ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 01.12.2025
Delhi High Court Examines Classification and Jurisdiction Issues in Export Tax Dispute
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 significant legal development, the Delhi High Court recently heard the case of M/s Talbros Sealing Material Pvt. β Ltd. vs. Additional Commissioner of Customs Export & Anr. β on November 21, 2025. β The case revolves around two critical issues: the classification of exported goods and the authority of the Customs Department to issue a Show Cause Notice (SCN) under the Integrated Goods and Services Tax Act, 2017 (IGST Act). β
Background of the Case
M/s Talbros Sealing Material Pvt. β Ltd., a company engaged in the export of sealing materials such as rubberized cork gaskets and rubber gaskets, filed a writ petition under Article 226 of the Constitution of India. β The petition challenges an Order-in-Original dated June 25, 2025, issued by the Office of the Commissioner of Customs (Export). β The impugned order raised demands and directed recoveries against the Petitioner, including rejection of IGST refunds, drawback amounts, and other export benefits. β
The dispute arose from the classification of the exported goods. β The Customs Department alleged that the Petitioner had incorrectly classified the products under HSN 40169340 instead of HSN 45041010, leading to inadmissible export benefits. β The department imposed penalties and ordered the recovery of excess incentives along with applicable interest.
Key Issues Raised β
- Classification of Goods: The Petitioner challenged the classification of its products, arguing that the Customs Department’s decision was incorrect. β The court allowed the Petitioner to file an appeal within 30 days regarding this issue, ensuring that the appeal would not be dismissed on the grounds of limitation. β
- Authority to Issue SCN: The Petitioner contended that the Customs Department lacked the authority to issue the SCN under the IGST Act. β It argued that only a proper officer notified under Section 73 of the Central Goods and Services Tax Act, 2017 (CGST Act) could raise demands or recover taxes. β On the other hand, the Respondent argued that Customs Officers are proper officers under Section 2(2) of the Customs Act, 1962, and can raise tax demands related to exports. β
Court’s Observations and Directions
The court acknowledged the complexity of the interplay between the Customs Act, IGST Act, and CGST Act. β It directed the Customs Department and CGST Department to file a joint affidavit clarifying who qualifies as the ‘proper officer’ in such cases. β The court also emphasized that the classification issue should be addressed through appellate remedies. β
Next Steps
The court has set the following timeline for the case:
- Counter Affidavit: To be filed within four weeks. β
- Rejoinder: To be filed within four weeks thereafter. β
- Next Hearing: Scheduled for February 24, 2026. β
Implications of the Case
This case highlights the challenges exporters face in navigating complex tax and customs regulations. β The outcome of this case could have significant implications for businesses dealing with similar classification and jurisdictional issues. β It also underscores the importance of clarity in the roles and responsibilities of different departments under the GST regime.β
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Source: Delhi High Court
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