𝐒 𝐉 𝐄𝐗𝐈𝐌 𝐒𝐞𝐫𝐯𝐢𝐜𝐞𝐬

“Indirect Tax I Indirect Tax Litigation I Customs & FTP I Central Licensing I Arbitration I Advisory”

Dated: 07.04.2025

CESTAT Allahabad sets aside the confiscation orders and penalties imposed by Customs

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Allahabad Bench, in its order dated 30 August 2024, pronounced final decisions in a series of connected customs appeals involving M/s Shakti Traders, M/s B.N. International, M/s Raghunath Laxminarayan, and several individual appellants. These cases relate to a large-scale customs duty evasion through misdeclaration of the country of origin of imported dry dates, routed via the UAE but alleged to be of Pakistan origin.

Case Background:

• Following the Pulwama terrorist attack in February 2019, the Indian government imposed 200% customs duty on goods of Pakistan origin under Notification No. 5/2019-Cus.
• The DRI (Lucknow Zonal Unit) conducted investigations revealing that multiple importers routed Pakistani-origin dry dates through UAE to falsely claim reduced 20% customs duty under CTH 0808041030 instead of the applicable 200% under CTH 98060000.
• Alleged mastermind Shri Kush Agarwal, Director of M/s GVO Global FZC (UAE), was said to have arranged fraudulent documentation, including Certificates of Origin.

Key Findings:

1. Country of Origin Manipulation:

• The Tribunal noted that dry dates imported by all three firms showed similar physical characteristics to those previously sourced from Pakistan.
• Laboratory tests and expert opinion from Atul Rajasthan Date Palms Ltd. concluded the goods were of Indian Subcontinent origin, which includes Pakistan.

2. Statements and Evidence:

• Multiple parties, including importers and buyers, admitted in Section 108 statements that the goods originated in Pakistan but were routed through Dubai.
• Supporting evidence included audio recordings, purchase histories, and Dubai customs transit documents indicating origin codes as “PK” (Pakistan).

3. Violation of Food Safety Labeling Regulations:

• Labels with origin and FSSAI information were stapled and easily removable, violating FSSAI Packaging & Labeling Regulations, 2011.

4. Legal Basis for Confiscation & Penalties:

• Goods were held liable for confiscation under Sections 111(m) and 111(o) of the Customs Act, 1962.
• Penalties under Sections 112(b) and 114AA were imposed based on collusion, misdeclaration, and intent to evade duty.

Key Tribunal Orders:

• Seized goods already auctioned; sale proceeds totaling ₹1.95 crores were appropriated.
• Penalties Confirmed/Awarded:
  • M/s Shakti Traders: ₹15 lakhs
  • Vikas Kumar Gupta & Akash Kumar Gupta: ₹75 lakhs each (combined under Sections 112(b) & 114AA)
  • Shri Kush Agarwal: Multiple penalties across cases totaling over ₹1.5 crores

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Source: CESTAT Allahabad

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