The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai has overturned a ₹1.69 crore customs duty demand and associated penalties related to the import of intraocular lenses, ruling that customs officials misapplied import valuation rules and overstepped their legal mandate regarding medical device licensing.

The bench of Justice Ajay Sharma (Judicial Member) and C.J. Mathew (Technical Member) held that the entire adjudication process was riddled with legal infirmities. It emphasized that goods imported by post are subject to a distinct procedural regime and that valuation methods applicable to air cargo imports cannot be extended to postal imports without due basis.

The case revolved around 49 past postal consignments of intraocular lenses that were reassessed at a significantly higher value by the Commissioner of Customs (Airport Special Cargo), Mumbai. The customs authority had also ordered confiscation of thousands of lenses and imposed penalties exceeding Rs. 4 crore, citing undervaluation and non-possession of a valid import license at the time of import.

Tribunal Finds No Legal Basis for Confiscation or Valuation

The Tribunal ruled that customs authorities wrongly relied on higher prices from unrelated air cargo imports to reassess the value of postal consignments, and that there was no evidence of misdeclaration or collusion with foreign suppliers.

“Patently, the provisions of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 were not intended to operate for assessment of post parcels,” the order noted.

It also strongly criticized the customs authority’s invocation of public health concerns to justify confiscation of expired lenses found at the importer’s premises, stating that the Customs Act does not confer such regulatory powers.

Import License Renewal Delay Was Not Fatal

While the import license under the Drugs and Cosmetics Act had lapsed during the pandemic, the Tribunal observed that a renewal application had been filed in May 2022 and was granted in October 2022—prior to the final adjudication. Therefore, seizure and penal action on that ground lacked legal merit.

“As at the time of adjudication, licence was available, seizure on that ground should have been vacated,” the bench observed.

The CESTAT has held that customs cannot act as regulators of public health or safety under the Drugs Act. Import valuation for postal parcels must be based on actual declared transaction values, not surrogate values from unrelated imports.

Case Details

Case Title: Epsilon Eye Care Pvt Ltd Versus Commissioner of Customs Airport Special Cargo

Case No.: Customs Appeal No: 85347 Of 2024

Date: 08/04/2025

Counsel For Appellant: Deepak Sharma, Deputy Commissioner (AR)

Counsel For Respondent: Advocate Sujay Kantawala