ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 21.10.2025
CESTAT Kolkata Sets Aside Confiscation and Penalty in Pre-Shipment Inspection
This Article has been written by Shri Ravi Shekhar Jha, Advocate 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.
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In a landmark decision, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Eastern Zonal Bench, Kolkata, has ruled in favor of M/s. Jai Salasar Balaji Industries Private Limited, setting aside the confiscation of imported goods and the imposition of penalties by the Principal Commissioner of Customs (Port), Kolkata. β This judgment, delivered on October 16, 2025, has significant implications for importers dealing with metallic waste and scrap.
Background of the Case
The case revolved around the import of “Low Nickel Turning Scrap (1.30 Nickel)” from Belgium by M/s. β Jai Salasar Balaji Industries Private Limited. β The consignment, weighing 261.850 MT, was inspected at Duisburg, Germany, by M/s. β Melt Enterprise Ltd., a DGFT-approved Pre-Shipment Inspection Agency (PSIA). β The inspection confirmed that the consignment was free from hazardous materials, explosives, and radiation levels exceeding natural background. β
However, the Customs Department raised concerns over a discrepancy between the port of loading (Antwerp, Belgium) and the place of inspection (Duisburg, Germany). β The department deemed the Pre-Shipment Inspection Certificate (PSIC) invalid, citing non-compliance with the Handbook of Procedures, 2023, and Foreign Trade Policy, 2023. β Consequently, the consignment was confiscated under Section 111(d) of the Customs Act, 1962, with a redemption fine of Rs. β 10,00,000/- and a penalty of Rs. β 15,00,000/- imposed under Section 112(a)(i) of the Act. β
Key Issues in the Appeal β
The appellant challenged the confiscation and penalties, arguing that the PSIC issued by M/s. Melt Enterprise Ltd. was valid and complied with the requirements of Para 2.51 of the Handbook of Procedures, 2023. β The appellant contended that there is no legal stipulation mandating that pre-shipment inspection must occur at the port of loading/shipment. β The inspection at Duisburg, an inland port and logistics hub, was necessary as the goods were transported to Antwerp for shipment to India. β
The Revenue argued that the PSIC was invalid as it was not issued from the country of origin, citing Public Notice No. 46/(2015-2020) dated January 14, 2022, which mandates inspection at the country of origin. β
CESTATβs Observations and Ruling β
After hearing both sides, the Tribunal made the following observations:
- Validity of PSIC: The Tribunal noted that the PSIC issued by M/s. β Melt Enterprise Ltd. was genuine and complied with the requirements of Para 2.51 of the Handbook of Procedures, 2023. β The certificate confirmed that the consignment was free from hazardous, radioactive, or explosive materials, fulfilling the primary objective of the PSIC requirement. β
- No Prohibition on Inspection Location: The Tribunal clarified that there is no legal requirement for pre-shipment inspection to be conducted exclusively at the port of loading/shipment. β The inspection at Duisburg, Germany, was valid as it ensured compliance with safety standards. β
- Post-Shipment Inspection Findings: The Tribunal emphasized that the post-shipment inspection conducted at the port of discharge confirmed the consignment’s compliance with all prescribed safety parameters, further validating the genuineness of the PSIC. β
- Confiscation and Penalty: The Tribunal held that the procedural deficiency in the PSIC did not amount to a violation of the Customs Act, 1962, or the Foreign Trade Policy, 2023. β As such, the confiscation of goods and imposition of redemption fine and penalty were deemed unsustainable. β
Final Order
The Tribunal passed the following order:
- The confiscation of goods under Section 111(d) of the Customs Act, 1962, was set aside. β
- The redemption fine of Rs. β 10,00,000/- and penalty of Rs. β 15,00,000/- imposed under Section 112(a)(i) of the Customs Act, 1962, were also set aside. β
- The Revenue was directed to release the detained consignment immediately, subject to payment of applicable customs duties. β
Implications of the Judgment β
This decision is a significant win for importers, as it clarifies the legal requirements for pre-shipment inspection certificates and emphasizes the importance of ensuring compliance with safety standards over procedural technicalities. The Tribunal’s ruling reinforces the principle that procedural lapses should not lead to the confiscation of goods or imposition of penalties if the primary objectives of the law are met. β
The judgment also highlights the need for clarity in regulatory provisions to avoid unnecessary disputes and delays in the clearance of goods. Importers can now breathe a sigh of relief, knowing that genuine efforts to comply with safety standards will be recognized and upheld by the judiciary.β
Source: CESTAT Kolkata
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