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Category: Supreme Court

  • Customs Duty on SEZ–DTA Clearances: Latest Judgments, Key Notifications & Compliance Insights

    Customs Duty on SEZ–DTA Clearances: Latest Judgments, Key Notifications & Compliance Insights

    ALO Law Office- IDT Tax I Arbitration I Litigation

    Date: 29.11.2025

    Customs Duty on SEZ–DTA Clearances: Latest Judgments, Key Notifications & Compliance Insights

    This Article has been written by Shri Ravi Shekhar Jha, Advocate 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.  β€‹

    Customs duty on transactions between the Domestic Tariff Area (DTA) and Special Economic Zones (SEZs) has gone through a lot of churn in the last few years – especially around export duty on DTAβ†’SEZ supplies and import-like duties on SEZβ†’DTA clearances. With the latest Supreme Court and High Court rulings, plus some important notifications and circulars, the position is now much clearer (and more taxpayer-friendly) on several issues.

    1. Why DTA–SEZ Customs Duty Is Such a Hot Topic

    SEZs are legally treated as deemed foreign territory for certain tax purposes. Under the SEZ framework, goods going from DTA to SEZ are treated as β€œexports”, while goods coming from SEZ to DTA are treated as β€œimports” – but that’s under the SEZ law, not automatically under the Customs Act.

    This duality has created classic disputes:

    • Can export duty be levied on DTAβ†’SEZ supplies?
    • How exactly are customs duties computed on SEZβ†’DTA clearances?
    • Can returned goods from SEZ to DTA get re-import exemption (Notification 45/2017-Cus)?
    • What is the interplay between Customs Act, 1962, the SEZ Act, 2005 and Customs Tariff Act, 1975 in these flows?

    Recent jurisprudence – especially the 2025 Supreme Court ruling in the Adani Power matter and the Andhra Pradesh High Court’s decision striking down the fifth proviso to Rule 27(1) of the SEZ Rules – has addressed some of these issues head-on.

    2. Statutory Framework: Customs Act vs SEZ Act

    2.1 Key provisions of the SEZ Act, 2005

    Some of the most important provisions of the SEZ Act for duty issues are:

    • Section 2(m) – Defines β€œexport” to include:
      • physical exports out of India, and
      • supplying goods from DTA to a SEZ unit or developer.
    • Section 26 – Grants exemptions from customs duties, excise, service tax etc. on goods/services imported or procured from DTA for authorised operations in SEZ.
    • Section 30 – Charging section for SEZβ†’DTA clearances: goods removed from an SEZ to DTA are chargeable to duties of customs (including ADD/CVD/SGD) as if such goods are imported into India.
    • Section 51 – Gives the SEZ Act overriding effect over other laws if there is inconsistency.
    • Section 53 – Deems an SEZ to be a territory outside the customs territory of India for specified purposes.

    2.2 Customs Act, 1962 & Customs Tariff Act, 1975

    • Section 12, Customs Act – The charging provision for customs duty on goods imported into or exported from India.
    • Customs Tariff Act, 1975 – Specifies rates of BCD, export duty, ADD, CVD, safeguard duty, etc.

    The core constitutional point is: no customs duty can be levied without a clear charging section in an Act of Parliament. Rules, notifications and circulars cannot create a new levy.

    3. Types of DTA–SEZ Transactions & Customs Duty Treatment

    3.1 DTA β†’ SEZ: Are these β€œexports” and is customs duty payable?

    Under the SEZ Act, supplies from DTA to SEZ are expressly treated as β€œexports” and SEZ units are entitled to benefits such as drawback and other export incentives.

    The Central Board of Excise & Customs (now CBIC) clarified this position through Customs Circular No. 29/2006, recognising that:

    • Supplies from DTA to SEZ are exports,
    • They are eligible for rebate/drawback, and
    • Exemptions from central excise duty apply to such supplies.

    3.1.1 Export duty on DTA→SEZ: the big controversy

    For years, authorities tried to levy export duty on DTA→SEZ supplies by relying on:

    • The definition of β€œexport” in Section 2(m) of SEZ Act, and
    • The fifth proviso to Rule 27(1) of the SEZ Rules, 2006, inserted in 2018, which stated that supplies from DTA to SEZ shall attract export duty where leviable.

    This was challenged on the ground that:

    • Section 12 of the Customs Act levies export duty only when goods go out of India;
    • SEZ units are still within India’s territory, even if deemed outside the customs territory for limited purposes; and
    • The SEZ Act has no charging section for export duty on DTAβ†’SEZ supplies, unlike Section 30, which specifically charges customs duty on SEZβ†’DTA movement.

    This controversy has now largely settled in favour of the assessee (discussed in Section 5 below).

    3.1.2 GST angle on DTA→SEZ supplies

    Under the IGST Act, supplies to SEZ are treated as zero-rated supplies, and all supplies from DTA to SEZ are treated as inter-State supplies to be governed by IGST provisions.

