Case Law Details

Case Name : Ocean Sky Impex Private Limited Vs Commissioner of Customs (CESTAT Chennai)
Appeal Number : Customs Appeal No. 40498 of 2023
Date of Judgement/Order : 31/10/2023
Related Assessment Year :

Ocean Sky Impex Private Limited Vs Commissioner of Customs (CESTAT Chennai)

Introduction: The recent order by the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) in the case of Ocean Sky Impex Private Limited versus the Commissioner of Customs, Chennai, sheds light on the provisional release of seized polyester coated fabric. This article delves into the details of the case, examining the grounds for the application and the subsequent decision by CESTAT.

Detailed Analysis: The appeal filed by Ocean Sky Impex Private Limited sought early hearing against the Order-in-Appeal No. Seaport C.Cus. II No. 477/2023 dated 21.07.2023. The primary prayer in the appeal was for the provisional release of seized goods, specifically “Polyester Coated Fabric (Polymeric Compound).”

The appellant had imported the goods from a China-based company, but an investigation by the Directorate of Revenue Intelligence (DRI) led to a classification dispute. The Textiles Committee, Chennai, reported a different classification, and Anti-Dumping Duty (ADD) was proposed. The goods were seized, leading to a plea for provisional release for re-export.

Despite depositing a substantial amount towards ADD, the DRI seized the goods. The appellant argued that the supplier acknowledged the mistake and requested re-export. The Hon’ble High Court directed the Department to decide on provisional release within 10 days. However, both the adjudicating authority and the first appellate authority rejected the request, citing an ongoing investigation.

The appellant’s contentions included the absence of a Section 124(a) notice, completion of the investigation, the substantial deposit made, and potential financial loss due to delayed re-export. The article critically analyzes these contentions and the reasoning of the authorities.

Conclusion: The CESTAT order, pronounced on 31.10.2023, sets aside the impugned order and directs the adjudicating authority to permit provisional release forthwith after suitable bond and Bank Guarantee. The decision highlights the importance of bona fide requests for re-export, considering financial interests and supplier acknowledgment. This case serves as a precedent for similar situations and emphasizes the need for a balanced approach in customs matters.

In conclusion, the Ocean Sky Impex case underscores the significance of procedural fairness and the duty to protect the interests of importers, balancing investigative needs with the rights of the appellant.


This application for early hearing is filed by the applicant namely, M/s. Ocean Sky Impex Private Limited, Ayanavaram, Chennai with a request for allowing its application for early hearing of the appeal filed by it against the impugned Order-in-Appeal No. Seaport C.Cus. II No. 477/2023 dated 21.07.2023.

2. Heard Shri Prem Ranjan Kumar, Ld. Advocate for the applicant. We find upon hearing, that the only prayer in the appeal is for provisional release of the seized goods and hence, we grant early hearing and with the consent of both the parties, we take up the appeal itself for final disposal.

 3.1 It is the case of the appellant that they had placed an order for import of “Polyester Coated Fabric (Polymeric Compound)” from a China based company vide various commercial invoices, the details of which are as under: –

S. No Commercial Invoice No. Date of invoice Quantity Total invoice
1. VC-2490 15.08.2022 241247.80 sqm. @USD 0.12/sqm. USD 28,349.74/-
2. VC-2502 16.08.2022 422647.80 sqm. @USD 0.12/sqm. USD 50,717.74/-
3. VC-2506 19.08.2022 423187.20 @USD 0.12/sqm. USD 50,782.46/-

The above goods when reached the Indian coast, the following bills-of-entry were filed for clearance: –

S. No. Bill-of-Entry No. Date of filing
1. 2214121 29.08.2022
2. 2299510 04.09.2022
3. 2299525 04.09.2022

3.2 It appears that there was an investigation by the Directorate of Revenue Intelligence (DRI), who apparently examined the consignment drawing samples therefrom and forwarding the same for examination by Textiles Committee, Chennai. The said committee vide its report on various dates appears to have reported the imported goods as: –

(i) Dyed woven polyester fabric coated/laminated with Polyurethane,

(ii) Dyed/printed polyester fabric, and

(iii) Dyed polyester fabric coated/laminated with Polyurethane

against the declared “Polyester Coated Fabric (Polymeric Compound)”. With the above report, the declared classification of the appellant under CTH 5903 9090 was proposed to be classifiable under CTH 5407 6190 and CTH 5903 2090.

