𝐀𝐚𝐝𝐫𝐢𝐤𝐚𝐚 𝐋𝐞𝐠𝐚𝐥 𝐒𝐞𝐫𝐯𝐢𝐜𝐞𝐬 (𝐀𝐋𝐒)

Category: Ministry of Finance

CESTAT Chandigarh ruled that the goods were correctly classified as HMS under CTH 72044900
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 10.03.2026

CESTAT Chandigarh ruled that the goods were correctly classified as HMS under CTH 72044900

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) Chandigarh recently delivered a significant judgment in the case of M/s J.S. Steel Traders vs. Commissioner of Customs, Amritsar. This case revolved around the classification and confiscation of imported goods declared as “Heavy Melting Scrap” (HMS) but partially identified by customs authorities as “old and used gas cut drill pipes.” The tribunal’s decision has set a precedent for similar cases involving the classification of imported goods under the Customs Tariff Act.

Background of the Case

M/s J.S. Steel Traders imported 99.120 MT of cargo, declared as HMS under Customs Tariff Heading (CTH) 72044900, via Bill of Entry No. 9767180 dated April 4, 2013. The consignment, imported from M/s A.W. Parker’s Enterprises, Australia, had a declared assessable value of Rs. 22,25,199, with a duty payable of Rs. 3,75,044. Upon examination by customs officers on April 10, 2013, it was found that 64.780 MT of the consignment was indeed HMS, but 35.000 MT consisted of “old and used gas cut drill pipes” of varying lengths and diameters.

The customs department alleged that the goods were misdeclared and classified incorrectly, claiming that the drill pipes were restricted items under Para 2.17 of the Foreign Trade Policy (FTP). Consequently, the Additional Commissioner confiscated the 35.000 MT of drill pipes, imposed a redemption fine of Rs. 1,30,000, and levied a personal penalty of Rs. 80,000. The Commissioner (Appeals) upheld this decision, prompting M/s J.S. Steel Traders to file an appeal with the CESTAT.

Arguments Presented

Appellant’s Arguments 

The counsel for M/s J.S. Steel Traders argued that:
1. The imported goods were not drill pipes but heavy melting scrap (HMS) intended for metal recovery through melting.
2. The goods were not serviceable as drill pipes due to their varying lengths and diameters, and the absence of male and female conical heads on both ends.
3. The classification under CTH 72044900 was correct, as the goods were unusable in their original form and fit only for melting.
4. The customs department failed to provide expert opinions or documentary evidence proving the goods were serviceable or misdeclared.
5. Subsequent imports of identical goods by the appellants were cleared without any objections, indicating consistency in their declarations.
The appellants relied on several judicial precedents, including Global Shiptrade Pvt. Ltd., Shiva Ispat Udyog, and Lucky Steel Industries, which established that old and used goods, if not serviceable, should be classified as scrap under Heading 7204.

Respondent’s Arguments

The Revenue argued that:
1. The goods were misdeclared as HMS, while a portion of the cargo consisted of old and used drill pipes, which are restricted under the FTP.
2. The goods were serviceable and could be reused for purposes such as fencing or structural support, and therefore did not qualify as scrap under Heading 7204.
3. The appellants did not possess the required authorization or license for importing restricted goods.
4. Misdeclaration was done with the intent to evade payment of applicable duties.
The Revenue relied on the HSN Explanatory Notes to Heading 72.04, which exclude articles that can be reused for their original purpose or adapted for other uses from the definition of “waste and scrap.”

Tribunal’s Observations

After hearing both sides, the tribunal made the following observations:
1. The customs department did not engage any expert or chartered engineer to examine the cargo, which could have provided clarity on the nature of the goods.
2. The department failed to provide documentary evidence proving that the goods were serviceable or could be reused for their original purpose.
3. Section Note 8 of the Customs Tariff Act defines “waste and scrap” as metal goods that are definitely not usable due to breakage, cutting-up, wear, or other reasons. The tribunal found that the goods in question met this definition.
4. Judicial precedents, including Global Shiptrade Pvt. Ltd. and Shiva Ispat Udyog, supported the appellants’ claim that old and used goods, in the absence of evidence proving serviceability, should be classified as scrap.
Final Decision

The tribunal concluded that the Revenue had not established a case of misdeclaration or provided sufficient evidence to support the claim that the goods were serviceable. It held that the imported goods were correctly classified as HMS under CTH 72044900 and were not liable for confiscation. Consequently, the tribunal set aside the impugned order and allowed the appeal, granting consequential relief to M/s J.S. Steel Traders.

Key Takeaways
1. Importance of Expert Opinion: The tribunal emphasized the need for expert examination to determine the nature of imported goods, especially in cases involving technical classifications.
2. Adherence to Customs Tariff Act: The decision highlighted the significance of adhering to the definitions provided in the Customs Tariff Act, particularly for waste and scrap.
3. Judicial Precedents: The tribunal relied heavily on previous judgments to establish that old and used goods, if not serviceable, should be classified as scrap.
4. Burden of Proof: The judgment underscored that the burden of proving misdeclaration lies with the Revenue, which must provide concrete evidence to support its claims.
Conclusion

The case of M/s J.S. Steel Traders serves as a crucial reference for importers and legal practitioners dealing with disputes related to the classification of goods under the Customs Tariff Act. It reinforces the importance of expert opinions, adherence to statutory definitions, and the need for the Revenue to substantiate its claims with evidence. This landmark decision is a step forward in ensuring fair and transparent customs practices in India.

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Source: CESTAT Chandigarh

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March 10, 2026
CESTAT Ahmedabad- No Violation of Plastic Waste (Management and Handling) Rules, 2011 in Export of RMD Gutkha by 100% EOU
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 09.03.2026

CESTAT Ahmedabad- No Violation of Plastic Waste (Management and Handling) Rules, 2011 in Export of RMD Gutkha by 100% EOU

Adv Ravi Shekhar Jha

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

In a landmark decision, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), West Zonal Bench at Ahmedabad, has ruled in favor of Appellant in a case concerning alleged violations of the Plastic Waste (Management and Handling) Rules, 2011. The case revolved around the export of RMD Gutkha in packaging materials that were suspected to be non-compliant with environmental regulations. The tribunal’s decision, delivered on October 8, 2018, has set a precedent for similar cases involving 100% Export Oriented Units (EOUs).

