Top Stories ‘Made in China’ Marking on Some Cartons Not Sufficient to Prove Smuggling Without Test Report or Documentation: CESTAT [Read Order] CESTAT ruled that ‘Made in China’ markings on some cartons without supporting evidence are insufficient to prove smuggling, and deleted penalties on appellants By Kavi Priya – On May 20, 2025 8:15 pm – 2 mins read The Kolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that mere markings such as “Made in China” on some cartons without any supporting test reports, photographs, or independent documentation are not sufficient to prove the foreign origin of seized firecrackers.

The case arose from a town seizure conducted by the Directorate of Revenue Intelligence (DRI) at a godown in Dankuni, West Bengal, where firecrackers valued at Rs. 5.82 crore were discovered and alleged to be of foreign (Chinese) origin. Read More: Different Floors of Single Building cannot be Counted as Separate “Residential Houses” u/s 54F of Income Tax Act: Delhi HC [Read Order] The department initiated proceedings against six individuals, including Santosh Kumar, a driver, and others associated with the storage and movement of the goods. The adjudicating authority ordered absolute confiscation of the goods and imposed penalties ranging from Rs. 50,000 to Rs. 10,00,000 on various appellants, which were upheld by the Commissioner (Appeals).

The appellant’s counsel argued that the firecrackers were seized in a location far from any international border, and that the seizure was based solely on the observation that “some cartons” bore “Made in China” markings. No photographs of such cartons were provided, nor were there any laboratory tests or reliable documentary evidence to establish the foreign origin of the goods. Read More: Supreme Court upholds Gujarat HC Ruling on GST Classification of ‘Fusible Interlining Cloth’ [Read Judgement] They further argued that since firecrackers are not notified goods under Section 123 of the Customs Act, 1962, the burden of proving foreign origin rested solely on the department.

The appellants also pointed out procedural lapses, including the denial of cross-examination and the department’s failure to make the godown owner a noticee in the proceedings. The revenue counsel argued that the seizure was based on credible intelligence and that the appellants, through their connections and transactions, were involved in smuggling restricted firecrackers. They argued that the markings and statements recorded during the investigation, along with mobile communication records, supported the department’s case. Read More: [BREAKING] Supreme Court Mandates Minimum 3 Years of Practice as Advocate for Entry into Judicial Service

The single-member bench comprising R. Muralidhar (Judicial Member) observed that no test reports or documentary evidence had been submitted to substantiate the claim of Chinese origin. The tribunal explained that under the Customs Act, the burden of proof lies on the department in cases involving non-notified goods, and that in the absence of corroborative evidence, markings on “some cartons” were insufficient to prove smuggling. The tribunal also took note of the fact that none of the appellants had admitted to ownership or knowledge of the foreign nature of the goods, and that no opportunity for cross-examination had been granted. The tribunal ruled that the proceedings suffered from serious evidentiary and procedural flaws, including a failure to establish the foreign origin of the goods and a disregard for principles of natural justice. It found that the penalties imposed were unsustainable in law and accordingly set aside the order of the Commissioner (Appeals) insofar as it related to the imposition of penalties on the appellants. The appeal was allowed with consequential relief. To Read the full text of the Order CLICK HERE