Hyderabad: The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in Hyderabad has upheld confiscation proceedings against Bengaluru-based Oswal Minerals for transporting imported manganese ore to an unauthorised private yard instead of the public bonded warehouse specified in customs records, sustaining a ₹80 lakh redemption fine and a ₹9 lakh penalty.A division bench comprising AK Jyotishi, member (Technical), and Angad Prasad, member (Judicial), dismissed the company’s appeal and held that the movement of warehoused imported goods to Dolphin Yard, an unapproved location, amounted to a violation of the Customs Act and warehousing regulations.The order was pronounced on Aug 12, 2026. The appeal arose from an Order-in-Appeal dated Dec 12, 2025, which had upheld the Aug 8, 2024, order of the joint commissioner of Customs.Ore moved to unapproved yardThe dispute concerns 5,550 MT of manganese ore of Gabonese origin, although the quantity is referred to as 5,500 MT in certain portions of the order. The ore was imported under a Warehouse Bill of Entry dated Dec 4, 2023.According to Customs, the Warehouse Bill of Entry required the cargo to be deposited in a public bonded warehouse. Instead, the ore was directly transported and stacked at Dolphin Yard, a private open yard belonging to Green Energy Resources.The department relied on transport challans, gate registers and statements recorded under Section 108 of the Customs Act from warehouse keepers, yard supervisors and employees of Oswal Minerals to establish that the cargo had not been deposited in the designated bonded warehouse.Customs also contended that officials of Oswal Minerals were aware of and had concurred with the decision to store the goods at Dolphin Yard, relying, among other material, on WhatsApp communications. It argued that under Section 147 of the Customs Act, acts of an authorised agent are deemed to have been carried out with the importer’s knowledge and consent unless the presumption is rebutted.The Revenue maintained that Chapter IX of the Customs Act requires imported warehoused goods to be deposited only in a warehouse approved by the proper officer. It argued that unauthorised removal attracted confiscation under Section 111(j), irrespective of whether there was actual duty evasion or deliberate intent.It also said that any irregularity in the search proceedings would not displace the physical and documentary evidence showing that the goods had been stored at an unauthorised location. According to Customs, the WhatsApp messages were corroborative and not the sole basis of the case.Importer denied intent to evade dutyOswal Minerals denied any clandestine intention to evade customs duty or divert the cargo into the domestic market. It said the ore remained under the effective control of the warehouse operator and was neither sold nor commercially utilised.The company said it had engaged Green Energy Resources only as a warehouse operator and logistics provider. If the operator temporarily stored the cargo at Dolphin Yard without the importer’s knowledge, Oswal Minerals argued, it could not be held vicariously liable for the independent acts of the service provider.It also questioned the search proceedings and challenged reliance on WhatsApp messages, contending that the electronic evidence had not been collected in accordance with Section 138C of the Customs Act.Citing decisions including Bisco and Vamsee Overseas Marine, the appellant argued that procedural lapses in warehousing could not by themselves justify confiscation where there was no deliberate attempt to evade duty.Oswal Minerals further contended that a redemption fine could not be imposed after the goods had been provisionally released against a bond and bank guarantee. It also argued that the department had failed to establish mens rea, or deliberate intention, which it claimed was necessary to sustain confiscation.Customs countered that provisional release did not take away the adjudicating authority’s power to impose a redemption fine, relying on the Supreme Court ruling in Western Components.Tribunal finds clear statutory violationRejecting the appeal, CESTAT held that transporting the imported goods to Dolphin Yard instead of the designated public bonded warehouse constituted a clear contravention of Sections 59 and 60 of the Customs Act, 1962, read with the Warehouse Goods (Removal) Regulations, 2016.The tribunal held that the goods were liable to confiscation under Section 111(j) and upheld the ₹80 lakh redemption fine under Section 125 and the ₹9 lakh penalty under Section 112(a).The bench found the fine and penalty legally sustainable, fair and proportionate, and dismissed Customs Appeal No. 30067 of 2026, affirming the orders passed by the lower customs authorities.