Background of the Case

The case originated from the customs authority’s seizure of goods intended for export by Appellant, a 100% EOU. The goods, RMD Gutkha, were packaged in materials that the customs authority believed violated Rule 5(d) and 5(g) of the Plastic Waste (Management and Handling) Rules, 2011. These rules prohibit the use of certain types of non-biodegradable plastic packaging materials.

Two shipping bills were at the center of the dispute:
1. Shipping Bill No. 6478523 dated 01.12.2011: 10,000 kg of RMD Gutkha valued at Rs. 2,29,64,063/- was exported, but samples were drawn for testing.
2. Shipping Bill No. 7419312 dated 03.02.2012: 10,000 kg of RMD Gutkha valued at Rs. 2,19,21,250/- was seized and not allowed to be exported.
The customs authority sent samples of the packaging material to the Customs Chemicals Laboratory in Vadodara for testing. The initial report indicated that the packaging material was composed of plastic, paper, and aluminum but did not clarify whether the plastic was biodegradable. This led to the issuance of a Show Cause Notice on July 31, 2012, proposing the confiscation of goods and imposing penalties on the appellant and other individuals involved.

Legal Proceedings

The adjudicating authority confirmed the charges in the Show Cause Notice, imposing hefty penalties and redemption fines on the appellant and other individuals. Dissatisfied with the decision, M/s R.M. Dhariwal (HUF) filed an appeal before the Commissioner (Appeals), who remanded the matter for a de novo decision. Despite the Commissioner’s clear instructions to re-test the packaging material to determine its biodegradability, the adjudicating authority reiterated its original findings, leading to further appeals.

Key Arguments by the Appellant 

The counsel for the appellant, argued that multiple test reports from reputable laboratories, including the Central Institute of Plastics Engineering & Technology (CIPET) and Customs Laboratory, Kandla, confirmed that the packaging material was made of biodegradable plastic based on Poly Lactic Acid (PLA). He emphasized that the adjudicating authority had ignored these findings and the directions of the Commissioner (Appeals) to conduct proper re-testing.

Additionally, the appellant cited a Supreme Court judgment in the case of R.M. Dhariwal 100% EOU vs. Union of India (2016), which established that the Plastic Waste (Management and Handling) Rules, 2011, do not apply to 100% EOUs exporting goods, even if the packaging material contains non-biodegradable plastic. The appellant argued that this precedent should apply to their case as well.

Tribunal’s Observations and Final Decision 

The tribunal carefully reviewed the submissions, test reports, and previous judgments, including the Supreme Court’s ruling in R.M. Dhariwal 100% EOU vs. Union of India and Baba Global Ltd. vs. Union of India. It noted the following:
1. Test Reports Confirm Biodegradability: Multiple test reports from CIPET and Customs Laboratories confirmed that the packaging material used by the appellant was made of biodegradable plastic based on Poly Lactic Acid, which is compliant with the Plastic Waste (Management and Handling) Rules, 2011.
2. Defiance of Commissioner’s Directions: The adjudicating authority failed to follow the Commissioner (Appeals)’ explicit instructions to re-test the packaging material and instead reiterated its original findings, which were not supported by conclusive evidence.
3. Supreme Court Precedent: The tribunal highlighted the Supreme Court’s judgment, which exempted 100% EOUs exporting goods from the application of the Plastic Waste (Management and Handling) Rules, 2011. The tribunal emphasized that the rules are aimed at preventing the use of hazardous, non-biodegradable plastic in the domestic market, not for goods meant exclusively for export.
Based on these observations, the tribunal concluded that the appellant had not violated the Plastic Waste (Management and Handling) Rules, 2011. It set aside the impugned order and allowed the appeals, ruling that the export goods were not liable for confiscation.

Implications of the Judgment

This decision is significant for businesses operating as 100% EOUs, particularly those involved in the export of goods packaged in materials containing plastic. The tribunal’s ruling reinforces the principle that the Plastic Waste (Management and Handling) Rules, 2011, are not applicable to goods manufactured for export, provided they are not sold in the domestic market.

The judgment also underscores the importance of adhering to procedural directions during legal proceedings. The adjudicating authority’s failure to comply with the Commissioner (Appeals)’ instructions for re-testing was deemed a serious procedural lapse, ultimately leading to the reversal of its decision.

Conclusion

The CESTAT’s ruling in favor of Appellant is a testament to the importance of evidence-based decision-making and adherence to legal precedents. It provides clarity on the applicability of environmental regulations to 100% EOUs and sets a benchmark for future cases involving similar disputes.

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Source: CESTAT Ahmedabad

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March 9, 2026
CESTAT Chennai upheld the differential duty demand but set aside the confiscation of goods, fine, and penalty
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 09.03.2026

CESTAT Chennai upheld the differential duty demand but set aside the confiscation of goods, fine, and penalty

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 Appellant vs. Commissioner of Customs, Tuticorin (Customs Appeal No. 41665 of 2014). This case revolved around allegations of undervaluation in the import of slack wax and residue wax, and the Tribunal’s decision provides valuable insights into the legal principles governing customs valuation, burden of proof, and provisional assessments. Below, we delve into the key legal principles that shaped the Tribunal’s ruling.

Background of the Case 

The case originated from an investigation by the Directorate of Revenue Intelligence (DRI) into alleged undervaluation of imported slack wax and residue wax by Appellants. Both entities, owned by Appellant 2 and his wife, respectively, were found to have declared values for imported goods that were significantly lower than contemporaneous import prices. The investigation revealed discrepancies in invoice values, proforma invoices, and account statements, suggesting deliberate undervaluation and misdeclaration.

The Commissioner of Customs, Tuticorin, issued a Show Cause Notice (SCN) proposing the rejection of declared values under Rule 12 of the Customs Valuation Rules, 2007, redetermination of values under Rules 3, 4, and 9, and recovery of differential duty along with interest and penalties. The appellants challenged the Commissioner’s order, leading to the appeals before the Tribunal.