    This is separate from customs duty, but in practice many businesses mix the two. The key is:

    • GST: DTAβ†’SEZ = zero-rated inter-State supply
    • Customs: DTAβ†’SEZ = no customs/export duty after the recent rulings, absent a charging section

    3.2 SEZ β†’ DTA: Treated as β€œimports” for customs

    When goods move from SEZ to DTA, Section 30 of the SEZ Act expressly provides that such clearances are chargeable to duties of customs (including ADD, CVD, safeguard, etc.) as if the goods were imported into India.

    CESTAT in Lupin Ltd v. Commissioner of Customs held that:

    • Clearances from SEZ to DTA attract customs duty under Section 30,
    • Rule 48(3) of SEZ Rules (which facilitates invoices instead of Bill of Entry in certain cases) cannot override the charging section, and
    • Reduced or nil duty can apply only where the tariff rate itself is nil or where a valid exemption notification so provides.

    Practical implication:
    Whenever goods are cleared from SEZ to DTA, treat them like imports – file a Bill of Entry (unless the specific β€œinvoice mode” conditions are satisfied) and pay customs duty as per the Customs Tariff.

    3.3 DTA β†’ SEZ β†’ DTA (returns of goods, β€œas is” or after processing)

    A very tricky area is when:

    1. Goods are supplied from DTA to SEZ (treated as export under SEZ Act), and
    2. The same goods – either unutilised or processed – are sent back to DTA.

    Key questions:

    • Is this a re-import entitled to benefit of Notification 45/2017-Cus (re-import of goods exported under rebate/drawback/bond)?
    • Who is the β€œimporter” – the SEZ unit or the DTA buyer?
    • What is the duty base – original export price, retained value, or full transaction value at the time of return?

    The Lupin line of decisions & commentary suggests:

    • Section 30 SEZ Act is the primary charging section for SEZβ†’DTA clearances, and
    • The benefit of Notification 45/2017-Cus is not automatically available for goods returning from SEZ to DTA; in many cases the DTA entity is treated as the importer liable to duty on full value.

    In short: β€œround-tripping” via SEZ does not automatically give a re-import exemption. Very careful structuring and documentation is required.

    4. Key Customs Notifications & Circulars Relevant to DTA–SEZ Duty

    This is not an exhaustive list, but covers notifications and circulars that often come up when structuring or litigating DTA–SEZ flows:

    4.1 Notification No. 52/2003-Cus., dated 31.03.2003

    • Grants exemption from customs duties on specified goods imported or procured by EOUs, STP, EHTP units etc. for manufacture and export.
    • Subsequent amendments (e.g. Notification 33/2018-Cus) extended the benefit to IGST/Compensation cess for such units.

    Though primarily for EOUs, the logic carries over when comparing SEZ vs EOU regimes and their treatment for imports and DTA clearances.

    4.2 Notification No. 50/2017-Cus., dated 30.06.2017 (General Exemption)

    • A comprehensive exemption notification listing effective BCD rates for hundreds of items.
    • Includes specific entries where goods received from SEZ to DTA and returned to SEZ (e.g. LPG used in manufacture of polyisobutylene) may enjoy nil BCD, subject to conditions.

    This shows how the Government has, in some cases, explicitly carved out SEZ–DTA–SEZ flows in the tariff/exemption structure.

    4.3 Notification No. 45/2017-Cus., dated 30.06.2017 (Re-import of exported goods)

    • Grants conditional exemption on re-import of goods earlier exported:
      • under duty drawback,
      • under rebate of central excise/service tax, or
      • under bond/other schemes.
    • The notification is central to disputes like Lupin, where it was argued that goods returning from SEZ to DTA should be treated as re-imports eligible for this exemption.

    Authorities have taken a restrictive view – in many cases, re-import exemption is denied where the transaction structure doesn’t strictly fit the notification language.

    4.4 Customs Circular No. 29/2006, dated 27.12.2006

    • Clarifies that supplies from DTA to SEZ are exports,
    • Such supplies are eligible for rebate/drawback, and
    • Specific excise notification (58/2003-CE) for SEZ supplies had become redundant.

    This circular has been repeatedly relied upon in litigation to demonstrate that Government’s own understanding is that DTAβ†’SEZ supplies are exports only for benefit (drawback/rebate), not for imposition of customs/export duty.

    4.5 Rule 27(1) of SEZ Rules & the Fifth Proviso (2018)

    • Rule 27(1) allows units or developers to import or procure from DTA without payment of duty, taxes and cess for authorised operations.
    • The fifth proviso, inserted in 2018, stated that supplies from DTA to SEZ shall attract export duty if leviable on the goods.
    • The Andhra Pradesh High Court has now held this fifth proviso to be ultra vires the SEZ Act (discussed below).

