ALS

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Category: CBIC CUSTOMS

  • CESTAT Delhi- Packaging Material Cannot Be Treated at Par with Imported Input Under Advance Authorisation

    CESTAT Delhi- Packaging Material Cannot Be Treated at Par with Imported Input Under Advance Authorisation

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

    Date: 16.09.2026

    CESTAT Delhi- Packaging Material Cannot Be Treated at Par with Imported Input Under Advance Authorisation

    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 & Service Tax Appellate Tribunal (CESTAT), New Delhi has allowed an appeal filed by M/s N.V. Distilleries and Breweries Ltd., setting aside an adjudication order that had sought recovery of customs duty on the allegation that the company violated the conditions of Notification No. 96/2009-Cus dated 11 September 2009 while fulfilling export obligations under the Advance Authorisation Scheme.

    The Principal Bench comprising Dr. Rachna Gupta, Officiating President, and Ms. Hemambika R. Priya, Member (Technical) delivered Final Order No. 51464/2026 on 15 September 2026 in Customs Appeal No. 50064 of 2020.

    The Tribunal drew an important distinction between an input physically incorporated in the exported product and packaging materials used for packing that product, holding that bottles, caps and labels could not be placed at par with the imported Vatted Malt Scotch used in manufacturing Indian Made Foreign Liquor (IMFL).

    The Dispute: Advance Authorisation and Rule 19(2) Benefits

    • N.V. Distilleries was engaged in the manufacture of Indian Made Foreign Liquor (IMFL), Country Liquor, PET bottles and un-denatured spirit. The dispute originated from intelligence received by the Directorate of Revenue Intelligence (DRI), Chandigarh Regional Unit concerning alleged violation of the conditions governing Advance Authorisations.
    • The Department alleged that the appellant had violated the condition contained in Notification No. 96/2009-Cus because, while using duty-free imported inputs under Advance Authorisations, it had also used domestically procured bottles, caps and labels under Rule 19(2) of the Central Excise Rules, 2002 in the exported IMFL.
    • According to the Department, exports manufactured using such domestically procured duty-free materials could not be counted towards discharge of the export obligation under the Advance Authorisations.

    Show Cause Notice Proposed Substantial Customs Duty Recovery

    • A Show Cause Notice dated 20 October 2016 proposed, among other things, recovery of β‚Ή1,93,62,179 in customs duty by invoking the bonds executed at the time of duty-free imports and Section 28(4) of the Customs Act, 1962, along with interest under Section 28AA.
    • A further customs duty demand of β‚Ή94,20,905 was proposed in respect of two Advance Authorisations on the allegation of failure to fulfil export obligations. The notice also proposed appropriation of amounts already deposited and penalties under Sections 114A and 114AA of the Customs Act, 1962.
    • The proposals in the Show Cause Notice were subsequently confirmed through Order-in-Original No. 14/2019 dated 30 August 2019, leading N.V. Distilleries to approach CESTAT.

    Appellant: Imported VMS and Domestic Packaging Were Different Materials

    • The appellant’s central argument was that the essence of the Advance Authorisation Scheme is that the imported input must be physically incorporated in the resultant export product.
    • In the present case, the appellant had imported Vatted Malt Scotch (VMS) under Advance Authorisation, which was incorporated into the IMFL subsequently exported.
    • However, the bottles, caps and labels were domestically procured under Annexure-45 and Rule 19(2) of the Central Excise Rules. Therefore, according to the appellant, there was no overlapping or double benefit because the imported material and the domestically procured materials were entirely different.
    • The appellant further argued that the Government’s export incentive framework is intended to neutralise domestic taxes and duties so that taxes are not exported. According to it, Advance Authorisation was availed for imported VMS, whereas Annexure-45 was utilised for domestically procured glass bottles, caps and labels, with the duty benefit being claimed only once in each case.
    • Reliance was placed upon the Punjab and Haryana High Court’s decision in R.P. International v. Union of India, 2017 (353) E.L.T. 307 (P&H).

    Revenue: Exemption Notification Must Be Strictly Construed

    1. The Revenue defended the adjudication order by contending that Condition (viii) of Notification No. 96/2009-Cus prohibited counting exports involving inputs sourced under Annexure-45 towards fulfilment of Advance Authorisation obligations.
    2. It alleged that the appellant had simultaneously used domestically sourced duty-free goods and imported duty-free material and had therefore breached the exemption conditions.
    3. The Department also relied upon the Supreme Court decisions in CCE, Chandigarh-I v. Mahaan Dairies, (2004) 11 SCC 798 and Commissioner of Customs (Import), Mumbai v. Dilip Kumar & Company, 2018 (361) E.L.T. 577 (S.C.) to argue that exemption notifications must be strictly interpreted and their conditions strictly complied with.

    CESTAT Examines Meaning of β€œMaterials”

    • The Tribunal identified the principal question as whether the importer had failed to fulfil its export obligations and violated Notification No. 96/2009-Cus, thereby attracting customs duty, interest and penalties under Sections 114A and 114AA.
    • CESTAT examined the Advance Authorisation framework and noted that the scheme permits duty-free import of inputs physically incorporated in the manufactured or resultant product that is required to be exported.

    Significantly, the Tribunal examined the definition of β€œmaterials” under the notification. It noted that the definition separately identifies:

    • raw materials, components, intermediates, consumables, catalysts and parts required for manufacture of the resultant product; and
    • packaging materials required for packing the resultant product.

    This statutory distinction became central to the outcome.

    Packaging Material Is Different From Manufacturing Input: CESTAT

    • CESTAT held that the notification itself differentiates between goods required for manufacture of the resultant product and goods merely used for packaging.
    • In this case, the raw material imported for manufacture of the resultant IMFL was VMS. Bottles, caps and labels, on the other hand, constituted packaging materials domestically procured under Annexure-45.
    • The Tribunal therefore held that the relevant condition of Notification No. 96/2009-Cus would apply to the imported material used in manufacturing the resultant product and that the packaging materials could not simply be equated with VMS.

    R.P. International Decision Relied Upon

    • CESTAT also relied on R.P. International v. Union of India to explain the distinction between the DFIA Scheme and the Advance Authorisation Scheme.
    • The Punjab and Haryana High Court had explained that while DFIA permits duty-free import of inputs β€œrequired for production of export product”, Advance Authorisation concerns inputs that are β€œphysically incorporated in the export product.”
    • Applying that distinction, CESTAT found that in the case of Advance Authorisation, the relevant imported input was the material physically incorporated into the resultant exported product.
    • The Tribunal consequently held that the packaging material had been wrongly placed at par with the imported VMS used in manufacturing IMFL. Since the packaging material was not physically incorporated in the IMFL itself, the exports were wrongly alleged to violate the Advance Authorisation conditions. The findings contained in the Order-in-Original were therefore liable to be set aside.

    DRI Jurisdiction Objection Rejected

    • The appellant also challenged the jurisdiction of DRI officers to initiate proceedings under Section 28 of the Customs Act.
    • CESTAT referred to the Supreme Court litigation concerning the competence of DRI officers to issue demand notices. It noted that although the earlier Supreme Court decision had held against DRI’s jurisdiction, the subsequent review judgment held that DRI officers, when appointed as customs officers and assigned the relevant functions of a β€œproper officer,” are competent to issue Show Cause Notices under Section 28.
    • The Tribunal therefore rejected N.V. Distilleries’ jurisdictional objection.
    • This aspect of the decision is important: the importer did not succeed on the DRI jurisdiction ground. Its appeal succeeded on the substantive merits of the Advance Authorisation dispute.

