February 13, 2026 : In a significant relief to Larsen & Toubro Limited, the Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has set aside customs duty demands and penalties imposed on the company and its officials, holding that materials brought ashore from Bombay High were duty-paid leftovers and not freshly imported goods.
The ruling was delivered by Judicial Member Somesh Arora in Final Order Nos. 10079–10081/2026 dated 12 February 2026.
Background of the Dispute
The appeals arose from orders passed by the Commissioner of Customs (Appeals), Ahmedabad, which had confirmed duty demands and penalties against Larsen & Toubro Limited and its officials, including Ishwarlal Nimba Raghuvanshi and Rajiv Newaskar.
The department alleged that certain materials brought to shore from Bombay High had not suffered customs duty and were concealed from authorities. It was further contended that since the goods were not reflected in the Import General Manifest (IGM), they were liable to customs duty along with penalties.
L&T’s Stand
L&T argued that the materials were not fresh imports but leftover fastening materials and scrap generated during fabrication and manufacturing activities undertaken for offshore platform structures at Bombay High.
The company explained that the scrap arose from both imported and indigenous steel plates and pipes. Customs duty had been paid on scrap generated from imported raw materials during in-bond manufacturing under Section 65 of the Customs Act, 1962, while excise duty had been discharged on scrap generated from indigenous materials.
Due to the inability to segregate scrap based on origin, the company paid customs duty to ensure compliance. The leftover materials used for sea fastening during transportation were later brought back to shore.
Tribunal’s Findings
The Tribunal noted that departmental comments were sought regarding L&T’s explanation. However, the department failed to provide any justification for rejecting the company’s claim that the materials were already duty-paid.
It observed that the department itself acknowledged that the scrap was generated from both imported and indigenous materials and that appropriate duties had been discharged.
The Bench held that non-filing of an Import General Manifest could only amount to an irregularity in cases involving freshly imported goods. In the present matter, the materials were already duty-paid goods used in execution of contractual obligations at Bombay High and later returned as leftovers.
The Tribunal categorically recorded that there was no material to show that the goods were newly imported or that any duty remained unpaid. It further observed that there was nothing on record to disbelieve L&T’s explanation that the materials were leftover and already duty-paid.
Penalties and Redemption Fine Set Aside
Since the primary duty demand was found unsustainable, the Tribunal also ruled that no redemption fine could be imposed. The penalties on L&T and its officials were consequently set aside.
The Bench emphasized that no malafide intent had been established by the department and, therefore, penalties were not justified. All three appeals were allowed with consequential relief.
Cause Title: Larsen & Tourbo Limited Versus Commissioner of Customs, Ahmedabad
Case No.: Customs Appeal No. 10426 of 2015-SM (with connected appeals)
Coram: Judicial Member Somesh Arora
Date of Decision: 12 February 2026
