Garnet Exports Are Regulated Irrespective of Inland or Beach Origin, Upholds Confiscation and Penalties: CESTAT

The Ahmedabad Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has dismissed an appeal challenging confiscation, redemption fine and penalties imposed for the export of garnet classified as “natural abrasives.” The bench of Dr. Ajaya Krishna Vishvesha (Judicial Member) and Satendra Vikram Singh, Member (Technical) observed that export of garnet is regulated irrespective of whether it is sourced from beach sands or inland areas, and cannot be freely exported without routing through the designated canalising agency. The dispute arose from two shipping bills filed in January 2019 for export of large quantities of goods declared as “Natural Abrasives” under Customs Tariff Heading (CTH) 2513 2090. Customs authorities allowed provisional export after drawing samples, subject to test reports, as the exporter cited urgent commercial constraints such as missing the connecting vessel and incurring heavy ground rent. Subsequent laboratory analysis by CRCL, Vadodara revealed that the samples were natural almandine–pyrope garnet, a mineral specifically listed under CTH 2513 2030. Based on this finding, the Department issued a Show Cause Notice alleging mis-declaration and violation of DGFT Notification No. 26/2015-20 dated 21 August 2018, which canalised the export of garnet and other beach sand minerals exclusively through Indian Rare Earths Limited (IREL). The adjudicating authority reclassified the goods under CTH 2513 2030, ordered confiscation under Sections 113(d) and 113(i) of the Customs Act, 1962, imposed a redemption fine of ₹2 lakh, and levied penalties of ₹50,000 each under Sections 114(i) and 114AA. These findings were affirmed by the Commissioner (Appeals), prompting the exporter to approach CESTAT. The exporter contended that the goods were manufactured from rocks and mineral lumps sourced from Bhilwara, Rajasthan, a non-coastal region, and therefore could not be treated as “beach sand minerals.” DGFT restrictions applied only to minerals mined from beach sands and not to inland-origin garnet used as abrasives. The test report merely identified the mineral but did not establish that it originated from beach sands. DGFT is the final authority on interpretation of export policy, and the notification should be read restrictively. The department on the other hand, argued that Garnet, regardless of origin, may contain rare earth elements (REEs) and traces of radioactive minerals such as monazite. Scientific studies and expert inputs from the Department of Atomic Energy (DAE) and Atomic Energy Regulatory Board (AERB) show that REEs are found both in coastal and inland deposits. The DGFT notification specifically lists “Garnet” under a dedicated tariff entry, without any geographical limitation. Misclassification under a residual heading was an attempt to bypass canalisation requirements. After examining the notification, scientific literature, expert opinions, and earlier precedent, including its own ruling in Tirupati Enterprises, the Tribunal held that DGFT Notification No. 26/2015-20 regulates export of garnet per se, not merely garnet mined from beaches. The term “Beach Sand Minerals” is used generically, while “Garnet” is specifically identified with its tariff heading, indicating legislative intent to regulate the mineral irrespective of origin. There is no scientific basis to claim that rare earth elements or associated radioactive minerals are confined to coastal regions; substantial inland deposits exist, including in Rajasthan. Customs tariff classifications do not distinguish between beach-origin and inland-origin garnet. The laboratory test report conclusively established the exported goods as garnet, and the report was never challenged. The Tribunal also observed that national security considerations and conservation of critical minerals underpin the canalisation policy, warranting strict interpretation and enforcement. CESTAT upheld the reclassification of the exported goods as natural garnet under CTH 2513 2030, confiscation of the goods under the Customs Act, redemption fine of ₹2 lakh in lieu of confiscation, and penalties imposed for mis-declaration and attempted circumvention of export policy. Case Details Case Title: M/s. Payal Synthetics Private Limited Versus Commissioner of Customs, Ahmedabad Case No.: CUSTOMS Appeal No. 10135 of 2024-DB Date: 22.12.2025 Counsel For Appellant: S. Suryanarayanan Counsel For Respondent: Aakash Singh Click Here To Read Order Read More: Customs Duty Demand, Penalties Imposed In Alleged Undervaluation And Misdeclaration Of Imported Automobile Parts Case Quashed: CESTAT

Garnet Exports Are Regulated Irrespective of Inland or Beach Origin, Upholds Confiscation and Penalties: CESTAT

Membership Required

Latest articles

GST Weekly Flashback: 15 To 21 February 2026

SAD Refund Limitation to Be Counted from Date of Domestic Sale And Not From The Date of Import: Calcutta HC

Titan Challenges Deemed Supply Provision Under GST: Madras High Court to Examine Taxability of Unreturned Job Work Inputs

Can Service Tax Be Demanded Solely on Form 26AS Data Without Pre-SCN Consultation? Gauhati High Court Remand Back Matter to CESTAT

More like this

GST Weekly Flashback: 15 To 21 February 2026

SAD Refund Limitation to Be Counted from Date of Domestic Sale And Not From The Date of Import: Calcutta HC

Titan Challenges Deemed Supply Provision Under GST: Madras High Court to Examine Taxability of Unreturned Job Work Inputs

About us

Company

Categories