Case Law Details

Case Name : Asok Sparklers Factory Vs Commissioner of Customs (CESTAT Chennai)
Appeal Number : Customs Appeal No. 40419 of 2023
Date of Judgement/Order : 21/11/2023
Related Assessment Year :

Asok Sparklers Factory Vs Commissioner of Customs (CESTAT Chennai)

Introduction: The case of Asok Sparklers Factory vs Commissioner of Customs unfolds a legal tussle over the imposition of a redemption fine on the re-export of imported Titanium Powder. The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Chennai have remanded the matter to assess the response of the Directorate General of Foreign Trade (DGFT).

Detailed Analysis:

1. Background of the Case:

  • The appeal challenges the Order-in-Appeal dated 03.07.2023, wherein the Commissioner of Customs (Appeals-II), Chennai, upheld the decision of the original authority.

2. Basis of Dispute:

  • The appellant-importer filed a Bill of Entry for clearance of goods, including Titanium Powder, a restricted item requiring DGFT clearance.
  • The absence of DGFT import license led to the adjudicating authority invoking Section 111(d) of the Customs Act, leading to confiscation with an option for redemption.

3. Order-in-Original and Appeal:

  • The original authority observed the waiver of the Show Cause Notice and ordered redemption under Section 125(1) for re-export upon a redemption fine of Rs.15,000.
  • The appellant appealed, but the first appellate authority affirmed the decision, leading to the current appeal before CESTAT Chennai.

4. Appellant’s Arguments:

  • The appellant contends Titanium Powder is restricted, not prohibited, under the Customs Act.
  • The application for import authorization is pending with DGFT, and no order has been issued yet.
  • Cites the distinction between prohibited and restricted goods per the Supreme Court and refers to relevant CESTAT orders.

5. Respondent’s Defense:

  • The Deputy Commissioner defends lower authorities, asserting the requirement of a license for the import of restricted items.
  • Points to the first appellate authority’s view that importing restricted goods without a license may be treated as prohibited.

6. CESTAT Decision:

  • CESTAT Chennai refrains from deciding on the merits and focuses on the pending DGFT application.
  • Emphasizes the bona fides of the appellant in addressing the requirement belatedly.
  • Sets aside the impugned order, remanding the matter to the adjudicating authority for a fresh decision post DGFT response.
  • Stresses the need for a de novo speaking order considering the DGFT’s decision.

Conclusion: The CESTAT Chennai, in the Asok Sparklers Factory vs Commissioner of Customs case, has remanded the matter, emphasizing the importance of awaiting the DGFT’s response on the pending application for import authorization. The distinction between prohibited and restricted goods, as established by the Supreme Court, remains a crucial aspect for future adjudication.


This appeal is filed against the Order-in-Appeal No. Seaport C. Cus. II No. 463/2023 dated 03.07.2023 passed by the Commissioner of Customs (Appeals-II), Chennai.

2. Heard A. Aruna, Ld. Advocate for the appellant and it is her case that the appellant-importer had filed Bill-of-Entry No. 9045755 dated 10.06.2022 for clearance of the goods which are mentioned in ‘Table-A’ of the Order-in-Original dated 05.08.2022. Out of the seven items, “Titanium   Powder” at Sl. No. 2 appeared to be a restricted item as per the import policy, requiring licence from the DGFT for clearance of the same for home consumption.

3. It is an undisputed fact that the appellant had not submitted any such DGFT import licence for import of the Titanium Powder, which was treated as sufficient reason by the adjudicating authority to hold the said goods liable for confiscation under Section 111(d) of the Customs Act, 1962.

4. It appears that upon being pointed out, the appellant vide its letter dated 03.08.2022 requested the Deputy Commissioner of Customs to release the remaining cargo except Titanium Powder, for which an application for licence had already been made by them to the DGFT.

5. The adjudicating authority vide Order-in- Original dated 08.2022, however, has only observed that the appellant had waived the Show Cause Notice and has proceeded to hold that Titanium Powder being a restricted item requiring DGFT licence for import and the importer having not produced the DGFT licence, the said goods were liable for confiscation under Section 111(d) ibid., however, also gave an option for redemption under Section 125(1) ibid. to redeem the said goods for the limited purpose of re-export only upon the payment of redemption fine of Rs.15,000/-. He has also ordered imposition of penalty under Section 112(a)(i) ibid.

