CESTAT Mumbai Allows Release Of Seized Drone Parts, Says Separate Consignments Not Complete Drones

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) at Mumbai has ordered the provisional release of seized drones and drone components, holding that Customs cannot deny release by treating separate consignments of parts as complete drones without establishing a one-to-one correlation and that the parts were capable of being reassembled into complete units.

A coram of Judicial Member Dr. Suvendu Kumar Pati and Technical Member M.M. Parthiban held that the Department failed to show that the imported parts corresponded to complete drones capable of being assembled.

“It cannot just simply be said that those are drones being brought in knocked-down or Semi-Knocked Down conditions without a one to one co-relation.”

The tribunal clarified that if authorities seek to treat imported parts as complete drones in dismantled form, they must establish that the parts together form complete units capable of reassembly. Import of different components in varying quantities through separate consignments would not, by itself, mean that complete drones were imported.

The case arose from refusal to grant provisional release of goods seized by Customs on the allegation that the imports violated DGFT Notification No. 54/2015-20, which restricts the import of fully built drones while allowing the import of components.

The importers had declared the goods as “drone parts and components.” Customs alleged that the consignments, taken together, amounted to complete drones brought in parts. It was also claimed that both importing entities were controlled by the same person and had split imports across multiple Bills of Entry. The goods were subsequently seized.

Challenging the action, the appellants argued that components are freely importable under the notification and that Customs wrongly relied on tariff interpretation rules to treat the parts as complete drones. They also pointed out that they are recognised drone manufacturers supplying to Indian Defence and government agencies.

The tribunal noted that the seized goods were imported in uneven quantities, ranging from 30 PCB units to 910 charging hubs. This, it held, weakened the allegation that the consignments represented complete drones in dismantled form.

It also took note of the appellants' claim that some components were sourced domestically and observed that the material on record did not establish that imported components alone were sufficient to assemble finished drones.

On the Department's argument relating to national security and public safety, the Tribunal found no basis to conclude that the appellants' conduct would endanger public safety or national security.

On the contrary, the record showed that the appellants supplied drones to Defence and other government security agencies, which would “tighten the security umbrella.”

The tribunal also held that reliance on CBIC Circular No. 35/2017-Customs to deny provisional release was misplaced. The circular had directed Customs officers not to allow provisional release of certain categories of goods, including goods treated as “prohibited.”

However, courts have held that such restrictions cannot override Section 110A of the Customs Act, which gives authorities the power to provisionally release seized goods on conditions. The tribunal noted that the relevant restriction in the circular has been found to be contrary to the law.

Allowing both appeals, the tribunal set aside the Commissioner's order and directed provisional release of the seized goods upon receipt of the order, subject to execution of indemnity and surety bonds of equivalent amount.

For Appellant: Advocate Ashwini Kumar along with Abhishek Godase

For Respondent: Ram Kumar, Dy. Commissioner, Authorised Representative