TaxTMI 
TaxTMI 
TaxTMI 
The Hon'ble CESTAT, Principal Bench, New Delhi, in M/s Swara Baby Products Limited Versus Commissioner of Customs-Indore - 2026 (4) TMI 447 - CESTAT NEW DELHI held that a demand for differential duty cannot be sustained on the grounds of importing quantities in excess of initial declarations under IGCR rules, if the customs authorities at the port of importation allowed the clearances.
Facts:
- M/s Swara Baby Products Limited ('the appellant') manufactures baby diapers and imports raw materials-super absorbent polymers and untreated fluff pulp-at a concessional rate of duty under Notification No. 50/2017-Cus. To avail of this benefit, the appellant was required to follow the procedure prescribed under the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017('IGCR Rules').
- The department ('the respondent') alleged that the appellant imported 2742 MT of polymers and 4343 MT of fluff pulp, which significantly exceeded the estimated quantities declared in their applications under Rule 5 of the IGCR Rules.
- A Show Cause Notice('SCN') was issued against the appellant and consequently, the Commissioner of Customs, Indore, confirmed a duty demand of Rs. 1,06,28,551/-, along with interest and an equal penalty under Section 28AA & 114A of the Customs Act, 1962('the Act'), by invoking the extended period of limitation under Section 28(4) of the Act. The appellant challenged the said duty demand by this appeal.
Issues:
- Whether the appellant has imported excess quantities of goods beyond what was declared under Rule 5 of the IGCR Rules?
Held:
The Hon'ble CESTAT, Principal Bench, New Delhi, in M/s Swara Baby Products Limited Versus Commissioner of Customs-Indore - 2026 (4) TMI 447 - CESTAT NEW DELHI held as under:
- Noted that under Sub-rule 3 of Rule 5 of IGCR Rules, the port-level Assistant Commissioner allows the benefit of an exemption only after receiving a copy of the importer's declaration forwarded by the jurisdictional Assistant Commissioner.
- Observed that It is impossible for excess goods to be cleared at a concessional rate unless the port authorities are satisfied with the documentation provided. The Assistant Commissioner at the port of importation is responsible for the collection of customs duty before releasing the goods.
- Held that it is the responsibility of the jurisdictional assistant commissioner to release goods after a copy is received by the Deputy Commissioner. But if the goods has been released, considering import of excess goods, either the jurisdiction commissioner or assistant commissioner is wrong. But, SCN does not allege any irregularity by either officer.
- Hence, in the absence of evidence showing officer error, the Tribunal presumed that the authorities were satisfied with the quantities at the time of clearance. Since there was no proof of irregularity in the clearance process, the demand for duty and the associated penalty were set aside.
Relevant Rules & Sections:
- Rule 5 of IGCR Rules, 2017: Procedure to be followed
(2) The importer who intends to avail the benefit of an exemption notification shall submit a continuity bond with such surety or security as deemed appropriate by the Deputy Commissioner of Customs or Assistant Commissioner of Customs having jurisdiction over the pre mises where the imported goods shall be put to use for manufacture of goods or for rendering output service, with an undertaking to pay the amount equal to the difference between the duty leviable on in puts but for the exemption and that already paid, if any, at the time of importation, along with interest, at the rate fixed by notification issued under section 28AA of the Act, for the period starting from the date of importation of the goods on which the exemption was availed and ending with the date of actual payment of the entire amount of the difference of duty that he is liable to pay.
(3) The Deputy Commissioner of Customs or, as the case may be, Assistant Commissioner of Customs having jurisdiction over the premises where the imported goods shall be put to use for manufacture of goods or for rendering output service, shall forward one copy of information received from the importer to the Deputy Commissioner of Customs, or as the case may be, Assistant Co
4) On receipt of the copy of the information under clause (b) of sub rule (1), the Deputy Commissioner of Customs or, as the case may be, Assistant Commissioner of Customs at the Custom Station of im portation shall allow the benefit of the exemption notification to the importer who intends to avail the benefit of exemption notification.