CESTAT Upholds 200% Customs Duty on Pakistani-Origin Brass Scrap Imports

Hub & Links Logistics (I) Pvt. Ltd. Vs Commissioner of Customs (CESTAT Delhi)

Summary: The Customs, Excise & Service Tax Appellate Tribunal, New Delhi, Principal Bench considered connected proceedings arising from Order-in-Original No. 02/2024 dated 31.01.2024 passed by the Commissioner of Customs (Preventive), Jodhpur (HQ at Jaipur). The first appeal was filed by M/s. Hub & Links Logistics (I) Pvt. Ltd., with connected appeals involving Sanjay Porwal and M/s. Bright Metals (India) Pvt. Ltd. The dispute concerned differential customs duty on ten Bills of Entry covering Brass Scrap (ISRI Pallu), the declared country of origin, tariff classification and the consequential interest and penalties.

The proceedings originated from information received from the National Customs Targeting Centre, New Delhi. In the live consignment covered by Bill of Entry No. 6601963 dated 09.12.2021, the importer had declared the goods and port of shipment as UAE. Container tracking on the Pakistan International Container Terminal, however, disclosed that the containers had originated from Pakistan, with seal numbers matching those recorded in the Indian Customs EDI system. Further examination of past imports identified ten Bills of Entry forming the subject matter of the present proceedings. The table in the order records the assessable values, self-assessed duty, correct duty and differential duty, with total differential duty stated at ₹20,65,37,318.

The Tribunal first recorded that on 16.07.2026 the Bench had made it clear that the next hearing would be the only opportunity for submissions and that the appeals would be decided on merits in the event of failure. On the date of hearing, although the appellant’s counsel sought further time, the Bench proceeded on merits after perusing the records and hearing the Revenue’s Special Counsel.

Revenue relied upon the Tribunal’s earlier Final Order Nos. 51371–51376/2023 dated 26.09.2023 in the appellant’s own connected case, M/s. Bright Metal India Pvt. Ltd. vs. Commissioner of Customs, Central Excise, CGST, Rajasthan, concerning the live consignment under Bill of Entry No. 6601963 dated 09.12.2021. The Tribunal noted that the modus operandi was the same and that the present past-import proceedings had emerged from further investigation of the live consignment. The appellant’s counsel did not object to the reliance placed on that earlier decision.

The impugned order had recorded that the container was identified as high-risk by the National Customs Targeting Centre and that physical examination disclosed Brass scrap (pipes). Worn and torn PP bags bearing references to Karachi, Pakistan and Korangi Industrial Area were also found. The Pakistan International Container Tracking Portal showed that the container had departed from Pakistan with the same seal number reflected in the Bill of Lading. The adjudicating authority consequently treated the country of origin as Pakistan and framed the issues as whether the goods under the ten Bills of Entry originated in UAE or Pakistan and whether the importer had mis-classified them under CTH 74040022 instead of CTH 98060000.

The Commissioner also relied upon statements recorded under Section 108 of the Customs Act, 1962. The statement of Shri Kailash Vitthal Mhatre, Sr. Manager of M/s. HUB & Links Logistics (1) Pvt. Ltd., was relied upon for the admission that the Brass scrap “Pallu” loaded in Karachi was transported to Jebel Ali and then to Indian ports without unloading from the containers at Jebel Ali, with the Bill of Lading date changed while the Bill of Lading number, description, quantity, container number and seal number remained unchanged. The Directors and the agent were also recorded as admitting that the goods imported under the disputed Bills of Entry may have originated from Pakistan.

On the basis of these materials, the Commissioner held that the containers had been loaded at Karachi and transported through Jebel Ali to India without unloading at Jebel Ali, and that the Pre-shipment Inspection Certificates had been issued without actual inspection of the goods and without actual unloading and loading in UAE. The Commissioner further held that the importer had classified the goods under CTH 74040022, while Notification No. 05/2019-Customs dated 16.02.2019 inserted tariff item 98060000 and prescribed customs duty at 200% for goods originating in or exported from the Islamic Republic of Pakistan. The Tribunal records the notification and its application to the disputed goods.

The Commissioner therefore held that the goods under the ten Bills of Entry originated from Pakistan and that the country of origin had been mis-declared as UAE. The goods described as Brass Scrap “Pallu” were held not to be classifiable under CTH 74040022 but under CTH 98060000 for levy of duty in accordance with Notification No. 05/2019-Customs dated 16.02.2019, with reassessment under Section 17(4) of the Customs Act, 1962.

The earlier Tribunal order dated 26.09.2023 had already concluded, in relation to the live consignment, that the country of origin was Pakistan and that the goods were classifiable under the notification at CTH 98060000. That order also dealt with confiscation under Section 111(m), redemption fine under Section 125, and penalties under Sections 112(a)(ii) and 114AA. In the present proceedings, the Tribunal expressly stated that, to avoid repetition, the reasoning in the earlier final order would be treated as part of the present order.

