Supreme Court Voids Customs Penalty Order Relied on AI-Generated Fake Precedents

The appellant faced a penalty of Rs 425 27 99 100 under Section 114 of the Customs Act, 1962 for allegedly misdeclaring natural diamonds as lab-grown to attract a lower tariff. After the High Court of Gujarat dismissed his appeal, the matter reached the Supreme Court.

The Bench declined to address the penalty merits upon finding that the Original Authority’s Order-in-Original had rested on non-existent and AI-hallucinated case citations. Relying on Pooja Ramesh Singh v. Jammu & Kashmir Bank Ltd., the Court held that any reliance on unverified AI-generated precedents amounts to judicial misconduct and warrants zero tolerance. Such decisions “are no decision in the eyes of the law” and must be set aside. The Supreme Court vacated the impugned order, leaving substantive issues open for fresh adjudication without unauthenticated AI material.