    CESTAT Sets Aside Order-in-Original and Allows Appeal

    Ultimately, CESTAT held that although the preliminary issue concerning DRI jurisdiction was decided against the appellant, the appellant succeeded on merits.

    The Tribunal accordingly set aside the Order-in-Original dated 30 August 2019 and allowed the appeal of N.V. Distilleries and Breweries Ltd.

    Significance for Advance Authorisation Holders

    The ruling is significant for exporters operating under the Advance Authorisation Scheme because it emphasises that the nature and role of each material must be examined before alleging violation of an exemption condition.

    The Tribunal’s reasoning distinguishes an imported input that is physically incorporated into the resultant export product from materials used for its packaging.

    The mere use of domestically procured packaging materials under another duty-relief mechanism cannot, on the reasoning adopted in this case, automatically justify treating those packaging materials at par with the imported manufacturing input. At the same time, the decision should not be read as permitting non-compliance with conditions attached to Advance Authorisations generally.

    The ruling turns on the wording of Notification No. 96/2009-Cus and the Tribunal’s finding that VMS and the domestically procured bottles, caps and labels occupied materially different roles in relation to the exported IMFL.

    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 Delhi

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  • Delhi High Court Quashes β‚Ή76.72 Lakh Excise Demand; Holds Adjudicating Authority Cannot Disregard Binding CESTAT Order

    Delhi High Court Quashes β‚Ή76.72 Lakh Excise Demand; Holds Adjudicating Authority Cannot Disregard Binding CESTAT Order

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

    Date: 15.09.2026

    Delhi High Court Quashes β‚Ή76.72 Lakh Excise Demand; Holds Adjudicating Authority Cannot Disregard Binding CESTAT Order

    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 in favour of Wellspring Universal, setting aside a β‚Ή76.72 lakh demand raised by the Central GST authorities after finding that the adjudicating authority had failed to give effect to an earlier CESTAT order which had already upheld the taxpayer’s entitlement to refund.

    A Division Bench comprising Justice Anil Kshetrapal and Justice Shail Jain, in Wellspring Universal v. Additional Commissioner of Central GST, W.P.(C) 11957/2025, set aside both the Demand-cum-Show Cause Notice dated 10 December 2019 and the consequential Order-in-Original dated 24 March 2025. The judgment was pronounced on 14 September 2026.

    The Court also directed refund of the petitioner’s β‚Ή7,67,200 statutory pre-deposit with applicable interest.

    Background of the Dispute

    • Wellspring Universal is a partnership firm engaged in manufacturing engineering products, particularly in the welding sector. It was registered as a 100% Export Oriented Unit (EOU) and also as a private bonded warehouse under Sections 58 and 65 of the Customs Act, 1962.
    • The dispute had a lengthy history involving CENVAT credit, excise duty paid on exports and subsequent refund proceedings.
    • Between April and December 2007, Wellspring exported goods through 36 consignments after paying excise duty of β‚Ή76,72,000. It initially sought rebate under Rule 18 of the Central Excise Rules, 2002. After the Department took the position that the EOU was not required to pay duty on exported goods, the petitioner repaid rebate already sanctioned and subsequently pursued its claim through the CENVAT credit/refund mechanism.
    • Earlier proceedings eventually culminated in an Order-in-Original dated 21 March 2017, whereby proceedings against the petitioner were dropped. That order was accepted by the competent reviewing authority and was not challenged.

    β‚Ή76.72 Lakh Refund Sanctioned

    • Following these proceedings, Wellspring filed a refund claim for β‚Ή76,72,000, which was sanctioned by the Assistant Commissioner, CGST, Janakpuri through Refund Order dated 6 May 2019.
    • The authority found, among other things, that the refund claim was within limitation and that the necessary documents evidencing export had been furnished.
    • The Department, however, reviewed the refund order and filed an appeal before the Commissioner (Appeals). During the pendency of that appeal, a separate Demand-cum-Show Cause Notice dated 10 December 2019 was issued alleging that the β‚Ή76.72 lakh refund had been erroneously sanctioned and proposing recovery with interest.
    • The Commissioner (Appeals) subsequently allowed the Department’s appeal on 16 December 2019, including on the ground that the credit ought to have been transitioned through TRAN-1 and that cash refund could not be sustained.

    CESTAT Ultimately Upheld Wellspring’s β‚Ή76.72 Lakh Refund

    • Wellspring challenged the Commissioner (Appeals)’ order before CESTAT.
    • In Final Order No. 56215/2024 dated 1 August 2024, CESTAT allowed Wellspring’s appeal and set aside the Commissioner (Appeals)’ order.
    • Significantly, CESTAT did not decide the matter merely on a technical ground. It expressly held that Wellspring was entitled to refund of β‚Ή76,72,000 under Rule 5 of the CENVAT Credit Rules, 2004.
    • CESTAT further held that a substantive benefit could not be denied merely because the petitioner had quoted the wrong rule while claiming refund or because the Assistant Commissioner had sanctioned it with reference to an incorrect rule.
    • CESTAT also specifically examined the Department’s limitation objection and held that the refund claim was not barred by limitation.

    Department Still Confirmed β‚Ή76.72 Lakh Demand

    • Despite the CESTAT decision, the Additional Commissioner passed an Order-in-Original on 24 March 2025, confirming the β‚Ή76.72 lakh demand against Wellspring.
    • Among the grounds adopted were that earlier refund claims had been rejected and not challenged, that the subsequent refund applications constituted fresh claims barred by limitation, and that the 2019 Refund Order had been set aside by the Commissioner (Appeals).
    • This prompted Wellspring to approach the Delhi High Court.

    Delhi High Court: CESTAT’s Operative Order Could Not Be Ignored

    • The High Court found a fundamental flaw in the Department’s approach.
    • It observed that the Commissioner (Appeals)’ order dated 16 December 2019, on which the Additional Commissioner had relied, had itself already been set aside by CESTAT on 1 August 2024.
    • Therefore, the adjudicating authority could not proceed in March 2025 as though the Commissioner (Appeals)’ order continued to remain an operative determination against Wellspring.

    The Court emphasised a significant principle governing departmental adjudication:

    An adjudicating authority exercising statutory powers must take into account operative orders passed by appellate authorities having appellate jurisdiction over it and cannot disregard a subsequent appellate determination directly bearing upon the issue under adjudication.

    Limitation Issue Could Not Be Reopened Contrary to CESTAT Finding

    • The High Court also rejected the Department’s attempt to once again treat the refund as time-barred.
    • CESTAT had already specifically considered the limitation issue and decided it in Wellspring’s favour. The Additional Commissioner, therefore, could not simply treat the refund as a fresh application and reach a conclusion directly contrary to the Tribunal’s determination.
    • The High Court observed that the petitioner had specifically communicated CESTAT’s 2024 decision to the adjudicating authority on 24 February 2025. Thus, this was not a situation where the authority was unaware of the appellate decision.
    • Nevertheless, the Order-in-Original was passed on 24 March 2025 without dealing with its effect.

    Substantive Refund Benefit Cannot Be Denied Merely for Quoting Wrong Rule

    • Another important aspect of the case is CESTAT’s underlying finding, which the High Court treated as operative.
    • CESTAT had held that Wellspring was substantively entitled to the β‚Ή76.72 lakh refund under Rule 5 of the CENVAT Credit Rules, 2004, and that the benefit could not be denied merely because an incorrect rule had been quoted while filing or sanctioning the refund claim.
    • The High Court clarified that CESTAT’s order had not merely removed the Commissioner (Appeals)’ order on a procedural or technical basis; the Tribunal had actually examined and upheld Wellspring’s substantive entitlement to the refund.

