on the extended period of limitation and the requirement of wilful misstatement or suppression for invoking penalties provide clarity on the legal standards for such actions. This decision is expected to serve as a guiding precedent for similar disputes in the future, ensuring that importers are not penalized unjustly based on assumptions or a change in the Department’s interpretation of the law.

Conclusion

The CESTAT’s ruling in favor of M/s. Sri Ragavendra Minerals is a victory for fair and transparent adjudication in customs matters.

Source: CESTAT Chennai

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April 3, 2026
CESTAT Chennai Allows Conversion of Shipping Bills u/s 149
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 02.04.2026

CESTAT Chennai Allows Conversion of Shipping Bills u/s 149

Adv Ravi Shekhar Jha

This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Chennai, recently delivered a pivotal judgment in the case of M/s. YSI Automotive India Pvt. Ltd. vs. The Commissioner of Customs, Chennai-IV Commissionerate. This case revolved around the conversion of Shipping Bills under the Export Promotion Capital Goods (EPCG) scheme, and the Tribunal’s decision has set a significant precedent for exporters navigating similar challenges.

Case Overview

The appeal was filed by M/s. YSI Automotive India Pvt. Ltd., represented by its Managing Director, against the Order-in-Original No. 08/2023 dated 03.01.2023, issued by the Commissioner of Customs, Chennai-IV. The dispute arose when the appellant sought to amend their Shipping Bills or obtain a ‘No Objection Certificate’ under Section 149 of the Customs Act, 1962. The request was to convert their Shipping Bills from Drawback Shipping Bills to Drawback Shipping Bills with EPCG Authorization, as their exports through M/s. Glovis India Ltd. qualified as third-party exports.

Initially, the Commissioner of Customs rejected the request through a non-speaking order (Order-in-Original No. 73204/2020 dated 16.01.2020). This prompted the appellant to approach the Hon’ble High Court, which quashed the Commissioner’s order and directed the Commissioner to reconsider the matter and pass a speaking order. Despite this directive, the Commissioner once again rejected the appellant’s claim, citing procedural issues related to the lack of physical examination of the goods under the EPCG scheme.

Key Legal Issue 

The central legal question in this case was whether the mention of the EPCG license number on the Shipping Bills was mandatory or whether the appellant could rely on other contemporaneous and supporting evidence to establish the fact of export under the EPCG scheme.

Arguments Presented
- Appellant’s Argument: The appellant argued that their request for conversion of Shipping Bills was valid and supported by evidence, including ‘No Objection’ letters from M/s. Glovis India Ltd., which endorsed the appellant as their supporting manufacturer. They also contended that the conversion would not impact the duty element and that the lack of physical examination was beyond their control, as the Risk Management System (RMS) selects consignments for examination.
- Respondent’s Argument: The Commissioner of Customs rejected the request, stating that Shipping Bills under the EPCG scheme are typically selected for examination by the RMS. Since the Shipping Bills in question were not filed under the EPCG scheme, the required physical examination was not conducted, and the absence of this examination was deemed crucial for denying the conversion.
Tribunal’s Observations

The Tribunal, comprising Hon’ble Member – Judicial and Hon’ble Member – Technical, made the following key observations:
1. Compliance with High Court Directions: The Hon’ble High Court had earlier directed the Commissioner to consider all materials furnished by the appellant and pass a speaking order. However, the Commissioner failed to adequately address the factual aspects, such as the endorsement of Shipping Bills by M/s. Glovis India Ltd. and the absence of any impact on the duty element due to the requested conversion.
2. Circulars Supporting Conversion: The Tribunal referred to Circular No. 36/2010 dated 23.09.2010 and Circular No. 6/2002 dated 23.01.2002, which allow the conversion of Shipping Bills from one Export Promotion Scheme to another, subject to prescribed examination procedures. The appellant met the requirements of these circulars, and the only reason for rejection was the lack of physical examination, which was beyond the appellant’s control.
3. Non-Examination Not a Valid Ground for Rejection: The Tribunal emphasized that the non-examination of Shipping Bills due to procedural requirements cannot be held against a bona fide claimant like the appellant. The RMS system selects consignments for examination, and the appellant had no role in preventing customs authorities from conducting the examination.
4. Precedent from Karnataka High Court: The Tribunal cited the decision of the Hon’ble High Court of Karnataka in Principal Commissioner of Customs, Bengaluru vs. M/s. Louverline Blinds (Order dated 30.07.2025 in Customs Appeal No. 4 of 2022), which supported the appellant’s case and reinforced the principle that procedural lapses should not penalize genuine claimants.
Final Judgment