6. Feeling aggrieved, it appears that the appellant filed an appeal before the first appellate authority, but however, even the first appellate authority vide impugned Order-in-Appeal dated 03.07.2023 having held that there was no irregularity or illegality in the order passed by the original authority, thereby rejecting their appeal, the present appeal has been filed before this forum.

7. 1 The Ld. Advocate would submit at the outset that Titanium Powder is only a restricted item, but not a prohibited item under the Customs Act and therefore, the authorities below have clearly erred in treating the same as a prohibited item thereby ordering confiscation of the same.

7.2 She would also contend that the appellant, as pointed out in their letter dated 08.2022 before the adjudicating authority, had filed an application for import authorization of restricted item namely, Titanium Powder, vide application dated 12.07.2022, but the authority namely, DGFT, having not passed any order till date, no order as to confiscation should have been passed by the original authority.

7.3 She would also rely on a decision of the Hon’ble Apex Court in the case of Commissioner of Customs v. M/s. Atul Automations Pvt. Ltd. [2019 (365) E.L.T. 465 (S.C.)] wherein the Hon’ble Apex Court has clearly distinguished between prohibited goods and restricted goods after referring to the provisions of the Foreign Trade Act and Section 125 of the Customs Act. She would also place reliance on orders of the Chennai Bench of the Tribunal in the cases of Commissioner of Customs v. M/s. S.P. Associates & ors. [Final Order Nos. 41931 to 41971 of 2021 dated 27.08.2021 in Customs Appeal No. 40098 of 2021 & ors. – CESTAT, Chennai] and M/s. Magal Engg. Tech Pvt. Ltd. v. Commissioner of Customs (Chennai-II) [Final Order No. 41039 of 2019 dated 09.09.2019 in Customs Appeal No. 40408 of 2019 – CESTAT, Chennai] in support of her case.

8.1 Per contra, Shri Ambe, Ld. Deputy Commissioner, defended the orders of lower authorities. He would also submit that Section 3 of the Foreign Trade (Development and Regulation) Act requires licence for import of any restricted item, failing which the import of the said item would be deemed to be prohibited.

8.2 He would further draw my attention to paragraph 11 of the impugned order of the first appellate authority wherein the first appellate authority has held that when goods categorized as ‘restricted’ requiring an import licence are imported without licence, they may be treated as prohibited.

9. Having heard the rival contentions, I find that the only issue to be decided is: whether the authorities below were correct in imposing redemption fine while ordering re-export of the imported Titanium Powder?

10.1 Facts are not in What the original authority has missed is the application addressed to the DGFT, though belatedly, which only shows the bona fides of the appellant. When pointed out as to the requirement of licence, the appellant appears to have immediately made an application and there are no disputes that the said application is still pending with the DGFT and no order has yet been made on the said application. Hence, I am of the prima facie view that the interests of justice would demand that the matter be remanded to the file of the adjudicating authority awaiting the response from the DGFT on the application made by the appellant and then, pass an appropriate speaking order based on any such communication from the DGFT on the application for import authorization of the restricted items made by the appellant.

10.2 Hence, I do not propose to pass any order on the merits or otherwise of the claims and counter- I find that the issue, therefore, depends on the response from the DGFT on the application made by the appellant.

11. In view of the above, I set aside the impugned order and remand the matter back to the file of the adjudicating authority, who shall await the response / order on the application for import authorization of restricted items filed by the appellant and then pass a de novo speaking order upon receipt of the said order from the It goes without saying that the authority shall afford reasonable opportunities of being heard to the appellant before passing any de novo order. The adjudicating authority shall also keep in mind the binding decision of the Hon’ble Supreme Court in the case of M/s. Atul Automations Pvt. Ltd. (supra) wherein a specific distinction has been made between prohibited goods and restricted goods. All the contentions are therefore left open.

12. The appeal is treated as allowed by way of remand.

(Order pronounced in the open court on 21.11.2023)

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