    Delhi High Court Quashes SCN and Order-in-Original

    • The Court ultimately found that the Additional Commissioner had committed a β€œmanifest error” in confirming the β‚Ή76.72 lakh demand.
    • It held that the impugned adjudication was fundamentally unsustainable because it failed to give effect to CESTAT’s subsequent Final Order and proceeded on the basis of an appellate order that had already ceased to exist.

    Accordingly, the High Court:

    • allowed Wellspring Universal’s writ petition;
    • set aside the Demand-cum-Show Cause Notice dated 10 December 2019;
    • set aside the Order-in-Original dated 24 March 2025 confirming β‚Ή76.72 lakh demand; and
    • directed refund of β‚Ή7,67,200 deposited as statutory pre-deposit, together with applicable interest in accordance with law.

    Why the Judgment Is Significant

    • The ruling reinforces judicial and quasi-judicial discipline within the tax adjudication hierarchy. Once a competent appellate tribunal has conclusively decided an issue and its order has neither been stayed nor set aside, a subordinate adjudicating authority cannot effectively nullify that decision by deciding the same issue on a contrary premise.
    • The High Court specifically recorded that CESTAT’s Final Order dated 1 August 2024 had not been shown to have been stayed or set aside in subsequent proceedings.
    • The judgment is also significant for legacy Central Excise/CENVAT disputes transitioning into the GST era. It demonstrates that the existence of a separate demand proceeding cannot justify ignoring an operative appellate determination that directly decides the taxpayer’s entitlement and limitation issues.

    Key Legal Principle

    A statutory adjudicating authority cannot disregard an operative decision of the appellate authority having jurisdiction over it. Where CESTAT has already adjudicated the taxpayer’s substantive entitlement to refund and limitation, the adjudicating authority cannot subsequently confirm a demand on premises directly contrary to that binding appellate determination.

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    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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  • Madras HC: Subsequent Amendment Cannot Be Applied Retrospectively to Deny Provisional Release of Imported Goods

    Madras HC: Subsequent Amendment Cannot Be Applied Retrospectively to Deny Provisional Release of Imported Goods

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

    Date: 14.09.2026

    Madras HC: Subsequent Amendment Cannot Be Applied Retrospectively to Deny Provisional Release of Imported Goods

    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 Madras High Court has ruled in favour of importer M/s Smart Impex Solutions on the issue of provisional release of imported goods, holding that a subsequent statutory amendment cannot govern imports covered by Bills of Lading issued before the amendment came into force unless the notification expressly provides for retrospective operation.

    Justice Hemant Chandangoudar directed Customs authorities to consider the petitioner’s request for provisional release under Section 110A of the Customs Act, 1962, within four weeks and, upon compliance with the conditions imposed, release the goods provisionally within a further period of two weeks.

    Dispute Over Import of Second-Hand Digital Multifunction Machines

    1. Smart Impex Solutions approached the High Court under Article 226 of the Constitution of India, seeking a writ of mandamus directing Customs authorities to allow provisional release of two consignments comprising various models of second-hand Highly Specialized Equipment – Digital Multifunction Print and Copying Machines.
    2. The consignments were covered by two Bills of Entry dated 3 August 2026. The corresponding Bills of Lading were dated 26 May 2026 and 24 May 2026, respectively.
    3. The importer sought provisional release on execution of a simple bond for 100% of the enhanced value of the goods and payment of applicable total GST on the enhanced value. The order records that Customs Duty was exempted. The enhanced valuation was based on inspection reports and valuation certificates issued by the Chartered Engineers, M/s Supreme Techno Associates Pvt. Ltd.

    Importer Relied on Earlier Madras High Court Decision

    1. Counsel for Smart Impex Solutions argued that the issue was no longer res integra and was squarely covered by an earlier common order of the Madras High Court dated 10 July 2025 in W.P. Nos. 29418 of 2024 etc. batch.
    2. In that batch of cases, the Court had directed consideration of importers’ requests for provisional release of similar goods under Section 110A of the Customs Act.

    Customs Relied on 2026 Amendment

    • The Customs Department opposed the petition by relying upon an amendment dated 10 March 2026 to the Notification dated 1 July 2021.
    • According to the Department’s submission recorded in the judgment, the amendment provided an exemption in respect of Highly Specialized Equipment satisfying the prescribed criteria, subject to a specific exemption issued by the Ministry of Electronics and Information Technology under paragraph 2 of the Gazette Notification dated 18 March 2021, as amended on 26 April 2023, where the equipment was manufactured or imported in quantities of less than 100 units per model per year.
    • Crucially, the amendment was stated to have come into force with effect from 15 June 2026.
    • Customs further submitted that, for considering the petitioner’s claim, the date of the Bills of Lading would be considered as provided under Section 15 of the Customs Act, 1962.

    Bills of Lading Pre-Dated the Amendment

    • The dates became decisive.
    • The High Court noted that the two Bills of Lading were dated 26 May 2026 and 24 May 2026, whereas the amendment relied upon by Customs came into force only on 15 June 2026.
    • The Court then laid down the central principle governing the dispute:
    • β€œUnless a statutory notification expressly provides for retrospective operation, it can only operate prospectively.”
    • Accordingly, the Court held that the amendment relied upon by Customs could not govern imports covered by Bills of Lading issued before the amendment commenced. Consequently, Customs could not refuse to consider the importer’s request for provisional release by relying upon that amendment.

    Earlier Judgment on Similar Imports Also Favoured Consideration of Provisional Release

    • The High Court further observed that the issue concerning provisional release of similar imported goods had already been considered in its common order dated 10 July 2025 in W.P. Nos. 29418 of 2024 etc. batch.
    • Importantly, the Customs authorities were unable to point out any distinguishing feature that would justify taking a different view in the case of Smart Impex Solutions.

    Customs Directed to Decide Section 110A Request Within Four Weeks

    • In view of these findings, the High Court disposed of the writ petition with specific directions.
    • The respondents were directed to consider Smart Impex Solutions’ request for provisional release under Section 110A of the Customs Act, 1962 and pass an appropriate order within four weeks from receipt of a copy of the High Court’s order. Customs was permitted to impose such conditions as may be considered necessary in accordance with law.
    • More importantly, the Court directed that once the petitioner complies with the conditions imposed by Customs, the imported goods shall be provisionally released within two weeks thereafter.

    Provisional Release Does Not Decide Customs Adjudication

    • The High Court nevertheless made an important distinction between provisional release of the goods and final adjudication of the Customs dispute.
    • It expressly clarified that provisional release would remain subject to the outcome of adjudication proceedings under the Customs Act, 1962.
    • The adjudicating authority was directed to decide those proceedings independently on their own merits and in accordance with law, without being influenced by observations made in the High Court’s order.
    • Thus, the judgment should not be interpreted as a final determination of the legality of the import, classification, valuation or any other issue that may arise during Customs adjudication. The relief granted by the High Court concerns the provisional release of the consignments.

    Why the Judgment Is Significant for Importers

    • The decision is significant for importers facing detention or non-release of goods where Customs seeks to rely upon a regulatory amendment introduced after the relevant import transaction.
    • The judgment reiterates the basic principle that, unless retrospective operation has expressly been provided, a statutory notification ordinarily operates prospectively. In the present case, because the Bills of Lading pre-dated the amendment’s commencement, Customs could not rely upon that later amendment as a ground for refusing even to consider provisional release.
    • The ruling also reinforces the practical importance of Section 110A of the Customs Act, which provides the statutory mechanism for provisional release of goods pending adjudication, subject to appropriate conditions.

