𝐀𝐚𝐝𝐫𝐢𝐤𝐚𝐚 𝐋𝐚𝐰 𝐎𝐟𝐟𝐢𝐜𝐞𝐬 (𝐀𝐋𝐎)

Category: CBIC CUSTOMS

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

Date: 30.03.2026

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

Adv Ravi Shekhar Jha

This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.

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

Background of the Case

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

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

Key Legal Principles Discussed 

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

1. Doctrine of Functus Officio 

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

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

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

2. Judicial Discipline

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

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

3. Res Judicata and Issue Estoppel 

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

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

Court’s Observations

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

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

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

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Source: Orissa High Court

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

ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 30.03.2026

Gujarat High Court Ruled Against Parallel Proceedings in Customs Duty Dispute

Adv Ravi Shekhar Jha

This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.

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

Background of the Case

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

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

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

Legal Proceedings

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

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

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

Key Legal Issues

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

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

Court’s Observations 

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

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

Judgment

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

Legal Principle Established

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

Conclusion

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

Source: Gujarat High Court

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

Date: 28.03.2026

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

Adv Ravi Shekhar Jha

This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.

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

Background of the Case 

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

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

Key Issues in the Case 

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

Arguments Presented

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

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

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

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

Source: CESTAT Delhi

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

Date: 28.03.2026

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

Adv Ravi Shekhar Jha

This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.

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

Background of the Case

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

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

Respondent’s Arguments

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

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

Court’s Observations

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

Key Judgments Referenced 

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

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

Directions to the Respondent

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

Conclusion

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

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Source: Madras High Court

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

Date: 27.03.2026

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

Adv Ravi Shekhar Jha

This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.

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

Background of the Case

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

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

Key Issues in the Case

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

Merits of the Case 

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

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

Extended Limitation Period 

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

Revenue Neutrality

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

Final Decision

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

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

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

Source: CESTAT Kolkata

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

Date: 27.03.2026

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

Adv Ravi Shekhar Jha

This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.

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

Background of the Case

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

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

Key Arguments Presented

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

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

Tribunal’s Observations and Decision

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

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

Implications of the Judgment

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

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

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Source: CESTAT Chennai

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March 27, 2026
CESTAT Allahabad Sets Aside Smuggling Allegations
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 26.03.2026

CESTAT Allahabad Sets Aside Smuggling Allegations

Adv Ravi Shekhar Jha

This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Allahabad, recently delivered a landmark judgment in the case of Customs Appeal No. 70501 of 2024, exonerating Appellant from allegations of smuggling Canadian-origin green peas into India. The case, which revolved around the seizure of 45,655 kilograms of green peas and four trucks, highlights critical issues surrounding the burden of proof in smuggling cases under the Customs Act, 1962.

Background of the Case

The case originated from an intelligence report received by Customs Officers alleging that Canadian-origin green peas were being smuggled into India through the Indo-Nepal border. Acting on this information, officials intercepted four trucks at appellant’s godown and office in Deoria, Uttar Pradesh, on October 12, 2021. Following an investigation, a Show Cause Notice (SCN) was issued on April 8, 2022, seeking the confiscation of the green peas and trucks under Section 111(b) of the Customs Act, 1962.

The Additional Commissioner upheld the SCN’s proposals in an Order-in-Original dated March 23, 2023, imposing a penalty of Rs. 5 lakhs on Appellant and other penalties on individuals involved. Appellant challenged this decision before the Commissioner (Appeals), who upheld the original order on January 24, 2024. Subsequently, Appellant filed an appeal with the CESTAT, Allahabad.

Arguments Presented

Appellant’s Defense

Represented by Advocate, Appellant argued that the case was built solely on statements from individuals and lacked substantive evidence. The primary evidence cited by the department was the labeling on the sacks, which read “Canadian origin green peas premium quality.” The appellant contended that the department failed to establish that the goods were smuggled through the Nepal border or that the seizure occurred at a customs station. He further argued that green peas are not notified under Section 123 of the Customs Act, 1962, which places the burden of proof on the revenue to establish the smuggled nature of goods.

Respondent’s Stand

The Authorized Representative for the revenue, reiterated the findings of the Commissioner (Appeals) and defended the penalties imposed.

