CESTAT Reduces Penalty for Jennex Granite Industries in Import Violation Case

Tribunal finds penalty disproportionate, lowers fine from Rs. 4 lakh to Rs. 1 lakh for abandoned restricted goods import.

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in Chennai delivered a significant judgment on November 28, 2025, in the case of M/s. Jennex Granite Industries versus Commissioner of Customs. The tribunal partially allowed the appeal filed by Jennex Granite Industries, reducing the penalty imposed for attempting to import restricted goods without proper authorization from Rs. 4,00,000 to Rs. 1,00,000.

The case centered around the appellant, a 100% Export Oriented Unit (EOU), which had imported rough granite blocks without the necessary license required under the Foreign Trade Policy 2009-2014. The goods were deemed restricted and subsequently classified as prohibited due to non-compliance with import conditions. Despite attempts to abandon the goods due to escalating costs and a dispute over shipping charges, the original adjudicating authority ordered absolute confiscation and imposed a substantial penalty under Section 112(a) of the Customs Act, 1962.

The tribunal, presided over by Mr. Vasa Seshagiri Rao, Member (Technical), found that while the appellant failed to comply with the import conditions, there was no malafide intent in their conduct. The tribunal highlighted that the penalty must be proportionate to the circumstances and the value of the goods involved. Citing precedents from the Supreme Court and other tribunal cases, the judgment emphasized that restricted goods under the Foreign Trade Policy are treated as prohibited if conditions are not met.

The decision marks a notable consideration of proportionality in penalties within the framework of customs law. The judgment also serves as a reminder of the stringent requirements for importers under the Foreign Trade Policy and the repercussions of non-compliance.

Bottom Line:

Customs Law - Restricted goods under Foreign Trade Policy are deemed prohibited goods if conditions for their import are not complied with - Penalty for attempting to import restricted goods without proper authorization can be imposed, but quantum of penalty should be proportionate to the circumstances and value of the goods.

Statutory provision(s): Customs Act, 1962 Section 111(d), Section 112(a), Section 23(2)

M/s. Jennex Granite Industries v. Commissioner of Customs, (CESTAT)(Chennai) (Regional Bench) : Law Finder Doc Id # 2820817