ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 12.09.2025
Supreme Court Orders Refund to Patanjali Foodsβ β β Β
This Article has been written by Shri Ravi Shekhar Jha, Advocate based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.
In a landmark judgment delivered on May 19, 2025, the Supreme Court of India has ruled in favor of M/s Patanjali Foods Limited (formerly known as M/s Ruchi Soya Industries Limited), directing the Union of India and its departments to refund amounts covered by bank guarantees encashed by the customs department. The judgment, authored by Justice, sets a significant precedent in the application of the doctrine of unjust enrichment and the interpretation of Section 27 of the Customs Act, 1962.
Background of the Case
The dispute originated in 2002 when M/s M.P. β Glychem Industries Limited (later merged with Ruchi Soya Industries Limited) imported crude degummed soybean oil and filed a bill of entry for clearance. β The customs department demanded higher customs duty based on a tariff value fixed under Section 14(2) of the Customs Act. β The appellant contended that the notification fixing the tariff value was not in effect at the time of import, and duty should be assessed under Section 14(1) instead. β
To resolve the impasse, the Gujarat High Court directed the appellant to furnish bank guarantees for the differential duty amounts, allowing the goods to be cleared. β Subsequently, the appellant challenged the validity of the notification, but the High Court dismissed the writ petitions in 2012. β Following this, the customs department encashed the bank guarantees in 2013, even as the appellant’s appeal was pending before the Supreme Court. β In 2015, the Supreme Court ruled in favor of the appellant in the case of Union of India vs. Param Industries Limited, holding that the notification fixing the tariff value was not offered for sale at the time of import, making the customs department’s demand for differential duty unlawful.
Source: Supreme Court
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