Tribunal’s Observations

After hearing both sides and reviewing the case records, the Tribunal made the following observations:
1. Lack of Evidence: The Tribunal noted that the recovery of green peas from the trucks near the godown was undisputed. However, the department failed to provide concrete evidence to prove the smuggled nature of the goods. The case relied heavily on statements from Mr. Pandey and the truck drivers, as well as the markings on the sacks, which were deemed insufficient to substantiate the smuggling allegations.
2. Burden of Proof: The Tribunal emphasized that green peas are not notified under Section 123 of the Customs Act, 1962. Therefore, the burden of proving the smuggled nature of the goods rested entirely on the revenue. The department failed to establish the place, method, time, and individuals involved in the alleged smuggling.
3. Unreliable Statements: The adjudicating authority did not examine the individuals whose statements were relied upon, as required under Section 138B of the Customs Act, 1962. Citing precedents such as M/s Flamingo (DFS) Pvt. Ltd. and M/s G-Tech Industries, the Tribunal held that unverified statements could not be relied upon as evidence.
4. Foreign Markings on Goods: The Tribunal referred to the case of M/s Gagan Deorah and other similar judgments, which established that foreign markings or origin alone do not prove the smuggled nature of goods. Corroborative evidence is essential, and the department failed to provide any.
Final Judgment

In its final order dated March 24, 2026, the Tribunal set aside the impugned order and ruled in favor of Appellant. The Redemption Fine of Rs. 18,26,200 and the penalty of Rs. 5,00,000 imposed under Section 112(b) of the Customs Act were also quashed. The Tribunal concluded that the revenue had not discharged its burden of proof and that the evidence presented was insufficient to substantiate the smuggling allegations.

Key Takeaways
1. Burden of Proof: This case underscores the importance of the burden of proof in smuggling cases, especially for goods not notified under Section 123 of the Customs Act, 1962. The revenue must provide tangible evidence to establish the smuggled nature of goods.
2. Role of Statements: Statements from individuals involved in a case must be verified under Section 138B of the Customs Act to be considered reliable evidence.
3. Foreign Markings: The presence of foreign markings on goods does not automatically imply smuggling. Corroborative evidence is necessary to substantiate such claims.
4. Judicial Precedents: The Tribunal’s reliance on previous judgments highlights the importance of consistency in legal interpretations and the need for robust evidence in cases involving allegations of smuggling.
Conclusion

The CESTAT’s decision in favor of Appellant serves as a reminder of the critical role of evidence in adjudicating smuggling cases. It reinforces the principle that allegations must be backed by concrete proof and that mere assumptions or unverified statements cannot form the basis for penal actions. This judgment is likely to have far-reaching implications for similar cases in the future, ensuring that justice is served in accordance with the law.

Source: CESTAT Allahabad

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March 26, 2026
CESTAT Bangalore ruled that the goods were rightly classified under CTH 6902 9010 as “Fire Clay Bricks and Shapes
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 26.03.2026

CESTAT Bangalore ruled that the goods were rightly classified under CTH 6902 9010 as “Fire Clay Bricks and Shapes

Adv Ravi Shekhar Jha

This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Bangalore Regional Bench, recently delivered a significant judgment in the case of M/s. Saint-Gobain India Pvt. Ltd. vs. The Commissioner of Customs, Cochin. The case revolved around the classification of imported goods under the Customs Tariff Act, 1962, and the imposition of differential duty and penalties. The tribunal ruled in favor of the appellant, M/s. Saint-Gobain India Pvt. Ltd., providing clarity on the classification of ceramic products under the Customs Tariff Heading (CTH).

Background of the Case

M/s. Saint-Gobain India Pvt. Ltd., formerly known as SEPR Refractories India Limited, filed 44 Bills of Entry between January 13, 2011, and January 6, 2012, for the clearance of imported goods described as ‘Expanded Space Fire Clay Grog’. The company classified these goods under CTH 6902 9010, which pertains to refractory ceramic constructional goods. The goods were assessed to duty and cleared for home consumption without examination.

However, two consignments (Bill of Entry No. 3698261 dated June 3, 2011, and Bill of Entry No. 5363159 dated December 2, 2011) were subjected to laboratory analysis. Based on the lab reports and technical data, the Commissioner of Customs reclassified the goods under CTH 6806 2000, which pertains to expanded mineral materials. Consequently, the Commissioner demanded a differential duty of ₹15,11,499/- along with interest under Section 28AA of the Customs Act, 1962, and imposed an equivalent penalty under Section 114A of the Customs Act, 1962.

Aggrieved by this decision, M/s. Saint-Gobain India Pvt. Ltd. filed an appeal before the CESTAT.

