CESTAT Delhi Sets Aside Customs Duty Demand on Gold Dore Bars Over Import License Conditions

ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 10.01.2026

CESTAT Delhi Sets Aside Customs Duty Demand on Gold Dore Bars Over Import License Conditions

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) recently delivered a significant judgment in the case of M/s. Yash Oro India Private Limited vs. ​ Principal Commissioner of Customs ACC (Import). ​ This case revolved around the import of gold dore bars from Tanzania and the applicability of customs duty exemptions under various notifications. ​ The judgment, pronounced on January 7, 2026, has set a precedent for interpreting import license conditions and the simultaneous applicability of multiple exemption notifications.

Background of the Case

M/s. Yash Oro India Private Limited, the appellant, imported gold dore bars from Tanzania under an Import License issued by the Directorate General of Foreign Trade (DGFT) on December 22, 2020. ​ The license allowed the import of gold dore bars with purity up to 95% and specified that the import was subject to Customs Notification No. ​ 12/2012-Cus dated March 17, 2012, which was later superseded by Customs Notification No. ​ 50/2017-Cus dated June 30, 2017. ​

The appellant, however, claimed exemption from customs duty under Notification No. ​ 96/2008-Cus dated August 13, 2008, which provides duty-free tariff preference for goods imported from Least Developed Countries (LDCs) like Tanzania. ​ The 2008 Notification exempts goods from customs duty and Agriculture Infrastructure and Development Cess (AIDC) when imported from LDCs.

The Principal Commissioner of Customs issued a show-cause notice to the appellant, alleging that the exemption claimed under the 2008 Notification violated the conditions of the Import License. ​ The Commissioner argued that the license explicitly required compliance with the 2012 Notification (later superseded by the 2017 Notification), which prescribed a concessional rate of customs duty for gold dore bars. ​ Consequently, the Commissioner demanded customs duty under Section 28(1) of the Customs Act, along with interest under Section 28AA and imposed penalties under Section 112(a)(ii) of the Customs Act. ​

Key Issues in the Case

The primary issue before the Tribunal was whether M/s. Yash Oro India Private Limited could claim the benefit of the 2008 Exemption Notification for importing gold dore bars, despite the Import License specifying compliance with the 2012 Notification. ​

Arguments Presented

Appellant’s Arguments:

1. Validity of Import License: The appellant argued that the Import License issued by the DGFT was valid and subsisting, and there was no allegation of violation by the DGFT. ​ Therefore, the customs authorities lacked jurisdiction to raise the demand. ​
2. No Mandatory Duty Payment Condition: The appellant contended that the Import License did not explicitly mandate payment of customs duty under the 2012 Notification, making the Principal Commissioner’s interpretation erroneous. ​
3. Simultaneous Exemption Benefits: The appellant argued that there is no express legal bar preventing the simultaneous availment of benefits under two exemption notifications. ​ Denying such benefits would be contrary to settled law. ​
4. International Obligations: Denying the benefit of the 2008 Exemption Notification would violate India’s international obligations under the Doha Ministerial Order and the Duty-Free Tariff Preference (DFTP) Scheme for LDCs. ​
5. Interest and Penalty: The appellant argued that interest under Section 28AA and penalty under Section 112 were not applicable. ​

Department’s Arguments:

1. License Conditions: The department emphasized that the Import License explicitly required compliance with the 2012 Notification, which was later superseded by the 2017 Notification. ​ This condition was non-negotiable as gold dore bars are classified as “restricted” under the Foreign Trade Policy. ​
2. Violation of License Terms: The department argued that the appellant’s claim for exemption under the 2008 Notification violated the license conditions, rendering the import ineligible and resulting in a short levy of customs duty. ​
3. Mandatory Compliance: The department cited judgments, including M/s Tasha Gold Pvt. ​ Ltd. vs. Union of India & Ors, to support its claim that importers must comply with the conditions of the notification specified in the Import License. ​
4. Confiscation and Penalty: The department argued that the violation of license conditions justified the confiscation of goods under Sections 111(d) and 111(o) of the Customs Act and the imposition of penalties under Section 112(a). ​

Tribunal’s Observations and Judgment ​

After considering the arguments, the Tribunal made the following key observations:

1. License Conditions: The Tribunal noted that the Import License did not explicitly bar the appellant from availing the benefits of other exemption notifications. ​ While the license required compliance with the 2012 Notification, it did not prohibit the appellant from claiming exemptions under the 2008 Notification. ​
2. Simultaneous Exemption Benefits: The Tribunal referred to previous judgments, including JSW Energy Ltd. vs. Union of India, which held that in the absence of an express bar, an importer can avail benefits under multiple exemption notifications. ​
3. DGFT’s Authority: The Tribunal emphasized that the DGFT is the sole authority to determine violations of Import License conditions under the Foreign Trade (Development and Regulation) Act, 1992. ​ The customs authorities cannot question the validity of an Import License unless the DGFT has canceled it. ​
4. International Obligations: The Tribunal acknowledged India’s commitment under international treaties, such as the Doha Ministerial Order and the DFTP Scheme, to provide duty-free access to products from LDCs. ​ Denying the benefit of the 2008 Notification would be inconsistent with these obligations. ​
5. Penalty and Interest: The Tribunal held that the imposition of penalty under Section 112(a)(ii) and interest under Section 28AA was not justified, as the appellant had not violated the license conditions. ​

Final Order

The Tribunal set aside the impugned order passed by the Principal Commissioner, ruling that the appellant was entitled to claim the benefit of the 2008 Exemption Notification. ​ The demand for customs duty, interest, penalty, and redemption fine was quashed, and the appeal was allowed.

Key Takeaways

1. Interpretation of Import License Conditions: The judgment clarifies that import license conditions must be interpreted strictly, and customs authorities cannot impose additional conditions that are not explicitly mentioned in the license.
2. Simultaneous Exemption Benefits: Importers can avail benefits under multiple exemption notifications unless there is an express legal bar preventing such simultaneous availment. ​
3. Authority of DGFT: The DGFT is the sole authority to determine violations of import license conditions. ​ Customs authorities cannot question the validity of an import license unless the DGFT has canceled it. ​
4. International Commitments: The judgment reinforces India’s obligation to honor international treaties and provide duty-free access to products from Least Developed Countries under the DFTP Scheme. ​

This landmark judgment is a significant development in the realm of customs law and foreign trade policy, providing clarity on the interplay between import license conditions and exemption notifications. It underscores the importance of adhering to international commitments and the need for a harmonious ​

Source: CESTAT Delhi

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