𝐀𝐚𝐝𝐫𝐢𝐤𝐚𝐚 𝐋𝐚𝐰 𝐎𝐟𝐟𝐢𝐜𝐞𝐬 (𝐀𝐋𝐎)

Author: Aadrikaa Law Office (ALO)

CESTAT Delhi Clarifies Limits of Custodian Responsibility in Customs Area
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 01.04.2026

CESTAT Delhi Clarifies Limits of Custodian Responsibility in Customs Area

Adv Ravi Shekhar Jha

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 id intelconsul@gmail.com or on his Mobile +91-9999005379.

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), New Delhi Principal Bench, recently delivered a significant judgment in the case of CONCOR vs. Principal Commissioner of Customs Imports ICD TKD-New Delhi. The case revolved around the alleged pilferage of imported goods while under the custody of Container Corporation of India Limited (CONCOR), a public sector undertaking responsible for managing Inland Container Depots (ICD) and Container Freight Stations (CFS).

Background of the Case 

The appeal arose from an Order-in-Original dated June 30, 2025, passed by the Principal Commissioner of Customs, New Delhi. The order confirmed a demand of Rs. 51,80,776/- as customs duty on CONCOR under Section 45(3) of the Customs Act, 1962, along with penalties of Rs. 5,10,000/- under Section 112(a)(ii) and Rs. 2,00,000/- under Section 117 of the Act. The case stemmed from a Show Cause Notice (SCN) issued on September 27, 2024, which alleged that the goods declared in the Import General Manifest (IGM) were pilfered and replaced with cement blocks while in the custody of CONCOR.

Key Facts
1. Custodian Responsibility: As per Section 45 of the Customs Act, CONCOR, as the custodian of imported goods, is responsible for their safe custody until they are cleared for home consumption, warehoused, or transshipped. If goods are pilfered while in the custodian’s care, the custodian is liable to pay duty on the pilfered goods.
2. Discrepancy in Goods: The SCN alleged that five containers, which were supposed to contain high-value goods such as aluminum ingots, zinc ingots, face masks, and disposable gloves, were found to contain cement blocks during examination.
3. Examination Reports: The containers were examined by customs officers on multiple occasions between September 2022 and August 2023. The examination reports, signed by customs officers and CONCOR representatives, indicated that the containers contained cement blocks. Importantly, these reports did not note any tampering or substitution of seals.
4. Final Inventory Report: In August/September 2023, CONCOR submitted a final inventory report seeking a No Objection Certificate (NOC) to dispose of the contents of the containers. The report listed the contents as cement blocks, consistent with the earlier examination reports.
Arguments Presented

CONCOR’s Submissions 
- Containers are received and retained on a “said to contain” basis, meaning neither the shipping line nor the custodian can verify the contents without customs inspection.
- The discrepancy between the IGM and the actual contents of the containers could not be attributed to CONCOR, as it had no authority to open or examine the containers.
- Examination reports signed by customs officers and CONCOR representatives confirmed the presence of cement blocks and did not indicate any tampering or substitution of seals.
- The burden of proof lies with the Revenue to establish that pilferage or substitution occurred while the containers were in CONCOR’s custody. No evidence was provided to support this claim.
- The demand for duty under Section 45(3) of the Customs Act was time-barred, as the provisions of Section 28 of the Act, which govern the time limit for raising demands, should apply.
Revenue’s Submissions 
- As the approved custodian under the Customs Act, CONCOR was responsible for the safe custody of the imported goods and ensuring their integrity.
- The discrepancy between the IGM and the actual contents of the containers indicated pilferage or substitution, making CONCOR liable to pay duty under Section 45(3) of the Act.
Tribunal’s Observations and Final Order 

After considering the submissions and examining the records, the Tribunal concluded that there was no evidence to prove that the goods were pilfered or substituted while in CONCOR’s custody. The examination reports, signed by customs officers and CONCOR representatives, confirmed the presence of cement blocks in the containers and did not indicate any tampering or substitution of seals.

The Tribunal emphasized that the custodian could not be held responsible for the contents of sealed containers received on a “said to contain” basis unless there was evidence of tampering or substitution of seals while in its custody. Since no such evidence was presented, the Tribunal held that the demand for duty and the penalties imposed on CONCOR were unsustainable.

The Tribunal allowed CONCOR’s appeal and set aside the impugned order, granting consequential relief to the appellant.

Key Takeaways
1. Custodian’s Responsibility: The judgment clarifies that a custodian is responsible for the safe custody of goods but cannot be held liable for discrepancies in the contents of sealed containers unless there is evidence of tampering or substitution of seals while in its custody.
2. Burden of Proof: The burden of proving pilferage or substitution lies with the Revenue, and it must provide positive evidence to establish the custodian’s liability.
3. Time Limit for Demands: The Tribunal highlighted that even though Section 45(3) does not specify a time limit for raising demands, the principles of reasonableness and the provisions of Section 28 of the Customs Act should apply.
4. Importance of Documentation: Examination reports and inventory records play a crucial role in determining the liability of custodians in cases of alleged pilferage or substitution.
This judgment serves as a significant precedent for custodians and stakeholders in the import-export industry, emphasizing the importance of proper documentation and the need for clear evidence in cases of alleged pilferage or substitution.

Source: CESTAT Delhi

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April 1, 2026
Calcutta High Court Directs Revenue to Approach Supreme Court Under Section 130E of Customs Act
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 01.04.2026

Calcutta High Court Directs Revenue to Approach Supreme Court Under Section 130E of Customs Act

Adv Ravi Shekhar Jha

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 id intelconsul@gmail.com or on his Mobile +91-9999005379.

On March 19, 2026, the High Court at Calcutta, under its Special Jurisdiction (Customs), delivered a significant judgment in the case of Commissioner of Customs (Port) vs. M/s Akash Exports, Through Its Proprietor. The case, registered as CUSTA/26/2026 and IA NO: GA/1/2026, was heard by a division bench comprising Hon’ble Justice.

Background of the Case

The dispute arose from an appeal filed by the Commissioner of Customs (Port) against M/s Akash Exports, alleging substantial errors in law committed by the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT). The appellant raised several critical questions of law under Section 130 of the Customs Act, 1962, which governs appeals to the High Court. The case revolved around issues of provisional release, smuggling allegations, valuation of imported goods, and penalties under the Customs Act.