    Key Takeaway

    The Madras High Court’s decision provides relief to M/s Smart Impex Solutions by requiring Customs to process its request for provisional release rather than reject it on the basis of a subsequently effective amendment.

    The key proposition emerging from the judgment is:

    A statutory amendment or notification cannot ordinarily be applied retrospectively to imports covered by Bills of Lading issued before its commencement unless retrospective operation is expressly provided. Customs therefore cannot rely upon such a subsequent amendment to refuse consideration of provisional release under Section 110A of the Customs Act.

    The petitioner/importer therefore succeeded on the provisional-release issue, although the underlying Customs adjudication remains open for independent determination.

    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: Madras High Court

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  • CESTAT Mumbai: EPCG Duty Demand Cannot Survive Once DGFT Issues EODC Confirming Fulfilment of Export Obligation

    CESTAT Mumbai: EPCG Duty Demand Cannot Survive Once DGFT Issues EODC Confirming Fulfilment of Export Obligation

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

    Date: 12.09.2026

    CESTAT Mumbai: EPCG Duty Demand Cannot Survive Once DGFT Issues EODC Confirming Fulfilment of Export Obligation

    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 .  

    In a significant ruling concerning imports under the Export Promotion Capital Goods (EPCG) Scheme, the CESTAT Mumbai has set aside the customs duty demand, redemption fine and penalties imposed upon Unison Hotels Limited and its Managing Director, Umesh Saraf, in relation to the import of a Honda CR-V under an EPCG authorization.

    The Tribunal held that the alleged violation of EPCG conditions could not legally survive once the competent DGFT authority had issued an Export Obligation Discharge Certificate (EODC) in favour of the importer.

    Background of the Dispute

    • Unison Hotels Limited is engaged in providing hotel-related services. For its business operations, it obtained EPCG authorizations from the Directorate General of Foreign Trade for importing four vehicles as capital goods while availing concessional customs duty benefits. One Honda CR-V was imported through Mumbai Sea Port, while three BMW cars were imported through Chennai Sea Port.
    • The Department initiated investigation on the basis of information alleging that the vehicles were being used as private vehicles for the personal use of the Managing Director and his family members rather than for commercial purposes connected with earning foreign exchange and fulfilling the prescribed export obligation.
    • In respect of the Honda CR-V imported through Mumbai, a show cause notice dated 30 August 2011 sought recovery of customs duty of β‚Ή9,41,922 along with interest, besides confiscation and penalties. The adjudicating authority confirmed the demand, ordered confiscation under Sections 111(d) and 111(o) of the Customs Act, 1962, permitted redemption on payment of a fine of β‚Ή7 lakh, and imposed penalties of β‚Ή1.50 lakh on Unison Hotels and β‚Ή1 lakh on Umesh Saraf. The Commissioner (Appeals) upheld the order.

    Issue Before CESTAT

    • The principal question before the Tribunal was whether the appellants had violated the conditions of the EPCG authorization and consequently failed to satisfy the requirements of Notification No. 97/2004-Customs dated 17 September 2004, under which concessional customs duty had been availed for import of the Honda CR-V.
    • The EPCG authorization required the importer, among other things, to fulfil an export obligation equivalent to eight times the duty saved within eight years and comply with the actual-user condition. In respect of the Honda CR-V, the authorization recorded an export obligation connected with the imported vehicle and required fulfillment through use of the imported capital goods.

    Appellants Relied on Earlier Chennai CESTAT Decision

    • The appellants argued that an identical dispute involving the other three BMW cars imported under the same EPCG arrangement had already been decided in their favour by a coordinate Bench of CESTAT Chennai through Final Order Nos. 40598-40599/2023 dated 21 July 2023. They contended that the facts and legal issues relating to the Honda CR-V were materially identical and therefore the same reasoning ought to apply.
    • The Mumbai Bench accepted this contention, observing that the factual matrix relating to the Honda CR-V was exactly similar to that relating to the BMW cars already adjudicated by the coordinate Bench. It consequently held that it could not take a different view in relation to the same appellants and substantially identical EPCG conditions.

    Revenue’s Allegation Found Premature

    • The Tribunal reproduced the reasoning adopted in the earlier proceedings, where it had been held that initiation of proceedings before expiry of the period available for fulfilment of the export obligation was premature. The EPCG authorization allowed eight years for fulfilment of the export obligation, whereas the show cause proceedings were initiated well before that period had expired.
    • The earlier Bench had also found that the importer had declared substantial foreign-exchange earnings, which were not disputed by the Revenue. The Tribunal emphasized that the essential inquiry was whether the imported capital goods had satisfied the actual-user requirement, and observed that the existence of foreign-exchange earnings supported the appellant’s case.
    • It further noted that allegations concerning vehicle registration, insurance or parking arrangements were matters primarily within the jurisdiction of the concerned transport or other authorities and could not, by themselves, establish a violation of EPCG conditions enforceable by Customs.

    DGFT’s EODC Became Crucial

    • A decisive factor in the Mumbai proceedings was that the DGFT had eventually issued the EODC/Redemption Letter on 11 January 2024 in respect of the relevant EPCG authorization.
    • The Tribunal recorded that the appellants had furnished the vehicle’s installation certificate, registration certificate showing the Honda CR-V as a β€œTourist Taxi Deluxe”, details of foreign-exchange earnings and repeated requests for issuance of the EODC.
    • The Bench held that once the competent DGFT authority had issued the EODC, the allegation of non-compliance with EPCG conditions under Notification No. 97/2004-Customs could no longer legally sustain. It also noted that the importer had asserted fulfillment of the export obligation even during the original proceedings and that DGFT had subsequently formally discharged the obligation.
    • The Tribunal further observed that non-production of the EODC during the earlier adjudication and appellate proceedings could not be held against the appellants because the certificate had not yet been issued by DGFT and the delay was beyond their control.

    Earlier Judicial Authorities Considered

    • The Tribunal also referred to several earlier decisions dealing with EPCG imports and actual-user requirements. Among them was Goldfinch Hotels Pvt. Ltd. v. Commissioner of Customs, 2015 (328) E.L.T. 282 (Tri.-Mumbai), where CESTAT had held that mere parking of an EPCG vehicle at a particular place or statements of drivers could not, without more, establish breach of the actual-user condition. The Bombay High Court later dismissed Revenue’s appeal against that decision.
    • The order also refers to Vadilal Chemicals Ltd. v. State of Andhra Pradesh, 2005 (192) E.L.T. 33 (S.C.), and M Far Hotels Ltd. v. Union of India, 2011 (270) E.L.T. 158 (Ker.), in the context of EPCG benefits and compliance with prescribed statutory or policy conditions.
    • The Tribunal additionally referred to the Delhi High Court’s ruling in Interglobe Enterprises Ltd. v. Union of India, 2006 (203) E.L.T. 202 (Del.), as followed in subsequent EPCG litigation, noting that the Supreme Court had dismissed the Revenue’s SLP in the connected matter.

    CESTAT’s Final Ruling

    The Mumbai Bench concluded that the order sustaining the customs duty demand, redemption fine and penalties was not legally sustainable. It therefore set aside the impugned order and allowed both appeals in favour of Unison Hotels Limited and Umesh Saraf.