After thoroughly reviewing the case, the Tribunal found no merit in the impugned order and set it aside. The appeal filed by M/s. YSI Automotive India Pvt. Ltd. was allowed, providing relief to the appellant and establishing a significant precedent for similar cases.

Key Takeaways from the Judgment
1. Importance of Procedural Fairness: The judgment highlights the need for customs authorities to ensure procedural fairness and consider all relevant evidence before rejecting claims.
2. Role of Circulars: The Tribunal’s reliance on Circular No. 36/2010 and Circular No. 6/2002 underscores the importance of adhering to established guidelines for the conversion of Shipping Bills under different export promotion schemes.
3. Impact on Exporters: This decision is a positive development for exporters who face challenges in converting Shipping Bills due to procedural issues. It reinforces the principle that genuine claimants should not be penalized for factors beyond their control.
Conclusion

The CESTAT Chennai’s decision in favor of M/s. YSI Automotive India Pvt. Ltd. is a landmark ruling that upholds the principles of justice and fairness in customs-related disputes. It serves as a reminder to both exporters and customs authorities to prioritize transparency and compliance with established legal frameworks. This case will undoubtedly serve as a guiding precedent for similar disputes in the future, ensuring that procedural lapses do not hinder the rights of genuine claimants.

Source: CESTAT Chennai

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April 2, 2026
CESTAT Bangalore- Procedural Errors Shouldn’t Deny Exporters MEIS Benefits
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 02.04.2026

CESTAT Bangalore- Procedural Errors Shouldn’t Deny Exporters MEIS Benefits

Adv Ravi Shekhar Jha

This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Bangalore, recently delivered a significant judgment in the cases of M/s. CII Guardian International Ltd. and M/s. Kuruwa Enterprises regarding the amendment of shipping bills to claim benefits under the Merchandise Export Incentive Scheme (MEIS). This decision, issued on March 30, 2026, sheds light on the procedural and legal aspects of amending shipping bills under Section 149 of the Customs Act, 1962, and its implications for exporters.

Background of the Case

The appeals arose from the rejection of requests by the Customs Authorities to amend shipping bills filed by the appellants. Both M/s. CII Guardian International Ltd. and M/s. Kuruwa Enterprises had inadvertently marked “No” in the reward column of their shipping bills instead of “Yes,” which prevented the electronic transmission of the shipping bills to the Directorate General of Foreign Trade (DGFT) portal for processing MEIS scrips. Consequently, the appellants were unable to claim their MEIS benefits.

The appellants requested amendments to their shipping bills under Section 149 of the Customs Act, 1962, which allows amendments to shipping bills based on documentary evidence that existed at the time of export. However, their requests were denied by the Customs Authorities, leading to appeals before the CESTAT.

Key Issues in the Appeals 

The primary issue in these appeals was whether the appellants’ requests for amendments to their shipping bills to correct the reward column from “No” to “Yes” could be allowed under Section 149 of the Customs Act, 1962. The appellants argued that the error was purely procedural and did not affect their substantive entitlement to MEIS benefits.