Arguments Presented

Appellant’s Arguments

The appellant, represented by Advocate, argued that the imported goods were correctly classified under CTH 6902 9010. Key points raised by the appellant included:
1. Technical Evidence: The appellant presented a technical write-up from the manufacturer and certification from the British Ceramic Confederation, which confirmed that the goods were ceramic products shaped into spherical pellets and fired at high temperatures, meeting the criteria for classification under CTH 6902.
2. Chemical Examiner’s Reports: The reports from the Chemical Examiner confirmed that the goods were ceramic materials, fired after shaping, and composed of silicates of aluminum. These findings supported the appellant’s classification.
3. Subsequent Imports: The appellant highlighted that similar products imported in 2014 were classified under CTH 6902 9010 without dispute, further validating their claim.
4. Limitation Period: The appellant argued that there was no misrepresentation or suppression of facts, and therefore, the extended period of limitation invoked by the Revenue was not justified.
Revenue’s Arguments

The Revenue, represented by Assistant Commissioner, contended that the goods were not fired after shaping, as evidenced by the supplier’s dispatch notes and packing list, which classified the goods under CTH 6806 2000. The Revenue also argued that the Chemical Examiner’s report was based on the appellant’s write-up and not on the actual manufacturing process.

Tribunal’s Observations and Decision 

After hearing from both sides, the tribunal, comprising Hon’ble Judicial Member and Hon’ble Technical Member, made the following observations:
1. Classification of Goods: The tribunal examined the technical literature provided by the manufacturer, the certification from the British Ceramic Confederation, and the Chemical Examiner’s reports. It concluded that the goods were ceramic products shaped before firing, satisfying the criteria for classification under CTH 6902 9010.
2. Chemical Examiner’s Reports: The tribunal emphasized that the Chemical Examiner’s reports were valid and should not have been disregarded by the Commissioner. It cited precedents from the Supreme Court, which held that such reports should not be dismissed unless proven erroneous.
3. Extended Limitation Period: Referring to the Supreme Court’s judgment in Uniworth Textiles Ltd. vs. Commissioner of Central Excise, the tribunal ruled that the extended period of limitation could not be invoked as there was no evidence of suppression or misrepresentation by the appellant.
4. Revenue’s Evidence: The tribunal noted that the Revenue’s reliance on a single invoice from the supplier was insufficient to justify the reclassification of the goods under CTH 6806 2000.
Final Order

The tribunal allowed the appeal, setting aside the Commissioner’s order and confirming the classification of the goods under CTH 6902 9010. The demand for differential duty, interest, and penalty was quashed, and the appellant was granted consequential relief.

Key Takeaways
1. Importance of Technical Evidence: The case highlights the significance of technical documentation, certifications, and expert reports in determining the correct classification of goods under the Customs Tariff Act.
2. Role of Chemical Examiner’s Reports: The tribunal reaffirmed the importance of Chemical Examiner’s reports in classification disputes, emphasizing that such reports should not be dismissed without valid reasons.
3. Extended Limitation Period: The judgment underscores that the extended period of limitation under Section 28AA of the Customs Act cannot be invoked without evidence of suppression or misrepresentation.
4. Precedents Matter: The tribunal relied on previous Supreme Court judgments to reinforce its decision, demonstrating the importance of judicial precedents in customs disputes.
Conclusion

The CESTAT’s ruling in favor of M/s. Saint-Gobain India Pvt. Ltd. is a landmark decision that provides clarity on the classification of ceramic products under the Customs Tariff Act. It underscores the importance of technical evidence, expert reports, and adherence to procedural fairness in customs disputes. This judgment will serve as a valuable reference for importers and legal practitioners dealing with similar classification issues.

Source: CESTAT Bangalore

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March 26, 2026
CUSTOMS BROKER LICENSING IN INDIA
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 25.03.2026

CUSTOMS BROKER LICENSING IN INDIA

Adv Ravi Shekhar Jha

This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.

Introduction:

The Customs Brokers Licensing Regulations, 2018 is the regulating legal provision for the grant of the license for working as a Customs Broker in India.

These regulations shall apply to, a Customs Broker who has been licensed and such other persons who have been employed or engaged by a licensed Customs Broker under these regulations or the Customs House Agents Licensing Regulations, 1984 or the Customs House Agents Licensing Regulations, 2004 or the Customs Brokers Licensing Regulations, 2013.

A Customs Broker has been defined under Regulation 2(d) as “Customs Broker” means a person licensed under these regulations to act as an agent on behalf of the importer or an exporter for purposes of transaction of any business relating to the entry or departure of conveyances or the import or export of goods at any Customs Station including audit.