Following the earlier Final Order dated 26.09.2023, the Tribunal upheld the impugned order. The appeals were accordingly dismissed.

Cases Discussed

• M/s. Bright Metal India Pvt. Ltd. vs. Commissioner of Customs, Central Excise, CGST, Rajasthan — Final Order Nos. 51371–51376/2023 dated 26.09.2023.

FULL TEXT OF THE CESTAT DELHI ORDER

Challenge in the present appeals is to the impugned order¹ whereby the Ld. Commissioner confirmed the show cause notice dated 30.12.2022 proposing demand of differential duty of Customs on classification of goods under CTH98060000 in terms of Notification 05/2019–Customs dated 16.02.2019 along with interest and penalty under Section 112(a)(i), 114A and 114AA of the Customs Act, 1962.

2. Briefly stated, the Customs Preventive Branch of the Commissionerate received information from National Customs Targeting Centre, New Delhi that M/s Bright Metals (India) Pvt. Ltd. having IEC No. 1302010841 filed Bill of Entry² No.6601963 dated 09.12.2021 at ICD CONCOR, Kanakpura, Jaipur, importing there under Brass Scrap (ISRI Pallu) and had declared country of origin and port of shipment as UAE, but the container tracking on Pakistan International Container Terminal³ divulged that the containers had originated from Pakistan. Further, the seal numbers, which were mentioned on container on PICT, were same as the seal number mentioned in ICES.

3. On further examination with respect to the past imports, it was found that in respect of the following BEs filed by the appellant, the container tracking on Pakistan International Container Terminal divulged that the containers had actually originated from Pakistan. The same numbers mentioned for the containers on PICT were matched with those mentioned in the Indian Customs EDI system. The details of 10 BEs, which are the subject matter of the present appeals are as follows:

4. Before proceeding to consider the issue on merits, we would like to take note of the order passed by the Bench on 16.07.2026, making it clear that the next date of hearing shall be the only opportunity for the parties to make their submissions, and in the event of any failure, the appeals shall be decided on merits. Today, although the Ld. Counsel appearing for the appellant had requested for some time, however, in view of the earlier order, we are constrained to hear the appeal on merits after perusing the records of the case and hearing the Ld. Special Counsel representing the Revenue.

5. Shri Sanjay Jain, representing the Revenue has placed on record the final order passed by this Tribunal in the appellant’s own case, titled as M/s. Bright Metal India Pvt. Ltd. vs. Commissioner of Customs, Central Excise, CGST, Rajasthan⁴ which related to the live consignment of import of Brass Scrap vide B.E. No. 6601963 dated 09.12.2021. The entire modus operandi is the same and in fact, it is during the further investigation of the live consignment, that the past imports relating to the present B.Es were detected. In other words, the present proceedings are an offshoot of the live consignment which has been decided by this Tribunal in the said final order, and therefore, the findings arrived therein are squarely applicable. The impugned order also takes note of it as under:

“5.2.1 I observe that the Additional Director General National Customs Targeting Centre (NCTC), New Delhi informed that high risk container no. SVWU9892740/40′ from UAE-Pakistan was being imported at ICD, CONCOR, Kanakpura, Jaipur. It was suspected by the NCTC that the said container had originated from Pakistan. Therefore, investigation was carried out and during physical examination, the container No. SVWU9892740/40 sealed with seal no. 017410. The goods were examined and identified by the approved valuer as found to be Brass scrap (pipes). During examination of the goods, some worn and torn PP bags filled with brass scrap were also found, on which the words Karachi, Pakistan, Government of Punjab, Korangi Industrial Area etc. were found printed. The said container was also verified from the website of Pakistan International Container Tracking Portal (PICT) https://pict.com.pk/en/online-tracking, which revealed that the seal no. affixed on the said container was same as originated from Pakistan. As per the said portal, the said container departed from Pakistan on 18.11.2021 with the same seal number as mentioned in the Bill of Lading No. SASLNH21715 dated 28.11.2021. The said case was investigated and has since been adjudicated.

5.2.2 I further observe that during investigation, it was found that 10 Bills of Entry were also filed earlier and cleared from ICD CONCOR on the same analogy, for which the instant Show Cause Notice was issued. I find that the main issues that are to be decided in the instant case are whether the Country of origin of the goods imported under the ten disputed Bills of Entry is UAE or Pakistan and whether the importer has mis-classified the goods imported under CTH 74040022 in place of the correct classification under CTH 98060000.”

6. The learned Counsel for the appellant has not objected to the submissions made relying on the earlier decision of this Tribunal in their own case.

