CESTAT Kolkata Sets Aside Customs Duty Demands: Rapeseed Oil Imports from Bangladesh Upheld Under SAFTA Exemption

Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 28.04.2026

CESTAT Kolkata Sets Aside Customs Duty Demands: Rapeseed Oil Imports from Bangladesh Upheld Under SAFTA Exemption

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata delivered a landmark judgment on April 27, 2026, concerning the import of crude rapeseed/mustard oils from Bangladesh under the South Asian Free Trade Area (SAFTA) Agreement.

Multiple appeals were filed by importers and their directors challenging the denial of customs duty exemption based on the authenticity of Certificates of Origin and the classification of the imported oils.

Background

• Importers Involved: Aone Agro Products Pvt. Ltd., Sowallow Enterprises, Bengani Commodities Pvt. Ltd., V.K. Oils Ltd., and their directors.
• Period of Dispute: Imports occurred between December 2019 and February 2020.
• SAFTA Benefit: Importers claimed customs duty exemption under SAFTA supported by Certificates of Origin issued by Bangladeshi authorities.
• Revenue’s Allegation: The Directorate of Revenue Intelligence (DRI) argued that the imported oils had less than 2% Erucic Acid, classifying them as Low Erucic Acid Rapeseed (LEAR) or Canola Oil, and contended that Bangladesh lacked the capability to produce such rapeseed.

Key Legal and Procedural Issues

1. Authenticity of Certificates of Origin

• Indian authorities sought verification from Bangladesh, which confirmed the certificates and local origin of the rapeseed.
• CESTAT held that unless a certificate is cancelled or proven fraudulent, Indian Customs cannot unilaterally reject it.

2. Sample Testing and Classification

• At import, samples were tested by CRCL, with results showing both above and below 2% Erucic Acid.
• DRI selectively retested a few samples and attempted to apply those findings to all consignments.
• The Tribunal held such extrapolation legally unsustainable.

3. Procedural and Legal Compliance

• All documents, including lab reports and certificates, were submitted at the time of import.
• No suppression or fraudulent conduct by importers was established.
• Extended limitation for Show Cause Notices was held time-barred.

4. Impact of Legal Amendments

• Section 28DA of the Customs Act came into force after the imports in question and had no retrospective application.

Tribunal’s Findings

The Tribunal set aside all demands, interest, and penalties imposed by Customs and granted consequential relief to the importers.

It reaffirmed that:

1. Verified Certificates of Origin are conclusive unless cancelled.
2. Selective sample testing cannot determine liability for all consignments.
3. No suppression or fraud was proved.
4. Proceedings were time-barred.

Broader Implications

• Reinforces the sanctity of Certificates of Origin under trade agreements.
• Clarifies limits of Customs reassessment powers.
• Protects importers’ rights through procedural fairness.

Conclusion

The CESTAT Kolkata decision is a landmark ruling for importers seeking preferential duty benefits under SAFTA and similar agreements. It highlights the importance of documentary evidence, procedural integrity, and respect for international certification processes.

Source: CESTAT Kolkata

Disclaimer

Handy Download:

Write to us at office@aadrikaalaw.com

Tel: +91-11-4999 2707 I +91-9999005379

www.aadrikaalaw.com