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Dated: 07.04.2025

CESTAT Mumbai noted that claiming a wrong exemption does not attract confiscation if there is no falsification of declaration

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai allowed the appeal filed by the National Sports Club of India (NSCI), setting aside the confiscation and penalty imposed on them for a misclaimed customs exemption.

Background of the Case:

• NSCI filed a Bill of Entry for importing SVPS Chillers, classifying them under CTH 84198940, and claimed the benefit of Notification No. 21/2012-Cus dated 17.03.2012.
• Customs authorities re-assessed the goods, denied the exemption on the ground that the chillers were not packaged commodities meant for retail sale under the Legal Metrology (Packaged Commodities) Rules, 2011.
• The goods were confiscated under Section 111(m) of the Customs Act, 1962, and NSCI was given an option to redeem them on a fine of ₹10 lakhs. A penalty of ₹5 lakhs was also imposed under Section 112(a).
• The Commissioner (Appeals) upheld the order and additionally invoked Section 111(o) for non-fulfilment of exemption conditions.

NSCI’s Submissions:

• The exemption was wrongly claimed inadvertently, and duty was promptly paid upon discovery of the error.
• There was no misdeclaration of goods regarding classification, value, or description.
• Contended that the Commissioner (Appeals) wrongly invoked Section 111(o) which was not part of the original adjudication.
• Relied on judicial precedents such as:
  • J.K. Industries Ltd. v. Commissioner of Customs
• • Lewek Altair Shipping Pvt. Ltd. v. Commissioner of Customs
  • Sirthai Superware India Ltd. v. Commissioner of Customs

CESTAT’s Observations:

• Section 111(m) deals with confiscation based on incorrect declaration of value or description. Since there was no such misdeclaration, this clause was not applicable.
• Section 111(o) applies only if a condition of an exemption notification is violated without sanction from the proper officer. This was not established in the original order.
• The Tribunal noted that claiming a wrong exemption does not attract confiscation if there is no falsification of declaration.
• Cited the Sirthai Superware case to affirm that wrong exemption claims alone do not justify penalty or confiscation.

Final Verdict:

• Confiscation of goods, ₹10 lakh redemption fine, and ₹5 lakh penalty imposed on NSCI were all set aside.
• The appeal was allowed in full in favour of NSCI.

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Source: CESTAT Mumbai

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