2026-VIL-529-MAD-CU
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CUSTOMS High Court Cases

Customs - Customs Notification 32/97 – Job Work Import – Diversion of Duty-Free Goods – Willful Suppression of Material Facts – Respondents imports betel nuts under job work scheme claiming duty exemption under Customs Notification 32/97 for manufacturing and exporting betel nut tannin - The investigation reveals that the goods were diverted to local market instead of being utilized for the stated purpose, the shipping bills for export were filed under wrong scheme code to evade EDI system scrutiny, waste disposal permission was obtained but not properly acted upon, and false claims were made regarding waste percentage and tannin content extraction – Whether the onus lies on the Department to prove that the permission for destruction of waste material was not acted upon by the importer in respect of the claimed wastage – HELD - The importers have violated the post-import conditions stipulated in Notification 32/97, particularly the condition that goods shall be utilized only for discharge of export obligation and none thereof shall be sold, loaned, transferred or otherwise used or disposed of - The Tribunal's reliance on mere permission granted for waste destruction without establishing actual compliance with the procedure is superficial and insufficient; the deliberate filing of shipping bills under wrong scheme code to circumvent the EDI system intervention, coupled with the absence of even a single correct shipping bill transaction, demonstrates wilful suppression of material information and not a bona fide mistake - The Tribunal erred in treating the consistent misrepresentation of scheme codes across all transactions as an inadvertent mistake by the Customs House Agent, when the Commissioner specifically found that the importer failed to produce even a single transaction with the correct scheme code, demonstrating a pattern rather than an isolated error - The importer's deliberate use of wrong scheme code enabled evasion of duty by deceiving the Government and preventing legitimate departmental checks and scrutiny through the EDI system's built-in intervention mechanism. The Tribunal's casual treatment of this willful suppression and its reliance on waste disposal permission to offset the incriminating materials regarding fraud is unsustainable without proper examination of both the order-in-original and SCN – The appeals filed by the Dept are allowed, the Tribunal's order is set aside, and the order-in-original passed by the Commissioner is restored
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