    Key Takeaway

    The ruling reinforces an important principle in EPCG disputes: where the DGFT, being the competent licensing authority, has accepted fulfillment of the export obligation and issued an EODC, Customs cannot ordinarily continue to sustain a demand founded on an allegation of non-fulfilment of the very same EPCG obligation without a legally sustainable basis to disregard that discharge.

    The decision is also significant because CESTAT rejected a purely factual inference of personal use based on matters such as vehicle location, registration-related allegations and statements, particularly when the importer demonstrated foreign-exchange earnings and subsequently secured formal discharge of its EPCG obligation from DGFT.

    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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  • CESTAT Ahmedabad- Customs Cannot Reclassify Naphtha as NGL Without Conclusive Scientific Evidence

    CESTAT Ahmedabad- Customs Cannot Reclassify Naphtha as NGL Without Conclusive Scientific Evidence

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

    Date: 11.09.2026

    CESTAT Ahmedabad- Customs Cannot Reclassify Naphtha as NGL Without Conclusive Scientific Evidence

    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 & Service Tax Appellate Tribunal (CESTAT), Ahmedabad has allowed the appeals filed by Hazel Mercantile Limited and connected appellants in a major customs classification dispute concerning whether imported petroleum cargo declared as Naphtha could be reclassified by Customs as Natural Gasoline Liquid (NGL).

    A Division Bench comprising Judicial Member Somesh Arora and Technical Member A.K. Jyotishi held that the Customs Department had failed to authoritatively establish the classification sought by it and that the classification declared by the importer could not be disturbed.

    The Naphtha vs NGL Dispute

    • Hazel Mercantile is engaged in the import, export and trading of petrochemicals, including Naphtha. The dispute arose from a consignment of approximately 20,110.767 MT which the company stated had been imported as Naphtha and was ultimately intended for export.
    • Hazel filed seven Bills of Entry declaring the product as Naphtha under CTH 2710 1229. Customs, however, alleged that the imported product was actually Natural Gasoline Liquid (NGL) and proposed classification under CTH 2710 1290. The goods were consequently seized by DRI.
    • The subsequent show cause notice proposed rejection of the declared description and classification, enhancement of the assessable value, confiscation under Sections 111(d), 111(m), 111(p) and 111(o) of the Customs Act, and penalties under Sections 112(a), 112(b), 114AA and 117.

    Conflicting Laboratory Reports Become Central Issue

    • The dispute largely turned on competing technical reports.
    • CRCL Kandla and CRCL Delhi treated the product as NGL. On the other hand, the importer relied upon reports from TUV India, Geo Chem Laboratories and CSIR-Indian Institute of Petroleum (IIP), Dehradun, apart from the load-port certification, to maintain that the product was Naphtha.
    • Pursuant to directions of the Gujarat High Court, fresh samples had been drawn. Geo Chem concluded that the sample conformed to Naphtha specifications, while IIP Dehradun concluded that the sample fell within the light Naphtha range.
    • CESTAT ultimately placed considerable weight on the expertise and depth of testing undertaken by these specialised laboratories.

    Specialised Laboratory Reports Preferred Over CRCL

    • The Tribunal observed that IIP Dehradun, which specialises in petroleum and petroleum-product testing, had conducted multiple tests before concluding that the sample fell within the range of light Naphtha.
    • It similarly noted that Geo Chem had subjected the sample supplied by the Department itself to detailed examination and concluded that the product was Naphtha.
    • CESTAT rejected Revenue’s contention that the private reports were unreliable merely because the importer had referred to the sample as Naphtha while forwarding it for testing. The Bench reasoned that a laboratory of such stature would not simply accept the description supplied by the party without conducting its own technical analysis.
    • The Tribunal therefore preferred the reports of the specialised testing agencies, finding that they had greater wherewithal to test petroleum products than the departmental laboratories.

    Burden to Prove Reclassification Lies on Customs

    • CESTAT reiterated the settled principle that where the Department seeks to change the tariff classification declared by an importer, the burden of proving the proposed alternative classification rests upon Revenue.
    • The Tribunal referred to Hewlett Packard India Sales Pvt. Ltd. v. Commissioner of Customs, observing that even where classification emerges from self-assessment, the Department must discharge the burden if it seeks to alter that classification.
    • It also relied upon Tata Chemicals Ltd. v. Commissioner of Customs, Union of India v. Garware Nylons Ltd. and Commissioner of Customs, Mundra v. Sunrise Traders on the relevance of scientific evidence, BIS standards and the insufficiency of inconclusive expert reports for disturbing an assessee’s classification.

    Reliance Industries Naphtha–NGL Ruling Considered

    • Hazel placed substantial reliance upon the earlier CESTAT Ahmedabad decision in Reliance Industries Ltd. v. Commissioner of Customs, Ahmedabad, 2024 (10) TMI 1555 – CESTAT Ahmedabad.
    • In that case, the Tribunal had observed that Naphtha is the genus and NGL is a species, and that NGL could fall within the broader description of Naphtha in the context considered there.
    • The Revenue’s appeal against the Reliance Industries decision was subsequently dismissed by the Supreme Court on 9 April 2025 in Civil Appeal Nos. 5133–5137 of 2025, the Court finding no good reason to interfere with CESTAT’s order.
    • CESTAT considered this jurisprudence while analysing Hazel’s classification dispute.

    β€œMost Akin” Test Does Not Help Revenue

    • The Department relied upon the Supreme Court’s decision in Gastrade International Ltd. v. Commissioner of Customs, Kandla and argued that the imported goods were most akin to NGL.
    • CESTAT, however, found the argument to be self-defeating in the facts of Hazel’s case.
    • The Bench observed that the reports of IIP Dehradun and Geo Chem were based on a significantly wider range of parameters and were issued by more specialised agencies. Those reports supported the appellant’s case even when the β€œmost akin” test was applied.
    • The Tribunal consequently held that whether the dispute was examined on the basis of akinness, inconclusive test reports or the common-parlance understanding that NGL is a species within the broader category of Naphtha, Revenue had failed to establish its proposed classification.

    Importer’s Classification Cannot Be Disturbed

    The Tribunal therefore reached the categorical conclusion that:

    β€œthe classification of the appellant cannot be allowed to be disturbed.”

    • It further held that the conclusions reached by the adjudicating authority were incorrect and could not be adopted.
    • This finding went to the root of the proceedings because the Department’s confiscation and penalty case substantially flowed from its allegation that Hazel had misdeclared NGL as Naphtha.

    CESTAT Allows Appeals on Merits

    • Having decided the fundamental classification controversy in favour of Hazel Mercantile, CESTAT observed that it was inclined to allow the appeals without going into the Department’s other pleas, since the appellants succeeded on the factual and legal merits of the classification issue.
    • The Tribunal accordingly allowed the appeals through Final Order Nos. 10728–10735/2026, pronounced on 7 September 2026.

    Important Observation on WhatsApp and Electronic Evidence

    • The proceedings also involved reliance by Revenue upon WhatsApp chats and other material extracted from mobile devices.
    • While deciding the matter principally on classification, CESTAT referred to Section 138C of the Customs Act, concerning admissibility of computer-generated evidence, and made an unusual concluding observation suggesting that the Department should consider a dedicated statutory provision governing mobile-phone evidence and the procedure for its extraction, rather than relying solely on Section 138C.
    • This observation could assume wider significance in customs investigations increasingly dependent upon mobile-phone data, messaging applications and digital forensic evidence.

    Key Legal Takeaway

    The decision reinforces a fundamental customs-classification principle: the Department cannot disturb an importer’s declared tariff classification merely by asserting an alternative description; the proposed reclassification must be affirmatively established through reliable technical evidence.

