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Category: ACTS

  • Supreme Court: DRI Cannot Secure NDPS Conviction Based Only on Statements of Co-Accused

    Supreme Court: DRI Cannot Secure NDPS Conviction Based Only on Statements of Co-Accused

    Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

    Date: 31.10.2026

    Supreme Court: DRI Cannot Secure NDPS Conviction Based Only on Statements of Co-Accused

    This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .  

    The Supreme Court of India set aside Surinder Kumar Khanna’s drug-trafficking conviction because the prosecution had no substantive evidence against him beyond statements made by his co-accused.

    Background of the case

    The case arose from a Directorate of Revenue Intelligence operation in Hoshiarpur, Punjab. Officers intercepted a white Indica car after receiving information that narcotics were being transported from Jammu towards Chandigarh. Two occupants, Raj Kumar alias Raju and Surinder Pal Singh, were found in the vehicle.

    A search of the car reportedly led to the recovery of four packets concealed in the boot-door area. The packets allegedly contained approximately 3.990 kg of heroin. The two occupants stated that the consignment had been collected from an individual in Jammu and was intended for delivery near PGI Chandigarh.

    Although Surinder Kumar Khanna was not present at the interception and no contraband was recovered from him, investigators later alleged that he was involved in the trafficking operation. A supplementary complaint was filed against him under Section 21(c) read with Section 29 of the Narcotic Drugs and Psychotropic Substances Act, 1985.

    Conviction by the trial court and High Court

    The trial court convicted Khanna and sentenced him to 12 years’ rigorous imprisonment, along with a fine of Rs. 1 lakh. On appeal, the Punjab and Haryana High Court upheld the conviction but reduced the prison term to 10 years.

    The High Court relied principally on statements made by Raj Kumar and Surinder Pal Singh under Section 67 of the NDPS Act. It held that these statements were admissible and established Khanna’s involvement in drug trafficking.

    The central issue before the Supreme Court

    The Supreme Court considered whether a co-accused’s alleged confession could, by itself, justify another accused person’s conviction.

    The prosecution accepted that, apart from the co-accused’s statements, there was no evidence directly connecting Khanna with the seized heroin or the other accused. Call-data records placed before the Court showed contact with a person in Dubai, but did not show that Khanna was in touch with either co-accused when they were apprehended.

    What the Court held

    The Court reaffirmed a fundamental evidentiary rule: a confession by one accused is not substantive evidence against a co-accused. It may only be considered to support or β€œlend assurance” to other independent evidence that already points to the co-accused’s guilt.

    The judgment relied on established precedents, including Kashmira Singh v. State of Madhya Pradesh and Hari Charan Kurmi v. State of Bihar. Those decisions explain that a court must first assess the evidence against an accused without considering a co-accused’s confession. Only if independent evidence is sufficient to support conviction may the confession be used as an additional source of assurance.

    The Court also noted that the NDPS Act contains no provision comparable to special statutes that expressly permit a co-accused’s confession to be used against another accused in specified circumstances.

    Importance of Section 67 statements

    The judgment acknowledged that the legal status of statements recorded under Section 67 of the NDPS Act had been referred to a larger Bench in an earlier case. However, the Court held that even if those statements were treated as confessions, they could not alone establish Khanna’s guilt.

    That distinction was decisive. The question was not merely whether the co-accused’s statements could be considered; it was whether they could independently prove a separate accused person’s involvement. The Court answered no.

    Final outcome

    Finding no substantive evidence against Khanna, the Supreme Court allowed his appeal, quashed his conviction and sentence, and acquitted him of the charges. It directed that he be released immediately unless required in custody in another case.

    Key legal takeaway

    Surinder Kumar Khanna v. Intelligence Officer, Directorate of Revenue Intelligence reinforces that criminal conviction must rest on reliable, independent evidence. A co-accused’s statement may corroborate an existing case, but it cannot fill the absence of evidence against another person accused of the offence.

    Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

    Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

    Source: Supreme Court

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    Ravi Shekhar Jha – Advocate, Bar Council of Delhi

  • Rajasthan High Court Quashes 14-Year-Old Customs Drawback Proceedings for Unreasonable Delay

    Rajasthan High Court Quashes 14-Year-Old Customs Drawback Proceedings for Unreasonable Delay

    Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

    Date: 31.10.2026

    Rajasthan High Court Quashes 14-Year-Old Customs Drawback Proceedings for Unreasonable Delay

    This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .  

    The Rajasthan High Court has set aside a 2008 customs show-cause notice and a 2022 adjudication order, holding that a 14-year delay without explanation or communication violated procedural fairness and natural justice.

    Case at a glance

    In Shivek Sharma v. Union of India (D.B. Civil Writ Petition No. 19485/2022), decided on 9 September 2025, the Rajasthan High Court at Jaipur examined whether Customs authorities could revive and adjudicate a long-pending allegation concerning duty drawback and DEPB benefits after more than a decade of inactivity.

    The petitioner, Shivek Sharma, was the legal heir of the late proprietor of M/s J. Minakshi International. The Directorate of Revenue Intelligence had investigated alleged misuse of export-promotion schemes involving exports of goods such as readymade garments, leather items and brass items. A show-cause notice was issued on 31 March 2008, but the department did not proceed to adjudicate it until 2021-22. An Order-in-Original creating recovery demands was eventually issued on 18 October 2022.

    The Court ruled that this prolonged, unexplained delay made the proceedings legally unsustainable.

    Background of the dispute

    The DRI’s investigation concerned alleged fraudulent export transactions during 2001-05. It resulted in a show-cause notice against several parties, including M/s J. Minakshi International, a proprietary concern of the petitioner’s father.

    Several developments made the delay especially significant:

    • The notice was issued in 2008, when the petitioner was 13 years old.
    • The proprietor, Pawan Kumar Sharma, died in April 2021.
    • The department began hearing-related action only after approximately 13 years of silence.
    • The petitioner stated that he had neither inherited nor carried on the business and was unaware of the pending proceedings.
    • After receiving hearing notices, he sought the underlying notice and relied-on documents, explaining that he could not reasonably understand or answer transactions dating back many years.

    Despite these objections, Customs passed an order in October 2022, seeking recovery of duty drawback and interest from the petitioner as legal heir.

    The legal issue: Can Customs adjudicate after 14 years?

    The central issue was not merely whether the Customs Act or Drawback Rules contained a fixed limitation period. It was whether administrative and quasi-judicial powers can be exercised after such an extreme delay when the affected party was not informed of the status of the case.

