Custom, Excise & Service Tax Tribunal
Maliakkal Industrial Enterprises vs Cochin-Cus on 5 December, 2025
C/21028, 21153/2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL
BANGALORE
REGIONAL BENCH - COURT NO. 1
Customs Appeal No. 21028 of 2015
(Arising out of Order-in-Original No. COC-CUSTM-000-COM-41-14-
15 dated 28.01.2015 passed by the Commissioner of Customs,
Cochin.)
M/s. Maliakkal Industrial
Enterprises Appellant(s)
D. No.XXI / 1773, Palluruthy,
Kochi - 682 006.
VERSUS
The Commissioner of Customs
Customs House, Respondent(s)
Kochi - 682 009.
WITH
Customs Appeal No. 21153 of 2015
(Arising out of Order-in-Original No. COC-CUSTM-000-COM-41-14-
15 dated 28.01.2015 passed by the Commissioner of Customs,
Cochin.)
The Commissioner of Customs Appellant(s)
Customs House,
Kochi - 682 009.
VERSUS
M/s. Maliakkal Industrial
Enterprises
D. No.XXI / 1773, Palluruthy, Respondent(s)
Kochi - 682 006.
APPEARANCE:
Shri Kuryan Thomas, Advocate for the Assessee.
Shri Maneesh Akhoury, Asst. Commissioner (AR) for the Revenue
CORAM:
HON'BLE MRS. R. BHAGYA DEVI, MEMBER (TECHNICAL)
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FINAL ORDER NO. 21935 - 21936 / 2025
DATE OF HEARING: 12.08.2025
DATE OF DECISION: 05.12.2025
PER: R. BHAGYA DEVI
These two appeals Appeal No.C/21028/2015 filed by the
appellant M/s. Malliakkal Industrial Enterprises and
C/21153/2015 filed by the Revenue are against common Order-
in-Original dated 28.01.2015 passed by the Commissioner of
Customs, Cochin.
2. The appellant M/s. Malliakkal Industrial Enterprises
imported 29 consignments of boric acid/boric acid anhydrate
during 19.10.2005 to 26.06.2013. Notification No.2 (RE
06)/2004-2009 dated 07.04.2006 (Sl.No.7) stipulated that
import of boric acid for non-insecticidal purposes shall be
permitted only on the basis of Import Permit issued by Central
Insecticide Board and Registration Committee under the Ministry
of Agriculture. At the time of import, the appellant did not
furnish the requisite Import Permit, hence, were not allowed to
clear the goods. The appellant approached the Hon'ble High
Court of Kerala and the Hon'ble High Court vide order dated
15.02.2012 in Writ Petition No.1577 of 2006 (K) held that as
per Section 38(b) of the Insecticide Act 1968, if goods falling
under the purview of the above Act were imported for non-
insecticidal use, provisions of the Act would not apply and hence
the condition in the import policy requiring importers to get
registered under the Insecticide Act, 1968 for applying for
licence to import boric acid was arbitrary and unsustainable. This
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order was challenged by the Revenue and the Division Bench of
the Hon'ble High Court of Kerala vide Order dated 03.06.2014 in
Writ Appeal No.648/2012 set aside the order of the Single
Bench. During the interregnum period, based on the directions
of the Hon'ble High Court, the imports of boric acid were
permitted after execution of bond in terms of Section 18 of the
Customs Act, 1962. The Revenue issued show-cause notice
dated 01.10.2014 under Section 124 read with Section 143 of
the Customs Act, 1962 alleging that the goods were liable for
confiscation under Section 111(d) of the Customs Act, 1962 read
with Section 3(3) of the FT(D&R) Act, 1992 and were liable for
penalty under Section 112(a) of the Customs Act, 1962. This
show-cause notice was adjudicated and the Commissioner in the
impugned order held that the goods were liable for confiscation
and accordingly, imposed a penalty of Rs.4,00,000/- on the
appellant under Section 112(a) of the Customs Act, 1962.
Aggrieved by this order, the appellant is in appeal before this
Tribunal. Revenue has also filed an Appeal No.ST/21153/2015
against the same impugned order dated 27.01.2015 on the
ground that the adjudicating authority erred in setting aside the
redemption fine and imposed less penalty, which is required to
be redetermined.
