The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Ahmedabad, has quashed the confiscation and penalty order imposed on Flamingo Logistics, a warehousing service provider operating within the Kandla Special Economic Zone (SEZ).
The bench of Somesh Arora (Judicial Member) has observed that there was no evidence suggesting that the service provider had prior knowledge about the nature of the imported goods being “old and used,” which were later re-exported without alteration.
The appellant, Flamingo Logistics, acting on instructions from its client M A Value Smart Trading Limited, Hong Kong, had filed four warehousing Bills of Entry for importing computer-related items including hard disks and computer towers. Upon inspection, Customs officials found dust and scratches on the items and, with input from HP India Sales Pvt. Ltd., concluded that the goods were second-hand.
As the import of second-hand goods is restricted under DGFT Notification No. 35 (RE-2012)/2009-2014 and para 2.31 of the Foreign Trade Policy, Customs placed the goods under seizure. Although the foreign client clarified that the goods were meant exclusively for re-export and not for sale in the domestic market, Customs ordered confiscation under Section 111(d) and (m) of the Customs Act, 1962, and imposed a fine and penalty.
The CESTAT found that Flamingo Logistics, being a service provider, had no culpable intent or advance knowledge that the goods were used.
The Tribunal noted that the goods were destined for re-export and not for home consumption. At least one Bill of Entry declared the re-export intent, and the omission in others was deemed a technical lapse. The goods were eventually re-exported without any alteration to the description or correction to label them as “old and used”. Customs themselves cleared the goods during re-export, casting doubt on their earlier claim.
The Tribunal further highlighted that under para 7A.5 of the Foreign Trade Policy, SEZs are allowed to warehouse all goods except prohibited ones — and the case did not involve any such prohibited items.
The Tribunal distinguished thecase from other precedents cited by the Department, including rulings in the Kay Bee Tax Spin Ltd. and Hemant Bhai R. Patel cases, which involved deliberate violations or goods clandestinely diverted to the domestic market. Here, Flamingo Logistics had followed due procedures within an SEZ environment and had cooperated with re-export directives.
The tribunal, while setting aside the confiscation and penalty orders, concluded that “The goods were re-exported after due process and examination by Customs. The penalty and fine were unjustified in absence of any evidence suggesting prior knowledge or intent to misdeclare.”
The Tribunal allowed consequential relief to Flamingo Logistics, providing much-needed clarity on procedural safeguards for SEZ-based service providers and the treatment of goods meant exclusively for re-export.
Case Details
Case Title: Flamingo Logistics Versus Commissioner Of Customs-Kandla
Case No.: Customs Appeal No. 10873 of 2020 – DB
Date: 09.07.2025
Counsel For Appellant: Vikas Mehta, Consultant
Counsel For Respondent: Sanjay Kumar, Superintendent (AR)
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