Exporter’s 1,372-Tonne Garnet Shipment Misdeclared As Refractory Material: CESTAT Upholds Confiscation And ₹35 Lakh Fine

Kuber Enterprises filed five shipping bills for export of goods declared as “Refractory Bed Material” under CTH 69021090. Testing identified the goods as Natural Garnet, classifiable under CTH 25132030, whose export was canalized through IREL. The Adjudicating Authority rejected the declared description and classification, redetermined the value at ₹2,57,94,972, rejected the drawback and RoDTEP claims, confiscated the goods with an option to redeem them on payment of ₹35 lakh, and imposed penalties of ₹15 lakh each under Sections 114(i) and 114AA of the Customs Act, 1962. The Commissioner (Appeals) upheld that order, and Kuber Enterprises appealed to the Tribunal

The appellant challenged the fine and penalties and raised the proposed e-auction of the goods; the Gujarat High Court had directed that the Tribunal consider the auction issue and that no auction take place pending its consideration

Section 125 of the Customs Act permits redemption of confiscated goods on payment of a fine; the Tribunal treated the quantum as a matter of the proper officer’s discretion, subject to review where the exercise is unlawful, mala fide, or extremely arbitrary

Sections 114(i) and 114AA provide for penalties in connection with the relevant customs violations and false or incorrect material declarations; the Tribunal considered the penalties in light of the attempted export of Natural Garnet under a misdeclared description

Section 110(1A), read with Notifications No. 31/86-Cus. and No. 20/2004-Cus. (N.T.), authorizes disposal of specified seized goods, including goods for which provisional release was ordered but not taken within one month

The Tribunal relied on Duncan Industries Ltd. v. Union of India for the principle that interference with administrative discretion is ordinarily confined to cases of statutory violation, mala fides, or extreme arbitrariness.

It also noted that Natural Garnet exports were canalized through IREL under DGFT Notification No. 26/2015-20 dated 21 August 2018.

The Tribunal found that the goods, valued at ₹2,57,94,972, had been presented for export as “Refractory Bed Material” despite being Natural Garnet, the export of which was canalized through IREL. In that context, it held that the ₹35 lakh redemption fine—approximately 13.5% of the redetermined value—and the penalties of ₹15 lakh each were not excessive or arbitrary.

It rejected the appellant’s reliance on principles concerning bona fide defaults and its challenge to the statutory penalties, finding no basis to interfere with the authorities’ exercise of discretion

On auction, it held that Section 110(1A) and the cited notifications provided authority for disposal, but directed that the authorities issue proper notice, allow at least 30 days for objections, and comply with the applicable statutory provisions and circulars

It permitted the Customs authorities to proceed with e-auction of the confiscated goods only after giving the appellant proper notice and an opportunity to object for at least 30 days, and after complying with the applicable law and instructions.