Substantial Questions of Law Raised 

The appellant, represented by Senior Advocate, presented the following key questions of law for the Court’s consideration:
1. Misinterpretation of Provisional Release: Whether the Tribunal erred in interpreting provisional release under Section 110A of the Customs Act, 1962, as provisional assessment under Section 18.
2. Disregard of Evidence: Whether the Tribunal committed a substantial error in law by disregarding overwhelming evidence of smuggling and fraud, treating the case as a mere procedural issue.
3. Valuation of Goods: Whether the Tribunal incorrectly rejected the re-determined value of goods by the department and accepted the declared/revised values, violating Rule 9 of the Customs Valuation Rules, 2007.
4. Penalty Under Section 114AA: Whether the Tribunal erred in setting aside the penalty under Section 114AA by treating it as consequential to the duty demand without appreciating the true scope of the section.
5. Perversity of the Tribunal’s Order: Whether the impugned order passed by the Tribunal was perverse in both facts and law.
Legal Framework

The Court examined the provisions of Sections 130 and 130E of the Customs Act, 1962, which outline the procedures for appeals to the High Court and Supreme Court, respectively. Section 130 allows appeals to the High Court if the case involves substantial questions of law, while Section 130E provides for appeals to the Supreme Court in cases involving the determination of the rate of duty or the value of goods for assessment purposes.

Court’s Observations

After reviewing the case and the legal provisions, the Court concluded that the appeal should be preferred before the Hon’ble Supreme Court under Section 130E of the Customs Act. The bench noted that the case involved substantial questions of law and related to the determination of the value of goods for assessment purposes, which falls under the purview of the Supreme Court.

Judgment

The High Court dismissed the appeals and connected applications filed by the Commissioner of Customs (Port). The Court also granted leave to the appellant’s advocate to obtain a certified copy of the tribunal’s order and replace it with a photocopy.

Implications of the Judgment

This judgment underscores the importance of correctly interpreting the provisions of the Customs Act, 1962, particularly Sections 130 and 130E, in determining the appropriate forum for appeals. By directing the matter to the Supreme Court, the High Court has reinforced the principle that cases involving substantial questions of law related to the valuation of goods for assessment purposes must be adjudicated at the highest judicial level.

Conclusion

The case of Commissioner of Customs (Port) vs. M/s Akash Exports highlights the complexities of customs law and the importance of judicial scrutiny in cases involving allegations of smuggling, fraud, and valuation disputes. The High Court’s decision to dismiss the appeals and direct the matter to the Supreme Court sets a precedent for similar cases in the future, ensuring that substantial questions of law are addressed by the appropriate judicial authority.

Source: Calcutta High Court

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April 1, 2026
CESTAT Bangalore- Export benefits cannot be denied due to procedural non-compliances when export obligations are met
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 31.03.2026

CESTAT Bangalore- Export benefits cannot be denied due to procedural non-compliances when export obligations are met

Adv Ravi Shekhar Jha

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 id intelconsul@gmail.com or on his Mobile +91-9999005379.

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Bangalore, recently delivered a significant judgment in the case of Midas Treads (India) Pvt Ltd vs. Commissioner of Customs, Cochin and related appeals. The case revolved around allegations of forged ISO certificates and manipulated test reports submitted by the appellant to avail benefits under the Duty-Free Import Authorization (DFIA) and Advance Authorization (AA) schemes. The tribunal’s decision, pronounced on March 30, 2026, has set a precedent for similar cases in the future.

Background of the Case

The appellant, Midas Treads (India) Pvt Ltd, is a manufacturer and exporter of pre-cured tread rubber, rubber compound sheets, and other products. The case arose from allegations that the appellant had used forged ISO certificates and manipulated test reports to avail benefits under the DFIA and AA schemes during the periods 2007–2009 and 2012–2015. The Directorate of Revenue Intelligence (DRI) conducted investigations and issued a Show Cause Notice (SCN) on March 15, 2018, alleging that the appellant had violated the conditions of the exemption notifications and manipulated test reports to meet the Standard Input Output Norms (SION).

The Commissioner of Customs, Cochin, passed an Order-in-Original on July 24, 2019, confirming the demand for customs duty and imposing penalties on the appellant and co-noticees. Aggrieved by this order, the appellant filed appeals before the CESTAT.

Key Issues in the Case

The primary issues in the appeals were:
1. Whether the appellant had submitted forged ISO certificates to avail benefits under the DFIA and AA schemes.
2. Whether the test reports submitted by the appellant were manipulated to meet SION requirements.
3. Whether the appellant had violated the conditions of the exemption notifications.
4. Whether the penalties imposed on the appellant and co-noticees were justified.
Arguments Presented

Appellant’s Arguments 
1. Compliance with Export Obligations: The appellant argued that they had fulfilled all export obligations under the DFIA and AA schemes, as evidenced by the Export Obligation Discharge Certificates (EODCs) issued by the Director General of Foreign Trade (DGFT). These EODCs were not challenged or reviewed by the authorities.
2. Validity of Test Reports: The appellant contended that samples of exported goods were drawn by the Customs authorities, and the test reports confirmed compliance with SION norms. They argued that the alleged procedural violation regarding ISO certification should not lead to denial of substantial export benefits.
3. ISO Certification: The appellant clarified that the ISO certificate was issued in 2009, not 2006, and submitted a letter dated July 30, 2013, to the Customs authorities to rectify the discrepancy. They emphasized that ISO certification was not a mandatory condition for availing benefits under the DFIA and AA schemes.
4. Legal Precedents: The appellant cited various judgments, including M/s IOCEE Exports Ltd vs. CC, Chennai and M/s Titan Medical Systems Pvt Ltd vs. CC, New Delhi, to argue that procedural violations should not result in denial of substantial benefits.
Respondent’s Arguments 
1. Forgery Allegations: The respondent argued that the appellant had submitted forged ISO certificates and manipulated test reports, which were confirmed by statements from employees and the issuing agency.
2. Non-Compliance with Notifications: The respondent contended that the appellant failed to comply with the conditions of exemption notifications, including the requirement for valid test reports and ISO certification.
3. Fraud and Suppression: The respondent alleged that the appellant had committed fraud and suppressed facts, justifying the invocation of the extended period of limitation and imposition of penalties.
4. Penalties on Co-Noticees: The respondent argued that the co-noticees were complicit in the alleged fraud and should also be penalized.
Tribunal’s Findings 

After hearing both sides and reviewing the evidence, the tribunal made the following observations:
1. ISO Certification: The tribunal noted that ISO certification was not a mandatory condition for availing benefits under the DFIA and AA schemes. The procedural violation regarding the ISO certificate did not justify denial of substantial export benefits.
2. Test Reports: The tribunal found that samples were drawn by the Customs authorities, and the test reports confirmed compliance with SION norms. There was no evidence to suggest that the exported goods were not in accordance with the prescribed norms.
3. Export Obligations: The tribunal observed that the appellant had fulfilled all export obligations, as evidenced by the EODCs issued by the DGFT. There were no allegations of diversion of raw materials or non-compliance with import conditions.
4. Penalties and Confiscation: The tribunal held that the penalties imposed on the appellant and co-noticees were unsustainable, as there was no evidence of personal involvement or unjust gain. The tribunal also set aside the confiscation of goods.
Final Decision

The tribunal set aside the impugned orders, allowing the appeals with consequential relief in accordance with the law. The decision emphasized that substantial export benefits cannot be denied due to procedural non-compliances, especially when there is no evidence of fraud or diversion of goods.