Typres of Customs Broker Licenses/permits:
1. “F card holder” means a person who has passed the examination referred to in regulation 6 and has been issued a photo identity card in Form F;
2. “G card holder” means a person who has passed the examination referred to in regulation 13 and has been issued a photo identity card in Form G;
3. “H card holder” means a person who has not passed the examination referred to in regulation 13 and has been issued a photo identity card in Form H;
Conduct of Exams:

The National Academy of Customs, Indirect Taxes and Narcotics (NACIN) shall conduct the CBLR exams every year it invites applications for conducting examination and subsequent grant of license to act as Customs Broker in “Form A” by publication in two leading national daily newspapers in English and Hindi in addition to disseminating the information on the web portal.

We update the prospective candidates Notifications as & when they are released by NACIN.

Eligibility Criteria:

An applicant shall be allowed a maximum of six attempts to clear the examination. The applicant for a license to act as a Customs Broker in a Customs Station, shall before applying to the Principal Commissioner of Customs or Commissioner of Customs, meet the following conditions that: –

(a) he is a citizen of India;

(b) he is a person of sound mind;

(c) he is not adjudicated as insolvent;

(d) he holds an Aadhaar number;

(e) he holds a valid PAN card;

(f) he has not been penalised for any offence under the Act, the Central Excise Act, 1944 (1 of 1944), the Finance Act, 1994(32 of 1994), the Central Goods and Services Act, 2017 (12 of 2017)and Integrated Goods and Services Tax Act, 2017 (13 of 2017);

(g) he has neither been convicted by a competent court for an offence nor any criminal proceeding is pending against him in any court of law;

(h) an individual applicant or in case the applicant is a firm, its partner or in the case of a company, its director or an authorised employee who may handle the Customs work shall-

(i) be a graduate from a recognized University; and

(ii) possess a professional degree such as Masters or equivalent degree in Accounting,

Finance or Management, CA/CS/MBA/LLM/ACMA/FCMA or Diploma in Customs Clearance work from any Institutes or University recognised by the Government or is having at least two years’ experience in transacting Customs Broker work as G-Card holder;

(i) the applicant has financial viability as evidenced by a certificate issued by a Scheduled Bank or such other proof acceptable to the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, in terms of possession of assets of value of not less than five lakhs rupees.

(2) A retired Group A officer from the Indian Revenue Service (Customs and Central Excise) having a minimum of five years’ experience in Group ‘A’ post shall also be eligible to apply for a license to act as a Customs Broker provided, he satisfies the conditions specified at (a), (b), (c), (d), (e), (f), (g) and (i) of sub-regulation (1)above.

Syllabus:

The examination may include questions on the following topics:

(a) preparation of various kinds of bills of entry, bills of export, shipping bills, and other clearance documents;

(b) arrival entry and clearance of vessels;

(c) tariff classification and rates of duty;

(d) determination of value of imported and export goods;

(e) conversion of currency;

(f) nature and description of documents to be filed with various kinds of bills of entry, shipping bills and other clearance documents;

(g) procedure for assessment and payment of duty including refund of duty paid;

(h) examination of goods at Customs Stations;

(i) prohibitions on import and export;

(j) bonding procedure and clearance from bond;

(k) re-importation and conditions for free re-entry;

(l) drawback and export promotion schemes including the Special Economic Zone scheme;

(m) offences under the Act;

(n) provisions of the allied Acts including the Central Goods and Services Act, 2017 (12 of 2017) and section 5 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017), the Indian Explosives Act, 1884 (4 of 1884), the Destructive Insects and Pests Act 1914 (2 of 1914), the Dangerous Drugs Act, 1930 (2 of 1930), the Drugs and Cosmetics Act, 1940 (23 of 1940), the Central Excise Act, 1944 (1 of 1944), the Copy Right Act, 1957 (14 of 1957), the Trade and Merchandise Marks Act 1958 (43of 1958), the Arms Act 1959 (54 of 1959), the Patents Act, 1970 (39 of 1970), the Narcotics Drugs and Psychotropic Substances Act, 1985 (61 of 1985), the Environment (Protection) Act, 1986 (29 of 1986), the Foreign Trade (Development and Regulations) Act, 1992 (22 of 1992), the Foreign Exchange Management Act,1999 (42 of 1999), the Design Act, 2000 (16 of 2000) and the Food Safety and Standard Act, 2006 (No. 34 of 2006), The Legal Metrology Act, 2009, The BIS Act, 2016, The Waste Management Rules of CPCB and other laws for the time being in force applicable to EXIM trade and the rules and regulations made under these Acts in so far as they are relevant to clearance of goods through Customs;

(o) provisions of the Prevention of Corruption Act, 1988 (49 of1988);

(p) procedure for appeal and revision applications under the Act; and

(q) online filing of electronic bills of entry and shipping bills vide the Indian Customs and Central Excise Electronic Commerce or Electronic data interchange gateway (ICEGATE) and Indian Customs Electronic data Interchange System (ICES).