Tribunal’s Observations and Decision 

The Tribunal, presided over by Hon’ble Member Judicial, examined the facts and legal provisions in detail. The key observations and findings are summarized below:
1. Procedural Error vs. Substant ive Entitlement: The Tribunal noted that the appellants had declared their intention to claim MEIS benefits in their shipping bills, but due to a procedural error, the reward column was marked incorrectly. The Tribunal emphasized that this was a procedural lapse and not a substantive issue that should disqualify the appellants from claiming MEIS benefits.
2. Section 149 of the Customs Act, 1962: The Tribunal highlighted that Section 149 allows amendments to shipping bills based on documentary evidence that existed at the time of export. The provision does not impose a time limit for such amendments, and the appellants had provided sufficient documentary evidence to support their claims.
3. Judicial Precedents: The Tribunal referred to several judgments, including those of the Hon’ble Madras High Court, Delhi High Court, Kerala High Court, and the Supreme Court, which consistently held that procedural lapses should not defeat substantive entitlements under beneficial export schemes like MEIS. Notable cases cited include:
  - Pasha International (Madras High Court)
  - Kedia Agencies Pvt. Ltd. (Delhi High Court)
  - Mangalath Cashews & Ors. vs. Commissioner of Customs (Kerala High Court)
  - M/s. Shah Nanji Nagsi Exports Pvt Ltd. vs. Union of India (Supreme Court)
4. Systemic Rigidity vs. Beneficial Schemes: The Tribunal underscored the importance of interpreting beneficial schemes like MEIS liberally to ensure that genuine exporters are not penalized for inadvertent procedural errors. It emphasized that administrative technology should facilitate, not hinder, the implementation of such schemes.
5. Rejection of Time Limit Argument: The Tribunal rejected the argument that amendments must be made within a “reasonable time,” as the Customs Act does not prescribe a specific time limit for amendments under Section 149. It also noted that the appellants had made their requests within the time frame allowed by relevant notifications and circulars.
Final Order

The Tribunal allowed the appeals and directed the Customs Authorities to permit the amendments to the shipping bills as requested by the appellants. It also emphasized that the appellants are entitled to consequential relief in accordance with the law.

Implications of the Judgment 

This landmark decision has significant implications for exporters and the implementation of the MEIS scheme. Key takeaways include:
1. Recognition of Procedural Errors: The judgment reinforces the principle that procedural errors, such as incorrect entries in shipping bills, should not prevent exporters from claiming benefits under export promotion schemes, provided the errors are rectified and the goods meet eligibility criteria.
2. Flexibility in Amendment Requests: The Tribunal clarified that Section 149 of the Customs Act does not impose a time limit for amendments, allowing exporters to correct errors even after the goods have been exported, as long as documentary evidence existed at the time of export.
3. Judicial Precedents: The decision aligns with previous judgments that advocate for a liberal interpretation of beneficial schemes to support genuine exporters and avoid unnecessary litigation.
4. Systemic Improvements: The Tribunal highlighted the need for systemic corrections to prevent procedural errors from obstructing the implementation of beneficial schemes like MEIS.
Conclusion

The CESTAT Bangalore’s decision in these appeals is a significant step toward ensuring that exporters are not unfairly denied benefits due to procedural lapses. It underscores the importance of balancing procedural compliance with substantive entitlements under beneficial schemes. This judgment serves as a reminder to both exporters and authorities to prioritize the intent and purpose of export promotion policies while addressing procedural issues in a fair and reasonable manner.

Source: CESTAT Bangalore

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April 2, 2026
CESTAT Delhi Clarifies Limits of Custodian Responsibility in Customs Area
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 01.04.2026

CESTAT Delhi Clarifies Limits of Custodian Responsibility in Customs Area

Adv Ravi Shekhar Jha

This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), New Delhi Principal Bench, recently delivered a significant judgment in the case of CONCOR vs. Principal Commissioner of Customs Imports ICD TKD-New Delhi. The case revolved around the alleged pilferage of imported goods while under the custody of Container Corporation of India Limited (CONCOR), a public sector undertaking responsible for managing Inland Container Depots (ICD) and Container Freight Stations (CFS).

Background of the Case 

The appeal arose from an Order-in-Original dated June 30, 2025, passed by the Principal Commissioner of Customs, New Delhi. The order confirmed a demand of Rs. 51,80,776/- as customs duty on CONCOR under Section 45(3) of the Customs Act, 1962, along with penalties of Rs. 5,10,000/- under Section 112(a)(ii) and Rs. 2,00,000/- under Section 117 of the Act. The case stemmed from a Show Cause Notice (SCN) issued on September 27, 2024, which alleged that the goods declared in the Import General Manifest (IGM) were pilfered and replaced with cement blocks while in the custody of CONCOR.