Key Takeaways
1. Procedural Violations vs. Substantial Rights: The judgment underscores that procedural violations should not lead to denial of substantial export benefits, provided the exporter fulfills all export obligations.
2. Role of ISO Certification: ISO certification is not mandatory for availing benefits under DFIA and AA schemes. It is only required for procedural relaxation in sampling and testing.
3. Importance of Legal Precedents: The tribunal relied on several landmark judgments to arrive at its decision, highlighting the importance of established legal principles in customs cases.
4. Fairness in Adjudication: The tribunal emphasized the need for fairness and reasonableness in adjudication, especially when there is no evidence of fraud or diversion.
Conclusion

The CESTAT Bangalore’s decision in the case of Midas Treads (India) Pvt Ltd vs. Commissioner of Customs, Cochin is a landmark judgment that reinforces the principle of fairness in customs adjudication. It provides clarity on the role of procedural compliance in availing export benefits and sets a precedent for similar cases in the future. This judgment is a significant step toward ensuring that exporters are not unfairly penalized for minor procedural lapses, provided they fulfill their substantial obligations under the law.

Source: CESTAT Bangalore

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March 31, 2026
Delhi High Court Ruled on Interest for Delayed Customs Duty Refunds
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 31.03.2026

Delhi High Court Ruled on Interest for Delayed Customs Duty Refunds

Adv Ravi Shekhar Jha

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 id intelconsul@gmail.com or on his Mobile +91-9999005379.

In a landmark judgment delivered on March 30, 2026, the Delhi High Court addressed a series of writ petitions filed by multiple companies seeking interest on delayed refunds of excess customs duty paid under protest. The case revolved around the failure of the Customs Department to update its Electronic Data Interchange (EDI) system, which prevented the Petitioners from availing concessional rates of duty under a government notification.

The judgment, delivered by Justice, provided clarity on the applicability of interest on refunds under the Customs Act, 1962, and set a precedent for similar cases in the future.

Background of the Case 

The Petitioners, including Lava International Ltd., Jaina Marketing & Associates, Jaina Mobile India Pvt. Ltd., Intex Technologies (India) Ltd., and U.T. Electronics Pvt. Ltd., had imported mobile phones, tablets, and related parts during various periods between 2014 and 2015. They paid additional customs duty, known as Countervailing Duty (CVD), at rates of 6% or 12.5%, instead of the concessional rate of 1% that they were entitled to under Notification No. 12/2012-CE.

The Petitioners argued that the Customs Department’s EDI system did not allow them to claim the concessional rate, forcing them to pay higher CVD under protest. They later sought refunds of the excess duty paid, along with interest, citing the Supreme Court’s decision in SRF Ltd. v. Commissioner of Customs, Chennai (2015), which clarified that the Petitioners were eligible for the concessional rate.

Key Legal Issues

The case revolved around two primary legal questions:
1. Were the Petitioners entitled to interest on the refunds of excess customs duty paid under protest? 
2. If so, from what date should the interest be calculated? 
The Court examined the following legal provisions and precedents:
- Section 27A of the Customs Act, 1962: Provides for interest on delayed refunds if the refund is not issued within three months from the date of receipt of the refund application.
- Section 27(1A) of the Customs Act, 1962: Requires refund applications to be accompanied by documentary evidence proving that the duty was paid and not passed on to another party.
- ITC Limited v. Commissioner of Central Excise (2019): Established that refund applications cannot be entertained unless the original assessment order (self-assessment or otherwise) is reassessed.
Arguments Presented

Petitioners’ Arguments 
- The excess customs duty was paid under protest due to the failure of the Customs Department to update its EDI system.
- The Petitioners were entitled to concessional rates of duty under Notification No. 12/2012-CE, as clarified by the Supreme Court in SRF Ltd. v. Commissioner of Customs, Chennai (2015).
- The Customs Department unduly retained the Petitioners’ money for several years, and interest should be paid as compensation for the delay.
Respondents’ Arguments
- Refunds were processed within the statutory three-month period after the refund applications were filed, so no interest was payable.
- The Petitioners failed to challenge the original self-assessment orders within the prescribed time, and refunds were granted only after re-assessment.
- A protest letter cannot be treated as a formal application for refund or re-assessment.
Court’s Findings

The Court divided its judgment into two parts, addressing the claims of Lava International Ltd. separately from the other Petitioners.

Lava International Ltd. (W.P .(C) 10977/2017 & W.P. (C) 11319/2017) 
- The Court found that the refunds were processed within the statutory three-month period after the refund applications were filed, as stipulated under Section 27A of the Customs Act, 1962.
- The Court noted that there was no undue delay on the part of the Customs Department in re-assessing or processing the applications once they were filed.
- Outcome: The Court ruled against Lava International Ltd., denying their claim for interest on the refunds.
Other Petitioners (W.P. (C) 1225/2024, W.P. (C) 1291/2024, W.P. (C) 1297/2024, & W.P. (C) 1325/2024) 
- The Court observed that there was a significant delay in re-assessment and refund processing by the Customs Department, with some cases taking over seven years from the date of the first re-assessment application.
- The Court held that the Petitioners were entitled to interest on the refund amounts for the period between the filing of the first re-assessment application and the date of actual refunds.
- Outcome: The Court ruled in favor of the Petitioners and directed the Customs Department to compute and pay interest at statutory rates within three months.
Key Legal Precedents Cited 

The Court relied on several landmark judgments to arrive at its decision:
- ITC Limited v. Commissioner of Central Excise (2019): Established the necessity of re-assessment before filing refund applications.
- SRF Ltd. v. Commissioner of Customs, Chennai (2015): Clarified the eligibility for concessional rates of customs duty.
- Union of India v. Tata Chemicals Ltd. (2014): Held that interest on refunds is a matter of right and serves as compensation for delayed payments.
- Indure Ltd. v. Commercial Tax Officer & Ors. (2010): Established that interest is payable on refunds of taxes paid under protest.
- Priya Blue Industries Ltd. v. Commissioner of Customs (Preventive) (2004): Highlighted the importance of challenging assessment orders before seeking refunds.
Conclusion

The Delhi High Court’s judgment in this case underscores the importance of timely re-assessment and refund processing by the Customs Department. While Lava International Ltd. was denied interest due to the timely processing of its refunds, the other Petitioners were awarded interest for the significant delays in their cases. This judgment serves as a reminder to both taxpayers and tax authorities about the importance of adhering to statutory timelines and the principle of restitution in cases of delayed refunds. It also highlights the evolving jurisprudence on the interplay between self-assessment, re-assessment, and refund claims under the Customs Act, 1962.

