Incorrect Fabric Label on Reimported Goods: CESTAT Finds No Misdeclaration as Composition Remains Same and Customs Duty Drawback Is Returned [Read Order]
CESTAT held there was no willful misdeclaration and it ruled that the duty demand could not be sustained to avoid double recovery.
![Incorrect Fabric Label on Reimported Goods: CESTAT Finds No Misdeclaration as Composition Remains Same and Customs Duty Drawback Is Returned [Read Order]](https://images.taxscan.in/h-upload/2025/06/11/2042321-reimported-goods-cestat-taxscan.webp "Incorrect Fabric Label on Reimported Goods: CESTAT Finds No Misdeclaration as Composition Remains Same and Customs Duty Drawback Is Returned [Read Order]")
The Chennai Bench of Customs,Excise and Service Tax Appellate Tribunal ( CESTAT ) found no misdeclaration in the case of incorrect fabric labels on reimported goods, as the actual fabric composition remained the same and the customs duty drawback was returned. PGC Corporation Limited,appellant-assessee, had imported goods into India, some of which were later exported with...
The Chennai Bench of Customs,Excise and Service Tax Appellate Tribunal ( CESTAT ) found no misdeclaration in the case of incorrect fabric labels on reimported goods, as the actual fabric composition remained the same and the customs duty drawback was returned.
PGC Corporation Limited,appellant-assessee, had imported goods into India, some of which were later exported with labels as required by the foreign buyer. After a few items were rejected, they were reimported with the same labels. While the fabric composition remained the same, the labels mentioned a different composition as per the buyer's requirement.
On reimport, the goods were tested by the Textile Committee, Chennai, which confirmed that the fabric composition was nearly the same, except for the label. Authorities treated this as misdeclaration and issued a show cause notice dated 31.07.2012, demanding duty, interest, and penalty.
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The assessee explained the transaction and the understanding with the foreign buyer, but the original authority held that there was misdeclaration and confirmed the demand. The First Appellate Authority upheld the order through Order-in-Appeal No. 80/2014 dated 20.08.2014. The appellant challenged this order before the tribunal.
The two member bench comprising of P.Dinesha ( Judicial Member) and M.Ajit Kuamr (Technical Member) heard both sides and noted that the dispute was only about the fabric composition mentioned on the label, not the actual composition of the goods. The assessee explained that the labelling error was due to internal miscommunication and that, in the case of seven shipping bills, there was no mismatch in the composition or its declaration.
The appellate tribunal observed that the assessee had voluntarily requested provisional release of the reimported goods and surrendered the duty drawback through a letter dated 19.05.2010. The reimport took place in July 2009, and the show cause notice was issued three years later, which indicated good faith.
Since the drawback was already returned with interest, the CESTAT found no case of willful misdeclaration. It held that the demand could not be sustained as it would amount to collecting duty twice. The penalty was also not justified, and the impugned order was set aside.
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In short,the appeal was allowed.
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