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Informist, Wednesday, Apr. 15, 2026

 

NEW DELHI – The Bombay High Court Wednesday held that foreign sellers cannot be held liable for the wrongs of the importers and it is the latter's liability to pay the customs duty, including any additional duty on further classification of goods. "... it is clear that the responsibility post importation of goods in India rests with the importer and the foreign exporter cannot be made liable for the violation in respect thereof," the high court said.

 

The high court quashed the show-cause notice issued by the customs department to German Karl Mayer STOLL Textilmaschinenfabrik GmbH for allegedly selling misdeclared goods to Indian importers. The court also quashed the customs department's show-cause notice to Karl Mayer India Pvt. Ltd. for providing technical and support services to the installation, start-up, and warranty of machines sold in India by the Karl Mayer Group. 

 

The German company is situated outside India, and the Customs Act did not apply to the territory outside India at the relevant point in time, the court said. The government's amendment to penalise entities for contraventions of the Customs Act, or for offences committed outside India by any person, was made in 2018, and the alleged misdeclaration of imports by the German company was prior to that, the court said. 

 

Neither the German company nor the Indian entity had submitted false information on the import of goods, the court said. "... we are of the considered view that the impugned show-cause notices in all the three petitions ought not to have been issued to the petitioners, and therefore the same are liable to be quashed and set aside, including any recovery notices that may have been issued in pursuance thereto," the court said.

 

From 2014 to 2017, the German company sold warp knitting machines to certain Indian importers. Thereafter, the Directorate of Revenue Intelligence initiated an investigation based on intelligence that certain importers in India were importing high-speed warp-knitting machines manufactured by the German company and misdeclaring them as fully-fashioned high-speed knitting machines to claim exemption.  End

 

Reported by Surya Tripathi

Edited by Saji George Titus

 

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