    The petitioner argued that even where legislation does not prescribe a specific deadline, adjudication must occur within a reasonable period. He also relied on the statutory timelines reflected in Section 28(9) of the Customs Act to emphasize the importance of prompt decision-making in customs matters.

    The Customs department argued that the case involved recovery of drawback and DEPB benefits under the Drawback Rules, rather than an ordinary duty-demand case. It also argued that the 2018 amendment introducing timelines under Section 28(9) did not apply retrospectively and that an appellate remedy was available.

    What the Court held

    The High Court rejected the department’s position and held that the doctrine of reasonable time applies to adjudication proceedings generally. The absence of an express statutory deadline does not permit authorities to keep a show-cause notice alive indefinitely.

    The Court identified several decisive failures:

    • Inordinate delay: The order was passed more than 14 years after the show-cause notice.
    • No explanation: Customs did not provide a cogent reason for the delay.
    • No communication: The petitioner and his father were not told that the matter remained pending or had been placed in a β€œcall book.”
    • No supporting record: The department did not produce material proving any transfer to the call book or explaining the basis for it.
    • No fault of the petitioner: The delay was not attributed to the petitioner or his late father.
    • Ignored submissions: The adjudicating authority did not meaningfully address the petitioner’s arguments and cited case law on stale proceedings.

    The Court described the 14-year delay as incompatible with lawful, fair and effective quasi-judicial adjudication. It reiterated the principle expressed in the maxim lex dilationes abhorretβ€”the law abhors delay.

    Why lack of communication mattered

    A key part of the ruling is that delay becomes particularly unfair when the noticee is left uninformed. The Court noted that communication is necessary where proceedings are kept in abeyance or transferred to a call book.

    Without notice, the affected person may lose access to records, witnesses and other evidence needed for a proper defence. Long silence can also reasonably lead a person to believe that the proceedings have been abandoned or concluded.

    Here, the department was silent for more than a decade. The Court found that this lack of transparency caused grave prejudice and violated natural justice.

    Writ petition allowed despite an appellate remedy

    The department argued that the petitioner should pursue an appeal against the Order-in-Original. The Court held that the availability of an appeal did not bar the writ petition in these circumstances.

    The challenge was based on a fundamental procedural defect: the arbitrary and delayed revival of proceedings, coupled with a breach of natural justice. Because the very adjudication process was found to be vitiated, the Court considered writ jurisdiction appropriate.

    Final outcome

    The Rajasthan High Court allowed the writ petition and quashed:

    1. The show-cause notice dated 31 March 2008, insofar as it concerned the petitioner; and
    2. The Order-in-Original dated 18 October 2022 passed under Section 122 of the Customs Act.

    The Court concluded that the petitioner was justified in treating the long-dormant proceedings as abandoned.

    Significance of the ruling

    This decision reinforces an important safeguard in customs and tax administration: authorities must adjudicate show-cause notices within a reasonable time, even where the governing provision does not specify a strict deadline.

    For businesses, proprietors, legal heirs and other noticees, the judgment confirms that a prolonged and unexplained revival of old proceedings can be challenged when it causes prejudice, particularly where the department failed to disclose the status of the case or preserve procedural fairness.

    For revenue authorities, it underscores that public-revenue objectives require diligence and timely action, not indefinite pendency.

    Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

    Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

    Source: Rajasthan High Court

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    Ravi Shekhar Jha – Advocate, Bar Council of Delhi

  • CESTAT Mumbai- Customs Cannot Calculate Import IGST on Exempted BCD

    CESTAT Mumbai- Customs Cannot Calculate Import IGST on Exempted BCD

    Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

    Date: 30.10.2026

    CESTAT Mumbai- Customs Cannot Calculate Import IGST on Exempted BCD

    This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .  

    The CESTAT Mumbai has held that where imports qualify for a Basic Customs Duty (BCD) exemption under a valid Duty-Free Import Authorisation (DFIA), IGST must be calculated without adding the notional tariff-rate BCD to the assessable value.

    In TGI International v. Commissioner of Customs, Nhava Sheva-III, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai set aside an order that had rejected the importer’s challenge to IGST assessments on 105 Bills of Entry. The Tribunal ruled that the relevant statutory test is the customs duty actually β€œchargeable” after giving effect to a valid exemption notification, not the BCD shown in the tariff schedule.

    Background: 105 DFIA-based fabric imports

    TGI International, a fabric trader, imported polyester viscose fabrics through 105 Bills of Entry. It claimed full exemption from BCD under Notification No. 19/2015-Customs dated 1 April 2015, which applies to eligible imports made against a valid DFIA issued by the Directorate General of Foreign Trade (DGFT).

    The DFIA scheme permits duty-free import of specified inputs subject to prescribed conditions, including production of the authorisation at clearance and endorsements relating to the export obligation and resultant product. In this matter, the Tribunal found that the importer had complied with the applicable DFIA and notification requirements.

    Although the BCD claimed on the imports was nil, the Indian Customs EDI System (ICES) calculated IGST by adding BCD at the normal tariff rate of 20% to the transaction value. The importer paid the system-calculated IGST because the Bills of Entry could not be amended through the system, then appealed the assessments.

    The core legal issue

    The dispute concerned the meaning of β€œduty of customs chargeable” when determining the value on which IGST is levied on imported goods.

    Section 3(8) of the Customs Tariff Act, 1975 requires IGST to be calculated on an aggregate value comprising:

    1. the value of imported goods determined under Section 14 of the Customs Act, 1962; and
    2. any customs duty chargeable on the goods under Section 12 of the Customs Act.

    TGI International argued that once the DFIA exemption reduced BCD to zero, there was no BCD amount to add to the assessable value for IGST. Customs authorities, however, treated the tariff-rate BCD as part of the IGST base, even though the importer did not pay that duty in cash.

    Tribunal’s findings

    Effective duty, not tariff duty, governs the IGST base

    The Tribunal held that an exemption notification issued under Section 25 of the Customs Act must be given effect while determining the customs duty β€œchargeable” under Section 12. Although the tariff rate of BCD on the goods was 20%, the effective BCD was nil because the imports were covered by the DFIA exemption.

    Accordingly, the Tribunal concluded that the effective duty liability, rather than the unadjusted tariff rate, must be added to the import value when calculating IGST.

    No duty debit was made under the DFIA

    The Commissioner (Appeals) had reasoned that the customs duty was effectively discharged through debit in the DFIA authorisation. CESTAT rejected this conclusion as factually unsupported.

