The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside the confiscation of imported crude degummed soybean oil (CDSBO), redemption fine, and penalties imposed on both the importer and the custodian, holding that there was no evidence of any attempt to clear goods without payment of customs duty.
The bench of Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) has observed that there was no evidence whatsoever to show that the importer had attempted to remove or clear the excess quantity without payment of customs duty. On the contrary, the documentary evidence demonstrated that the importer had instructed the custodian not to release the cargo until duty was paid.
The dispute arose from the import of 1,500 metric tonnes of Crude Degummed Soybean Oil by Vinayak Oil & Fat Private Limited through Haldia Port. The imported cargo was discharged into a storage tank maintained by Aegis Logistics Limited, the custodian of the goods.
Upon measurement, the importer filed a Bill of Entry for clearance of 1,453.650 metric tonnes of oil and paid the applicable customs duty. However, during the clearance process, the custodian informed the importer that approximately 49.330 metric tonnes of oil still remained in the storage tank.
Subsequently, customs authorities detained the excess quantity. Proceedings were initiated through a show cause notice proposing confiscation of 45.189 metric tonnes of CDSBO and imposition of penalties on both the importer and the custodian.
The Department alleged that both the importer and the custodian had prior knowledge of the excess quantity of oil available in the storage tank and intended to remove it without payment of customs duty. Based on this allegation, the adjudicating authority confiscated the goods under Sections 111(j), 111(l), and 111(m) of the Customs Act, 1962.
The adjudicating authority also imposed a redemption fine of ₹6 lakh and appropriated customs duty amounting to ₹10.38 lakh relating to the excess quantity. Further, penalties equal to the duty amount were imposed on both parties under Section 114A of the Customs Act.
The Commissioner (Appeals) subsequently upheld the action against the importer while remanding the matter concerning the custodian for fresh adjudication.
Before the Tribunal, the importer argued that there had never been any attempt to clear the excess quantity without payment of customs duty. It contended that immediately after being informed about the excess oil, it had instructed the custodian not to release any tanker until customs duty on the additional quantity was paid.
The importer relied upon an email dated December 22, 2018, wherein it specifically requested the custodian not to release any tanker because excess quantity had been received from the tank and customs duty would be paid on the excess quantity before clearance. The email formed a crucial piece of evidence before the Tribunal.
The Bench noted that the excess quantity was eventually cleared only after payment of the applicable customs duty. Therefore, the very foundation of the confiscation proceedings failed.
Accordingly, the Tribunal held that the excess quantity of oil was not liable for confiscation and, consequently, the redemption fine imposed by the authorities could not survive.
The Tribunal also examined the penalties imposed under Section 114A of the Customs Act, which requires proof of fraud, collusion, wilful misstatement, or suppression of facts leading to duty evasion.
It found that the adjudicating authority’s conclusion that the importer and custodian had acted together to remove goods without payment of duty was unsupported by evidence. The records instead showed that the custodian had informed the importer about the excess quantity and that the importer had immediately directed that no release be made before payment of duty.
The Tribunal categorically held that no corroborative evidence existed to establish collusion, wilful misstatement, suppression of facts, or any intention to evade customs duty. Since the essential ingredients required for invoking Section 114A were absent, the penalties imposed on both parties were legally unsustainable.
In its final order dated June 11, 2026, the CESTAT set aside the confiscation of the goods, quashed the redemption fine, and deleted the penalties imposed under Section 114A of the Customs Act. The Tribunal also overturned the Commissioner (Appeals)’ direction remanding the matter against the custodian for fresh adjudication.
Allowing both appeals, the Bench concluded that the facts on record clearly established bona fide conduct on the part of both the importer and the custodian and that there was no intention to remove goods without payment of customs duty.
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