    5. Recent Case Law: How Courts Have Read DTA–SEZ Customs Duty

    Here are some key judicial developments that anyone dealing with DTA–SEZ flows should know.

    5.1 Union of India v. Adani Power Ltd & Ors – Supreme Court, 2025

    In a landmark 2025 judgment, the Supreme Court dismissed the Union’s appeals and held that no export duty is leviable on DTAβ†’SEZ supplies.

    Key takeaways:

    • Section 12, Customs Act is the exclusive charging provision for customs duty.
    • DTAβ†’SEZ transfers do not involve goods crossing the territorial boundary of India, hence cannot be taxed as β€œexports” under Section 12.
    • The SEZ Act defines such supplies as β€œexports” only for granting benefits, not for expanding the customs duty net.
    • Rules or SEZ provisions cannot create a new tax levy in the absence of a charging section in the parent Act.

    This judgment aligns constitutional tax principles with the SEZ scheme and gives strong support to assessees who resisted export duty demands on DTA→SEZ supplies.

    5.2 TUF Metallurgical Pvt Ltd v. Union of India – Andhra Pradesh High Court, 2025

    The Andhra Pradesh High Court struck down the fifth proviso to Rule 27(1) of SEZ Rules, 2006 (which mandated export duty on DTA→SEZ supplies) as ultra vires the SEZ Act.

    Ruling highlights:

    • The SEZ Act contains no charging provision for export duty on DTAβ†’SEZ supplies, unlike Section 30 for SEZβ†’DTA.
    • Rules framed under the Act cannot create a substantive levy of export duty; they are limited to procedural aspects.
    • Export duty can only be imposed under Section 12 of the Customs Act, which is not attracted to goods moving between DTA and SEZ within India.

    This ruling was a major step in dismantling the export-duty-on-DTAβ†’SEZ regime even before the Supreme Court’s Adani decision.

    5.3 Lupin Ltd v. Commissioner of Customs – CESTAT Delhi, 2023

    In Lupin, the Tribunal dealt with goods supplied from DTA to SEZ and later returned to DTA.

    Key principles:

    • Section 30 of the SEZ Act is the charging section when goods move from SEZ to DTA. Duty is payable as if the goods are imported into India.
    • Rule 48(3) SEZ Rules (which allows an invoice instead of Bill of Entry for certain returns) is only a procedural facilitation; it does not override the substantive duty liability.
    • Benefit of Notification 45/2017-Cus (re-import of exported goods) is not automatic for SEZβ†’DTA returns; it must be tested strictly against the language and conditions of the notification.

    Post-Lupin, customs authorities have been wary of granting re-import exemptions on SEZ→DTA flows unless the DTA importer clearly fits within Notification 45/2017.

    5.4 Government Revision / Clarificatory Orders

    In revision orders under Section 35EE of the Central Excise Act (applied mutatis mutandis), the Central Government has itself acknowledged that:

    • Supplies from DTA to SEZ are exports β€œoutside the territory of India” for SEZ purposes,
    • SEZ Act creates a legal fiction for giving benefits comparable to actual exports,
    • But no export duty is payable in absence of a charging provision.

    These orders are frequently cited in support of taxpayers in DTA–SEZ disputes.

    6. Practical Compliance Pointers for Businesses

    From a practitioner’s perspective, here’s how you may want to structure your advice/checklist for clients:

    6.1 For DTA β†’ SEZ supplies

    • Treat supplies as exports under SEZ and GST law:
      • Use LUT/Bond or IGST-paid route for zero-rated supplies under IGST Act.
    • As on date, no export duty is leviable on DTAβ†’SEZ supplies post Adani & TUF Metallurgical, unless Parliament amends the law.
    • Maintain:
      • SEZ-endorsed ARE-1/ARE-3/Invoice,
      • SEZ Approval for authorised operations,
      • Proof of receipt by SEZ unit/developer,
      • Documentation for drawback/rebate/ITC refunds.

    6.2 For SEZ β†’ DTA clearances

    • Treat every clearance as import into India, i.e.:
      • File Bill of Entry (except narrow cases under Rule 48(3)),
      • Pay BCD, SWS, ADD, safeguard, IGST, etc. as applicable.
    • Carefully review Notification 50/2017-Cus to see if a specific concessional rate or nil duty applies for your product.

    6.3 When goods are returned from SEZ to DTA

    • Don’t assume automatic re-import exemption under Notification 45/2017-Cus.
    • Examine:
      • Who is the exporter in the original DTAβ†’SEZ transaction?
      • Who is the importer of record for the SEZβ†’DTA return?
      • Was the original export under drawback/rebate/bond satisfying Notification 45/2017 conditions?
    • Consider whether it is more defensible to:
      • Treat the return as a fresh import via Section 30, claim ITC of IGST, or
      • Structure via physical export & re-import outside SEZ, if commercially feasible.