Key Legal Principles Followed by the Tribunal 

The Tribunal’s decision was guided by several established legal principles, which are crucial for understanding the nuances of customs valuation and the adjudication process in cases of alleged undervaluation.

1. Burden of Proof and Onus of Proof 

The Tribunal emphasized the distinction between the burden of proof and the onus of proof. It stated that the burden of proof lies on the party asserting a fact, and this burden does not shift. However, the onus of proof can shift during the evaluation of evidence. The department must establish a high degree of probability to shift the onus to the importer, who then has the responsibility to provide a credible explanation.

The Tribunal cited the Hon’ble Supreme Court’s judgment in Rabindra Chandra Paul vs. Commissioner of Customs and Commissioner of Customs, Calcutta vs. South India Television (P) Ltd., which held that the department must prove that the declared invoice price is incorrect. It also referred to SOUNDS N. IMAGES vs Collector of Customs, which stated that customs authorities must establish the actual value of imported goods using legally recognized methods.

2. Rejection of Declared Transaction Value 

The Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 prescribe transaction value as the primary basis for valuation under Rule 3(1), subject to Rule 12. The Tribunal clarified that Rule 3(1) applies only if the declared value is acceptable. If the proper officer has reasonable doubt about the truth or accuracy of the declared value, Rule 12 is triggered, and the declared transaction value can be rejected.

In this case, the declared value was found to be substantially lower than contemporaneous import prices, justifying the rejection of the transaction value under Rule 3(1). The Tribunal held that the department had discharged its initial burden of demonstrating that the declared value was unreliable.

3. Admissibility of Evidence 

The Tribunal noted that the test of admissibility of evidence lies in its relevancy. It cited precedents from the Hon’ble Supreme Court, which state that the department must prove that the declared invoice price is incorrect and that the facts admitted by the party need not be proved. The Tribunal also emphasized that the authenticity of emails and account statements retrieved during the investigation was not disputed by the appellant, further strengthening the department’s case.

4. Standard of Proof 

The Tribunal applied the standard of proof required in civil cases, which is the “preponderance of probabilities.” It stated that the inference of preponderance of probabilities can be drawn from materials on record and circumstances. This standard is less stringent than the “beyond reasonable doubt” standard used in criminal cases.

5. Provisional Assessment and Penal Provisions 

The Tribunal referred to judgments that held that Section 28 of the Customs Act is not applicable in cases of provisional assessment. It concluded that penal provisions such as confiscation, fine, and penalty are not attracted in cases where assessments are provisional. The Tribunal cited the Hon’ble Supreme Court’s judgment in Commnr. Central Excise & Customs, Mumbai & Ors. vs M/s. I.T.C. Ltd. & Ors., which held that proceedings under Section 28 cannot be initiated without completing the assessment process.

6. Non-Traversal Doctrine

The Tribunal applied the doctrine of non-traversal, noting that the appellant failed to reply to the Show Cause Notice or appear for personal hearings despite multiple opportunities. This failure to contest the allegations led to the acceptance of the department’s findings.

7. Cross-Examination

The Tribunal referred to recent judgments, including M/s AMRITHA MARKETING, MADURAI vs THE JOINT COMMISSIONER OF CGST AND CENTRAL EXCISE CENTRAL, MADURAI, which held that the right to cross-examine witnesses is part of the principles of natural justice but must be specifically requested with valid reasons. In this case, the appellant did not request cross-examination of witnesses, nor did they dispute the authenticity of the evidence presented.

Tribunal’s Final Decision 

The Tribunal upheld the assessments made by the Commissioner of Customs but set aside the confiscation of goods, fine, and penalty imposed. It concluded that penal provisions were not applicable due to the provisional nature of the assessments. The Tribunal also noted that the appellant failed to participate in the proceedings, attracting the doctrine of non-traversal.

The impugned order was modified to exclude confiscation, fine, and penalty, and the appellant was deemed eligible for consequential relief as per law.

Conclusion

The Tribunal’s decision in this case underscores the importance of adhering to legal principles in customs valuation disputes. It highlights the department’s responsibility to establish a prima facie case of undervaluation and the shifting of onus to the importer to provide credible explanations. The judgment also clarifies the application of provisional assessments and the limitations on penal provisions in such cases.

Source: CESTAT Chennai

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March 9, 2026
CESTAT Delhi- Nutraceutical Raw Materials Not Classifiable as ‘Food Preparations’ Under CTH 2106
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 07.03.2026

CESTAT Delhi- Nutraceutical Raw Materials Not Classifiable as ‘Food Preparations’ Under CTH 2106

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 landmark judgment in the case of Sundyota Numandis Probioceutical Pvt. Ltd. vs. Principal Commissioner, Customs New Delhi. The case revolved around the classification of three imported products—Tendofit, Mobilee, and GG Orosoluble—and the imposition of customs duty, interest, and penalties amounting to ₹7,07,02,027. The Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal.

Background of the Case

Sundyota Numandis Probioceutical Pvt. Ltd., an Ahmedabad-based company engaged in the manufacture and sale of nutraceutical and probiotic products, imported three key ingredients—Tendofit, Mobilee, and GG Orosoluble—for use in their products. The Customs Department alleged that the company had misclassified these products and issued a show-cause notice, claiming that the goods were liable to be classified under Chapter Heading (CTH) 2106 as “Miscellaneous Edible Preparations.” The Department argued that the products were edible preparations and imposed differential customs duty, interest, and penalties.

The appellant challenged the classification, asserting that the products were raw materials and not edible preparations at the time of import. They argued that Tendofit and Mobilee should be classified under CTH 3913 as natural polymers, while GG Orosoluble should be classified under CTH 3002 as a probiotic.