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Source: Delhi High Court

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March 31, 2026
Orissa High Court Reinforces Doctrine of Functus Officio and Judicial Discipline in Duty Drawback
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 30.03.2026

Orissa High Court Reinforces Doctrine of Functus Officio and Judicial Discipline in Duty Drawback

Adv Ravi Shekhar Jha

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 id intelconsul@gmail.com or on his Mobile +91-9999005379.

The legal system thrives on principles that ensure stability, finality, and fairness in adjudication. Among these principles, the doctrine of functus officio and judicial discipline play a pivotal role in maintaining the integrity of judicial and quasi-judicial processes. A recent judgment by the Orissa High Court in the case of Vedanta Limited v. Union of India & Others (W.P.(C) No.1005 of 2026) provides a compelling example of how these principles are applied to prevent arbitrary revisitation of settled issues.

Background of the Case

The petitioner, Vedanta Limited, challenged an order passed by the Commissioner (Appeals), Bhubaneswar, which nullified an earlier appellate order that had granted duty drawback benefits to the company. The dispute revolved around the eligibility of Vedanta Limited to claim duty drawback on exports made during the period April 2017 to March 2018. The earlier appellate order, dated 30.09.2023, had conclusively adjudicated the matter, granting the petitioner duty drawback benefits subject to the reversal of Input Tax Credit (ITC). This order was accepted by the Customs Department and was not challenged further.

However, in a subsequent appeal, the Commissioner (Appeals), Bhubaneswar, revisited the issue and overturned the earlier appellate order, denying the petitioner the duty drawback benefits. This prompted Vedanta Limited to file a writ petition before the Orissa High Court, challenging the legality of the Commissioner’s actions.

Key Legal Principles Discussed 

The Orissa High Court’s judgment extensively analyzed the following legal principles:

1. Doctrine of Functus Officio 

The doctrine of functus officio is a fundamental principle in administrative and judicial law. It states that once a judicial or quasi-judicial authority has rendered a decision, it becomes functus officio, meaning it has fulfilled its function and is no longer authorized to revisit, amend, or reverse the decision unless explicitly permitted by law.

The court cited several precedents, including Ajay Mohan v. H.N. Rai (2008) and State of Punjab v. Davinder Pal Singh Bhullar (2011), to emphasize that once a decision is finalized, the authority that issued it cannot alter or review it, except to correct clerical or arithmetical errors. The principle ensures finality in decision-making and prevents endless litigation.

In this case, the Commissioner (Appeals), Bhubaneswar, acted in violation of the functus officio doctrine by revisiting the earlier appellate order, which had already attained finality.

2. Judicial Discipline

The principle of judicial discipline mandates that subordinate authorities must respect and implement the decisions of higher appellate authorities. The Orissa High Court referred to the landmark judgment in Union of India v. Kamlakshi Finance Corporation Ltd. (1992), where the Supreme Court held that revenue officers are bound by the decisions of appellate authorities and cannot refuse to implement them simply because they disagree with the outcome.

In the present case, the Commissioner (Appeals), Bhubaneswar, failed to adhere to judicial discipline by revisiting and overturning the earlier appellate order, which had been accepted by the Customs Department.

3. Res Judicata and Issue Estoppel 

While the principles of res judicata and issue estoppel do not strictly apply to quasi-judicial proceedings, the court noted that their underlying rationale—finality of decisions—should guide administrative authorities. Res judicata prevents the re-litigation of issues that have already been decided, while issue estoppel bars parties from raising the same issue in subsequent proceedings.

The court emphasized that the findings and observations in the earlier appellate order had attained finality and could not be reopened in a subsequent appeal. The Commissioner (Appeals) was bound by the earlier decision and could not take a contrary view.

Court’s Observations

The Orissa High Court made several critical observations in its judgment:
1. Finality of Decisions: The court held that the earlier appellate order had attained finality and could not be revisited by the Commissioner (Appeals). The principle of functus officio barred the Commissioner from revising the decision.
2. Judicial Discipline: The court criticized the Commissioner (Appeals) for failing to respect the earlier appellate order, which had been accepted by the Customs Department. The court emphasized that such actions lead to undue harassment of assessees and chaos in the administration of tax laws.
3. Res Judicata and Issue Estoppel: The court noted that the principles of res judicata and issue estoppel, while not strictly applicable to quasi-judicial proceedings, should guide administrative authorities in ensuring finality and consistency in their decisions.
4. Precedential Value: The court highlighted the importance of adhering to precedents and ensuring that decisions are not arbitrarily overturned, as this undermines the stability of the legal system.
Conclusion

The Orissa High Court’s judgment in Vedanta Limited v. Union of India & Others serves as a reminder of the importance of adhering to established legal principles in judicial and quasi-judicial proceedings. The doctrine of functus officio, judicial discipline, and the principles of res judicata and issue estoppel are essential to ensuring finality, consistency, and fairness in the legal process.

By setting aside the impugned order and remitting the matter for reconsideration, the court has reinforced the need for authorities to respect the finality of appellate decisions and adhere to the principles of judicial discipline. This judgment is a significant contribution to the jurisprudence on administrative law and serves as a guide for authorities to act within the bounds of their jurisdiction.

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Source: Orissa High Court

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March 30, 2026
Gujarat High Court Ruled Against Parallel Proceedings in Customs Duty Dispute

ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 30.03.2026

Gujarat High Court Ruled Against Parallel Proceedings in Customs Duty Dispute

Adv Ravi Shekhar Jha

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 id intelconsul@gmail.com or on his Mobile +91-9999005379.

In a significant judgment, the High Court of Gujarat at Ahmedabad, presided over by Honourable Justices delivered a ruling in favor of Messrs Om Siddh Vinayak Impex Pvt. Ltd. & 1, quashing a show cause notice issued by the Commissioner of Customs, Kandla. The case, Special Civil Application No. 20016 of 2016, revolved around the legality of parallel proceedings initiated by customs authorities concerning the same subject matter.

Background of the Case

The dispute originated from the import of 2563.2 kilograms of synthetic fabric/stock lots from China by the petitioner company under Bill of Entry No. 2376 dated 25.09.2003. The company claimed a concessional rate of customs duty under a Letter of Permission (LOP) issued by the Development Commissioner, Kandla Special Economic Zone, allowing them to operate as a Special Economic Zone (SEZ) unit.

