CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL BANGALORE REGIONAL BENCH - COURT NO. 2 Customs Appeal No. 20140 of 2024 (Arising out of Order-in-Original No. MLR-CUSTM-VS-COM-004- 2268/2023-24 dated 10.10.2023 passed by the Commissioner of Customs, Mangalore.)

M/s. Catasynth Speciality Chemicals Private Ltd., Appellant(s)

Industrial Plot # 42A, Mangalore SEZ Ltd., Bajpe, Dakshina Kannada, Mangaluru – 574 142.

VERSUS The Principal Commissioner of Customs, Respondent(s)

New Customs House, Panambur, Mangaluru – 575 010.

APPEARANCE:

Mr. Anil Kumar. B, Advocate for the Appellant M r. Sanjay Venkat, Superintendent (AR) for the Respondent CORAM:

HON'BLE MR. P.A. AUGUSTIAN, MEMBER (JUDICIAL)

HON'BLE MRS. R. BHAGYA DEVI, MEMBER (TECHNICAL)

Final Order No. 20973 / 2025 DATE OF HEARING: 13.06.2025 DATE OF DECISION: 13.06.2025 PER : R. BHAGYA DEVI This appeal is filed by the appellant M/s. Catasynth Speciality Chemicals Pvt. Ltd. against Order-in-Original No. 2268/2023 dated 10.10.2023 passed by the Principal Commissioner of Customs, Mangaluru.

2. Briefly the facts are that the appellant’s unit is located at Mangalore Special Economic Zone Ltd., (MSEZ), Dakshina Kannada operating under Rule 19(4) of SEZ Rules, 2006 for manufacture of certain speciality chemicals. They had executed Bond-cum-Legal undertaking in the prescribed Form-H under Rule 22(i) of SEZ Rules, to fulfil the obligations cast on them. A major fire accident had occurred in the appellant’s Plant No.4 manufacturing chemical products which resulted in loss of raw materials, semi-finished goods, finished goods and capital goods on account of the fire. The insurance surveyors report based on the various inspections carried out, observed that the duty foregone in respect of goods damaged in the fire accident was to extent of Rs.1,80,90,233/-. In view of the above, show-cause notice dated 12.04.2023 was issued to the appellant demanding duty amount of Rs.1,80,90,233/- along with interest. The Commissioner in the impugned order accordingly confirmed the above duty amount along with interest and confiscated the goods and allowed to redeem the goods on payment of fine of Rs.1,00,00,000/- under Section 125 of the Customs Act, 1962 and imposed penalty of Rs.20,00,000/- under Section 112(a)(ii)

of the Customs Act, 1962.

2. The Learned Counsel submitted that the goods are still lying with the Revenue and hence, the matter needs to be disposed of at the earliest in view of the directions of the Hon’ble High Court of Karnataka in Writ Petition No. 3097/2025 dated 13.02.2025. The Learned Counsel narrating the incident of fire and the destructions of the goods seeks release of the damaged goods without payment of redemption fine pending disposal of the appeal. It is also submitted that the goods are not liable for confiscation under Section 111(o) of the Customs Act, 1962 and it is also stated that the redemption fine imposed on them exceeds the market value of the damaged goods which is liable to be set aside. The appellant disputed the duty liability of Rs.1,80,90,233/- since capital goods are partially used and requests for setting aside fine and penalty.

3. The Learned Authorised Representative (AR) on behalf of the Revenue submitted that the appellant had executed a Bond- cum-Legal undertaking in terms of the SEZ Act / Rules and had procured duty-free goods for their manufacturing activity in terms of the SEZ Act / Rules. On account of the fire accident on 24.04.2021, in which there was a considerable loss of Plant and Machinery, Raw Material, Work-in-progress and Packing material Stock as also Damage to Building. Consequently, a show-cause notice was issued demanding duty on the goods destroyed in the fire accident which was adjudicated by the Commissioner of Customs, Mangalore vide OIO No. 04/2023-4 dated 10.10.2023 wherein duty of Rs.1,80,90,233/- was demanded under Section 28(1) of the Customs Act, 1962 and Section 26(1) of the SEZ Act, 2005 read with Rules 22, 25, 27, 34 and 47 of the SEZ Ru