Key Arguments by Sundyota Numandis 
1. Tendofit Classification:
  - Tendofit is a bovine cartilage extract containing 85% mucopolysaccharides (MPS) and 15% collagen.
  - MPS, primarily composed of chondroitin sulfate, provides the essential character to Tendofit, making it a natural polymer.
  - The product is imported in bulk packaging (25 kg drums) and is not edible in its imported form. It requires further formulation into prescribed dosage strength (260-520 mg/day) as per Food Safety and Standards Authority of India (FSSAI) approval.
  - Expert opinions from IIT Delhi and international rulings, such as the US Customs Ruling, support the classification of chondroitin sulfate under CTH 3913.
2. Mobilee Classification:
  - Mobilee is a natural extract derived from rooster comb, comprising 60-75% sodium hyaluronate, 10% polysaccharides, and 5% collagen.
  - Sodium hyaluronate provides the essential character to Mobilee, making it a natural polymer under CTH 3913.
  - Similar to Tendofit, Mobilee is imported in bulk packaging (5 kg drums) and is not edible in its imported form. It requires formulation into prescribed dosage strength (80 mg/day) before consumption.
  - The classification of sodium hyaluronate under CTH 3913 is supported by US Customs Rulings and the EU Customs Tariff.
3. GG Orosoluble Classification:
  - GG Orosoluble is a probiotic containing Lactobacillus Rhamnosus GG, along with excipient carriers like xylitol and sorbitol for stability during storage and transportation.
  - The product is not edible in its imported form and requires further processing to become a dietary supplement.
  - Expert opinion from IIT Bhubaneswar confirmed that GG Orosoluble is a probiotic and should be classified under CTH 3002, which covers cultures of microorganisms.
Key Arguments by the Department
1. The Department argued that Tendofit and Mobilee were food preparations due to the presence of collagen and their use as nutraceuticals for human consumption.
2. It contended that GG Orosoluble was a dietary supplement and not a probiotic, as it contained excipient carriers and was ready for human consumption.
3. The Department relied on the FSSAI certification obtained by the appellant to argue that the products were edible preparations.
Tribunal’s Observations and Ruling 

The Tribunal analyzed the case based on the provisions of the Customs Act, 1962, the Customs Tariff Act, 1975, and the General Rules of Interpretation (GIR). Key observations and rulings include:
1. Classification at the Time of Import:
  - The Tribunal emphasized that goods must be classified based on their condition at the time of import, as per the “as imported” principle established by the Supreme Court in the case of Commissioner of Customs (Imports) vs. M/s Welkins Foods.
  - The Department failed to provide evidence that the imported goods were edible at the time of import.
2. Tendofit:
  - The Tribunal ruled that Tendofit is not edible in its imported form and is a raw material for nutraceuticals. It upheld the appellant’s classification under CTH 3913 as a natural polymer.
3. Mobilee:
  - The Tribunal found that Mobilee’s essential character is provided by sodium hyaluronate, which is classified under CTH 3913 as a natural polymer. It rejected the Department’s claim that the presence of collagen changes its classification to a food preparation.
4. GG Orosoluble:
  - The Tribunal ruled that GG Orosoluble is a probiotic and not a food preparation. It upheld the appellant’s classification under CTH 3002, relying on expert opinion and the absence of contrary evidence from the Department.
5. Burden of Proof:
  - The Tribunal reiterated that the burden of proof lies with the Department to establish the correctness of its proposed classification. In this case, the Department failed to discharge this burden.
Conclusion

The Tribunal’s decision to set aside the impugned order and allow the appeal is a significant victory for Sundyota Numandis Probioceutical Pvt. Ltd. The judgment underscores the importance of classifying goods based on their condition at the time of import and the need for the Department to provide robust evidence to support its claims. This case also highlights the value of expert opinions and international rulings in resolving classification disputes.

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Source: CESTAT Delhi

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March 7, 2026
CESTAT Kolkata Sets Aside Penalty on CHA
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 07.03.2026

CESTAT Kolkata Sets Aside Penalty on CHA

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), Kolkata, recently delivered a significant judgment in the case of M/s Express Clearing Agency vs. Commissioner of Customs (Port), Kolkata. This case, registered as Customs Appeal No. 75407 of 2020, revolved around the imposition of a penalty of Rs. 3 lakhs on the appellant, M/s Express Clearing Agency, under Section 114AA of the Customs Act, 1962. The final order, numbered 75239/2026, was pronounced on February 13, 2026, by Hon’ble Member Judicial.

Background of the Case

M/s Express Clearing Agency, a Customs House Agent (CHA), was penalized for allegedly being involved in altering the classification of imported goods to favor the importer, Kejriwal Electronics Ltd. The case originated from proceedings against the importer, where a Show Cause Notice was also issued to the CHA. The adjudicating authority confirmed the demand against the importer and imposed penalties on both the importer and the CHA.

The appellant challenged the penalty before the Commissioner of Customs (Appeals), Kolkata, but the appeal was dismissed. Subsequently, the appellant approached the CESTAT, seeking relief on the grounds that the main importer’s appeal had already been decided in their favor by the Tribunal in Final Order No. 75653/2025 dated February 26, 2025.

Key Arguments Presented
1. Appellant’s Argument:
  - The appellant’s counsel, argued that the main issue of classification of goods had already been resolved in favor of the importer, Kejriwal Electronics Ltd., by the Tribunal in its earlier order.
  - The counsel contended that since the importer’s penalty and confirmed duty were set aside, the penalty imposed on the CHA should also be revoked.
2. Respondent’s Argument:
  - The respondent justified the penalty imposed on the CHA, alleging that the appellant played a role in altering the classification of goods to benefit the importer.
Tribunal’s Observations

The Tribunal carefully examined the case records and referred to its previous rulings, including Final Order No. 75653/2025 and other relevant case laws. The key findings were:
1. Classification of Goods:
  - The Tribunal reiterated its earlier decision that the imported goods, described as “multi-media speaker systems,” were correctly classified under Chapter Heading 8518, as their primary function was sound amplification. The department’s argument to classify the goods under Chapter Heading 8527 was rejected.
2. Precedents:
  - The Tribunal referred to similar cases, such as Logic India Trading Co. vs. Commissioner of Customs, Cochin and ONKYO SIGHT & SOUND INDIA PVT. LTD. vs. Commissioner of Customs, Chennai, where the classification of similar goods was upheld under Chapter Heading 8518.
3. Implications for the CHA:
  - Since the main importer’s appeal was allowed and the penalties imposed on them were set aside, the Tribunal found no merit in penalizing the CHA. The impugned order against M/s Express Clearing Agency was therefore set aside.
Final Decision

The Tribunal allowed the appeal filed by M/s Express Clearing Agency, setting aside the penalty of Rs. 3 lakhs imposed under Section 114AA of the Customs Act, 1962. The appellant was deemed eligible for consequential relief as per the law.

