ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 12.02.2026
Kerala High Court Upholds Preferential Duty Benefits Under India-Sri Lanka FTA
This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email idΒ intelconsul@gmail.com or on his Mobile +91-9999005379.
On January 27, 2026, the High Court of Kerala delivered a significant judgment in favor of Tolins Tyres Limited, a private limited company engaged in export and import operations. β The case revolved around the denial of preferential duty benefits under the India-Sri Lanka Free Trade Agreement (ISFTA) for the import of agricultural pneumatic tyres from Sri Lanka. β The court’s decision not only upheld the rights of the petitioner but also set a precedent for similar cases in the future. β
Background of the Case
Tolins Tyres Limited imported 126 agricultural pneumatic tyres from Colombo, Sri Lanka, and filed a bill of entry for home consumption under Section 46 of the Customs Act upon the consignment’s arrival at the Port in Kochi on October 18, 2025. β The company submitted a Certificate of Origin (Exhibit P5) issued by the Department of Commerce, Sri Lanka, which entitled them to preferential duty benefits under the ISFTA (Exhibit P1). β However, the Customs authorities rejected the claim for preferential duty treatment without providing any specific reasons. β
In response, Tolins Tyres Limited submitted a letter (Exhibit P6) requesting the reassessment of the bill of entry based on the Certificate of Origin. β Despite this, the faceless Customs authority rejected the claim again, as evidenced by Exhibit P11. β This led the petitioner to file a writ petition challenging the rejection. β
Interim Relief Granted β
During the initial hearing on December 16, 2025, the court issued an interim order directing the Customs authorities to release the imported goods upon the petitioner furnishing a bank guarantee for the amount due. β Following this order, the goods were released. β
Arguments Presented
The petitioner, represented by Senior Counsel , argued that the rejection of preferential duty benefits was based solely on the retrospective issuance of the Certificate of Origin. The counsel contended that this reason was invalid, citing Exhibit P10, a clarification issued by the Central Board of Indirect Taxes and Customs (CBIC). β The clarification explicitly stated that preferential duty benefits under the ISFTA should not be denied merely because the Certificate of Origin was issued retrospectively. β
The petitioner also referred to a judgment by the Madras High Court (Exhibit P12), which dealt with a similar issue and ruled in favor of the petitioner in that case. β These arguments were supported by various exhibits, including communications from the Department of Commerce, Sri Lanka (Exhibit P8) and an email (Exhibit P9) confirming the validity of the Certificate of Origin.
The Court’s Judgment
After hearing both parties, Justice found merit in the petitioner’s arguments. β The court noted that the rejection of preferential duty benefits was primarily based on the retrospective issuance of the Certificate of Origin, a reason that was not valid as per the CBIC’s clarification in Exhibit P10. β The court also observed that the Customs authority had failed to provide specific reasons for rejecting the claim. β
In light of these findings, the court quashed the orders (Exhibits P7 and P11) and directed the Customs authority to reconsider the matter. β The court instructed the competent authority to pass necessary orders within one month, following the procedure outlined in Section 28DA of the Customs Act and taking into account the relevant exhibits and observations made in the judgment. β
Implications of the Judgment
This judgment is a significant win for Tolins Tyres Limited and other businesses engaged in international trade under free trade agreements. It reinforces the principle that preferential duty benefits cannot be denied on arbitrary grounds, such as the retrospective issuance of Certificates of Origin. β The court’s reliance on the CBIC’s clarification and the Madras High Court’s precedent highlights the importance of consistency and fairness in the application of trade agreements. β
Conclusion
The Kerala High Court’s decision in favor of Tolins Tyres Limited is a landmark ruling that underscores the importance of adhering to the provisions of free trade agreements. It serves as a reminder to authorities to ensure transparency and fairness in their assessments, thereby fostering trust and confidence among businesses engaged in international trade. This case is a testament to the power of judicial intervention in upholding the rights of businesses and ensuring compliance with established trade policies.
Source: Kerala High Court
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