    The Bills of Entry showed β€œzero” against the duty-debit field. The DFIA documentation recorded the permitted CIF value and quantity of dyed polyester fabrics, but did not require debit of the BCD amount as a precondition for the exemption. The Tribunal therefore found that it was incorrect to treat the tariff BCD as a duty discharged through the authorisation.

    ICES could not override the legal valuation rule

    The Tribunal noted that ICES had added a notional BCD amount while computing IGST and had not taken account of the exemption claimed under Notification No. 19/2015-Customs. System-generated assessments cannot displace the statutory requirement to use the duty actually chargeable after the applicable exemption is applied.

    Reliance on earlier decisions

    CESTAT found support in earlier Tribunal rulings that distinguish the tariff rate from the effective rate after exemptions:

    • In Morarjee Brembana Ltd., the Tribunal held that only the effective customs duty, after applying the applicable exemption notification, should be added for calculating additional customs duty.
    • In Parasrampuria International, the Tribunal held that where BCD is nil due to an exemption, no BCD amount can be added to the assessable value merely because a tariff rate otherwise exists.

    The Revenue relied on Poddar Pigments Ltd., but CESTAT held that the case was distinguishable because it concerned interest on delayed IGST payment, not the correct BCD component for IGST valuation.

    Why the ruling matters

    The decision clarifies an important valuation principle for DFIA and other exemption-based imports: the IGST base must reflect the effective customs-duty liability, not a hypothetical duty calculated at the tariff rate.

    For eligible DFIA imports, this means a nil BCD exemption should result in zero BCD being added to the IGST valuation base. The ruling also reinforces that customs assessment systems must apply the substantive benefit of a valid exemption notification rather than mechanically loading tariff-rate duty into the calculation.

    Conclusion

    By allowing TGI International’s appeals, CESTAT Mumbai confirmed that a valid BCD exemption under the DFIA scheme must be fully reflected in IGST valuation. Where the effective BCD is nil, Customs cannot add the tariff-rate BCD notionally to inflate the IGST payable on imported goods.

    Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

    Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

    Source: CESTAT Mumbai

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    Ravi Shekhar Jha – Advocate, Bar Council of Delhi

  • Supreme Court: Section 37 NDPS Bail Conditions Cannot Be Ignored Merely Because No Drugs Were Recovered from Accused

    Supreme Court: Section 37 NDPS Bail Conditions Cannot Be Ignored Merely Because No Drugs Were Recovered from Accused

    Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

    Date: 30.10.2026

    Supreme Court: Section 37 NDPS Bail Conditions Cannot Be Ignored Merely Because No Drugs Were Recovered from Accused

    This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .  

    The Supreme Court of India set aside the Delhi High Court’s bail order in Narcotics Control Bureau v. Mohit Aggarwal, reaffirming that bail in NDPS cases involving commercial quantities is subject to the strict β€œtwin conditions” in Section 37 of the NDPS Act.

    Background of the case

    The case arose from a Narcotics Control Bureau (NCB) operation in January 2020. Acting on information that a courier parcel booked from Agra for delivery in Ludhiana contained narcotic substances, NCB officers searched the courier company’s godown in Delhi.

    The parcel was labelled as containing β€œsurgical items,” but officers allegedly recovered 50,000 Tramadol tablets weighing 20 kg. The prosecution alleged that the consignment had been sent without a valid bill and had been mis-declared.

    During the investigation, the NCB traced the alleged supply chain to several persons, including Mohit Aggarwal. Searches later led to the recovery of a much larger stock of psychotropic substances from the godown of another accused, Promod Jaipuria. The reported seizure included Tramadol, Zolpidem and Alprazolam tablets and capsules, injections, and syrup bottles, amounting to hundreds of kilograms of controlled substances.

    Mohit Aggarwal was arrested on 11 January 2020. His two bail applications before the Special Judge under the NDPS Act were rejected. However, the Delhi High Court subsequently granted him post-arrest bail under Section 439 of the Code of Criminal Procedure.

    The central legal issue

    The key question before the Supreme Court was whether the High Court had correctly applied Section 37 of the Narcotic Drugs and Psychotropic Substances Act, 1985 while granting bail.

    Section 37 imposes additional restrictions on bail where the alleged offence involves commercial quantities of narcotic drugs or psychotropic substances. Before bail can be granted, the court must satisfy two cumulative conditions when the prosecution opposes release:

    • there must be reasonable grounds to believe that the accused is not guilty of the alleged offence; and
    • the accused must not be likely to commit an offence while on bail.

    The prosecution must also receive an opportunity to oppose the bail application.

    Arguments before the Court

    NCB’s case

    The NCB argued that the High Court had taken an overly narrow view by focusing on the absence of any recovery from Mohit Aggarwal’s residence or shop. It contended that the investigation yielded independent circumstantial material connecting him with the alleged drug network.

    According to the NCB, disclosures attributed to Mohit Aggarwal led officers to the godown from which a substantial quantity of psychotropic substances was recovered. It also relied on call-detail records said to show contact between the co-accused. The agency argued that these circumstances, together with the commercial quantity involved, made the grant of bail contrary to Section 37.

    Respondent’s case

    Mohit Aggarwal argued that the consignment had not been booked by him, no narcotics were recovered from him, and searches of his residence and shop produced nothing incriminating. He also challenged reliance on statements recorded under Section 67 of the NDPS Act.

    The respondent relied on the Supreme Court’s ruling in Tofan Singh v. State of Tamil Nadu, which held that confessional statements recorded under Section 67 are inadmissible at trial under the NDPS Act. He further pointed to the period already spent in custody, the filing of the charge-sheet, and the commencement of trial.

    Supreme Court’s ruling

    The Supreme Court allowed the NCB’s appeals, quashed the High Court’s bail order, cancelled Mohit Aggarwal’s bail bonds, and directed that he be taken into custody.

    The Court agreed that the alleged confessional statements recorded under Section 67 could not be relied upon as substantive confessions in light of Tofan Singh. However, it held that this did not end the inquiry. The prosecution had also relied on other material, including the alleged recovery following the respondent’s disclosures and phone records indicating contact among the co-accused.

    The Court held that the High Court should not have treated the absence of a recovery from the respondent’s personal possession as sufficient to conclude that he was not guilty. That conclusion was premature at the bail stage, particularly when other circumstantial evidence was on record.

    Meaning of β€œreasonable grounds” under Section 37

    A major contribution of the judgment is its explanation of the phrase β€œreasonable grounds.” The Court reiterated that this standard requires more than a prima facie view. It calls for substantial and credible probable grounds for believing that the accused is not guilty.