Significance of the Judgment

This judgment is a landmark decision for Customs House Agents (CHAs) and importers alike, as it underscores the importance of proper classification of goods under the Customs Act. The Tribunal’s reliance on established precedents and its detailed analysis of the classification issue highlight the importance of adhering to the principal function of goods when determining their classification.

Moreover, the judgment reinforces the principle that penalties cannot be imposed arbitrarily, especially when the main issue has already been resolved in favor of the importer. It serves as a reminder to authorities to ensure that penalties are justified and proportionate to the alleged offense.

Conclusion

The CESTAT Kolkata’s decision in favor of M/s Express Clearing Agency is a testament to the importance of fair adjudication and the role of precedents in ensuring consistency in legal decisions. This case will likely serve as a reference point for similar disputes in the future, providing clarity on the classification of goods and the liability of CHAs in customs-related matters.

Source: CESTAT Kolkata

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March 7, 2026
CESTAT Mumbai Sets Aside Order on Misdeclaration and Re-Determination of Import Value
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 06.03.2026

CESTAT Mumbai Sets Aside Order on Misdeclaration and Re-Determination of Import Value

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), Mumbai, recently delivered a significant judgment in the case of Chandan Steel Limited vs. Commissioner of Customs (Import), Nhava Sheva. The case revolved around the import of used and unused articles of base metal and flange protection caps by Chandan Steel Limited from Germany, and the subsequent dispute over the valuation and classification of the imported goods.

Background of the Case 

Chandan Steel Limited filed Bill of Entry No. 3347203 dated September 23, 2013, for the clearance of 24.105 MTs of “used/unused articles of base metal and flange protection caps, of various sizes (articles of plastics).” The goods were classified under Customs Tariff Item (CTI) 8487 9000 and CTI 3926 9099, with a declared assessable value of €10,387.50 (FOB), freight charges of $1,650, and insurance costs of ₹539, amounting to a total value of ₹10,03,355.

The importer requested a first-check examination of the goods by customs authorities at the port of import, as the consignment contained both used and unused items. Upon examination, customs officers found that the goods consisted of old and used second-hand nuts, bolts, pipe fittings, V joints, and other items. They concluded that the goods required a No Objection Certificate (NOC) from the Pollution Control Board and Pre-Shipment Inspection Certificate (PSIC). The customs authorities deemed the goods as misdeclared and not allowed for import, as they were old and used items other than capital goods.

Adjudication and Appeals 

Following adjudication proceedings, the original authority ordered the re-assessment of the imported goods based on the certificate provided by a Chartered Engineer and comparable values of contemporaneous imports. The differential duty payable was determined to be ₹1,42,817, along with interest. The goods were confiscated under Section 111(m) of the Customs Act, 1962, and released upon payment of a redemption fine of ₹60,000 under Section 125 of the Act. Additionally, a penalty of ₹30,000 was imposed under Section 112(a).

Chandan Steel Limited challenged the order before the Commissioner of Customs (Appeals), who upheld the original authority’s decision. Dissatisfied with the outcome, the appellant approached the CESTAT.

Key Issues for Determination 

The Tribunal was tasked with addressing two primary issues:
1. Validity of Value Enhancement: Whether the enhancement of the value of imported goods and the determination of differential duty based on the Chartered Engineer’s certificate and contemporaneous imports were legally sustainable under Section 14 of the Customs Act, 1962, and the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 (CVR, 2007).
2. Misdeclaration Allegations: Whether the confiscation of goods and imposition of redemption fine and penalty on the appellant for alleged undervaluation and misdeclaration were justified under the Customs Act, 1962.
Tribunal’s Observations and Findings 

After hearing both sides and reviewing the case records, the Tribunal made the following observations:
1. Re-determination of Value: The Tribunal noted that the authorities had failed to provide data on contemporaneous import values to justify the re-determination of the assessable value. The re-assessment was solely based on the Chartered Engineer’s certificate, which did not meet the requirements of Rule 3 and subsequent rules of CVR, 2007. The Tribunal emphasized that the proper officer must follow the sequential order of valuation methods outlined in Rules 3 to 9 of CVR, 2007, which was not done in this case.
2. Misdeclaration Allegations: The Tribunal found that the appellant had requested a first-check examination of the goods to verify their description, classification, and condition. The Chartered Engineer’s certificate confirmed that the goods were in conformity with the appellant’s declaration. Therefore, the Tribunal held that the allegation of misdeclaration was not supported by evidence and was contrary to the facts of the case.
3. Legal Precedents: The Tribunal referred to the case of RKG International Private Limited vs. Commissioner of Customs (Export), Nhava Sheva (2018), where it was held that enhancement of value based solely on a Chartered Engineer’s certificate, without considering contemporaneous imports, was arbitrary and unsustainable.
Final Decision

The Tribunal concluded that the authorities had not adhered to the legal provisions of Section 14 of the Customs Act, 1962, and CVR, 2007 in re-assessing the value of the imported goods. It also found no evidence to support the allegations of misdeclaration. Consequently, the Tribunal set aside the impugned order dated April 10, 2014, passed by the Commissioner of Customs (Appeals) and allowed the appeal in favor of Chandan Steel Limited.

Source: CESTAT Mumbai

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March 6, 2026
CESTAT Delhi Overturns 19.76 Crore Duty Demand on Aircraft Imports
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 06.03.2026

CESTAT Delhi Overturns 19.76 Crore Duty Demand on Aircraft 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.