The customs authorities initially conducted a provisional assessment of the goods, pending reports from the Textile Committee, Mumbai. Subsequently, the petitioner paid the assessed duty and cleared the goods to their unit. However, a small quantity of the imported materials was sold in the local market, triggering scrutiny from the customs department.

In March 2007, the Assessing Officer finalized the assessment, enhancing the assessable value of the goods and determining a customs duty of Rs. 71,57,744. This was followed by a show cause notice dated 06.09.2007, proposing confiscation of the goods, recovery of customs duties, and imposition of penalties under various sections of the Customs Act, 1962.

Legal Proceedings

The petitioners challenged the final assessment order dated 09.03.2007 before the Commissioner of Customs (Appeals), who set aside the order on the grounds of non-compliance with the principles of natural justice. The matter was remanded for re-assessment. Subsequently, a second show cause notice dated 18.12.2008 was issued by the Deputy Commissioner of Customs, proposing changes in the classification and valuation of the goods, along with a demand for differential customs duty and interest.

The second show cause notice culminated in an adjudication order dated 12.11.2015, which confirmed the duty demand of Rs. 71,57,744 and denied the claim for a concessional rate of customs duty. The petitioners appealed this order, and the Commissioner of Customs (Appeals) set aside the adjudication order in May 2016. The customs department then filed an appeal before the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), which is currently pending.

Despite the ongoing appeal, the customs authorities issued a notice of hearing in connection with the earlier show cause notice dated 06.09.2007. The petitioners argued that pursuing two parallel proceedings for the same subject matter was illegal and constituted an abuse of the process of law. They approached the High Court to quash the earlier show cause notice.

Key Legal Issues

The primary legal issue in this case was whether the customs authorities could initiate and pursue two parallel proceedings for the same subject matter. The petitioners contended that the proposals in both show cause notices were largely identical, and the matter had already been adjudicated upon in the proceedings arising from the second show cause notice.

The respondents argued that the scope of the two show cause notices was distinct, with the first notice focusing on the clearance of goods into the Domestic Tariff Area (DTA) without payment of customs duty and the second notice addressing classification and valuation issues.

Court’s Observations 

The High Court conducted a detailed analysis of the two show cause notices and the subsequent proceedings. It noted that both notices arose from the same subject matter—the import of goods under Bill of Entry No. 2376 dated 25.09.2003—and both sought to levy the same differential customs duty of Rs. 71,57,744 with interest. The court observed that the issue of duty liability based on the alleged diversion of goods to the DTA had already been adjudicated upon in the proceedings arising from the second show cause notice.

The court further noted that the adjudicating authority had widened the scope of the second show cause notice to include issues of diversion, which were already the subject of the first show cause notice. This led to a situation where the same subject matter was being addressed in two separate proceedings, which the court deemed impermissible.

Judgment

The High Court ruled in favor of the petitioners, quashing the show cause notice dated 06.09.2007 to the extent it related to the petitioners. The court held that pursuing two parallel proceedings for the same subject matter was contrary to sound public policy and constituted an abuse of the process of law. It emphasized that the continuance of the earlier show cause notice could not be contingent upon the outcome of the proceedings arising from the subsequent show cause notice.

Legal Principle Established

The judgment established the principle that authorities cannot initiate or pursue parallel proceedings for the same subject matter. Once a matter has been adjudicated upon, it is not permissible to initiate another proceeding on the same issue, as this would lead to duplication and abuse of legal processes.

Conclusion

The High Court’s decision in this case serves as a reminder of the importance of adhering to the principles of natural justice and avoiding duplicative legal proceedings. It underscores the need for administrative authorities to act within the bounds of their jurisdiction and refrain from initiating multiple proceedings for the same cause of action. This judgment is a significant precedent in the realm of customs law and reinforces the principle of fairness and efficiency in legal processes.

Source: Gujarat High Court

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March 30, 2026
CESTAT Delhi Sets Aside Penalty on CHA Under Section 117 of the Customs Act, 1962
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 28.03.2026

CESTAT Delhi Sets Aside Penalty on CHA Under Section 117 of the Customs Act, 1962

Adv Ravi Shekhar Jha

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 id intelconsul@gmail.com or on his Mobile +91-9999005379.

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, recently delivered a significant judgment in the case of M/s. H.C. Khanna & Company vs. Principal Commissioner of Customs, Air Cargo Complex (Import), New Delhi. The judgment, pronounced by Hon’ble Member Judicial, on March 24, 2026, addressed the imposition of penalties under Section 117 of the Customs Act, 1962, on the Customs House Agent (CHA) for alleged violations during the filing of Bills of Entry for importers.

Background of the Case 

The case involved four appeals filed by M/s. H.C. Khanna & Company, a Customs House Agent (CHA), against penalties imposed under Section 117 of the Customs Act, 1962. The appeals arose from four separate Orders-in-Original issued by the Principal Commissioner of Customs, Air Cargo Complex (Import), New Delhi. The importers involved were M/s. Jet Airways (India) Ltd. and M/s. Jet Lite (India) Ltd., who had imported aircraft parts and allegedly misdeclared the goods to avail lower rates of IGST and Basic Customs Duty (BCD).

The department alleged that the CHA failed to fulfill its responsibility to ensure the accuracy of the information provided by the importers, thereby violating clauses (d) and (e) of Regulation 10 of the Customs Broker Licensing Regulations (CBLR), 2018. Consequently, penalties ranging from Rs. 50,000 to Rs. 2,00,000 were imposed on the CHA under Section 117 of the Customs Act, 1962.

Key Issues in the Case 

The primary issue before the Tribunal was whether the penalty under Section 117 of the Customs Act, 1962, was justifiably imposed on the appellant/CHA in the given circumstances. Section 117 of the Customs Act provides for penalties in cases where any person contravenes or fails to comply with provisions of the Act, and no express penalty is provided elsewhere.

