No Evidence of Export Attempt of Prohibited Shark Fins: CESTAT Quashes Confiscation and Penalty, Clarifies ‘Attempt to Export’ [Read Order]

The Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has set aside the confiscation of shark fins worth Rs. 55.6 crores and the penalty of ₹7 crore imposed, holding that there was no evidence of an attempt to export.

The Tribunal clarified that mere storage of prohibited goods does not constitute “attempt to export” under Section 113(d) of the Customs Act, 1962. It said that Section provides that goods attempted to be improperly exported are liable for confiscation. Specifically, clause (d) covers goods brought into or attempted to be exported from a customs area in violation of prohibitions under the Act or any other law.

Coming to the facts, a search in 2018 by the Directorate of RevenueIntelligence (DRI) led to the seizure of 2,961 kg of shark fins in Mumbai and 5,061.88 kg in Veraval, Gujarat. Since the export of shark fins is prohibited under Notification No. 110 (RE-2013)/2009-14 dated 6 February 2015, the DRI alleged that the appellant intended to illegally export them.

The Adjudicating Authority confiscated the seized goods, revalued them at over ₹55.6 crore, and imposed a penalty of ₹7 crore on appellant - proprietor of Global Impex Trading, M. Sarafath Ali.

Before the Tribunal, the appellant’s counsel Adv. Ramachandran Mattiyil asserted that there was no evidence of actual or attempted export, as there were no shipping bills, proforma invoices, buyer communications, or transport to a customs-notified area.

They contended that the DRI had relied solely on retracted statements recorded under alleged coercion. It was further submitted that trading or storing shark fins domestically was not prohibited, and valuation could not be based on uncorroborated statements.

The appellant’s counsel argued that the case was built mainly on statements allegedly obtained under coercion, which were later retracted before a Magistrate. He contended that such retracted statements, without corroborative evidence, cannot establish an intent to export, especially since storage or domestic trading of shark fins is not prohibited.

The counsel relied on the Supreme Court’s ruling in A. Tajudeen v. Union of India, 2015 and the Delhi High Court’s decision in DRI v. Mahendera Kumar Singhal, 2016.

In addition, the counsel relied on multiple Supreme Court and CESTAT decisions to submit that preparation alone does not amount to an “attempt to export” and that the burden lies on Revenue to prove such intent, which was absent in this case.

The Revenue, however, defended the confiscation and penalty, reiterating the findings of the adjudicating authority.

After hearing the submissions, the CESTAT held that merely storing shark fins in cold storage could not be treated as an “attempt to export,” since no shipping bills, invoices, buyer communications, or movement to a customs area were found.

The bench relied on Malkiat Singh v. State of Punjab (1969) and other precedents and clarified that preparation alone is not an attempt; an overt act moving directly towards export is essential. Since the department failed to produce any evidence of such intent or action, confiscation could not be sustained.

According to the tribunal “In order to constitute an act of attempt to export, the ingredients required to be fulfilled are intention, preparation, and preliminary act to export. We find that the department had not brought on any iota of evidence to prove their case that the appellant had intended to export the shark fins.”

With regard to the re-determined value of USD 1000 per kg, the bench noted that the department relied solely on an uncorroborated and retracted statement, which lacked details regarding period, quantity, quality, or corresponding shipping bills.

No follow-up statements or corroborative evidence from co-noticees were obtained. In the absence of such material, the re-determination of value at an inflated rate was held to be contrary to the Customs Valuation Rules, 2007, read with Section 14 of the Customs Act, 1962, said the court in its order.

Further, it was held that such a penalty under Section 114(i) of the Customs Act, arises only when goods are liable to confiscation. Since confiscation itself was invalid, the penalty on the proprietor was also unsustainable.

Judicial Member S.K. Mohanty and Technical Member M.M. Parthiban finally held that “We do not find any merits in the impugned order, insofar as it has confiscated the shark fins, re-determined the value at higher side and imposed penalty on the proprietor of the appellant. Therefore, the impugned order is set aside and the appeal is allowed in favour of the appellant.”

Adv. Ramchandran Mattiyil and Adv. Asmita Kuvalekar appeared for the Appellant. Mr. Ram Kumar, Authorized Representative appeared for the Respondent

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