The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi Bench has restored the penalty under Section 114A of the Customs Act, 1962, holding that once confiscation of goods for mis-declaration is upheld, the absence of penalty is legally unsustainable. 

The bench of Dr. Rachna Gupta (Judicial Member) and Hemambika R. Priya (Technical Member) set aside the order of the Commissioner (Appeals) which had earlier waived the penalty despite confirming confiscation and enhanced valuation.

The matter pertains to imports made in May 2021, where the importer declared 32 oxygen concentrators and 3,200 oximeters with a total assessable value of ₹14.65 lakh. However, upon 100% examination based on specific intelligence, customs authorities обнаружed substantial mis-declaration. The consignment included large quantities of undeclared goods such as over 11,000 pulse oximeters, additional oxygen concentrators, infrared thermometers, LCD combos, LED modules, and other electronic items.

Subsequently, the goods were seized under Section 110 of the Customs Act, and their value was reassessed by a government-approved Chartered Engineer at ₹7.88 crore—significantly higher than declared. The proprietor admitted to the revised valuation and duty liability, attributing the discrepancy to the overseas supplier. 

The original adjudicating authority confirmed a differential duty demand of ₹17.60 lakh, ordered confiscation under Sections 111(l) and 111(m), imposed a redemption fine, and levied an equivalent penalty under Section 114A. However, the Commissioner (Appeals), while upholding confiscation and enhanced valuation, reduced the redemption fine and set aside the penalty, citing lack of evidence of deliberate suppression.

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Challenging this relief, the Department argued that the importer failed to substantiate the claim of “supplier’s mistake” with any documentary evidence such as purchase orders or correspondence. It was further contended that the magnitude of mis-declaration and presence of completely undeclared items clearly indicated intent to evade duty.

The Tribunal agreed with the Department’s position, observing that the findings of the Commissioner (Appeals) were contradictory. It noted that once confiscation under Sections 111(l) and 111(m) is upheld—implying mis-declaration and suppression—the waiver of penalty on the ground of lack of intent cannot stand.

The Tribunal emphasized that the importer had voluntarily accepted the mis-declaration, waived issuance of show cause notice, and paid the differential duty along with fine and interest. It also noted that the duty initially paid was only ₹2.50 lakh, significantly lower than the reassessed liability, clearly establishing short payment of duty.

The Tribunal held that no credible evidence was produced to justify the mis-declaration. It concluded that the act constituted suppression of facts and misstatement, attracting mandatory penalty under Section 114A.

The Tribunal set aside the order of the Commissioner (Appeals) and restored the penalty and original adjudication findings, allowing the Department’s appeal. 

Case Details

Case Title: Principal Commissioner of Customs Versus M/s. S K Enterprises

Citation: JURISHOUR-991-CES-2026(DEL) 

Case No.: Customs Appeal No. 52297 Of 2021

Date: 28/04/2026

Counsel For  Appellant:  M.K. Shukla, Authorised Representative

Counsel For Respondent: None

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