ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 14.01.2026
CESTAT Delhi Clarifies LDC Duty-Free Exemption Applicability on Restricted Items Under FTDR Act
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.comor on his Mobile +91-9999005379.
The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) in New Delhi recently delivered a significant judgment in the case of M/s. R.K. Jewels vs. β Principal Commissioner of Customs ACC (Import). β This case revolved around the import of gold dore bars from Tanzania and the applicability of exemption notifications under the Customs Act, 1962. β 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. R.K. Jewels, the appellant, imported gold dore bars from Tanzania under an Import License issued by the Directorate General of Foreign Trade (DGFT) on September 16, 2021. β The license permitted the import of gold dore bars with purity up to 95% and specified that the import was subject to Customs Notification No. β 12/2012-Cus dated March 17, 2012, which was later superseded by Customs Notification No. β 50/2017-Cus dated June 30, 2017. β
The appellant filed Bills of Entry on September 12 and September 15, 2023, claiming exemption from customs duty under Notification No. β 96/2008-Cus dated August 13, 2008. β This notification provided duty-free benefits for goods imported from Least Developed Countries (LDCs), including Tanzania, under the Duty-Free Tariff Preference (DFTP) scheme. β The appellant also submitted a country of origin certificate to support its claim. β
However, the customs department alleged that the appellant had violated the conditions of the Import License by claiming exemption under the 2008 Exemption Notification instead of the 2012 Notification (or its successor, the 2017 Notification). β A show-cause notice was issued, and the Principal Commissioner of Customs confirmed the demand for customs duty, interest under Section 28AA of the Customs Act, and imposed penalties under Section 112(a)(ii) of the Customs Act. Redemption fines were also imposed under Section 125 of the Customs Act. β
Key Issues in the Case β
The primary issue in this case was whether the appellant could claim the benefit of the 2008 Exemption Notification for importing gold dore bars when the Import License explicitly stated that the import was subject to the 2012 Notification. β The customs department argued that the appellant was obligated to pay customs duty under the 2012 Notification, as gold dore bars are classified as “restricted” items under the Foreign Trade Policy. β The department contended that the appellant’s claim for exemption under the 2008 Notification violated the Import License conditions and resulted in a short levy of customs duty. β
On the other hand, the appellant argued that the Import License did not explicitly prohibit the simultaneous availment of benefits under multiple exemption notifications. β The appellant also contended that the customs department lacked jurisdiction to determine violations of Import License conditions, as this authority lies solely with the DGFT under the Foreign Trade (Development and Regulation) Act, 1992 (FTDR Act). β
The Tribunal’s Observations and Judgment β
After hearing arguments from both sides, the Tribunal made the following key observations:
- Interpretation of Import License Conditions: The Tribunal noted that the Import License issued by the DGFT did not explicitly bar the appellant from availing the benefits of the 2008 Exemption Notification. β The Principal Commissioner’s finding that the license conditions could only be fulfilled by paying customs duty under the 2012 Notification was not supported by the license’s terms. β
- Simultaneous Availment of Exemption Notifications: The Tribunal referred to previous judgments, including JSW Energy Ltd. vs. Union of India, which established that in the absence of an explicit bar, an importer can avail benefits under multiple exemption notifications. β The Tribunal held that the appellant was entitled to claim exemption under the 2008 Notification.
- Jurisdiction of Customs Authorities: The Tribunal emphasized that the customs authorities cannot question the validity of an Import License issued by the DGFT unless the DGFT itself has canceled the license. β This principle was supported by the Supreme Court’s judgment in Titan Medical Systems Pvt. β Ltd. vs. Collector of Customs, New Delhi and the Delhi High Court’s judgment in M/s. Designco and others vs. Union of India. β
- International Obligations: The Tribunal acknowledged that denying the benefit of the 2008 Exemption Notification would violate India’s international obligations under the Duty-Free Tariff Preference (DFTP) scheme for Least Developed Countries, as outlined in the Doha Ministerial Order and the Hong Kong Ministerial Declaration. β
Final Decision
The Tribunal concluded that the appellant was entitled to claim the benefit of the 2008 Exemption Notification and that the customs department’s demand for duty, interest, penalty, and redemption fine was unsustainable. The Tribunal set aside the impugned order passed by the Principal Commissioner and allowed the appeal. β
Key Takeaways
- Importance of License Conditions: Importers must carefully adhere to the conditions specified in their Import Licenses. β However, the absence of explicit restrictions in the license allows for the simultaneous availment of multiple exemption notifications. β
- Jurisdiction of Customs Authorities: Customs authorities cannot question the validity of an Import License issued under the FTDR Act unless the DGFT has canceled the license. β
- International Trade Obligations: Exemption notifications issued under international trade agreements, such as the DFTP scheme, must be honored to uphold India’s commitments under global treaties. β
- Self-Assessment Responsibility: Importers are responsible for ensuring the correct computation and payment of customs duties under the self-assessment regime. β
This judgment serves as a crucial reference for importers and legal practitioners dealing with customs duty exemptions and Import License conditions. It underscores the need for clarity in license terms and the importance of adhering to international trade obligations. β
Source: CESTAT Delhi
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