    At the same time, the Court clarified that a bail court is not expected to conduct a mini-trial or finally determine guilt. The inquiry is limited: whether the material available gives the court reasonable grounds to believe that the accused is not guilty and unlikely to reoffend while on bail.

    This approach reflects the special statutory framework of the NDPS Act. In ordinary criminal cases, the general bail principles under the Code of Criminal Procedure apply. In commercial-quantity NDPS cases, those principles are supplemented by the stricter statutory threshold in Section 37.

    Why the High Court’s approach was rejected

    The Supreme Court identified three core problems with the grant of bail:

    • Insufficient application of Section 37: The High Court did not adequately assess whether both statutory conditions for bail had been met.
    • Overemphasis on lack of personal recovery: The absence of contraband at the respondent’s residence or shop did not by itself establish that he was unconnected with the alleged offence.
    • Failure to account for circumstantial evidence: The alleged recovery from a co-accused’s godown and the call-detail records were relevant material that required consideration, even if Section 67 confessions were excluded.

    The Court also made clear that the duration of custody, filing of the charge-sheet, and commencement of trial are not, by themselves, persuasive grounds for granting bail where Section 37 applies.

    Significance of the decision

    Narcotics Control Bureau v. Mohit Aggarwal is an important bail decision under the NDPS Act because it reinforces the limited scope for release in commercial-quantity cases. It confirms that courts must separately and carefully apply the two conditions in Section 37 rather than relying only on ordinary bail considerations.

    The ruling also draws a practical distinction between inadmissible Section 67 confessions and other evidence. While an accused’s alleged confession to an NDPS officer cannot be used as substantive evidence at trial, independent circumstances such as recoveries, communications records, and other investigative material can still be relevant at the bail stage.

    Key takeaway

    The judgment confirms that in commercial-quantity NDPS cases, bail cannot rest merely on the absence of direct recovery or on time spent in custody; the court must find credible and substantial grounds to believe the accused is not guilty and unlikely to commit another offence while on bail.

    Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

    Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

    Source: Supreme Court

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    Ravi Shekhar Jha – Advocate, Bar Council of Delhi

  • Karnataka HC: NDPS Investigation by Police Sub-Inspector Not Illegal Merely on Grounds of Officer’s Rank

    Karnataka HC: NDPS Investigation by Police Sub-Inspector Not Illegal Merely on Grounds of Officer’s Rank

    Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

    Date: 29.10.2026

    Karnataka HC: NDPS Investigation by Police Sub-Inspector Not Illegal Merely on Grounds of Officer’s Rank

    This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .  

    The Karnataka High Court has dismissed petitions seeking to quash NDPS proceedings, holding that a police sub-inspector may validly register an FIR, investigate the case, and file the final report where authorised under law.

    Case overview

    In Joswin Lobo v. State of Karnataka and the connected petition filed by Anirudh V. Konnur, the petitioners challenged criminal proceedings arising from a narcotics case registered by the Byadarahalli Police Station in Bengaluru. The proceedings concerned alleged offences under Sections 8(c), 21(c), 22(c), 23(c), 27(a) and, in one petition, 20(ii)(B) of the Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS Act).

    The petitioners invoked Section 482 of the Code of Criminal Procedure, seeking quashing of the special case pending before the NDPS Special Court. Their core argument was narrow but significant: the police sub-inspector who registered the FIR, investigated the allegations, and submitted the charge sheet was not the β€œofficer in charge” of the police station and was therefore not competent to conduct the investigation.

    Allegations underlying the proceedings

    According to the prosecution case recorded in the order, police acted on information received on 22 June 2021 that five persons in a paying-guest accommodation near East West College were allegedly holding narcotic drugs and psychotropic substances for sale.

    The prosecution alleged that Joswin Lobo, identified as accused No. 1, was found with 56.5 grams of MDMA/ecstasy tablets, 350 grams of hashish, and a mobile phone allegedly used to contact buyers. Other accused persons were alleged to possess LSD strips and MDMA tablets. Police carried out seizure proceedings, prepared a panchanama, and took the accused into custody. A charge sheet was later filed on 26 November 2021 after receipt of the forensic science laboratory report.

    The High Court’s ruling addressed only the legal challenge to the investigating officer’s authority. It did not determine guilt or innocence on the underlying allegations.

    The legal issue before the Court

    Justice M. Nagaprasanna framed the central issue as whether the criminal proceedings were invalid because the FIR and final report were not filed by the officer in charge of the police station.

    The defence contended that this alleged defect went to the foundation of the prosecution and rendered the proceedings unsustainable. The State opposed the petitions, relying on Karnataka government notifications and the Supreme Court’s Constitution Bench decision in Mukesh Singh v. State.

    NDPS Act framework: powers of search, seizure and investigation

    The Court examined the relevant provisions of the NDPS Act:

    • Section 42 permits empowered officers to enter, search, seize and arrest without a warrant in specified circumstances.
    • Section 52 requires arrested persons and seized articles to be forwarded without unnecessary delay to the nearest police-station officer in charge or to an officer empowered under Section 53.
    • Section 53 allows the Central or State Government, through an official notification, to invest specified officers or classes of officers with the powers of an officer in charge of a police station for NDPS investigations.

    The Court also noted that the Criminal Procedure Code applies to NDPS searches, seizures, arrests and warrants where its provisions are not inconsistent with the NDPS Act.

    Karnataka notifications supported the officer’s authority

    A key feature of the decision was the Court’s reliance on Karnataka government notifications issued on 11 September 1986. The notifications empowered officers at or above the rank of sub-inspector in the Excise Department, as well as drug inspectors in the Drugs Control Department, to exercise powers of an officer in charge of a police station for investigating NDPS offences.

    The Court found that the statutory framework and notifications supported the authorised exercise of investigative powers in NDPS matters. It rejected the assertion that the sub-inspector’s involvement, by itself, invalidated the FIR or charge sheet.

    Supreme Court precedent: Mukesh Singh v. State

    The High Court treated the Supreme Court’s five-judge ruling in Mukesh Singh v. State as decisive. That judgment considered the relationship between the Criminal Procedure Code and the NDPS Act and held that the NDPS Act does not prohibit an informant or complainant from also acting as the investigating officer.

    The Supreme Court had explained that Section 42 expressly refers to police officers, while Section 53 does not separately use the word β€œpolice” because police officers may already perform the role of officer in charge under the Criminal Procedure Code. It also held that the NDPS Act does not require the officer empowered to investigate to be different from the officer who received or recorded the information.