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, recently delivered a significant judgment in the case of M/s Privilege Airways Pvt. Ltd. & Appellant vs. Commissioner of Customs (Preventive). The case revolved around the denial of exemption benefits under Notification No. 21/2002-Cus (S.No. 347B) for the import of a Falcon 2000 aircraft by Privilege Airways Pvt. Ltd. The Tribunal, in its Final Order No. 50309-50310/2026 dated March 3, 2026, set aside the impugned order passed by the Commissioner of Customs (Preventive), New Delhi, providing consequential relief to the appellants.

Background of the Case

M/s Privilege Airways Pvt. Ltd. imported a Falcon 2000 jet aircraft under the conditional exemption Notification No. 21/2002-Cus (S.No. 347B). This notification provided duty exemptions for aircraft imported into India for non-scheduled (passenger) services or non-scheduled (charter) services, subject to certain conditions. Specifically, Condition No. 104 required the importer to:
1. Obtain approval from the Ministry of Civil Aviation for importing aircraft for non-scheduled services.
2. Furnish an undertaking to the customs authorities that the aircraft would be used exclusively for non-scheduled (passenger) or non-scheduled (charter) services. In case of failure to comply, the importer would be liable to pay the duty that would have been applicable without the exemption.
Privilege Airways had provided the required undertaking, stating that the aircraft would be used for non-scheduled (passenger) services. However, it was later discovered that the aircraft was chartered out to M/s Housing Development & Infrastructure Ltd. (HDIL), whose directors were the same as those of Privilege Airways. The aircraft was used exclusively for the private purposes of HDIL’s directors, leading the customs authorities to allege a violation of Condition No. 104(ii) of the exemption notification.

Impugned Order and Appeals 

Following the discovery, a Show Cause Notice (SCN) was issued on May 25, 2009, to Privilege Airways, its director and others. The SCN proposed recovery of duty amounting to Rs. 19,76,50,325 under Section 28 of the Customs Act, 1962, along with interest. It also proposed the confiscation of the aircraft under Section 125 of the Act, with a redemption fine of Rs. 15,00,00,000, and penalties of Rs. 5,00,00,000 on Privilege Airways and Rs. 20,00,000 on Appellant under Section 112(a) of the Act.

The Commissioner of Customs (Preventive), New Delhi, upheld the allegations in the SCN and passed the impugned order on July 30, 2010. Aggrieved by this decision, Privilege Airways and its director filed appeals before the CESTAT.

Key Issues in the Case

The primary issue before the Tribunal was whether aircraft imported for non-scheduled (passenger) services could also be used for non-scheduled (charter) services without violating the conditions of the exemption notification. The appellants argued that the use of the aircraft for non-scheduled (charter) services was permissible under the notification, as clarified by a larger bench of the Tribunal in the case of VRL Logistics vs. Commissioner of Customs, Ahmedabad (Customs Appeal No. 74 of 2010-LB, Order dated August 8, 2022).

Tribunal’s Observations and Decision 

The Tribunal noted that the larger bench in VRL Logistics had already addressed the issue and held that aircraft imported for non-scheduled (passenger) services could be used for non-scheduled (charter) services. The larger bench had clarified that such usage did not violate the conditions of the exemption notification. The Tribunal also observed that the customs authorities could not question the validity of the permission granted by the Directorate General of Civil Aviation (DGCA) unless the DGCA itself had canceled the permit.

In light of the precedent set by the larger bench in VRL Logistics, the Tribunal found no reason to take a different view in the present case. It held that the impugned order passed by the Commissioner of Customs (Preventive) could not be sustained and must be set aside.

Final Order

The Tribunal set aside the impugned order dated July 30, 2010, and provided consequential reliefs to the appellants. This decision effectively nullified the duty demand of Rs. 19,76,50,325, the redemption fine of Rs. 15,00,00,000, and the penalties imposed on Privilege Airways and its director.

Conclusion

The judgment in this case underscores the importance of adhering to established legal precedents and clarifications provided by higher judicial authorities. It also highlights the need for customs authorities to respect the permissions granted by regulatory bodies like the DGCA unless such permissions are explicitly revoked. This decision is likely to have significant implications for the aviation industry, particularly for operators engaged in non-scheduled air transport services.

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Source: CESTAT Delhi

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March 6, 2026
CESTAT Chennai Sets Aside Customs Valuation Order
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 05.03.2026

CESTAT Chennai Sets Aside Customs Valuation Order

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), Chennai Regional Bench – Court No. III, recently delivered a significant judgment in the case of M/s. Junaid Interior Design vs. Commissioner of Customs, Chennai II Commissionerate. The case revolved around allegations of undervaluation of imported architectural gypsum moulding products by the appellant, M/s. Junaid Interior Design, and the subsequent rejection of declared values by the customs authorities. The tribunal’s decision, delivered on March 3, 2026, has set a precedent for the interpretation of customs valuation rules and the admissibility of evidence in such cases.

Background of the Case

The case originated from an investigation conducted by the Directorate of Revenue Intelligence (DRI), Bangalore Zonal Unit, which alleged that M/s. Junaid Interior Design had misdeclared the value of architectural gypsum moulding products imported from M/s. Hock Keng Heng Plaster Industrial SDN BHD, Malaysia. During searches conducted at the appellant’s premises and the residence of its proprietor, the DRI seized documents and a Lenovo laptop containing soft copies of invoices that allegedly indicated higher values for the imported goods than those declared in the bills of entry.

Following the investigation, a show cause notice was issued to the appellant, and the Additional Commissioner of Customs adjudicated the case, rejecting the declared value of the goods and re-determining their value based on contemporaneous import prices. The adjudicating authority imposed a differential duty of Rs. 21,74,678/- along with interest, confiscated the goods, and levied penalties under Sections 114A and 114AA of the Customs Act, 1962. The appellant challenged this decision before the Commissioner of Customs (Appeals-II), who upheld the original order. Subsequently, the appellant filed an appeal before the CESTAT.

