CESTAT Quashes ₹10.8 Crore Customs Duty Demand, Rejects Reliance On Wikipedia, Internet Material

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Delhi, has set aside a Rs. 10.8 crore customs duty demand and penalties against a marble importer, finding that in this case the allegation of diversion of imported marble into the domestic market was based on Wikipedia and other internet material, as well as unproven third-party statements.

The tribunal noted that the department had relied on “Wikipedia and other information available on the internet” to conclude that “Harmony Brown” marble is available only in India.

A bench of President Justice Dilip Gupta and Technical Member P.V. Subba Rao held the following:

“Information obtained from the internet cannot be solely relied upon to assert that the Harmony Brown/Fantasy Brown is available only in India and on that ground fasten liability of duty on the United or to hold that it had diverted such a large quantity of marble blocks.”

The case arose after searches conducted between January 9 and 12, 2020, where the department alleged a shortage of 8,351.58 MT of imported marble and proposed duty on the entire imported quantity of 15,104.1 MT. The Commissioner confirmed demand on 14,184.84 MT along with penalties.

Before the tribunal, the appellants argued that there was no evidence of diversion, pointing out that no buyers or transporters were identified and no consignments were intercepted. They also said exports had been verified as genuine.

The tribunal noted that even as per the department's own case, 6,752.56 MT of marble was physically available in the factory.

“Thus, even according to the SCN this stock was lying in the factory of the United, a 100% EOU and it was not diverted. Such being the case, there is absolutely no case to demand duty on this quantity of the marble.”

For the remaining quantity, the tribunal held that the allegation of diversion was also based on statements of third parties, which were not admitted in evidence in accordance with law.

“Only if the Commissioner admits them as evidence as per section 138B of the Act will they be relevant.”

“Therefore, the demand of duty on 8,351.58 MT of rough marble blocks said to have been diverted into domestic market after exporting marble slabs made of Indian marble cannot be sustained and needs to be set aside.”

The Tribunal also set aside penalties, finding no suppression or misstatement at the time of import and no evidence of false declarations. Accordingly, the impugned order was set aside, and all appeals were allowed.

For Appellants: AdvocateS A.K. Prasad; Jitin Singhal

For Department: Bhagwat Dayal, Authorized Representative