(r) knowledge of regulations, rules, notifications, etc. under the Customs Act and other Allied Acts.

Validity of License:

A license granted under regulation 7 shall be valid for a period of ten years from the date of issue and shall be renewed from time to time in accordance with the procedure specified in sub-regulation (2):

Obligations of Customs Brokers:

A Customs Broker shall –

(a) obtain an authorisation from each of the companies, firms or individuals by whom he is for the time being employed as a Customs Broker and produce such authorisation whenever required by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be;

(b) transact business in the Customs Station either personally or through an authorized employee duly approved by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be;

(c) not represent a client in any matter to which the Customs Broker, as a former employee of the Central Board of Indirect taxes and Customs gave personal consideration, or as to the facts of which he gained knowledge, while in Government service;

(d) advise his client to comply with the provisions of the Act, other allied Acts and the rules and regulations thereof, and in case of non-compliance, shall bring the matter to the notice of the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be;

(e) exercise due diligence to ascertain the correctness of any information which he imparts to a client with reference to any work related to clearance of cargo or baggage;

(f) not withhold information contained in any order, instruction or public notice relating to clearance of cargo or baggage issued by the Customs authorities, as the case may be, from a client who is entitled to such information;

(g) promptly pay over to the Government, when due, sums received for payment of any duty, tax or other debt or obligations owing to the Government and promptly account to his client for funds received for him from the Government or received from him in excess of Governmental or other charges payable in respect of cargo or baggage on behalf of the client;

(h) not procure or attempt to procure directly or indirectly, information from the Government records or other Government sources of any kind to which access is not granted by the proper officer;

(i) not attempt to influence the conduct of any official of the Customs Station in any matter pending before such official or his subordinates by the use of threat, false accusation, duress or the offer of any special inducement or promise of advantage or by the bestowing of any gift or favour or other thing of value;

(j) not refuse access to, conceal, remove or destroy the whole or any part of any book, paper or other record, relating to his transactions as a Customs Broker which is sought or may be sought by the Principal Commissioner of Customs or Commissioner of Customs, as the case maybe;

(k) maintain up to date records such as bill of entry, shipping bill, transhipment application, etc., all correspondence, other papers relating to his business as Customs Broker and accounts including financial transactions in an orderly and itemised manner as may be specified by the Principal Commissioner of Customs or Commissioner of Customs or the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case maybe;

(l) immediately report the loss of license granted to him to the Principal Commissioner of Customs or Commissioner of Customs, as the case may be;

(m) discharge his duties as a Customs Broker with utmost speed and efficiency and without any delay;

(n) verify correctness of Importer Exporter Code (IEC)number, Goods and Services Tax Identification Number (GSTIN), identity of his client and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information;

(o) inform any change of postal address, telephone number, e-mail etc. to the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, of all Customs Stations including the concerned Deputy Commissioner or Assistant Commissioner of the Commissionerate who has granted the license immediately within two days;

(p) maintain all records and accounts that are required to be maintained under these regulations and preserve for at least five years and all such records and accounts shall be made available at any time for the inspection of officers authorised for this purpose; and

(q) co-operate with the Customs authorities and shall join investigations promptly in the event of an inquiry against them or their employees.

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March 25, 2026
CESTAT Bangalore Resolves Customs Duty Exemption for Toll Management System Imports
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 25.03.2026

CESTAT Bangalore Resolves Customs Duty Exemption for Toll Management System Imports

Adv Ravi Shekhar Jha

This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.

In a significant judgment, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Bangalore Regional Bench, has ruled in favor of M/s. Indra Sistemas India Pvt. Ltd. and GMR entities in a case concerning the denial of customs duty exemption on imported toll management system (TMS) equipment. The case revolved around the interpretation of exemption Notification No. 12/2012-Cus dated March 17, 2012, and the compliance with its conditions.