7. To ascertain the country of origin of the goods imported, the Ld. Commissioner, examined the printouts taken from the PICT.com, the screenshots of the same are produced in the impugned order itself and on that basis, recorded a finding that container numbers and seal numbers reflected in the screenshot of EDI systems are matching with the printout of PICT site. Hence, it is not a case where the allegation is solely based on the online tracking of Container No. SVW989272740/40 (live consignment dealt earlier) on the website of PICT.

8. Further, the statements of the Directors/Senior Managers of the appellant companies recorded under Section 108 of the Act was taken into account. Reference is invited to the findings recorded by the Commissioner in the impugned order as under:

“5.4.2 I find that in his statement dated 04.03.2023, Shri Kailash Vitthal Mhatre, Sr. Manager of M/s HUB & Links Logistics (1) Pvt. Ltd., the delivery agent of the importer, on being shown the documents, has also admitted that as per the information contained in documents, the goods i.e. Brass scrap “Pallu” loaded in these containers in Karachi Port which were transported to JEBEL ALI and subsequently transport from JEBEL ALI to Indian Port(s) were found same and goods were not unloaded from the containers at JEBEL ALI once loaded from Karachi. B/L date of these containers was changed only and remaining i.e. B/L. No., description of goods, quantity, container no, and seal no. unchanged when reached at Indian Ports.

5.4.3 Further, on being confronted with these screenshots during the recording of their statements, both the Directors, Shri Ashish Porwal and Shri Sanjay Porwal and also Shri Abdul Kadir. Agent who arranged the import for the importer from M/s Aden Scrap, UAE, admitted that the said goods imported vide said BOEs may have originated from Pakistan.

5.4.4 Thus, on the basis the above evidences, it is clear that the containers of goods i.e. Brass scrap “Pallu” were loaded at Karachi Port, which were transported to JEBEL ALI and subsequently transported from JEBEL ALI to Indian port were found same and goods were not unloaded from the containers at JEBEL ALI once loaded from the Karachi. When these goods reached at Indian ports and only B/L date of these containers were changed otherwise the B/L No, description of the goods, quantity, container No. and seal No. remained unchanged. I find it clearly proven that the Pre-shipment Inspection Certificates issued for the goods, imported under the disputed ten Bills of Entry, were issued without actual inspection of the goods and without even unloading and loading of the goods in UAE.

5.5 Now, I take up the issue of classification of the imported goods. I observe that the importer has classified said goods namely scrap under CTH 74040022. The said CTH covers the declared goods namely Brass Scrap. However, I find that the Government of India vide Notification No. 05/2019-Customs dated 16.02.2019, inserted tariff item 98060000 specifying levy of customs duty @ 200% on “All goods originating in or exported from the Islamic Republic of Pakistan”. By virtue of the said Notification, all goods originated from Pakistan fall under CTH 98060000. In the present case, the country of origin of the goods has been established to be mis-declared as UAE in place of Pakistan.”

9. On the basis of the abovementioned findings, it was held that:

“5.7 From the above, I hold that-

(i) It is established that the goods under the disputed ten Bills of Entry were originated from TRU Pakistan and that the country of origin was mis-declared as UAE.

(ii) The said goods declared as Brass Scrap “Pallu” is not classifiable under CTH 74040022, but being originated from Pakistan, is correctly classifiable under CTH 98060000 for the purpose of levy of duty in accordance with Notification No. 05/2019-Customs dated 16/02/2019and accordingly the Bills of Entry are liable to be re-assessed in terms of Section 17(4) of the Customs Act, 1962.”

10. We may now refer to the conclusion arrived at by the Tribunal in the Final Order dated 26.09.2023, which reads as:

“32. We therefore conclude that the country of origin of the containers in question is Pakistan and therefore, the same are classifiable under the Notification No. 5/2019 as per CTH 980060000. Since the goods have been imported on the basis of fake PSIC, they are liable to be confiscated in terms of Section 111(m). In the event of confiscation, the redemption fine under Section 125 has been rightly levied. As the importer company and its director are responsible for the import having been made in violation of the statutory provisions and FTP 2015-2020, they are liable to penalty both under Section 112 (a)(ii) and also under 114 AA. We are also in agreement with the Quantum of penalty levied on the importer company and its director under the impugned order. In view of our findings, the appeals filed by the importer company and its director are devoid of any merits. The consequential relief of re-export, in the facts of the case, needs to be affirmed on payment of redemption fine and also enhanced penalty both under Section 112 (a)(ii) and Section 114AA of the Act. Thus, the appeals filed by the Department also deserves to be dismissed.”

For the sake of avoiding repetition, the reasoning given in the earlier final order be treated as part of this order.

11. Following the Final Order dated 26.09.2023, we uphold the impugned order. The appeals are, accordingly dismissed.

[Order pronounced on 20.08.2026]

Notes:

¹ Order-in-Original No. 02/2024 dated 31.01.2024

² B/E

³ PICT

⁴ Final Order Nos. 51371–51376/2023 dated 26.09.2023