Arguments Presented

Appellant’s Arguments:
1. Limited Role of CHA: The appellant argued that its role was limited to filing Bills of Entry based on the documents and instructions provided by the importers. The responsibility for accurate classification and declaration rested solely with the importers under Sections 17 and 46 of the Customs Act, 1962.
2. Lack of Technical Expertise: The CHA contended that it lacked the technical competence to question the classification of specialized goods like aircraft parts.
3. No Evidence of Negligence: The appellant argued that there was no evidence to prove that it was aware of any misclassification or that it acted negligently.
4. Invalid Show Cause Notice: The appellant highlighted that the importers were undergoing insolvency proceedings, and the National Company Law Tribunal (NCLT) had already approved their resolution plan. As per the Supreme Court’s ruling in Ghanshyam Mishra and Sons Pvt. Ltd. vs. Edelweiss Asset Reconstruction Company Ltd., all claims not part of the resolution plan stand extinguished, making the show cause notice invalid.
Respondent’s Arguments:
1. Due Diligence Requirement: The department argued that under Regulation 10(d) of CBLR, 2018, the CHA is obligated to exercise due diligence to ensure the accuracy of information provided to customs authorities, including classification and duty rates.
2. Professional Vigilance: The CHA was expected to raise red flags and alert authorities in cases of anomalies, especially when inconsistent classifications were used for the same products during the same period.
Tribunal’s Observations and Judgment

After hearing both parties and reviewing the evidence, the Tribunal made the following observations:
1. Role of CHA: The Tribunal emphasized that the CHA’s role is limited to processing documents for customs clearance based on information provided by importers. The CHA is not a technical expert and cannot be held responsible for verifying the accuracy of the classification of specialized goods like aircraft parts.
2. Onus on Importers: The Tribunal reiterated that under Section 46(4) of the Customs Act, 1962, the responsibility for providing truthful declarations in the Bills of Entry lies solely with the importers. The CHA cannot be held liable for misdeclarations made by the importers.
3. No Evidence of Violation: The Tribunal found no evidence to support the department’s claim that the CHA had violated clauses (d) and (e) of Regulation 10 of CBLR, 2018. Moreover, no proceedings were initiated against the CHA under these regulations.
4. Invalid Show Cause Notice: The Tribunal held that the show cause notices were invalid as the importers’ resolution plan had already been approved by the NCLT, extinguishing all claims not included in the plan.
5. Precedents: The Tribunal relied on several judicial precedents, including Kunal Travels (Cargo) vs. Commissioner of Customs (Import & General), IGI Airport, New Delhi, which clarified that CHAs are not responsible for verifying the genuineness of information provided by importers.
Final Decision

The Tribunal concluded that the penalty under Section 117 of the Customs Act, 1962, was wrongly imposed on the appellant/CHA. It held that the findings of the adjudicating authority were based on assumptions and lacked evidence. Consequently, the orders under challenge were set aside, and all four appeals were allowed.

Key Takeaways
1. Limited Liability of CHAs: This judgment reinforces the principle that Customs House Agents are not responsible for verifying the technical accuracy of the information provided by importers.
2. Onus on Importers: The responsibility for accurate classification and declaration of goods lies with the importers, as mandated by Sections 17 and 46 of the Customs Act, 1962.
3. Invalid Show Cause Notices: Claims against entities undergoing insolvency proceedings and with approved resolution plans cannot be pursued, as per the Supreme Court’s ruling in Ghanshyam Mishra and Sons Pvt. Ltd.
4. Importance of Evidence: Penalties under Section 117 of the Customs Act require concrete evidence of contravention or failure to comply with the Act. Assumptions and presumptions are insufficient grounds for imposing penalties.
This landmark decision by the CESTAT serves as a crucial precedent for cases involving the role and responsibilities of Customs House Agents, emphasizing the need for clear evidence and adherence to legal provisions before imposing penalties.

Source: CESTAT Delhi

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March 28, 2026
Madras High Court Quashes Customs Confiscation Order for Violating Natural Justice Principles
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 28.03.2026

Madras High Court Quashes Customs Confiscation Order for Violating Natural Justice Principles

Adv Ravi Shekhar Jha

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 id intelconsul@gmail.com or on his Mobile +91-9999005379.

The Madras High Court, in its judgment dated February 20, 2026, delivered by Honourable, quashed the impugned confiscation order passed by the Additional Commissioner of Customs (Group 5), Chennai, in the case of M/s. Hiseins Exim vs. The Additional Commissioner of Customs (Group 5) [WP No. 35884 of 2024]. The court held that the order was passed in violation of the principles of natural justice and the mandatory provisions of Section 124 of the Customs Act, 1962.

Background of the Case

The petitioner, M/s. Hiseins Exim, challenged the confiscation order (Original No. 109886/2024/Gr5 dated October 17, 2024) issued by the respondent, the Additional Commissioner of Customs, Chennai. The petitioner argued that the order was passed without issuing a mandatory show cause notice or affording an opportunity for a personal hearing, as required under Section 124 of the Customs Act, 1962. The petitioner contended that this was a clear violation of the principles of natural justice.

The petitioner further stated that while they had submitted a letter on September 14, 2023, waiving the issuance of a show cause notice and personal hearing, this waiver was only intended to expedite the re-export of goods and did not apply to the confiscation of goods. The petitioner argued that the confiscation order caused serious civil consequences, and therefore, the issuance of a show cause notice and personal hearing was mandatory.

Respondent’s Arguments

The respondent, represented by the standing counsel, argued that the petitioner had voluntarily waived the issuance of a show cause notice and personal hearing through their letter dated September 14, 2023. The respondent contended that this waiver applied to both Section 28 and Section 124 of the Customs Act. Furthermore, the respondent argued that the petitioner had the option to file a statutory appeal before the competent appellate authority, making the writ petition non-maintainable.

The respondent also relied on the Supreme Court’s decision in Commissioner of Customs, Mumbai vs. Virgo Steels [2002 (141) E.L.T. 598 (S.C.)], which held that the right to a show cause notice under Section 28 of the Customs Act could be waived by the concerned party.

Court’s Observations

Justice analyzed the provisions of Sections 28 and 124 of the Customs Act and emphasized the distinction between the two. The court observed that:
1. Section 28 of the Customs Act deals with the recovery of duties not levied, short levied, or erroneously refunded. A show cause notice under this section can be waived if the concerned party voluntarily relinquishes their right to it.
2. Section 124 of the Customs Act, however, mandates the issuance of a show cause notice and the provision of a reasonable opportunity for a hearing before confiscating goods or imposing penalties. This requirement is essential to uphold the principles of natural justice and cannot be waived through pre-printed forms or under pressure.
The court further noted that the confiscation of goods and imposition of penalties under Section 124 of the Customs Act have serious civil consequences for the importer/exporter. Therefore, the issuance of a show cause notice and the provision of a personal hearing are mandatory and cannot be waived.