    Where competing laboratory reports exist, the expertise of the testing body, comprehensiveness of the parameters tested and reliability of the methodology become critical considerations.

    The ruling is particularly significant for the petroleum and petrochemical sector because it also engages with the continuing tariff distinction between Naphtha and Natural Gasoline Liquid, the β€œmost akin” test and the earlier Reliance Industries ruling recognising NGL as a species within the broader genus of Naphtha.

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    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 Ahmedabad

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  • CESTAT Mumbai Sets Aside Customs Duty Demand Under EPCG Scheme; Delay in EODC Issuance by DGFT Held Beyond Exporter’s Control

    CESTAT Mumbai Sets Aside Customs Duty Demand Under EPCG Scheme; Delay in EODC Issuance by DGFT Held Beyond Exporter’s Control

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

    Date: 10.09.2026

    CESTAT Mumbai Sets Aside Customs Duty Demand Under EPCG Scheme; Delay in EODC Issuance by DGFT Held Beyond Exporter’s Control

    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 & Service Tax Appellate Tribunal (CESTAT), Mumbai has granted significant relief to CEAT Limited in an EPCG dispute, setting aside a customs duty demand of β‚Ή1.79 crore, along with redemption fine and penalty, after finding that the company had fulfilled its export obligations and that the delay in issuance of the Export Obligation Discharge Certificate (EODC) by DGFT was beyond its control.

    The Regional Bench comprising Judicial Member Ajay Sharma and Technical Member M.M. Parthiban allowed CEAT’s appeal against the Order-in-Original dated 22 May 2025 passed by the Commissioner of Customs (Export), Mumbai.

    Background of the EPCG Dispute

    • CEAT, engaged in the manufacture of automobile tyres, had obtained six EPCG authorisations in 2013 for importing capital goods against the export of tyres. The capital goods imported under these authorisations were valued at approximately β‚Ή7.76 crore, involving customs duty foregone of β‚Ή1,79,12,579. CEAT had executed bonds undertaking fulfilment of its export obligations.
    • Customs subsequently alleged that CEAT had failed to produce the required Capital Goods Installation Certificates and had also not submitted the EODC as required under the applicable EPCG exemption notification.
    • Accordingly, a show cause notice dated 7 October 2024 proposed recovery of the entire duty foregone amount of β‚Ή1.79 crore with interest, confiscation of the imported capital goods under Section 111(o) of the Customs Act, 1962, and penalty under Section 112(a). The Commissioner confirmed the proposals through the Order-in-Original dated 22 May 2025.

    CEAT Had Already Applied to DGFT for EODC

    • Before CESTAT, CEAT contended that it had fulfilled the prescribed export obligation and had already approached the DGFT authorities for issuance of the EODC.
    • Significantly, the application seeking the discharge certificate had been submitted to DGFT on 13 January 2020, well before the Customs adjudication. The EODC, however, remained pending with the licensing authority when the Commissioner passed the impugned order.
    • CEAT also produced installation certificates issued by the jurisdictional Central Excise authorities covering the imported capital goods. Subsequently, the EODC covering all six EPCG authorisations was issued by DGFT, and Customs itself accepted the discharge certificate and cancelled the bonds executed under the six EPCG authorisations.

    Delay by DGFT Was Beyond Exporter’s Control: CESTAT

    • The Tribunal found that the requisite conditions concerning installation of the imported capital goods had been fulfilled.
    • More importantly, CESTAT noted that CEAT had submitted the necessary details to DGFT for obtaining the EODC as early as 13 January 2020, whereas the certificate was ultimately issued only later by the DGFT authorities.
    • The Tribunal therefore held that non-production of the EODC during adjudication was beyond CEAT’s control, since the competent authority had not issued the certificate despite CEAT having completed the exports necessary for fulfilment of its export obligation and submitted the requisite documents.
    • This finding is particularly important for EPCG disputes where an importer/exporter has completed the substantive export obligation but faces Customs proceedings merely because the formal discharge certificate remains pending before DGFT.

    Customs Should Not Prematurely Decide EPCG Compliance While EODC Is Pending

    • CESTAT relied upon its earlier decision in Alca Technologies v. Commissioner of Customs, Nhava Sheva-IV, reported at 2019 (369) E.L.T. 1447 (Tri.-Mumbai).
    • In that case, the Tribunal had held that where an application for EODC remained pending before the licensing authority, the proper course for Customs was to keep the show cause notice pending until the licensing authority took a decision, rather than independently proceeding to conclude that the conditions of the exemption notification had not been fulfilled.
    • The principle assumes importance because determination of whether the export obligation under an EPCG authorisation has been discharged substantially falls within the framework administered by DGFT.

    CESTAT Notes Contradictory Stand Taken by Customs

    • One of the strongest observations in the order concerned the contradictory positions adopted within the Customs Department itself.
    • After DGFT issued the EODC, the Customs authorities accepted the certificate and cancelled the bonds relating to all six EPCG licences. At the same time, the impugned adjudication order continued to demand customs duty on the premise that CEAT had failed to submit the EODC.
    • CESTAT observed that, on one hand, Customs had confirmed the duty demand for non-production of the EODC, while on the other hand, authorities of the same Commissionerate had subsequently accepted the EODC and cancelled the bonds.
    • The Tribunal therefore found no merit in sustaining the demand merely on the ground of non-submission of the documents during the original adjudication.

    Duty Demand, Redemption Fine and Penalty Set Aside

    • In light of CEAT’s fulfilment of the EPCG conditions, issuance of the EODC by DGFT, production of installation certificates and subsequent cancellation of the bonds by Customs itself, CESTAT held that the impugned order could not legally survive.
    • The Tribunal accordingly held that the order, insofar as it confirmed the customs duty demand along with redemption fine and penalty, was legally unsustainable.
    • The impugned order was therefore set aside and CEAT’s appeal was allowed.

    Key Legal Takeaway

    The ruling reinforces an important principle in EPCG and export-promotion disputes: where an exporter has completed the substantive export obligation and has timely approached DGFT for an EODC, it should not ordinarily suffer adverse customs consequences merely because issuance of the formal certificate remains pending with the licensing authority.

    The decision also underlines the need for coordination between DGFT and Customs. Where the licensing authority is still considering an EODC application, Customs should avoid prematurely concluding that the export obligation has not been fulfilled.

    Once DGFT subsequently certifies fulfilment and Customs itself accepts that certificate by cancelling the corresponding bonds, maintaining a duty demand based solely on earlier non-production of the EODC becomes untenable.

    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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  • Gujarat High Court Order on IGST Refunds for Exporters

    Gujarat High Court Order on IGST Refunds for Exporters

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

    Date: 09.09.2026

    Gujarat High Court Order on IGST Refunds for Exporters

    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 Gujarat High Court recently delivered a significant judgment in the case of Messrs Aculife Healthcare Pvt. Ltd. & Anr. vs. The Union of India & Anr., addressing the contentious issue of IGST refunds on exported goods procured under the Advance Authorization Scheme. This article provides a detailed overview of the case, the legal arguments, the court’s reasoning, and its broader implications for exporters and GST compliance.