    Applying that principle, the Karnataka High Court concluded that the police sub-inspector who registered the case and submitted the final report could be treated as competent to perform those functions.

    Court’s decision

    The Court held that the petitioners’ sole ground for quashing the proceedings lacked merit. It found no legal basis to conclude that the FIR, investigation, search, seizure, or charge sheet had been invalidated merely because they were handled by a police sub-inspector rather than another officer described as the officer in charge.

    Both Criminal Petition No. 570 of 2022 and Criminal Petition No. 3455 of 2022 were dismissed. The Court also disposed of the pending applications.

    Why the ruling matters

    The decision reinforces that NDPS prosecutions cannot be quashed solely on the argument that a sub-inspector was not competent to register the FIR or undertake the investigation. The validity of the officer’s authority must be assessed within the wider statutory scheme, applicable government notifications, and the Criminal Procedure Code.

    It also confirms the continuing importance of the Supreme Court’s ruling in Mukesh Singh, particularly for challenges based on the investigating officer’s role or the fact that the same officer was involved in receiving information, registering the case, and conducting the investigation.

    The ruling does not remove the procedural safeguards built into the NDPS Act. Requirements concerning authorised searches, recording and reporting information, handling seized material, and protecting applicable rights during personal searches remain legally significant in each case.

    Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

    Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

    Source: Karnataka High Court

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  • Delhi HC: Importers Cannot Be Penalised for Administrative Failure of Customs Settlement Board

    Delhi HC: Importers Cannot Be Penalised for Administrative Failure of Customs Settlement Board

    Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

    Date: 29.10.2026

    Delhi HC: Importers Cannot Be Penalised for Administrative Failure of Customs Settlement Board

    This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .  

    The Delhi High Court has ruled that the statutory clock for customs settlement proceedings must stop when the Interim Board for Settlement is unable to function for want of quorum, protecting applicants from losing their settlement remedy because of an institutional vacancy.

    Background of the dispute

    Holitech India Private Limited, an importer of components used in cellular mobile phones and related products, faced two customs show-cause notices dated 21 September 2023. The notices concerned alleged wrongful use of a customs-duty exemption notification, classification issues, and alleged non-payment of differential duty on unutilised or rejected goods.

    To resolve the disputes through the settlement route under Chapter XIVA of the Customs Act, 1962, Holitech filed settlement applications. After earlier applications were not admitted, fresh applications filed in August 2024 and March 2025 were admitted and taken forward.

    Following amendments introduced through the Finance Act, 2025, pending matters before the Settlement Commission were transferred to the Interim Board for Settlement-I, Delhi. The Board heard Holitech, co-applicants and departmental representatives on 22 August 2025. Holitech also supplied additional written submissions requested by the Board, and the matters were reserved for orders.

    The quorum issue

    Before the Interim Board could issue its orders, one of its members retired on 30 September 2025. From 1 October 2025, the Board lacked the required quorum and could not legally continue with or decide the settlement proceedings.

    The Board’s office later confirmed that the applications had remained pending β€œfor want of quorum” since 1 October 2025. Despite this acknowledged inability to function, communications dated 17 April 2026 treated the proceedings as abated from 8 April 2026 because no settlement order had been passed within the period prescribed by Section 127C of the Customs Act.

    The communications also stated that the jurisdictional customs authorities could resume adjudication of the show-cause notices.

    The legal question

    The central issue before the Delhi High Court was whether settlement proceedings automatically abate when the statutory deadline expires, even though the Interim Board was legally incapable of passing an order because it did not have the required quorum.

    Holitech argued that it had done everything required of it: its applications were admitted, hearings were completed, written submissions were filed and nothing remained pending on its side. It contended that it should not lose a statutory remedy because the adjudicatory forum became non-functional for administrative reasons.

    The respondents argued that the statutory time limit was mandatory and that, once it expired without an order, abatement followed automatically. They maintained that the law contained no express exception for a period when the Board lacked quorum.

    The Court’s reasoning

    The Court rejected a purely literal reading of the statutory time limit. It held that Section 127C must be interpreted as a complete scheme, rather than by isolating the provisions on deadlines and abatement.

    The Court emphasized that the statutory timeline assumes the continued existence of a legally constituted authority capable of carrying out its duties. A body without quorum cannot validly exercise adjudicatory powers or pronounce an order affecting the parties’ rights.

    The Court drew a critical distinction between:

    • a delay caused while a competent authority is able to decide but fails to do so; and
    • a delay caused because the authority itself is legally unable to function.

    Treating these situations identically, the Court said, would produce an unreasonable result. An applicant who had diligently pursued settlement proceedings would lose the remedy through circumstances entirely outside its control, while having no means to secure a decision from a non-functional Board.

    The Court held that the phrase requiring an order within the prescribed period cannot include a period during which the Interim Board had ceased to be an effective adjudicatory forum due to lack of quorum. The time for disposal must therefore exclude the period of institutional incapacity.

    Decision and relief granted

    The Court set aside both communications dated 17 April 2026 that had declared the settlement proceedings abated.

    It ruled that, for Holitech’s applications, the entire period from 1 October 2025 until 4 August 2026 must be excluded when calculating the timeline under Section 127C(8A), read with Section 127C(12), of the Customs Act.

    Because that period could not be counted, the alleged expiry of the statutory period on 8 April 2026 no longer had any legal basis. The settlement applications did not abate.

    The Court also noted that the vacancy had subsequently been filled and that Interim Board for Settlement-I, Delhi had regained the required quorum. It directed the Board to resume Holitech’s applications from the stage immediately before the abatement communications and decide them expeditiously in accordance with law.

    Why the ruling matters

    The decision establishes that statutory deadlines for settlement proceedings cannot be applied in a way that penalizes applicants for the adjudicatory forum’s legal inability to function.

    It preserves the purpose of the customs settlement mechanism: timely and conclusive resolution of disputes, without making access to that remedy dependent on administrative contingencies beyond an applicant’s control. The ruling does not decide the merits of Holitech’s customs disputes. Those issues remain open for determination by the duly constituted Interim Board.

    Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

    Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

    Source: Delhi High Court

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  • CESTAT Kolkata Upholds Classification of Ice-Cream Making Machinery Under CTH 8438

    CESTAT Kolkata Upholds Classification of Ice-Cream Making Machinery Under CTH 8438

    Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

    Date: 28.10.2026

    CESTAT Kolkata Upholds Classification of Ice-Cream Making Machinery Under CTH 8438

    This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .  