Key Facts
1. Custodian Responsibility: As per Section 45 of the Customs Act, CONCOR, as the custodian of imported goods, is responsible for their safe custody until they are cleared for home consumption, warehoused, or transshipped. If goods are pilfered while in the custodian’s care, the custodian is liable to pay duty on the pilfered goods.
2. Discrepancy in Goods: The SCN alleged that five containers, which were supposed to contain high-value goods such as aluminum ingots, zinc ingots, face masks, and disposable gloves, were found to contain cement blocks during examination.
3. Examination Reports: The containers were examined by customs officers on multiple occasions between September 2022 and August 2023. The examination reports, signed by customs officers and CONCOR representatives, indicated that the containers contained cement blocks. Importantly, these reports did not note any tampering or substitution of seals.
4. Final Inventory Report: In August/September 2023, CONCOR submitted a final inventory report seeking a No Objection Certificate (NOC) to dispose of the contents of the containers. The report listed the contents as cement blocks, consistent with the earlier examination reports.
Arguments Presented

CONCOR’s Submissions 
- Containers are received and retained on a “said to contain” basis, meaning neither the shipping line nor the custodian can verify the contents without customs inspection.
- The discrepancy between the IGM and the actual contents of the containers could not be attributed to CONCOR, as it had no authority to open or examine the containers.
- Examination reports signed by customs officers and CONCOR representatives confirmed the presence of cement blocks and did not indicate any tampering or substitution of seals.
- The burden of proof lies with the Revenue to establish that pilferage or substitution occurred while the containers were in CONCOR’s custody. No evidence was provided to support this claim.
- The demand for duty under Section 45(3) of the Customs Act was time-barred, as the provisions of Section 28 of the Act, which govern the time limit for raising demands, should apply.
Revenue’s Submissions 
- As the approved custodian under the Customs Act, CONCOR was responsible for the safe custody of the imported goods and ensuring their integrity.
- The discrepancy between the IGM and the actual contents of the containers indicated pilferage or substitution, making CONCOR liable to pay duty under Section 45(3) of the Act.
Tribunal’s Observations and Final Order 

After considering the submissions and examining the records, the Tribunal concluded that there was no evidence to prove that the goods were pilfered or substituted while in CONCOR’s custody. The examination reports, signed by customs officers and CONCOR representatives, confirmed the presence of cement blocks in the containers and did not indicate any tampering or substitution of seals.

The Tribunal emphasized that the custodian could not be held responsible for the contents of sealed containers received on a “said to contain” basis unless there was evidence of tampering or substitution of seals while in its custody. Since no such evidence was presented, the Tribunal held that the demand for duty and the penalties imposed on CONCOR were unsustainable.

The Tribunal allowed CONCOR’s appeal and set aside the impugned order, granting consequential relief to the appellant.

Key Takeaways
1. Custodian’s Responsibility: The judgment clarifies that a custodian is responsible for the safe custody of goods but cannot be held liable for discrepancies in the contents of sealed containers unless there is evidence of tampering or substitution of seals while in its custody.
2. Burden of Proof: The burden of proving pilferage or substitution lies with the Revenue, and it must provide positive evidence to establish the custodian’s liability.
3. Time Limit for Demands: The Tribunal highlighted that even though Section 45(3) does not specify a time limit for raising demands, the principles of reasonableness and the provisions of Section 28 of the Customs Act should apply.
4. Importance of Documentation: Examination reports and inventory records play a crucial role in determining the liability of custodians in cases of alleged pilferage or substitution.
This judgment serves as a significant precedent for custodians and stakeholders in the import-export industry, emphasizing the importance of proper documentation and the need for clear evidence in cases of alleged pilferage or substitution.

Source: CESTAT Delhi

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April 1, 2026