Key Issues in the Appeal 

The tribunal identified several critical issues for consideration:
1. Voluntariness of the Appellant’s Statement: The appellant argued that the statement recorded by the DRI was not voluntary, as it was recorded in English, a language the appellant was not proficient in. The tribunal noted that the statement could not be considered voluntary unless it was recorded in a language known to the deponent. The tribunal emphasized the importance of recording statements in a language understood by the individual, especially in the era of advanced translation tools.
2. Admissibility of Soft Copies of Invoices: The tribunal examined whether the soft copies of invoices downloaded from the appellant’s laptop could be considered valid evidence. The appellant had retracted the statement admitting the invoices, and the tribunal found that the invoices were dated later than the date of import, making them irrelevant to the case. Citing the Supreme Court’s decision in Additional Director General Adjudication, Directorate of Revenue Intelligence vs. Suresh Kumar And Co. Impex Pvt. Ltd., the tribunal held that retracted statements render the associated documents inadmissible as evidence.
3. Rejection of Declared Value Based on Contemporaneous Imports: The tribunal scrutinized the rejection of the declared value based on higher contemporaneous import prices of identical or similar goods. It noted that the customs authorities failed to provide sufficient details about the contemporaneous imports, such as item descriptions, quality, and commercial factors influencing transaction values. The tribunal emphasized that higher contemporaneous prices alone cannot override evidence submitted by the appellant, such as local sale invoices, which supported the declared value.
4. Re-determination of Value: The tribunal found that the customs authorities did not adequately verify whether the contemporaneous import prices represented identical or similar goods. It held that the declared value could not be rejected without considering factors such as quantity ordered, nature of goods, discounts, and local sale prices.
5. Imposition of Penalties: The tribunal ruled that the imposition of penalties under both Sections 114A and 114AA of the Customs Act amounted to double punishment for the same offense. It also noted that Section 114AA is intended to address export-related offenses, making its application in this case legally unsustainable.
Tribunal’s Decision 

After a detailed examination of the facts, evidence, and legal precedents, the tribunal ruled in favor of the appellant. It set aside the impugned Order-in-Appeal and allowed the appeal with consequential relief. The tribunal’s decision emphasized the importance of adhering to the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, and ensuring that evidence used to reject declared values is both admissible and relevant.

Key Takeaways
1. Voluntariness of Statements: The tribunal underscored the importance of recording statements in a language understood by the deponent, rejecting the notion that a statement recorded in an unfamiliar language could be considered voluntary.
2. Admissibility of Evidence: The judgment clarified that soft copies of invoices or other electronic evidence must meet the requirements of Section 138C of the Customs Act, 1962, and cannot be admitted if the associated statement is retracted.
3. Rejection of Declared Value: The tribunal highlighted that higher contemporaneous import prices alone are insufficient to reject declared values. Customs authorities must consider all commercial factors and provide detailed evidence to support their claims.
4. Penalties: The decision reinforced the principle that penalties should not be imposed twice for the same offense and clarified the scope of Section 114AA of the Customs Act.
Conclusion

The CESTAT Chennai’s decision in the case of M/s. Junaid Interior Design is a landmark ruling that reinforces the importance of procedural fairness and adherence to legal standards in customs valuation disputes. It serves as a reminder to customs authorities to ensure that their actions are backed by admissible evidence and comply with established rules and regulations. For importers, the judgment highlights the importance of maintaining accurate documentation and challenging any arbitrary or unjustified actions by authorities. This case will undoubtedly serve as a reference point for future disputes in customs valuation and evidence admissibility.

Source: CESTAT Chennai

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March 5, 2026
Madras High Court Upholds Classification of Roasted Areca Nuts Under Customs Tariff Heading 2008
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 05.03.2026

Madras High Court Upholds Classification of Roasted Areca Nuts Under Customs Tariff Heading 2008

Adv Ravi Shekhar Jha

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

On August 1, 2023, the High Court of Madras delivered a significant judgment in the case of C.M.A. Nos. 600, 1206, and 1750 of 2023, addressing the classification of roasted areca nuts (betel nuts) under the Customs Tariff Act, 1975. The case revolved around whether roasted areca nuts should be classified under Customs Tariff Heading (CTH) 2008 19 20 or under CTH 0802 80. The court upheld the ruling of the Customs Authority for Advance Rulings (CAAR), affirming that roasted areca nuts fall under CTH 2008 19 20.

Background of the Case

The case was brought before the High Court by the Commissioner of Customs, Chennai II Commissionerate, challenging the rulings of the CAAR. The respondents, importers of roasted areca nuts, had filed applications with the CAAR seeking advance rulings on the classification of their products. The importers argued that roasted areca nuts should be classified under CTH 2008 19 20, which covers “other roasted nuts and seeds” under Chapter 20 of the Customs Tariff Act.

The Commissioner of Customs contended that roasted areca nuts should be classified under CTH 0802 80, which covers “other nuts, fresh or dried, whether or not shelled or peeled.” The Commissioner argued that roasted areca nuts are not commercially distinct from regular areca nuts and should therefore fall under Chapter 8.

Key Issues in the Case

The primary issue before the court was whether roasted areca nuts should be classified under CTH 2008 19 20 or CTH 0802 80. The court considered the following factors:
1. Distinction Between Roasting and Drying: The court examined whether the process of roasting is distinct from drying and whether it alters the classification of areca nuts.
2. Specific vs. General Tariff Entries: The court analyzed whether roasted areca nuts should be classified under the specific entry for roasted nuts in Chapter 20 or the general entry for fresh or dried areca nuts in Chapter 8.
3. HSN Explanatory Notes: The court considered the Harmonized System of Nomenclature (HSN) Explanatory Notes, which provide guidance on the classification of goods under the Customs Tariff Act.
4. Precedents and Common Parlance Test: The court reviewed previous judgments and rulings, including the Supreme Court’s decision in Crane Betel Nut Powder Works v. Commissioner of Customs & Central Excise and the Tribunal’s ruling in S.T. Enterprises v. Commissioner of Customs, to determine their relevance to the case.
Court’s Observations and Findings 

1. Roasting vs. Drying 

The court noted that roasting is a distinct process from drying, as outlined in the Customs Tariff Act and HSN Explanatory Notes. Roasting involves subjecting areca nuts to high temperatures (130–150°C), which alters their physical and chemical characteristics, distinguishing them from dried areca nuts.