    The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata has dismissed six Revenue appeals against J.B. Pen Mart, holding that the disputed imported ice-cream making machinery should be classified under Customs Tariff Heading (CTH) 8438 rather than CTH 8418. The Tribunal also rejected Customs’ enhancement of the declared import value because the statutory reassessment procedure was not followed.

    The dispute: classification and valuation of imported machinery

    The case concerned six Bills of Entry filed by J.B. Pen Mart for imported ice-making and ice-cream making equipment during 2017 and 2018. The importer had sought classification under CTH 8438 80 90, covering machinery used in the industrial preparation or manufacture of food and drink.

    Customs authorities reclassified the goods under CTH 8418 69 90, treating them as ice-cream machines or refrigeration-related equipment. They also enhanced the declared value of the imports, resulting in an aggregate differential duty demand of Rs. 12,27,374.98.

    J.B. Pen Mart paid the additional duty to secure clearance of the goods and avoid demurrage, but did so under protest. The company challenged both the classification and the valuation before the Commissioner (Appeals), who ruled in its favour. The Revenue then appealed to CESTAT.

    Tribunal’s finding: no valid reassessment without a speaking order

    A central issue was the Customs department’s failure to issue a speaking order under Section 17(5) of the Customs Act, 1962.

    Where Customs reassesses goods contrary to an importer’s self-assessment on classification or value, the proper officer must issue a reasoned order within 15 days unless the importer has expressly accepted the reassessment in writing. In this case, the Tribunal found that no such order had been issued.

    The Tribunal rejected the Revenue’s argument that payment of the revised duty amounted to acceptance. It noted that J.B. Pen Mart had paid under protest, sought to avoid port-related charges, and subsequently challenged the reassessment. These facts showed that the importer had not accepted the revised classification or enhanced value.

    As a result, the Tribunal held that the reassessment was unsustainable for breach of statutory procedure and principles of natural justice.

    Why CTH 8438 was preferred over CTH 8418

    The Tribunal also found that the Department’s own past treatment of comparable machinery supported classification under CTH 8438.

    The record showed a consistent history of orders and assessments treating similar ice-cream making equipment as machinery for food preparation under CTH 8438, including:

    • A 2008 departmental review stating that ice-cream candy making machinery was classifiable under CTH 8438.
    • A 2012 Order-in-Appeal that classified an integrated ice-cream production system under CTH 8438 80 90.
    • The 2018 appellate order in J.B. Pen Mart’s own matter.
    • A 2025 Order-in-Appeal involving the same importer, which again held that complete ice-cream making and ice-cube machines belonged under CTH 8438 80 90.
    • A subsequent October 2018 clearance of identical goods for J.B. Pen Mart under CTH 8438.

    The Tribunal distinguished complete machinery used to prepare and dispense edible products from ordinary refrigeration equipment. While Heading 8418 covers refrigerators, freezers, and similar cooling equipment, the imported machines were designed for the production of ice cream and ice cubes as food products. Their principal function was food preparation, making CTH 8438 the more appropriate heading.

    Inconsistent departmental practice benefited the importer

    CESTAT observed that Customs had taken divergent positions over the years, classifying similar goods under CTH 8438 in 2008, 2012, 2018, and 2025, while seeking classification under CTH 8418 for the disputed 2017–2018 imports.

    The Tribunal held that Revenue could not selectively classify identical or similar goods under different tariff headings without cogent reasoning. Because the Department itself had created uncertainty through inconsistent practice, the benefit of that confusion had to go to the importer.

    The Tribunal also noted that prior appellate orders supporting CTH 8438 had not been effectively challenged or stayed by the Department. Those orders therefore continued to carry weight in determining the correct classification.

    Value enhancement was set aside

    The Tribunal upheld the Commissioner (Appeals)’ decision to reject the enhanced import values. Customs had not provided evidence showing why the transaction values declared by J.B. Pen Mart should be rejected, nor had it disclosed a lawful method for determining the enhanced values.

    The order emphasizes that transaction value cannot be discarded merely on assumption or routine assessment practice. Customs must first establish legally valid grounds under the Customs Valuation Rules, 2007. Comparable-import data, if relied upon, must be supported by evidence regarding quality, quantity, country of origin, and timing of imports.

    In this case, there was no evidence that the invoices were unreliable, that the buyer and seller were related, or that any amount over the invoice price had been paid. The failure to issue a Section 17(5) speaking order independently made the value enhancement invalid.

    Key takeaways from the decision

    • Classification must reflect the machine’s principal function. Complete machinery designed for making ice cream and ice cubes as edible products may fall under CTH 8438 as food-preparation machinery rather than under CTH 8418 as cooling equipment.
    • A speaking order is mandatory for disputed reassessments. Customs must issue a reasoned order under Section 17(5) when it changes declared classification or value without the importer’s written acceptance.
    • Payment to avoid demurrage is not acceptance. An importer’s payment of additional duty, particularly under protest, does not eliminate its right to challenge reassessment.
    • Declared value needs evidence to be rejected. Customs cannot enhance value without lawful reasons, supporting evidence, and compliance with the Customs Valuation Rules.
    • Consistency in assessments matters. When the Department has repeatedly accepted a particular classification for similar goods, it must provide strong reasons and follow due process before departing from that position.

    CESTAT Kolkata therefore dismissed the Revenue’s appeals and confirmed the relief granted to J.B. Pen Mart: classification under CTH 8438 and assessment at the importer’s declared values.

    Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

    Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

    Source: CESTAT Kolkata

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  • Supreme Court: Mere Allegations of Drug Trafficking Financing Cannot Establish Guilt Under Section 27A NDPS Act

    Supreme Court: Mere Allegations of Drug Trafficking Financing Cannot Establish Guilt Under Section 27A NDPS Act

    Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

    Date: 28.10.2026

    Supreme Court: Mere Allegations of Drug Trafficking Financing Cannot Establish Guilt Under Section 27A NDPS Act

    This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .  

    The Supreme Court of India set aside Mohammed Fasrin’s conviction under the Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS Act), holding that the prosecution failed to produce reliable, corroborated evidence linking him to the alleged heroin-trafficking operation.

    Background of the case

    On 4 January 2003, narcotics officers received information that 7.4 kg of heroin was being transported in a Toyota Qualis parked near Tamil Nadu Hotel on the Madurai–Alagar Koil Road. Officers intercepted the vehicle and recovered seven packets of heroin concealed in a false compartment beneath the front seat.