Key Judgments Referenced 

The court referred to several landmark judgments to support its decision:
1. Salmag Enterprises vs. Additional Commissioner of Customs (Adj), Tuticorin [2021 (378) E.L.T. 415 (Mad.) ]: The Madras High Court held that the issuance of a show cause notice under Section 124 of the Customs Act is mandatory, even if the importer/exporter had earlier agreed to waive it.
2. Shiv Shakti Trading Co. vs. Commissioner of Customs (Preventive) [2016 (336) E.L.T. 415 (Del)]: The Delhi High Court ruled that in cases involving serious offenses or high stakes, the issuance of a show cause notice cannot be waived.
3. Dharampal Satyapal Ltd. vs. Dy. Commissioner of C. Ex ., Gauhati [2015 (320) E.L.T. 3 (S.C.)]: The Supreme Court emphasized that the validity of an order must be assessed based on the principle of “prejudice” and the test of fair hearing.
4. Automotive Tyre Manufacturers Association vs. Design ated Authority and Others [2011 (2) SCC 258]: The Supreme Court reiterated the importance of providing a reasonable opportunity to be heard before passing orders that have adverse consequences.
Court’s Decision

The Madras High Court concluded that the impugned confiscation order was invalid as it was passed without issuing a mandatory show cause notice under Section 124 of the Customs Act and without affording the petitioner a personal hearing. The court held that the respondent’s actions violated the principles of natural justice and quashed the impugned order.

Directions to the Respondent

The court granted liberty to the respondent to initiate fresh proceedings for the confiscation of goods, recovery of differential customs duty, and imposition of penalties. However, the court directed the respondent to issue a show cause notice to the petitioner under Section 124 of the Customs Act and follow the due procedure established by law, ensuring adherence to the principles of natural justice.

Conclusion

This judgment reinforces the importance of adhering to the principles of natural justice and the mandatory provisions of the Customs Act, particularly Section 124, which requires the issuance of a show cause notice and a reasonable opportunity for a hearing before confiscating goods or imposing penalties. The decision serves as a reminder to authorities to ensure compliance with legal procedures to protect the rights of importers and exporters.

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Source: Madras High Court

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March 28, 2026
CESTAT Kolkata Clarifies Scope of Valuation Rule 10(2) and Limits of Extended Limitation
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 27.03.2026

CESTAT Kolkata Clarifies Scope of Valuation Rule 10(2) and Limits of Extended Limitation

Adv Ravi Shekhar Jha

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 id intelconsul@gmail.com or on his Mobile +91-9999005379.

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Kolkata, recently delivered a significant judgment in the case of Customs Appeal No. 75332 of 2024, involving M/s. Jindal Nickel & Alloys Ltd. and the Commissioner of Customs (Preventive), Kolkata. This case revolved around the inclusion of freight and insurance charges in the assessable value of imported goods and the invocation of the extended limitation period under Section 28(4) of the Customs Act, 1962. The tribunal’s decision has set a precedent for similar cases in the future.

Background of the Case

M/s. Jindal Nickel & Alloys Ltd., a trader and importer of goods, imports Ferro Silicon and Magnesium Ferro Silicon from Bhutan through the Land Customs Station (LCS) at Jaigaon, located at the Indo-Bhutan border. The dispute arose when the Commissioner of Customs (Preventive), Kolkata, issued an Order-in-Original (No. 09/Cus/CC(P)/WB/2023-24 dated 31.10.2023), directing the re-assessment of the imported goods. The order mandated the inclusion of freight charges (20% of the Free on Board (FOB) value) and insurance charges (1.125% of the FOB value) in the assessable value, as per Rule 10(2) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.

The department alleged that the appellant had misared the assessable value of the goods by excluding freight and insurance charges, resulting in a short payment of Integrated Goods and Services Tax (IGST) amounting to ₹83,43,639 during the period July 2017 to June 2018. Consequently, the department imposed a penalty of an equal amount under Section 114A of the Customs Act, 1962, and demanded the recovery of the evaded IGST along with interest under Section 28AA.

Key Issues in the Case

The case revolved around two primary issues:
1. Inclusion of Freight and Insurance Charges in Assessable Value: The department argued that the appellant failed to include freight and insurance charges in the assessable value, as mandated by Rule 10(2) of the Customs Valuation Rules. The appellant contended that the FOB value declared in the invoice was equivalent to the Cost, Insurance, and Freight (CIF) value, as there was no transportation cost or insurance required between the Bhutan Customs Station at Phuentsholing and the Indian LCS at Jaigaon.
2. Invocation of Extended Limitation Period: The department invoked the extended limitation period under Section 28(4) of the Customs Act, alleging suppression and willful misstatement by the appellant. The appellant argued that they had disclosed all relevant information in the invoice and Bill of Entry, and the case was one of interpretation rather than suppression.
Tribunal’s Observations and Judgment

Merits of the Case 

The tribunal examined the appellant’s claim that the FOB value was equivalent to the CIF value due to the absence of transportation costs and insurance between the two borders. While the appellant argued that the goods were invoiced on an FOB basis, which included transportation costs within Bhutan, the tribunal noted that the appellant failed to provide documentary evidence to substantiate this claim. The tribunal emphasized that oral arguments alone could not establish the equivalence of FOB and CIF values.

The tribunal also highlighted the terms and conditions printed on the invoice-cum-challan, which indicated that the goods were dispatched at the buyer’s risk and the seller’s responsibility ceased once the goods left the factory premises. This supported the department’s claim that transportation and insurance costs were incurred and should be included in the assessable value as per Rule 10(2) of the Valuation Rules.

Extended Limitation Period 

The tribunal scrutinized the department’s invocation of the extended limitation period under Section 28(4) of the Customs Act. It noted that the appellant had clearly declared the FOB value and indicated NIL freight charges in the Bill of Entry. The tribunal held that the charge of suppression or willful misstatement could not be substantiated, as the appellant had disclosed all relevant information in the invoice and Bill of Entry. The tribunal emphasized that the extended limitation period could only be invoked in cases of deliberate default or willful intent to evade duty, which was not evident in this case.

Revenue Neutrality

The tribunal also considered the revenue neutrality of the case, noting that the appellant was eligible to avail credit for any duty paid on transportation and insurance costs. This further supported the appellant’s argument that there was no intention to evade duty.

Final Decision

After considering the arguments and evidence presented by both parties, the tribunal ruled in favor of the appellant. It set aside the order of the lower authority and allowed the appeal on the grounds of limitation. The tribunal concluded that the extended period of limitation was not applicable, as the department failed to establish suppression or willful misstatement by the appellant.