    Background of the Case

    1. Export Transactions and IGST Refunds
      • The petitioner, Aculife Healthcare Pvt. Ltd., exported medicaments between July 2017 and April 2019, paying Integrated Goods & Services Tax (IGST) on these exports.
      • The IGST paid was refunded under Section 16 of the IGST Act, 2017.
    2. Dispute Arises
      • Authorities issued a show-cause notice in April 2023, arguing that since the petitioner procured goods duty-free under the Advance Authorization Scheme, they were not eligible to pay IGST on exports as per Sub-rule (10) of Rule 96 of the CGST Rules, 2017.
      • The Assistant Commissioner raised a demand for refund reversal, citing that the IGST payment and refund were contrary to Rule 96(10).
    3. Appellate Proceedings
      • The petitioner appealed, and the Commissioner (Appeals) reduced the demand, referencing the Gujarat High Court’s earlier decision in the Cosmo Films Ltd. case, which clarified the prospective application of Rule 96(10) from October 9, 2018.
      • The demand was reduced to Rs. 9,97,222/-.

    Legal Arguments Presented

    • Petitioner’s Stand:
      • The petitioner argued that the appeal was pending when Notification No. 20/2024 (dated October 8, 2024) omitted Rule 96(10).
      • Citing the Adwrap Packaging Ltd. case, the petitioner contended that the omission of Rule 96(10) should apply to all pending proceedings where final adjudication had not occurred.
    • Respondent’s Position:
      • The government did not dispute that the appeal was pending when the notification was issued.

    The High Court’s Decision

    • The Court held that since the proceedings were pending before the appellate authority when Notification No. 20/2024 was issued, the omission of Rule 96(10) applied to the petitioner’s case.
    • The impugned order demanding refund reversal was quashed and set aside.
    • The petition was allowed, providing relief to the exporter.

    Key Takeaways and Implications

    1. Prospective Omission of Rule 96(10):
      • The omission of Rule 96(10) by Notification No. 20/2024 applies to all cases pending final adjudication as of the notification date.
      • Exporters with similar pending disputes may benefit from this precedent.
    2. Legal Certainty for Exporters:
      • The judgment reinforces the principle that changes in tax rules, especially those affecting substantive rights, should not be applied retrospectively to the detriment of taxpayers.
    3. Reference to Precedents:
      • The Court relied on its earlier decisions (Cosmo Films Ltd. and Adwrap Packaging Ltd.), ensuring consistency in GST jurisprudence.
    4. Practical Impact:
      • Exporters who procured goods under duty-free schemes and faced IGST refund reversals can seek relief if their cases were pending as of October 8, 2024.

    Conclusion

    This Gujarat High Court order provides much-needed clarity on the application of GST rules to exporters using the Advance Authorization Scheme. It underscores the importance of timely legal recourse and highlights the judiciary’s role in protecting taxpayer rights amidst evolving tax regulations.

    Connected Matter

    CESTAT Chennai on Refund of Excess Export Duty and Limitation under Section 27 of the Customs Act, 1962

    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: Gujarat High Court

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  • CESTAT Chennai on Refund of Excess Export Duty and Limitation under Section 27 of the Customs Act, 1962

    CESTAT Chennai on Refund of Excess Export Duty and Limitation under Section 27 of the Customs Act, 1962

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

    Date: 08.09.2026

    CESTAT Chennai on Refund of Excess Export Duty and Limitation under Section 27 of the Customs Act, 1962

    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 & Service Tax Appellate Tribunal (CESTAT) Chennai recently delivered a significant judgment in the case of JSW Steel Ltd. vs. Commissioner of Customs, addressing the complex issue of export duty refunds and the application of statutory time limits. This article provides a detailed analysis of the case, its background, legal arguments, and the Tribunal’s final decision, offering valuable insights for exporters and legal professionals alike.

    Case Background

    JSW Steel Ltd. exported “Non Alloy Steel Slabs Export Prime Steel” under four shipping bills in June and July 2008. At the time, export duty was levied at 15% ad valorem, as per Notification No.66/2008-Cus. The company paid export duty based on the Free on Board (FOB) value declared in the shipping bills.

    However, a subsequent CBEC Circular (No.18/2008-Cus dated 10.11.2008) clarified that until 31.12.2008, the FOB price should be treated as the cum-duty price for export duty computation. This clarification revealed that JSW Steel had overpaid export duty. Consequently, JSW filed a refund claim for Rs.1,61,96,066/- on 30.01.2009.

    Chronology of Legal Proceedings

    1. Initial Rejection: The refund claim was initially rejected as time-barred under Section 27 of the Customs Act, 1962.
    2. First Appeal: The Commissioner (Appeals) allowed JSW’s appeal, holding that Section 27’s time limit did not apply.
    3. Tribunal Remand: On Revenue’s appeal, the Tribunal remanded the case for reconsideration of facts and the applicability of Section 27.
    4. Refund Sanctioned: The original authority, after reassessment, sanctioned the refund, recognizing the excess payment and the applicability of the CBEC Circular.
    5. Revenue’s Appeal: The Commissioner (Appeals) again held the refund claim as time-barred, prompting JSW to appeal to CESTAT Chennai.

    Key Legal Issues

    1. Limitation Period for Refund Claims

    • JSW’s Argument: The limitation period should run from the date of reassessment (21.09.2015), not the original payment date, as the excess payment was only recognized after the CBEC Circular and subsequent reassessment.
    • Revenue’s Argument: The relevant date is the original payment date, making the refund claim time-barred under Section 27.

    2. Nature of the Excess Payment

    • JSW contended that the excess amount was not “duty” as defined under the Act, since it was collected without authority of law, and thus not subject to Section 27’s limitation.

    3. Interest on Refund

    • JSW also sought interest on the refunded amount, arguing that the delay was due to departmental actions.

    Tribunal’s Analysis and Findings

    A. Applicability of Section 27 Limitation

    • The Tribunal held that the cause of action for refund arose only upon reassessment on 21.09.2015, when the excess payment was officially recognized.
    • The refund application, though filed earlier, was linked to the reassessment, and thus not time-barred.
    • The Tribunal rejected arguments to bypass Section 27 using the Limitation Act or Article 265 of the Constitution, citing the Supreme Court’s decision in Mafatlal Industries Ltd. v. Union of India.

    B. Assessment and Reassessment

    • The Tribunal clarified that the Note dated 21.09.2015 constituted a valid reassessment under Section 2(2) of the Customs Act.
    • Only the excess amount, not reflected in the original assessment, was subject to refund upon reassessment.

    C. Interest on Refund

    • Interest under Section 27A is payable from three months after the date of reassessment (21.09.2015), not from the original refund application date.
    • This aligns with the Supreme Court’s ruling in Ranbaxy Laboratories Ltd. v. Union of India.

    Final Order and Implications

    • The Tribunal set aside the impugned order of the Commissioner (Appeals) and restored the original order sanctioning the refund of Rs.1,61,96,066/- to JSW Steel Ltd.
    • Interest is to be paid from 22.12.2015 (three months after reassessment) until the date of actual refund.
    • The decision reinforces the principle that refund claims linked to reassessment are not time-barred from the original payment date, providing clarity for exporters facing similar issues.

    Conclusion

    The CESTAT Chennai’s decision in the JSW Steel Ltd. case sets an important precedent for the treatment of export duty refunds, particularly regarding the limitation period and the recognition of reassessment as the trigger for refund claims. Exporters and legal practitioners should carefully consider this ruling when dealing with similar disputes, ensuring that refund applications are aligned with the latest assessments and departmental clarifications.

