ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 17.11.2025
Madras High Court Quashes Customs Orders on Wheat Gluten Import Under DFIA
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.
The Madras High Court, in a significant ruling on October 15, 2025, quashed multiple orders issued by the Additional Commissioner of Customs, Chennai II Commissionerate, regarding the import of Wheat Gluten under Duty-Free Import Authorisation (DFIA). The judgment, delivered by Honourable Justice, addressed a series of writ petitions filed by M/s. Parry Enterprises India Limited and M/s. β Fame Shipping Agency, challenging the orders that denied duty exemption on imported Wheat Gluten.
Background of the Case
M/s. Parry Enterprises India Limited, engaged in importing and trading Wheat Gluten, and its licensed Custom Broker, M/s. β Fame Shipping Agency, filed writ petitions against the Additional Commissioner of Customs. β The dispute arose when the petitioners imported Wheat Gluten under DFIA, claiming exemption from customs duty as per a notification dated September 11, 2009. β The DFIA was issued for the export of biscuits, and the petitioners argued that Wheat Gluten qualifies as Wheat Flour under the same classification.
The Customs Department, however, contended that Wheat Gluten is not covered under the DFIA license, which only allows the import of Wheat Flour. β Consequently, the Department issued show-cause notices, demanding duty, cess, and penalties, and sought to confiscate the imported goods. β
Petitionersβ Argument
The petitioners argued that the issue of whether Wheat Gluten qualifies as Wheat Flour had already been settled by the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) in multiple cases, including Uni Colloids Impex Pvt Ltd. vs. Commissioner of Customs (2014) and Unibourne Food Ingredients LLP vs. Commissioner of Customs, Mundra (2022). β In these cases, CESTAT had consistently held that Wheat Gluten is classified as Wheat Flour with specific technical characteristics and is eligible for duty exemption under DFIA. β
The petitioners contended that the Customs Department was bound by the decisions of CESTAT and could not take an independent view contrary to the established precedent. β
Respondentβs Stand
The Customs Department argued that the petitioners were not entitled to the exemption as Wheat Gluten was not covered under the DFIA license. β They further stated that the Department had not appealed against the CESTAT decisions due to monetary limits, but this did not preclude them from raising the issue in other cases. β The Department also argued that the petitioners had an alternative remedy of appeal and questioned the maintainability of the writ petitions. β
High Courtβs Observations and Judgment
Justice rejected the Customs Departmentβs arguments and emphasized the importance of judicial discipline. The Court held that the Customs Department is bound by the decisions of higher appellate authorities, such as CESTAT, unless those decisions are overturned by a competent court. β The Court referred to the Supreme Courtβs judgment in Union of India vs. Kamlakshi Finance Corporation Ltd. (1991), which established that revenue officers must follow the orders of appellate authorities unreservedly. β
The Court also dismissed the argument regarding the maintainability of the writ petitions, stating that the bar on entertaining writ petitions due to alternative remedies is not absolute, especially when the jurisdiction of the authority passing the orders is challenged. β
Key Takeaways from the Judgment
- Binding Nature of CESTAT Decisions: The Court reiterated that decisions of appellate authorities like CESTAT are binding on assessing officers unless overturned by a higher court. β
- Judicial Discipline: The judgment emphasized the importance of judicial discipline in ensuring consistency and fairness in the administration of tax laws. β
- Writ Petition Maintainability: The Court clarified that the availability of an alternative remedy does not bar the High Court from exercising its jurisdiction under Article 226 of the Constitution, particularly when the authorityβs jurisdiction is in question. β
- Wheat Gluten Classification: The Court upheld CESTATβs consistent stance that Wheat Gluten falls under the same classification as Wheat Flour and is eligible for duty exemption under DFIA.
Conclusion
This landmark judgment by the Madras High Court is a significant win for importers and exporters, as it reinforces the binding nature of CESTAT decisions and provides clarity on the classification of Wheat Gluten under DFIA. The ruling also underscores the judiciaryβs role in ensuring that administrative authorities adhere to established legal precedents, thereby preventing undue harassment of businesses and ensuring consistency in the application of tax laws.
Source: Madras High Court
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