    Several people found in the vehicle were prosecuted and convicted. Mohammed Fasrin, however, was not found in the vehicle and the prosecution’s case against him rested primarily on two alleged confessional statements:

    • A statement by a co-accused, Hasan Mohamed (A-2)
    • Fasrin’s own statement, recorded after his arrest

    The trial court convicted Fasrin for offences including financing illicit trafficking and involvement in drug-related export or import activity. The Madras High Court upheld that decision. He was sentenced to 15 years’ rigorous imprisonment and a fine of Rs. 1,50,000.

    What the prosecution alleged

    The prosecution alleged that Fasrin was connected to an international heroin-smuggling arrangement. According to the co-accused’s statement, an individual named β€œMohammed” from Bombay had arranged the movement of the heroin. The co-accused was allegedly told that the drugs would be transferred through another person, Nalliappan, and eventually handed to Fasrin.

    This account did not establish a direct connection between Fasrin and the recovered heroin. The alleged chain depended on statements attributed to people who were not examined during the trial.

    Why the Supreme Court overturned the conviction

    No direct or corroborative evidence

    The Court found that there was virtually no independent evidence showing that Fasrin financed, possessed, transported, imported, exported, or otherwise participated in the narcotics operation.

    Neither the alleged Bombay-based Mohammed nor Nalliappan was examined as a witness or made an accused in the case. Their absence left a critical gap in the prosecution’s account of how the heroin was supposedly meant to reach Fasrin.

    A co-accused’s confession was insufficient

    The Court described a co-accused’s confession as a weak form of evidence that must be supported by independent material. Such a statement may provide investigators with a lead, but it cannot by itself prove another person’s guilt.

    Here, the co-accused’s statement was also substantially hearsay: it merely alleged that another person had said the heroin would eventually be handed to Fasrin. The prosecution did not produce evidence to verify that assertion.

    Fasrin’s alleged confession required scrutiny and support

    Fasrin’s own alleged confession was recorded after he had been arrested. The Court proceeded on the assumption that the statement could be admissible, without deciding the wider legal question concerning confessions recorded under Section 67 of the NDPS Act.

    Even on that assumption, the Court held that the prosecution had not shown that the statement was voluntary, free from pressure, and recorded after Fasrin had been informed of his rights. A custodial confession is weak evidence unless supported by reliable corroboration. No such corroboration was available.

    The legal significance of the ruling

    The decision reinforces that serious NDPS allegations do not lower the prosecution’s burden of proof. Convictions for financing illicit drug trafficking under Section 27A require evidence that the accused directly or indirectly financed prohibited activities, or harboured people involved in them.

    The Court’s reasoning highlights three safeguards:

    • Confessional statements need careful evaluation, particularly where they are made in custody.
    • A co-accused’s statement cannot substitute for independent proof against another accused person.
    • Missing links in the prosecution’s narrative matter, especially when key intermediaries are neither examined nor prosecuted.

    Outcome

    The Supreme Court allowed Fasrin’s appeal, set aside the decisions of the trial court and the Madras High Court, and discharged his bail bonds. The ruling makes clear that suspicion and uncorroborated confessions cannot sustain a conviction where the prosecution fails to establish a credible evidentiary link between the accused and the alleged narcotics offence.

    Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

    Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

    Source: Supreme Court

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  • CESTAT Allahabad: Customs Cannot Bypass Mandatory Valuation Rules Through Importer’s Consent Letter

    CESTAT Allahabad: Customs Cannot Bypass Mandatory Valuation Rules Through Importer’s Consent Letter

    Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

    Date: 27.10.2026

    CESTAT Allahabad: Customs Cannot Bypass Mandatory Valuation Rules Through Importer’s Consent Letter

    This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .  

    The CESTAT Allahabad held that an importer’s written acceptance of an enhanced customs value does not remove its statutory right to challenge that reassessment, particularly where Customs has not properly disclosed the grounds and evidence for rejecting the declared transaction value.

    Case at a glance

    In Final Order Nos. 70472-70474/2026, decided on 16 October 2026, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Allahabad, allowed three connected appeals filed by Artex Overseas Pvt. Ltd. and Artex Textile Pvt. Ltd. against the Principal Commissioner of Customs, ICD Dadri.

    The dispute concerned imports of polyester knitted fabric from China. Customs had enhanced the declared unit values of the consignments based on alleged contemporaneous import data. The Commissioner (Appeals) rejected the importers’ challenges primarily because they had signed written letters accepting the enhanced values at the time of clearance.

    CESTAT set aside those appellate orders and granted consequential relief in accordance with law.

    Background: declared values were substantially enhanced

    The importers had declared negotiated invoice values for polyester knitted fabric. Customs enhanced those values as follows:

    • Artex Overseas Pvt. Ltd.: declared value of USD 1.00 per kg enhanced to USD 1.77 per kg for three Bills of Entry dated 20 and 24 May 2019.
    • Artex Textile Pvt. Ltd.: declared value of USD 1.05 per kg enhanced to USD 1.85 per kg for Bills of Entry dated 31 March 2020 and 7 April 2020.

    The goods were found to conform to the declarations on examination. However, Customs raised concerns after comparing the consignments with contemporaneous import data and sought more detailed information on the fabric, including composition and dimensions.

    The department then treated the declared values as liable for rejection under Rule 12 of the Customs Valuation Rules, 2007, and reassessed the goods at higher values.

    Importers’ case: acceptance was compelled and lacked legal foundation

    Artex Overseas and Artex Textile argued that they had correctly self-assessed duty on the basis of their invoices and negotiated purchase prices. They maintained that the department did not issue out-of-charge orders and did not act on their requests for provisional assessment.

    According to the importers, they paid duty at the enhanced values under protest to prevent clearance delays and were effectively compelled to issue letters of consent. They repeatedly sought speaking orders explaining the reassessment, but none were issued.

    Their principal legal arguments were:

    • A written acceptance of enhancement does not bar an importer from filing an appeal.
    • Customs must follow Section 14 of the Customs Act, 1962 and the valuation process prescribed by the Customs Valuation Rules, 2007.
    • Rule 12 requires the proper officer to form a reasonable doubt about the truth or accuracy of the declared value and, when required, communicate the grounds in writing.
    • A generic reference to contemporaneous import data is insufficient; Customs must provide material showing genuine comparability, including relevant factors such as quantity, quality, GSM, commercial level and timing of the transaction.
    • Mere reliance on NIDB or external import data cannot, without independent and cogent supporting evidence, justify rejection of the declared transaction value.