    Connected Matter

    Gujarat High Court Order on IGST Refunds for Exporters

    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 Chennai

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  • Judicial Scrutiny of Confiscation and Penalty Orders on Restricted Second-Hand Imports

    Judicial Scrutiny of Confiscation and Penalty Orders on Restricted Second-Hand Imports

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

    Date: 07.09.2026

    Judicial Scrutiny of Confiscation and Penalty Orders on Restricted Second-Hand Imports

    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 recent decision by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Bangalore, in the case of M/s. Ascent Circuits Pvt. Ltd. versus the Commissioner of Customs, highlights critical aspects of Indian customs law, particularly regarding the import of second-hand goods and the exercise of discretion in confiscation and penalty proceedings. This article provides a detailed overview and analysis of the case, its legal context, and its broader implications for importers and regulatory authorities.

    Case Background

    M/s. Ascent Circuits Pvt. Ltd. imported a “Posalux Machine DLR Measuring Unit.” Upon examination, customs authorities determined the goods were second-hand and classified as restricted under the Foreign Trade Policy (FTP). The original adjudicating authority ordered the goods to be released upon payment of a redemption fine of Rs. 30,000 under Section 125 of the Customs Act, 1962, and imposed a penalty of Rs. 10,000 under Section 112(a) of the Act.

    Both the importer and the Revenue appealed. The Commissioner (Appeals) dismissed the importer’s appeal, allowed the Revenue’s appeal, ordered absolute confiscation (no redemption), and enhanced the penalty to Rs. 1,00,000 under Section 114AA.

    Key Legal Issues

    1. Classification and Restriction of Goods

    • The core issue was whether the imported machine was a second-hand good and thus restricted under the FTP.
    • The examination report and a Chartered Engineer’s certificate confirmed the goods were second-hand, aged over six months, with a residual life of over six years.
    • As per FTP 2015-2020, import of second-hand goods (other than capital goods) is restricted and requires authorization.

    2. Confiscation and Redemption Fine

    • Section 125 of the Customs Act allows authorities discretion to offer redemption of confiscated goods upon payment of a fine, except in cases where absolute confiscation is warranted.
    • The Tribunal emphasized that this discretion must be exercised judiciously, with clear reasoning, and not as a mere formality.
    • The Commissioner (Appeals) relied on Supreme Court precedent (Union of India vs. Raj Grow Impex LLP) to justify absolute confiscation, but the Tribunal found the facts distinguishable and the reasoning insufficient for denying redemption.

    3. Penalty Provisions and Enhancement

    • The original penalty was imposed under Section 112(a), but the Commissioner (Appeals) enhanced it under Section 114AA, which deals with fraudulent documents.
    • The Tribunal held that these sections address different types of violations and that the enhancement was not justified in this context.

    Tribunal’s Findings and Decision

    • The Tribunal found that the goods were indeed second-hand and restricted, but not absolutely prohibited.
    • There was no evidence of fraud or mala fide intent by the importer.
    • The original authority’s decision to allow redemption on payment of fine was appropriate.
    • The enhancement of penalty and order of absolute confiscation by the Commissioner (Appeals) were set aside.
    • The appeal was allowed, restoring the original order: goods could be redeemed on payment of fine, and the lower penalty was reinstated.

    Legal and Practical Implications

    1. Discretion in Confiscation: Authorities must provide clear, reasoned justification when exercising discretion, especially when opting for absolute confiscation over redemption.
    2. Penalty Assessment: Penalties must be proportionate and based on the specific nature of the violation; enhancement requires a solid legal basis.
    3. Importer Responsibilities: Importers must ensure compliance with FTP and maintain documentation to establish the nature and condition of imported goods.
    4. Precedent Value: The case clarifies the application of Supreme Court judgments and the limits of administrative discretion in customs matters.

    Conclusion

    The Ascent Circuits Pvt. Ltd. case underscores the importance of reasoned decision-making in customs adjudication and the need for proportionality in penalties. It serves as a valuable reference for importers, legal practitioners, and customs officials navigating the complexities of restricted goods under Indian law.

    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 Bangalore

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    Ravi Shekhar Jha – Advocate, Bar Council of Delhi

  • Supreme Court Sets Zero Tolerance for AI-Generated Fake Legal Citations

    Supreme Court Sets Zero Tolerance for AI-Generated Fake Legal Citations

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

    Date: 07.09.2026

    Supreme Court Sets Zero Tolerance for AI-Generated Fake Legal Citations

    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 recently delivered a landmark judgment in the case of Vijay Ghanshyam Gadiya vs. Union of India & Anr., addressing the critical issue of artificial intelligence (AI)-generated fake legal citations in judicial proceedings. This article explores the background, key findings, and broader implications of the judgment for the legal community and the use of AI in courts.

    Background of the Case

    • Case Origin: The appellant, Vijay Ghanshyam Gadiya, was penalized by the Additional Commissioner of Customs, Surat, for mis-declaring a consignment of natural diamonds as lab-grown diamonds to evade higher tariffs. The penalty imposed was Rs. 425,27,99,100 under Section 114 of the Customs Act, 1962.
    • Legal Journey: Gadiya’s challenge to the penalty was dismissed by the High Court of Gujarat. The matter was then appealed to the Supreme Court.

    Discovery of AI-Generated Fake Citations

    • Appellant’s Contention: During the Supreme Court proceedings, it was argued that several judgments and articles cited by the customs authority in their original order were generated using AI and were either non-existent or had fake citations.
    • Supreme Court’s Verification: The Court independently verified these references and found that:
      • Some cited case laws did not exist or had fabricated citations.
      • Some existing cases were misrepresented, with AI “hallucinating” legal principles not actually present in those judgments.

    Supreme Court’s Observations and Ruling

    Zero Tolerance for Fake AI-Generated Precedents

    • The Court emphasized a zero-tolerance policy for producing, citing, or using AI-generated precedents without proper verification.
    • It declared that:
      1. Advocates citing such unverified AI-generated judgments commit misconduct.
      2. Judges relying on fake or hallucinated AI-generated material commit a serious lapse.
      3. Any decision influenced by such material is invalid and must be set aside, even if the fake material had only an indirect impact.

    Integrity in Judicial Decision-Making

    • The Court stressed the necessity of maintaining the sanctity and integrity of the adjudication process.
    • It clarified that while AI can be a valuable assistive tool, it must never replace human adjudication. AI should serve as “training wheels,” not as the “pilot” in judicial decision-making.

    Outcome of the Case

    • The Supreme Court set aside both the High Court’s order and the original penalty order.
    • The case was remanded for fresh adjudication by a different officer of the same rank.
    • The Court left it to the appointing authority to consider disciplinary action against the author of the flawed order.

    Broader Implications for the Legal System

    Responsible Use of AI in Courts

    • The judgment acknowledges the growing role of AI in legal research and court processes, referencing the Supreme Court’s draft Regulations for Use of Artificial Intelligence in Courts (2026).
    • However, it draws a clear line: AI-generated content must be rigorously verified before being used in legal arguments or judgments.

    Safeguarding Legal Integrity

    • The ruling serves as a warning to both the Bar and the Bench against the uncritical adoption of AI-generated legal materials.
    • It reinforces the principle that the legitimacy of judicial decisions depends on the authenticity and accuracy of the sources relied upon.

    Conclusion

    The Vijay Ghanshyam Gadiya judgment is a pivotal moment in the intersection of law and technology in India. It sets a strong precedent for the responsible use of AI in the legal system, ensuring that technological advancements do not compromise the integrity of judicial decision-making. Legal professionals and courts must exercise due diligence and uphold the highest standards of verification when engaging with AI-generated content.

    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

    Disclaimer

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    “Handy Order for Download”Download

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    Tel: +91-11-4999 2707

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    Ravi Shekhar Jha – Advocate, Bar Council of Delhi