2. Specific vs. General Tariff Entries

The court emphasized the principle that specific tariff entries take precedence over general ones. While Chapter 8 covers fresh or dried areca nuts, Chapter 20 specifically includes roasted nuts under CTH 2008 19 20. The court held that roasted areca nuts should be classified under the specific entry for roasted nuts.

3. HSN Explanatory Notes 

The court highlighted the importance of HSN Explanatory Notes in determining tariff classifications. The notes explicitly classify roasted areca nuts under Chapter 20, supporting the CAAR’s ruling.

4. Precedents and Common Parlance Test

The court clarified that the judgments in Crane Betel Nut Powder Works and S.T. Enterprises were not applicable to the present case, as they dealt with different processes (boiling and drying) and tariff entries. The court also stated that the common parlance test is irrelevant when a specific tariff entry exists.

Conclusion

The High Court of Madras dismissed the appeals filed by the Commissioner of Customs, affirming the CAAR’s ruling that roasted areca nuts are classifiable under CTH 2008 19 20. The court concluded that the process of roasting is distinct from drying and that roasted areca nuts fall under a specific tariff entry, which prevails over the general entry for fresh or dried areca nuts. This judgment underscores the importance of adhering to specific tariff classifications and the relevance of HSN Explanatory Notes in resolving disputes related to the Customs Tariff Act. It also highlights the principle that specific entries in tariff classifications take precedence over general entries, even if the products in question are not commercially distinct.

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Source: Madras High Court

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March 5, 2026
CESTAT Chennai Quashes Undervaluation Demand
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 03.03.2026

CESTAT Chennai Quashes Undervaluation Demand

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. Ankit Impex & M/s. SBB International vs. The Principal Commissioner of Customs. This case revolved around allegations of undervaluation of imported goods and the subsequent imposition of penalties and confiscation of goods under the Customs Act, 1962. The Tribunal’s decision, pronounced on February 4, 2026, has set a precedent for similar cases involving provisional assessments and the invocation of Section 28 of the Customs Act.

Background of the Case

The appellants, M/s. Ankit Impex and M/s. SBB International, had imported goods declared as “Recycled LDPE Granules” under various Bills of Entry, including Bill of Entry No. 268168 dated July 22, 2009. The goods were provisionally assessed, and duties were paid based on the declared value. However, the Directorate of Revenue Intelligence (DRI) initiated an investigation based on intelligence suggesting that the importers were undervaluing their goods to evade customs duties.

During the investigation, incriminating documents, including an actual invoice, were recovered, which allegedly proved that the importers had submitted fabricated invoices to the customs authorities. A Show Cause Notice (SCN) was issued on August 23, 2013, proposing to reject the declared value, re-determine the value based on the recovered invoice, demand differential duty, confiscate the goods, and impose penalties under Sections 112(a), 114A, and 114AA of the Customs Act, 1962.

The Adjudicating Authority passed an Order-in-Original on March 29, 2023, upholding the allegations and imposing penalties. The importers appealed to the Commissioner of Customs (Appeals), who rejected their appeal on December 12, 2024. Subsequently, the importers filed appeals before the CESTAT, Chennai.

Key Issues Raised in the Appeals 
1. Non-availability of Relied Upon Documents (RUDs): The appellants argued that the relied-upon documents mentioned in the SCN were not provided to them, despite repeated requests. The Adjudicating Authority claimed that the documents were provided, but this assertion was contradicted by the Authority’s own findings in the Order-in-Original.
2. Provisional Assessment and Section 28: The appellants contended that the consignments were cleared provisionally, and the assessments were not finalized due to pending test reports. They argued that a demand under Section 28 of the Customs Act, 1962, was premature and legally unsustainable, as the section applies only to finalized assessments.
Tribunal’s Observations and Decision

The Tribunal carefully examined the facts of the case, the rival contentions, and the documents placed on record. It noted several discrepancies in the Adjudicating Authority’s findings, particularly regarding the availability of RUDs. The Tribunal also emphasized that the demands raised under Section 28 were premature, as the assessments were provisional and not finalized.

The Tribunal referred to its own previous decision in the case of M/s. Shami Impex vs. Commissioner of Customs & Ors.  [Final Order Nos. 40819-40823/2024 dated July 9, 2024], which held that demands under Section 28 cannot be raised for provisionally assessed consignments. The Tribunal also cited judgments from the Hon’ble Supreme Court and various High Courts, which consistently held that Section 28 of the Customs Act applies only to finalized assessments.

Based on these findings, the Tribunal set aside the demands, penalties, and confiscation orders imposed by the Adjudicating Authority and the Commissioner (Appeals). The appellants were granted consequential reliefs as per the law.

Key Takeaways from the Judgment 
1. Importance of Relied Upon Documents: The Tribunal highlighted the necessity of providing all relied-upon documents to the appellants along with the SCN. Failure to do so violates the principles of natural justice and undermines the adjudication process.
2. Provisional Assessments and Section 28: The judgment reinforces the principle that demands under Section 28 of the Customs Act, 1962, cannot be raised for provisionally assessed consignments. The section is applicable only after the finalization of assessments.
3. Judicial Precedents: The Tribunal’s decision aligns with previous judgments from the Supreme Court and High Courts, emphasizing the importance of adhering to established legal principles in customs cases.
Conclusion

The CESTAT Chennai’s decision in this case serves as a reminder of the importance of procedural fairness and adherence to legal provisions in customs adjudications. It underscores the need for authorities to provide all relevant documents to appellants and to ensure that assessments are finalized before invoking Section 28 of the Customs Act, 1962. This landmark judgment will undoubtedly serve as a guiding precedent for similar cases in the future, ensuring that justice is served in accordance with the law.

Connected Matter

Calcutta HC Sets Aside Customs Demand: Jurisdictional Error and Breach of Natural Justice in Provisional Assessment under the Customs Act

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Source: CESTAT Chennai

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March 3, 2026