    Department’s position: written consent eliminated the need for a speaking order

    The department relied on the importers’ acceptance letters. It argued that the letters recorded that the importers had been informed of the grounds for rejecting their declared values, had seen data relating to similar or identical imports, and had agreed to the enhanced values without seeking a show-cause notice or speaking order.

    On that basis, the department contended that Section 17(5) of the Customs Act relieved Customs of the obligation to issue a speaking order once reassessment was accepted in writing.

    Tribunal’s findings: waiver is limited to the speaking order, not the right to appeal

    The Tribunal found that the Commissioner (Appeals) had focused too narrowly on the acceptance letters and had not applied the full legal principles governing customs valuation.

    CESTAT relied on the Supreme Court’s ruling in Century Metal Recycling Pvt. Ltd. v. Union of India, which confirms that Rule 12(2) cannot be bypassed or waived. The proper officer must form a reasoned view that there is doubt about the declared value and communicate the grounds for that doubt to the importer when required.

    The Tribunal also followed the Delhi High Court’s decision in Niraj Silk Mills v. Commissioner of Customs, which clarified that:

    • Written acceptance under Section 17(5) may waive the procedural requirement for a speaking order.
    • It does not waive or extinguish the importer’s statutory right to challenge the reassessment.
    • A reassessment based only on NIDB data is not sustainable unless supported by independent, cogent evidence and a reasoned justification for departing from the declared value.

    The Tribunal noted that the acceptance letters did not themselves disclose the alleged contemporaneous-import details on which Customs relied.

    The revenue authorities had therefore failed to bridge the gap between a standard-form acceptance and the evidentiary basis required to lawfully reject transaction value.

    Decision and practical significance

    CESTAT held that the case was squarely governed by the Delhi High Court’s ruling in Niraj Silk Mills. It therefore set aside all three Orders-in-Appeal and allowed the appeals of Artex Overseas Pvt. Ltd. and Artex Textile Pvt. Ltd., with consequential relief as permitted by law.

    The ruling reinforces an important safeguard in customs valuation: an importer’s consent to clearance at an enhanced value cannot be treated as a blanket surrender of its right to contest an unlawful reassessment. Customs must still demonstrate, through disclosed and relevant material, why the declared transaction value should be rejected and why the substituted value is legally supportable.

    For importers, the decision underscores that consent letters signed to secure release of detained goods do not necessarily end the valuation dispute.

    For Customs authorities, it emphasizes the need for transparent, evidence-based valuation orders rather than reassessments founded solely on generic references to database values or contemporaneous imports.

    Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

    Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

    Source: CESTAT Allahabad

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  • Supreme Court: Being a B.Tech Graduate Does Not Entitle an NDPS Accused to Bail

    Supreme Court: Being a B.Tech Graduate Does Not Entitle an NDPS Accused to Bail

    Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

    Date: 27.10.2026

    Supreme Court: Being a B.Tech Graduate Does Not Entitle an NDPS Accused to Bail

    This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .  

    The Supreme Court of India cancelled the bail granted to Prateek Shukla, holding that the Allahabad High Court had not properly applied the stringent bail standards required under the Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS Act).

    Background of the case

    The case arose from an investigation by the Narcotics Control Bureau (NCB) into suspected diversion of acetic anhydride, a controlled substance that can be used in the illicit manufacture of narcotic drugs. In October 2018, the NCB received information that Altruist Chemicals Private Limited had purchased a substantial quantity of acetic anhydride but had not filed the required quarterly returns for two reporting periods.

    During searches connected with the company, the NCB alleged that it recovered 896 grams of acetic anhydride and 1.885 kg of amphetamine from the company’s registered premises. Investigators also found documents relating to Griffin International, of which Prateek Shukla and Afghan national Bismillah Khan Ahmadzai were stated to be directors.

    The investigation subsequently extended to a godown in Karheda village, Ghaziabad, where the NCB alleged that it recovered 9,650 kg of acetic anhydride along with empty drums. A search of Shukla’s residence allegedly yielded company stamps, banking documents, business papers and other material said to connect multiple entities and co-accused persons.

    Allegations and prosecution case

    The NCB’s complaint alleged that the accused were part of an international drug syndicate involved in the diversion, storage, sale, purchase and export of the controlled substance. Shukla was arrested on 22 October 2018 and was charged under Sections 8, 9A, 25A, 23 and 29 of the NDPS Act.

    The prosecution argued that the material recovered during the investigation established a prima facie connection between Shukla and the alleged conspiracy. It also contended that, given the gravity of NDPS offences, the High Court had granted bail without adequate reasons or proper consideration of the statutory restrictions in Section 37 of the NDPS Act.

    Defence raised by the respondent

    Shukla maintained that he had resigned as a director of Altruist Chemicals on 4 May 2018, after joining the company earlier that year. He argued that the relevant purchases and deliveries of acetic anhydride took place after his resignation and that he had informed the NCB of his departure from the company on 22 May 2018.

    He further contended that he could not be held responsible for the company’s later failure to submit quarterly returns. The High Court accepted his bail plea, observing prima facie that he may not be guilty, while also referring to his clean background and educational qualification.

    Why the Supreme Court intervened

    The Supreme Court found that the High Court’s reasoning did not demonstrate judicial consideration of the seriousness of the allegations or the legal test governing bail under Section 37 of the NDPS Act. It emphasized that merely noting the parties’ submissions is not enough; a bail order must show a reasoned application of the statutory standards.

    The Court specifically criticized the High Court’s reliance on Shukla being educated and holding a Bachelor of Technology degree as a reason to conclude that he was unlikely to commit an offence in the future. It held that this was an extraneous consideration in an NDPS bail decision.

    The Supreme Court also noted that the prosecution’s materials showed Shukla as a director of Altruist Chemicals, while his own bail application referred to transferring 99% of his shareholding to Bismillah Khan Ahmadzai. The Court observed that the respondent’s materials appeared to suppress more than they disclosed, though it did not decide the criminal charges at this stage.

    Supreme Court’s decision

    Allowing the Union of India’s appeal, the Supreme Court set aside the Allahabad High Court’s order dated 7 May 2019. Shukla’s bail was cancelled, and he was directed to surrender immediately.

    Legal significance

    The ruling underscores that bail in serious NDPS cases cannot rest on general observations about an accused person’s education, background or future conduct. Courts must apply the specific statutory safeguards under Section 37 and give reasons that engage with the allegations, the evidence and the gravity of the offence.

    The decision reinforces the Supreme Court’s expectation that bail orders in narcotics cases reflect a careful and legally grounded assessment rather than a cursory evaluation.

    Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

    Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

    Source: Supreme Court

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