Import Declared as Grey Fabric Found to Be Corduroy: Madras HC Upholds Confiscation and Penalties under Customs Act, But Relieves Non‑Importing Entity [Read Order]

The Madras High Court, in a case where the import was declared as grey fabric but found to be corduroy, upheld the confiscation and penalties imposed on the parties under the Customs Act by the authorities, but relieved a non-importing entity from the same.

The case arose from the import of a consignment declared as Cotton Griege (Grey) fabric. The appellant claimed the benefit of the Duty Free Replenishment Certificate (DFRC licence)

Upon clearance, the Directorate of Revenue Intelligence (DRI) had examined the consignment, finding the goods to be Corduroy and not Cotton Griege (Grey) fabric. The consignment was seized on, and an Order-In-Original was passed. The authorities treated this as a misdeclaration under Section 111(m) of the Customs Act, 1962, leading to confiscation of the goods, denial of exemption, and imposition of penalties.

The consignment consists of 40,000 meters of corduroy. The adjudicating authority had passed an order confirming misdeclaration, denying exemption under Notification No. 90/2004-Customs, and levying duty and countervailing duty.

The order also imposed a penalty of ₹47.77 lakh on Vikram Traders under Section 114A. Penalties were also imposed on associated entities and individuals under Section 112. Redemption of the confiscated goods was permitted on payment of ₹4 lakh and applicable duties. Later on appeal, the CESTAT upheld the order but reduced penalties. The tribunal, however, affirmed that the imposed goods were corduroy and not grey fabric as declared.

Aggrieved by the same, the appellants preferred an appeal before the high court. The counsel for the appellants tried to fit the imported corduroy fell with in the ambit of grey cotton fabric, but failed to prove the same.

The Division Bench of Dr. Justice AnitaSumanth and Justice P. Dhanabal held that the misdeclaration was clearly established, which clearly justifies the confiscation and penalty. Thus, the appeal filed by Vikram Traders were dismissed

The appeal filed by Shrikrishna Spinning and Weaving Mills was allowed. The court observed that the entity had no role in the subject import and could not be penalised. The penalty imposed on them was set aside.

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