Key Takeaways
1. Importance of Documentary Evidence: The tribunal emphasized the need for documentary evidence to substantiate claims regarding the equivalence of FOB and CIF values. Oral arguments alone are insufficient to meet legal requirements.
2. Strict Interpretation of Suppression: The tribunal reiterated that suppression or willful misstatement must be proven with clear evidence of deliberate intent to evade duty. Mere non-payment or incorrect statements cannot be equated with suppression.
3. Revenue Neutrality: The tribunal highlighted that cases involving revenue neutrality, where the appellant is eligible to claim credit for the duty paid, are less likely to be considered as deliberate evasion.
4. Extended Limitation Period: The judgment clarified that the extended limitation period under Section 28(4) of the Customs Act can only be invoked in cases of deliberate default or suppression, not for mere errors or misinterpretations.
Conclusion

The decision in Customs Appeal No. 75332 of 2024 serves as a crucial precedent for importers and the customs department alike. It underscores the importance of proper documentation, the need for clear evidence in cases of alleged suppression, and the significance of revenue neutrality in determining the intent behind duty evasion claims. This judgment is a reminder of the importance of adhering to legal provisions while also ensuring that enforcement actions are based on solid evidence and not mere assumptions.

Source: CESTAT Kolkata

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March 27, 2026
CESTAT Chennai Ruled on Validity of Load Port Chartered Engineer Certificates in Second-Hand Machinery Valuation Dispute
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 27.03.2026

CESTAT Chennai Ruled on Validity of Load Port Chartered Engineer Certificates in Second-Hand Machinery Valuation Dispute

Adv Ravi Shekhar Jha

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 id intelconsul@gmail.com or on his Mobile +91-9999005379.

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Chennai, recently delivered a significant judgment in the case of M/s. Abirami Weaving Mills vs. The Commissioner of Customs (Customs Appeal No. 40225 of 2017). This case revolved around the valuation of imported second-hand machinery and the rejection of the declared value based on a Chartered Engineer’s certificate. The Tribunal’s decision has set a precedent for similar cases, emphasizing the importance of adhering to established guidelines and the validity of Load Port Chartered Engineer certificates.

Background of the Case

M/s. Abirami Weaving Mills imported 20 units of “Used Picanol GTM AS Rapier Looms with CAM Motion Type: GTM-2N190 with Standard Accessories” from M/s. PT Bandung Sakura Textile Mills, Indonesia. The machinery, manufactured in Belgium in 1993, was imported in used condition. The importer declared the unit price as USD 4,000 (CIF) and the total invoice value as USD 80,000 (CIF). However, the importer failed to produce a certificate from an independent Chartered Engineer or equivalent authority in the country of supply, which would provide details such as the price of new machinery, its current condition, reconditioning or repair costs, dismantling costs, and expected lifespan.

The customs authorities rejected the declared value of USD 4,000 per unit and re-determined the value at USD 7,500 per unit based on a local Chartered Engineer’s certificate. The importer paid the enhanced duty without protest but later challenged the valuation in an appeal before the Commissioner (Appeals). The Commissioner upheld the original order, leading the importer to file a second appeal before the CESTAT.

Key Arguments Presented

Appellant’s Arguments
1. Validity of Load Port Chartered Engineer’s Certificate: The appellant argued that the valuation of second-hand machinery should be based on the Load Port Chartered Engineer’s certificate, as per para-8 of the Board Circular No. 4/2008-Cus dated 12.02.2008. The Load Port certificate was obtained on 28.09.2015, prior to the issuance of Board Circular No. 25/2015 dated 15.10.2015, which introduced additional requirements for such certificates. Therefore, the rejection of the Load Port certificate was unjustified.
2. Transaction Value: Referring to Section 14 of the Customs Act, 1962, the appellant contended that the transaction value of imported goods should be the price actually paid or payable for the goods when sold for export to India. The appellant emphasized that there was no evidence to suggest that the declared value was incorrect or that the importer and supplier were related parties.
3. Inconsistencies in Local Chartered Engineer’s Certificate: The appellant highlighted that the local Chartered Engineer’s certificate did not provide details about the operational condition of the machinery, which was crucial for valuation. This raised questions about the reliability of the reassessed value.
4. Precedents: The appellant cited previous judgments, including Barani Industries vs. Commissioner of Customs [2025 (10) TMI 829 CESTAT Chennai] and Motor Industries Co. Ltd. vs. CC [2009 (244) ELT 4 (SC)], to support their case.
Respondent’s Arguments

The Departmental Representative supported the findings of the lower authorities, arguing that the rejection of the declared value was justified due to the absence of certain details in the Load Port Chartered Engineer’s certificate.

Tribunal’s Observations and Decision

After hearing both parties and reviewing the documents, the Tribunal focused on the key issue: whether the declared value of the imported second-hand machinery was rightly enhanced based solely on the local Chartered Engineer’s certificate.
1. Validity of Load Port Certificate: The Tribunal noted that the Load Port Chartered Engineer’s certificate contained all material particulars of the imported machinery, including its original value and confirmation that the goods were used and not reconditioned. The only missing detail was the year of manufacture, which the Tribunal deemed non-critical for determining the nature and value of the goods.
2. Rejection of Declared Value: The Tribunal found that the rejection of the declared value was unjustified, as the Load Port certificate was improperly dismissed. The Board’s Circular No. 4/2008-Cus clearly states that a local Chartered Engineer’s certificate should only be accepted in the absence of a proper Load Port certificate. In this case, the Load Port certificate was available and contained sufficient information to establish the nature and value of the goods.
3. Precedents and Guidelines: The Tribunal referred to previous judgments, including Barani Industries vs. Commissioner of Customs, which supported the appellant’s contention that the rejection of the declared value based solely on the local Chartered Engineer’s certificate was untenable.
4. Need for Re-evaluation of Guidelines: The Tribunal observed that the Board’s circular issued in 2008 might require a re-evaluation in light of advancements in technology and the current practices in international trade.
Final Order

The Tribunal concluded that the redetermination of the declared value based solely on the local Chartered Engineer’s certificate was not in order. It set aside the impugned order and allowed the appeal, thereby upholding the declared value of the imported second-hand machinery.

Implications of the Judgment

This landmark decision has significant implications for importers and customs authorities:
1. Reaffirmation of Transaction Value: The judgment reinforces the principle that the transaction value of imported goods should be the primary basis for valuation, provided there is no evidence of misrepresentation or related-party transactions.
2. Importance of Load Port Certificates: The Tribunal emphasized the validity of Load Port Chartered Engineer certificates, provided they contain sufficient information to establish the nature and value of the goods.
3. Need for Updated Guidelines: The Tribunal’s observation about the need to revisit the 2008 Board Circular highlights the importance of aligning regulatory guidelines with current technological advancements and trade practices.
Conclusion

The CESTAT Chennai’s decision in the case of M/s. Abirami Weaving Mills vs. The Commissioner of Customs serves as a crucial reminder of the importance of adhering to established guidelines and respecting the validity of Load Port Chartered Engineer certificates. It also underscores the need for customs authorities to provide clear and justifiable reasons when rejecting declared values. This judgment is expected to provide clarity and guidance for future cases involving the valuation of imported second-hand machinery.

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Source: CESTAT Chennai

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March 27, 2026