The Customs, Excise and Service Tax Appellate Tribunal has clarified that confiscation of imported goods under Section 111(d) of the Customs Act, 1962 cannot be justified solely for failure to comply with a procedural BIS registration requirement when there is no evidence of dishonest intent or mala fide. This ruling reinforces the principle that administrative penalties must be proportionate and grounded in culpability, not technical non-compliance.
Background & Facts
The Dispute
The appellant, M.G. Bakers Pvt Ltd, imported stainless steel deep fryers under Tariff Item 84198110, declaring them accurately in the Bill of Entry dated 05.04.2025. At the time of import, the Bureau of Indian Standards (BIS) Quality Control Order, 2024, mandated that such electrical appliances require mandatory BIS registration by the foreign manufacturer. The appellant, as the importer, did not possess or submit a BIS certificate. Customs authorities treated the goods as "prohibited" under Section 2(33) of the Customs Act and ordered confiscation under Section 111(d), with a redemption fine of Rs. 25,000.
Procedural History
- 05.04.2025: Bill of Entry filed; goods examined and found lacking BIS certification
- 21.07.2025: Commissioner (Appeals), CGST Ludhiana, upheld confiscation order
- 03.02.2026: Appeal heard before CETAT, Chandigarh Regional Bench
- 26.02.2026: Tribunal delivered final order setting aside confiscation
Relief Sought
The appellant sought: (1) Setting aside of the confiscation order; (2) Release of goods without penalty; (3) Recognition that the BIS requirement under the 2024 Order had been superseded by the 2025 Order, which deferred compliance to 19.03.2026.
The Legal Issue
The central question was whether Section 111(d) of the Customs Act, 1962 permits confiscation of goods for a procedural failure to obtain BIS registration, where the importer acted in good faith and the violation occurred during a transitional regulatory period with no mens rea established.
Arguments Presented
For the Appellant
The appellant argued that the Quality Control Order, 2024, was superseded by S.O. 2232(E) dated 19.05.2025, which explicitly deferred the effective date of BIS registration to 19.03.2026. The appellant emphasized that the 2025 Order contained a saving clause "except as respects things done or omitted to be done before such supersession," which did not validate retrospective enforcement. Counsel contended that BIS registration is a procedural obligation on the manufacturer, not the importer, and that no mala fide or fraudulent intent was proven. Reliance was placed on the principle that confiscation is a draconian remedy requiring proof of culpability.
For the Respondent
The Department argued that at the time of import (05.04.2025), the 2024 Order was in force and compliance was mandatory. It contended that the 2025 Order, while superseding the 2024 Order prospectively, did not nullify violations already committed. The Department maintained that the goods were imported in contravention of a statutory condition, thereby falling squarely within the definition of "prohibited goods" under Section 2(33), justifying confiscation under Section 111(d).
The Court's Analysis
The Tribunal undertook a careful statutory and contextual interpretation of the Quality Control Orders and the Customs Act. It acknowledged that the 2025 Order explicitly deferred the BIS requirement to 19.03.2026 and that the Department itself admitted the goods were not prohibited in nature but merely subject to a procedural condition.
"The registration with the BIS is only a procedural requirement for which there is no justification for confiscation of the goods and imposition of penalty."
The Court distinguished between prohibited goods - those absolutely barred from import - and goods subject to regulatory conditions. It held that failure to comply with a procedural requirement, absent evidence of intent to evade law or deceive authorities, does not transform permitted goods into prohibited ones. The Tribunal emphasized that mens rea is essential for penal consequences under the Customs Act, citing settled principles from CIT v. P. Mohanakrishnan and Union of India v. M/s. R. K. Industries.
The Court further noted that the adjudicating authority had already permitted re-export, indicating that the goods were not inherently unlawful. The imposition of confiscation, therefore, was disproportionate. The Tribunal concluded that a redemption fine, not confiscation, was the appropriate remedy for a procedural lapse.
The Verdict
The appellant prevailed. The Tribunal held that confiscation under Section 111(d) is not warranted for procedural BIS registration lapses in the absence of mens rea, and set aside the confiscation order. The goods were ordered released upon payment of a reduced redemption fine of Rs. 15,000.
What This Means For Similar Cases
Confiscation Requires Proof of Culpability
- Practitioners must now challenge confiscation orders where the violation is purely procedural and no fraud, concealment, or intent is alleged
- The burden shifts to the Department to establish mala fide or deliberate evasion, not mere non-compliance
- Importers can rely on this judgment to argue against disproportionate seizure of goods under Section 111(d)
Regulatory Transitions Do Not Validate Retroactive Enforcement
- When a new order supersedes an earlier one with a deferred effective date, violations occurring between the supersession and the new effective date are not automatically penalized
- The saving clause in S.O. 2232(E) applies only to completed acts, not to ongoing compliance obligations
- Importers should document reliance on transitional notifications to defend against retrospective penalties
Procedural Non-Compliance ≠ Prohibited Goods
- Goods subject to registration, certification, or labeling requirements are not "prohibited" under Section 2(33) unless explicitly banned
- Customs authorities must distinguish between regulatory non-compliance and statutory prohibition
- Redemption fines, not confiscation, are the appropriate remedy for technical breaches of quality control norms
