#JayaTradingCompany – 𝐀𝐚𝐝𝐫𝐢𝐤𝐚𝐚 𝐋𝐞𝐠𝐚𝐥 𝐒𝐞𝐫𝐯𝐢𝐜𝐞𝐬 (𝐀𝐋𝐒)

ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 24.02.2026

CESTAT Chennai Overturns Confiscation and Penalty on Import of Second-Hand Digital Multifunction Machines

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 landmark decision, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Chennai, has delivered justice to M/s. Jaya Trading Company in a long-standing legal battle concerning the import of second-hand digital multifunction print and copying machines. The case, which dates back to 2009, has finally been resolved in favor of the appellant, setting a precedent for similar cases in the future.

Background of the Case

M/s. Jaya Trading Company, a Delhi-based importer and trader of second-hand digital multifunction print and copying machines, filed a Bill of Entry No. 321038 on September 29, 2009, at Chennai Port for a consignment of old and used machines. The goods were declared at a value of EUR 16,490/- (C&F) based on the supplier’s invoice. However, the Customs Department ordered a first-check examination and valuation by an approved Chartered Engineer, who appraised the value at EUR 20,923/- (C&F). To avoid demurrage and detention charges, the company accepted the enhanced value for assessment and paid the duty, while disputing the licensing objection raised by the Department.

The Additional Commissioner of Customs passed an Order-in-Original on October 9, 2009, rejecting the declared value, adopting the Chartered Engineer’s valuation, and confiscating the goods under Section 111(d) of the Customs Act read with Section 3(3) of the Foreign Trade (Development and Regulation) Act (FTDR Act). The order also imposed a redemption fine of ₹4,49,000/- and a penalty of ₹1,50,000/- under Section 112(a) of the Customs Act.

Legal Proceedings

The Appellant filed an appeal on January 29, 2010, before the Commissioner of Customs (Appeals-II), Chennai. Although the appeal was admitted and heard on merits in April 2010, it remained pending due to similar cases being under consideration by the Hon’ble Madras High Court. The High Court later ruled in favor of importers in cases such as City Office Equipment and Sai Graphics Systems, holding that second-hand digital multifunction print and copying machines were freely importable prior to June 5, 2012, and that the amendment to Para 2.17 of the Foreign Trade Policy was prospective.

Despite this settled legal position, the Commissioner (Appeals) rejected the Appellant’s appeal in May 2016, citing limitation issues and treating the date of dispatch as the date of service. This decision was made without examining the merits of the case or providing notice to the Appellant.

CESTAT Chennai’s Final Order 

The case was brought before the CESTAT Chennai, where the Appellant challenged the rejection of their appeal on the grounds of limitation and the legality of the confiscation, redemption fine, and penalty imposed by the Customs Department.

After a thorough examination of the case records, statutory provisions, and relevant case laws, the Tribunal delivered its final order on February 19, 2026. The key findings and rulings are as follows:

Appeal Not Barred by Limitation: The Tribunal held that the Commissioner (Appeals) erred in rejecting the appeal on the ground of limitation. Section 128 of the Customs Act, 1962, clearly states that the limitation period is to be calculated from the date of communication of the order, not the date of dispatch. Since the Appellant received the Order-in-Original on November 3, 2009, and filed the appeal on January 29, 2010, the appeal was well within the condonable period. The rejection of the appeal after six years without notice was deemed legally unsustainable and violative of natural justice.
Importability of Second-Hand Digital Multifunction Machines: The Tribunal reaffirmed the legal position established by the Hon’ble Madras High Court that second-hand digital multifunction print and copying machines were freely importable under Para 2.17 of the Foreign Trade Policy prior to June 5, 2012. The restriction introduced on this category of goods was prospective and did not apply to imports made in September 2009.
Confiscation Under Section 111(d): The Tribunal found that the confiscation of goods under Section 111(d) of the Customs Act was unsustainable, as the imported goods were freely importable at the time of import.
Valuation and Section 111(m): The Tribunal observed that the enhancement of value was based solely on the Chartered Engineer’s estimation, without any evidence of undervaluation, forged invoices, or suppression. As such, confiscation under Section 111(m) was not warranted.
Redemption Fine and Penalty: Since the goods were not liable for confiscation, the Tribunal held that the redemption fine under Section 125 and penalty under Section 112(a) of the Customs Act were also unsustainable. The import was made under a bona fide belief, supported by the prevailing policy and judicial pronouncements, with no evidence of mens rea or contumacious conduct.

Conclusion

The CESTAT Chennai’s decision to set aside the impugned orders and allow the appeal on merits is a significant victory for M/s. Jaya Trading Company. The Tribunal’s ruling not only provides relief to the Appellant but also reinforces the settled legal position regarding the importability of second-hand digital multifunction print and copying machines prior to June 5, 2012.

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