Background of the Case 

The case originated from the import of toll collection and traffic control equipment by M/s. Indra Sistemas India Pvt. Ltd. (Appellant-1) during 2012-2013. The company claimed exemption under Sl. No. 368 of Notification No. 12/2012-Cus, which provides duty-free import for goods required for road construction projects. The equipment was imported for use in TMS projects on National Highways 9 and 13, which were being constructed and operated by M/s. GMR OSE Hongund Hospet Highways Pvt. Ltd. and M/s. GMR Hyderabad Vijayawada Expressway Pvt. Ltd. (collectively referred to as Appellant-2).

The exemption was granted based on the condition that the imported goods would be used exclusively for road construction projects and would not be sold or disposed of for five years without prior approval from customs authorities. The appellants argued that they had complied with all conditions of the notification, including furnishing the necessary undertakings and bonds to the customs authorities.

However, the Commissioner of Customs alleged that the appellants had violated the conditions of the notification. The primary contention was that Appellant-1 was not explicitly named as a sub-contractor in the Concession Agreements between the National Highways Authority of India (NHAI) and Appellant-2. Additionally, the Commissioner claimed that the imported equipment was transferred to Appellant-2 within five years of importation, which allegedly violated the notification’s conditions.

Key Issues in the Case 

The Tribunal considered three critical issues:
1. Eligibility for Duty Exemption: Whether the benefit of Sl. No. 368 of Notification No. 12/2012-Cus was available to the imported TMS equipment used in the National Highway projects.
2. Confiscation of Goods: Whether the duty-free imported equipment was liable for confiscation under Section 111(o) of the Customs Act, 1962.
3. Imposition of Penalties: Whether penalties were justifiable under the Customs Act, 1962.
Tribunal’s Observations and Ruling

1. Eligibility for Duty Exemption 

The Tribunal ruled that Appellant-1 was eligible for the exemption under Sl. No. 368 of Notification No. 12/2012-Cus. It noted that the Concession Agreements between NHAI and Appellant-2 allowed the appointment of sub-contractors for project implementation. Appellant-2 had entered into agreements with Appellant-1 for the supply, installation, commissioning, and maintenance of TMS, which were duly communicated to NHAI. Furthermore, NHAI issued a certificate on July 5, 2012, acknowledging Appellant-1 as a contractor for the project.

The Tribunal emphasized that the non-mention of Appellant-1’s name in the Concession Agreements did not disqualify them from availing the exemption. It referred to a 2013 CBIC circular and previous judicial precedents, which clarified that the absence of a sub-contractor’s name in the main contract does not invalidate their eligibility for exemption if the project authority certifies their role.

2. Confiscation of Goods 

The Tribunal rejected the Revenue’s claim that the imported equipment was liable for confiscation under Section 111(o) of the Customs Act. It held that the transfer of TMS equipment from Appellant-1 to Appellant-2 after project completion was a contractual obligation and did not constitute a violation of the notification’s conditions. The Tribunal clarified that the notification does not prohibit the transfer of goods after the completion of the project.

3. Imposition of Penalties 

The Tribunal set aside the penalties imposed on the appellants, stating that the allegations of aiding and abetting and suppressing facts were baseless. It ruled that the appellants had acted in compliance with the notification and had fulfilled their obligations under the Concession Agreements and sub-contractor agreements.

Key Takeaways from the Judgment
1. Interpretation of Exemption Notifications: The Tribunal underscored the importance of a harmonious reading of contracts and related documents to determine compliance with exemption notifications. It emphasized that procedural lapses should not override substantive compliance.
2. Role of Sub-Contractors: The judgment clarified that sub-contractors are eligible for duty exemptions even if their names are not explicitly mentioned in the main contract, provided their role is certified by the project authority.
3. Post-Project Transfer of Goods: The Tribunal ruled that the transfer of goods after project completion does not violate the conditions of exemption notifications, provided the goods were used exclusively for the intended purpose during the project.
4. Precedents and Circulars: The judgment relied on previous rulings and CBIC circulars to interpret the notification and resolve ambiguities.
Conclusion

The CESTAT’s ruling in favor of M/s. Indra Sistemas India Pvt. Ltd. and GMR entities is a landmark decision that provides clarity on the interpretation of exemption notifications and the role of sub-contractors in infrastructure projects. It reinforces the principle that procedural lapses should not be used to deny substantive benefits and highlights the importance of considering the overall intent and context of contracts and agreements. This judgment is expected to have a significant impact on similar cases in the future, particularly in the infrastructure and road construction sectors.

Source: CESTAT Bangalore

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March 25, 2026