𝐒 𝐉 𝐄𝐗𝐈𝐌 𝐒𝐞𝐫𝐯𝐢𝐜𝐞𝐬

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Dated: 30.01.2025

CESTAT New Delhi overturns penalty and confiscation order for mis-declared Import due to supplier error

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), New Delhi, ruled in favor of S B International, overturning penalties imposed for an alleged misdeclaration of imported goods. The case arose when customs authorities found that the company had imported zinc ingots instead of lead ingots, as declared in the Bill of Entry. The importer argued that the misdeclaration was due to an error by the foreign supplier and not an intentional violation.

Key Highlights of the Proceedings:

1. Case Background:
   • S B International imported goods declared as lead ingots, but customs officials found zinc ingots instead.
   • The misdeclaration was attributed to a supplier’s mistake, not intentional fraud.
2. Customs Authority’s Action:
   • The goods were seized under Section 110 of the Customs Act, 1962.
   • A redemption fine of ₹5 lakhs and a penalty under Section 112(a) were imposed despite no intent to evade duty.
3. Importer’s Defense:
   • Presented a letter from the foreign supplier admitting the mistake.
   • Argued that both products were freely importable and had the same duty structure, negating any financial gain from misdeclaration.
4. Tribunal’s Observations:
   • The adjudicating authority had itself noted that there was no intent to evade duty.
   • Found that the supplier’s mistake led to the incorrect declaration, not the importer’s actions.
5. Final Verdict:
   • Confiscation, fine, and penalty were set aside.
   • The Tribunal ruled in favor of the importer, recognizing the misdeclaration as a bonafide mistake, not an offense under customs law.

This ruling reinforces the importance of intent in customs disputes and provides relief to importers facing penalties due to supplier errors.

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Source: CESTAT New Delhi

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