3. The Learned Counsel on behalf of the appellant submitted
that the direction of the Revenue to obtain permit from the
Central Insecticide Board and Registration Committee was
challenged by the appellant before the Hon'ble High Court of
Kerala and based on the Hon'ble High Court directions, the
Revenue permitted clearance of boric acid consignments on
payment of duty and the same was released on execution of a
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bond by the appellant. The Writ Petition which was in favour the
appellant was challenged by the Revenue and the Division Bench
of Hon'ble High Court of Kerala held against the appellant by
setting aside the order of the Single Bench. Pursuant to that, the
show-cause notice was issued under Section 124 and 143 of the
Customs Act, 1962 proposing confiscation and penalty. It is
submitted that the goods were provisionally cleared based on
the orders of the Hon'ble High Court, hence, the provisions of
Section 111(d) for confiscation and Section 112(a) for imposition
of penalty cannot be invoked. It is also submitted that the end-
use condition of the bond that the imports to be used for
industrial purpose only was satisfied and therefore, confiscation
or penalty does not arise. Further, the appellant submits that the
provisions of Section 124 and 143 could not have been invoked
as the bond executed by them was a Provisional Duty (PD) Bond
under Section 18 of the Customs Act, 1962.
4. The learned Authorized Representative for the Revenue
submitted that it is a fact that import permit was required from
Central Insecticides Board and Registration Committee at the
time of clearance of the impugned products as is held by the
Division Bench of the Hon'ble High Court of Kerala. The appellant
had failed to produce the same at the time of import. Though the
goods were released provisionally based on the directions of the
Hon'ble High Court of Kerala, the fact still remains that the
substantial condition of import was not satisfied by the
appellant, hence, as per the bond, the goods were liable for
confiscation and penalty was rightly imposed.
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5. Heard both sides. The undisputed facts are that the
appellant vide 29 Bills of Entry imported boric acid for non-
insecticidal purposes and as per the Notification, they were
allowed to import only on production of a registration
certification from the concerned authorities. Rejecting this
direction of the Revenue, the appellant filed Writ Petition and
pending the decision on the issue the impugned goods were
cleared provisionally as per the directions of the Hon'ble High
Court of Kerala. The order dated 07.02.2007 of the Hon'ble High
Court is reproduced below:
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Accordingly, the Revenue cleared the goods on the basis of a PD
bond reproduced below:
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6. Again, on 23rd July 2013 the Hon'ble High Court issued
another order for provisional release on the condition that the
goods are used only for industrial purposes. The order is
reproduced below:
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7. There are 29 Bills of Entry involved in this appeal as listed
below which are for the period from 19.10.2005 to 26.06.2013.
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Admittedly, Sl. No. 28 & 29 were imported prior to Notification
No. 6/2004-2009 dated 07.04.2006 and are not part of the
dispute. For the remaining Bills of Entry, the imports are
between 30.05.2006 to 26.06.2013.
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8. During this period, the consignments were provisionally
cleared based on the directions of the Hon'ble High Court and
also it is to be noted that the Hon'ble High Court of Kerala at
Ernakulam in the appellant's Writ Petition (Maliakkal Industrial
Enterprises Versus Union of India 2013 (290) E.L.T. 330
(Ker.) (15-2-2012) observed as follows:
"8. ..................................... According to me, for valid imposition
of such a condition on importers, Section 38 of the Insecticides Act,
1968 should have been qualified by words like, "subject to provisions
of the export-import policy", "except otherwise provided for in any
other law for the time being in force", which is not the case here. Or
else, an appropriate provision should be made in the Foreign Trade
(Development and Regulation) Act, 1992, or at least in the import
policy, making it obligatory on the authorities under the Insecticides
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Act, to consider applications for registration of boric acid, which is not
intended for use as an insecticide. In the above circumstances, I have
no doubt in my mind that the impugned condition in the import policy
requiring the petitioners to take out a registration under the
Insecticides Act, 1968, for applying for licence to import boric acid is
arbitrary and unsustainable and is liable to be quashed. I do so".
Thus, it is pertinent to note that the Hon'ble High Court (Single
Bench) during the period of dispute had clearly held that the
appellant was not required to produce the registration certificate.
However, the Division Bench on appeal by the Revenue had set
aside the above decision of the Hon'ble High Court (Single
Bench) and held that registration certificate was necessary for
the imports. The Division Bench on appeal filed by the Revenue
(Union Of India Versus Maliakkal Industrial Enterprises
2015 (330) E.L.T. 924 (Ker.) (3-6-2014) observed as
follows:
"3. A learned Single Judge allowed the writ petitions (four in number).
The writ petitions have been allowed on two grounds. It was firstly
found that subordinate legislation should not only be in conformity with
the Constitution and parent legislation, but it also must conform to any
other law made by the legislature. It was accordingly found that
imposition of condition of registration under the Act, in respect of
insecticides which were imported for non-insecticidal purposes, was
contrary to the Act in view of Section 38 of the Act, which exempted
insecticides which were imported meant to be used for non-insecticidal
purposes. The next ground on which the writ petitions were allowed
was that requiring the importers to get themselves registered under the
Act was arbitrary and it was unworkable since the Act did not apply to
insecticides imported for non-insecticidal purposes. Registration was not
contemplated in respect of such insecticides and it could also be
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refused by the authorities. Another learned Single Judge allowed one of
the writ petitions [W.P.(C) No. 11388/2005] following the judgment of
the learned Single Judge in the batch of writ petitions.......