3.3 The said goods appeared to the Revenue to be attracting Anti Dumping Duty (‘ADD’ for short) and the same appears to have been proposed, in response to which, there is no dispute that the appellant had deposited an amount of Rs.2,37,86,402/- towards the same.

3.4 Thereafter, it appears that the DRI seized the imported goods vide seizure memos dated 19.10.2022 and 18.11.2022 and the said goods were permitted to be warehoused in terms of Section 49 of the Customs Act, 1962.

3.5 It appears that the appellant pleaded before the authorities that it had only ordered for “Polyester Coated Fabric (Polymeric Compound)” and upon coming to know that a different product/goods had been exported by the supplier, they had immediately contacted the foreign supplier, in response to which their supplier appears to have accepted their mistake in wrong shipment and in turn, had requested the appellant to re-export the same back to them.

3.6 The appellant appears to have pleaded that on the request of their supplier, they sought for provisional release of the seized goods, for the purposes of re-export, vide their letter dated 19.04.2023. It also appears that the appellant brought to the notice of the officials as to the legal position for release of the seized goods as prescribed under Section 110(2) ibid., when no notice was issued under Section 124(a) to the person from whose possession the goods were seized.

3.7 There being no response from the DRI/Department, it appears that the appellant approached the Hon’ble High Court of Judicature at Madras and the Hon’ble High Court appears to have directed the Department to decide the application dated 19.04.2023 filed by the appellant for provisional release, within a period of 10 days.

3.8 Consequently, the adjudicating authority has passed an Order dated 20.05.2023 rejecting the request for provisional release on the ground that the investigation was at crucial stage and under process and therefore any decision on re-export of the goods at that stage would jeopardize the investigation.

3.9 Seriously aggrieved by the said rejection, the appellant appears to have approached the Commissioner (Appeals), Custom House, Chennai.

4. The first appellate authority having considered the contentions of the appellant has, however, rejected the request for provisional release on the very same ground that the investigation was still under progress. The first appellate authority has recorded the pleadings in 32 paragraphs running to about 18 pages. He, however, has not countered the pleadings on   law as    well as facts urged by the appellant in the impugned order.

5. The crux of the contentions of the appellant before us are as under: –

  • No Notice under Section 124(a) having been issued, seizure of the goods was clearly without jurisdiction and illegal.
  • Investigation having been completed with the issuance of Show Cause Notice, the seized goods may not be required for investigation.
  • In any case, they had already deposited over 2.37 crores which is sufficient to protect the interests of the Revenue.
  • The foreign supplier having agreed to take back the goods, any delay in re-export would result in financial loss to the appellant.

6. Per contra, Shri N. Satyanarayan, Ld. Assistant Commissioner, supported the findings in the impugned order.

7. Heard both sides and perused the record.

 7.1 It is not the case of the Revenue that the imported goods were either prohibited or forbidden or banned by any Foreign Trade Policies. Even if it is proved that it is a case of mis-declaration, the interest of the Revenue is always safeguarded by the undisputed fact of deposit of over Rs.2.37 crores by the appellant and in any case, there is no scope for re-valuation since the goods in question are not requested for clearance for home consumption, rather for re-export.

 8.2 Undoubtedly, any delay in provisional release would only be detrimental to the financial interests of the assessee since it is the assessee who would be liable to pay warehousing charges, demurrages, etc., and there may also be a fear in the mind of the appellant as to rejection by the foreign supplier in case of delay in re-export. The pleading of the appellant as to the acceptance by the foreign supplier on the wrong shipment as well as taking back the goods in question clearly shows the bona fides of the appellant, which are not at all doubted anywhere by the authorities below.

9. In view of the foregoing, we do not find any justifiable case made out by the authorities for not permitting the bona fide request for re-export of the seized goods and hence, we set aside the impugned order. Further, we also direct the adjudicating authority to accede to the request for provisional release of the seized goods forthwith after taking suitable bond and Bank Guarantee.

10. The appeal is disposed of on the above terms.

(Order pronounced in the open court on 3 1.10.2023)

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