No Confiscation or Penalty Without Proof of Unlicensed Clearance: CESTAT Rejects DRI’s Assumptions in Marble Imports

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi, has set aside massive penalties imposed on Marble City India Ltd, its director, and several logistics and forwarding companies in a long-running dispute over alleged excess import of restricted rough marble, holding that the Revenue proceeded on assumptions without concrete evidence and ignored the realities of the customs clearance process. The bench of Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) allowed six appeals, quashing penalties imposed by the Principal Commissioner of Customs, ICD Tughlakabad, through orders passed in September and October 2024. The penalties included over Rs. 431 crore under Section 112(a)(i) and about Rs. 364 crore under Section 114AA of the Customs Act, 1962, imposed on Marble City India Ltd alone, along with penalties on its director and associated customs brokers and logistics firms. The case traces back to imports made between December 2003 and April 2008 by two companies—P.G. Industries Ltd and Priceless Overseas Ltd—which later amalgamated into Marble City India Ltd. During the relevant period, import of rough marble blocks was “restricted” under the Foreign Trade Policy and permitted only against Special Import Licences (SILs) issued by the Directorate General of Foreign Trade (DGFT). Based on a Directorate General of Revenue Intelligence (DRI) investigation initiated years later, the department alleged that the companies had imported rough marble in excess of quantities permitted under SILs or without valid licences in respect of several Bills of Entry. As the adjudication records and manual endorsements on Bills of Entry were not traceable, the department presumed that the excess quantities had been cleared without proper adjudication and proposed confiscation and penalties through a show cause notice issued in January 2014, covering more than 1,000 Bills of Entry. The appellants consistently maintained that wherever imports exceeded the licensed quantity, the issue was adjudicated contemporaneously by customs officers, the goods were confiscated and released on payment of redemption fine and penalty, and only thereafter cleared for home consumption. They pointed out that the imports pre-dated the self-assessment regime and necessarily passed through multiple layers of customs scrutiny, including appraising officers, examining officers, and the “out of charge” officer. Marble City also highlighted that many old records were unavailable due to passage of time and destruction of documents in a fire accident in 2012. Despite repeated requests and even directions of the Delhi High Court in 2016 to supply copies of assessed Bills of Entry and related records, the department could not furnish complete documentation, relying instead on incomplete electronic data that did not capture manual adjudication details. The Tribunal found the Revenue’s approach fundamentally flawed. It noted that for restricted goods like rough marble, clearance for home consumption could not have occurred unless customs officers were satisfied either that a valid licence existed or that the matter had been adjudicated with redemption fine and penalty imposed. Accepting the department’s case would imply that multiple customs officers and custodians systematically allowed clearance without licence or adjudication—an inference the Tribunal described as untenable in the absence of any evidence of collusion or negligence. The Bench emphasised that electronic records alone, especially from a period when adjudication was conducted manually, were insufficient to conclude that no adjudication had taken place. It held that the burden lay on the department to positively establish illegal clearance, which it failed to do. Drawing an analogy, the Tribunal observed that absence of decade-old records cannot automatically lead to adverse inferences against importers when even the department itself does not possess such records. Finding that the impugned orders were based on presumptions rather than proof, the Tribunal set aside all penalties imposed not only on Marble City and its director but also on the associated forwarding agents and logistics companies. Having decided the matter on merits, the Bench held that it was unnecessary to examine the question of limitation. Case Details Case Title: Marble City India Limited Vs New Delhi Case No.: Customs Appeal No. 50093 Of 2025 Date: 07/01/2026 Counsel For Appellant: B.L. Narasimhan Counsel For Respondent: Ranjan Prakash Click Here To Read Order Read More: CAT Directs Refund of Recovery, Grants Higher Grade Pay Under 3rd MACP to Central Excise Officer

No Confiscation or Penalty Without Proof of Unlicensed Clearance: CESTAT Rejects DRI’s Assumptions in Marble Imports

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