S. Kantilal & Company Vs Commissioner of Customs (CESTAT Mumbai)
In a case involving the mis-declaration of imported goods, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in Mumbai has ruled that a redemption fine cannot exceed the market value of the seized goods, less any duty payable. The ruling was made in the appeal of S. Kantilal & Company vs. Commissioner of Customs, which challenged the Principal Commissioner’s order imposing a redemption fine of ₹12,50,000 and penalties totaling ₹7,00,000 on the appellant firm and one of its partners.
The case originated from an import by S. Kantilal & Company of what was declared as “Rough Diamonds” valued at ₹1.24 crore from a Dubai-based firm. Upon examination by Customs and the Gemmological Institute of India, the goods were identified as low-value “Natural Topaz” worth only ₹8,291. Following an investigation, the Customs authorities alleged mis-declaration and proposed a confiscation of the goods along with fines and penalties.
The case was first remanded by CESTAT to the Commissioner for reconsideration, as the appellant had not previously argued the proportionality of the fine. In the second round of litigation, the Principal Commissioner maintained the high fine and penalty, citing a nexus between the importer and exporter. The Commissioner argued that the transaction was a ploy to launder money, and the high fine was necessary to adequately punish the firm as an “economic offender.”