...............
55. No doubt, if the restriction had not been imposed by law (the amendment on 7-4-2006 to the statutory policy), the question would arise as to what is the effect of executive instructions on the right to import boric acid as per the statutory policy till the date of the amendment that is 7-4-2006. An executive order cannot impinge on a legal right. There was a right available under the extant statutory policy before the amendment. It could be said that an executive order could not have imposed a restriction on the right available under the policy. But, after the amendment with effect from 7-4-2006 the issue is purely academic as restriction is placed by statutory amendment".
9. The Review Petition against the above order filed by the appellant was also dismissed (Maliakkal Industrial Enterprises Versus Union of India 2017 (353) E.L.T. 172 (Ker.) (dated 28-2-2017) observing as follows:
"16. The learned counsel for the review petitioners submits that though the liability initially mulcted upon by the Commissioner was to a nominal extent, it has now been sought to be enhanced by filing an appeal at the instance of the Department and hence the grievance. This Court does not intend to express any opinion with regard to the quantification of the liability, either towards the duty or the penalty, as it is open for the review petitioners to have the same challenged by way of appropriate proceedings in accordance with law.
17. Before parting with the case, it is necessary to make an observation that the common judgment was passed by the Division Bench of this Court nearly 2½ years ago. Despite the specific Page 13 of 17 C/21028, 21153/2015 observation made by the Bench in Paragraph 45 as to the course being pursued in respect of 'Local manufacturers', the fact remains that they are still to obtain the registration, though their application is stated as pending, as put forth by Mr. Santhosh Mathew - the learned counsel appearing for the 6th respondent. Absolutely no explanation is forthcoming from the part of the Government, as to the delay involved, virtually permitting the 'Local manufacturers' to deal with the product without getting any registration envisaged under the relevant provisions of law. This being the position, the plea of 'discrimination' raised by the review petitioners, which was 'left open' by the Division Bench assumes more importance. It is open for the review petitioners to pursue appropriate proceedings, in accordance with law, for redressal of the grievance, by virtue of the right reserved in Paragraph 53 of the common verdict, extracted already.
18. With the above observations, interference is declined and the review petitions are dismissed".
10. From the above discussions, it is clear that the imports made by the appellant have been cleared under the directions of the Hon'ble High Court and during the relevant period of dispute, the Hon'ble High Court had held in favour of the appellant. The decision of the Division Bench of the Hon'ble High Court dated 03.06.2014 was much later after the imports had taken place. Moreover, the Division Bench of the Hon'ble High Court of Kerala vide order dated 23.07.2013 had also held that the consignment already cleared provisionally by the appellant shall be used only for industrial purposes. Accordingly, the Revenue vide letter dated 30.07.2013 (reproduced below) had directed the appellant to produce evidence to the effect that the impugned goods are used only for industrial purposes. The appellant in turn complying with the above condition produced various end-use Page 14 of 17 C/21028, 21153/2015 certificates vide letter dated 09.10.2014 (reproduced below) indicating that the consignments were used for industrial purposes only.
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11. In view of the above, I find that during the disputed period, the consignments were cleared on the directions of the Hon'ble High Court of Kerala and the directions of the Revenue to comply with the condition that it will be used only for industrial purpose also stands complied. Hence, the question of imposing penalty under Section 112(a) does not arise. Also taking into consideration the fact that the Commissioner in the Page 16 of 17 C/21028, 21153/2015 impugned order held that since the goods are not physically available cannot be confiscated nor redemption fine be imposed. I do not find, any irregularity in clearance of the imports to attract penalty under Section 112(a) of the Customs Act, 1962. Moreover, it is a fact that the bond is executed under Section 18 while the show-cause notice is issued under Section 124 read with Section 143 of the Customs Act, 1962, which is not in accordance with provisions of Section 18 of the Customs Act, 1962. Accordingly, the penalty is set aside and the appeal No.C/21028/2015 filed by the appellant is allowed.
12. In Appeal No. C/21153/2015, the Revenue is in appeal on the ground that the Commissioner had failed to impose redemption fine under Section 125 of the Customs Act, 1962 and in not imposing commensurate penalty under Section 112(a). For the reasons discussed above, since the goods were cleared based on the directions of the Hon'ble High Court of Kerala, we do not find any reason to impose redemption fine and penalty, in the circumstances, the goods were imported and cleared. Consequently, the appeal filed by the Revenue is rejected.
Appeal No. C/21028/2015 is allowed and Appeal No. C/21153/2015 is dismissed.
(Order pronounced in Open Court on 05.12.2025.) (R. BHAGYA DEVI) MEMBER (TECHNICAL) rv Page 17 of 17