    6.4 Litigation strategy pointers

    • For pending or prospective demands of export duty on DTAβ†’SEZ:
      • Rely on Adani Power (SC, 2025) + TUF Metallurgical (AP HC, 2025) + earlier revision orders & Circular 29/2006 to argue absence of charging provision.
    • For SEZβ†’DTA issues:
      • Accept Section 30 as the charging section, but explore:
        • Product-specific exemptions in 50/2017-Cus,
        • Eligibility under 45/2017-Cus,
        • Valuation disputes (transaction value vs. cost-plus, related party, etc.).

    7. Suggested Case Citations

    You can safely incorporate and discuss the following real cases:

    1. Union of India v. Adani Power Ltd & Ors, Supreme Court of India, 2025
      • Issue: Levy of export duty on supplies from DTA to SEZ.
      • Held: No export duty can be charged on DTAβ†’SEZ; Section 12 Customs Act is not attracted when goods do not physically leave India.
    2. TUF Metallurgical Pvt Ltd v. Union of India & Ors, Andhra Pradesh High Court, 2025
      • Issue: Validity of fifth proviso to Rule 27(1) SEZ Rules imposing export duty on DTAβ†’SEZ supplies.
      • Held: Proviso is ultra vires the SEZ Act; there is no charging provision for export duty on such supplies in the Act.
    3. Lupin Ltd v. Commissioner of Customs, CESTAT Delhi, 2023
      • Issue: Duty on goods returned from SEZ to DTA, and applicability of Notification 45/2017-Cus.
      • Held: Customs duty under Section 30 SEZ Act is payable on SEZβ†’DTA clearances; Rule 48(3) cannot override the charging section; re-import exemption must strictly comply with Notification conditions.
    4. Government of India Revision Orders (e.g., F.No. 198/57/16-RA)
      • Issue: Treatment of supplies from DTA to SEZ as export; availability of benefits and levy of duty.
      • Held: DTAβ†’SEZ supplies are exports by legal fiction for granting benefits, not for imposing export duty; no export duty is payable in absence of a charging provision.
    5. Various High Court & CESTAT decisions following Adani / TUF Metallurgical
      • These further reinforce that export duty cannot be levied on DTAβ†’SEZ supplies solely on the basis of SEZ rules or notifications, without an explicit charging section.

    8. Conclusion

    The law on customs duty in DTA–SEZ transactions is now considerably clearer:

    • DTA β†’ SEZ
      • Treated as exports under SEZ/GST law for benefits.
      • No export duty under Customs Act, in the absence of a clear charging provision (post-Adani & TUF Metallurgical).
    • SEZ β†’ DTA
      • Treated as imports into India.
      • Section 30 SEZ Act read with Customs Tariff applies; customs duty is payable unless validly exempted.
    • DTA β†’ SEZ β†’ DTA (returns)
      • Require careful planning to determine whether re-import benefits (45/2017-Cus) are available or whether full customs duty must be paid under Section 30.

    For businesses, this is the right time to:

    • Re-examine historic export duty demands on DTAβ†’SEZ transactions,
    • Re-align contracts and documentation for SEZβ†’DTA clearances, and
    • Proactively plan transaction structures around the current judicial position and key customs notifications discussed above.

    Listen to this on our #YouTube Channel

    Source: CBIC, Supreme Court, Andhra Pradesh High Court, CESTAT

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  • DGFT issues Clarification on Redemption of Advance Authorisations Impacted by Rule 96(10) of CGST Rules in context to the Supreme Court judgement

    DGFT issues Clarification on Redemption of Advance Authorisations Impacted by Rule 96(10) of CGST Rules in context to the Supreme Court judgement

    ALO Law Office- IDT Tax I Arbitration I Litigation

    Date: 12.11.2025

    DGFT issues Clarification on Redemption of Advance Authorisations Impacted by Rule 96(10) of CGST Rules in context to the Supreme Court judgement

    This Article has been written by Shri Ravi Shekhar Jha, Advocate 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 Directorate General of Foreign Trade (DGFT), under the Ministry of Commerce & Industry, Government of India, has issued Policy Circular No. ​ 07/2025-26 dated November 11, 2025, addressing concerns related to the redemption of Advance Authorisations (AAs) impacted by the erstwhile Rule 96(10) of the Central Goods and Services Tax (CGST) Rules, 2017. This circular provides much-needed clarity for exporters and trade members who faced challenges due to the earlier provisions of Rule 96(10) and its implications on imports made between October 13, 2017, and January 9, 2019. ​

    Background

    Rule 96(10) of the CGST Rules, prior to its amendment, restricted the refund of IGST paid on exports in cases where exporters or their suppliers availed specified duty exemptions under Customs Notification No. ​ 79/2017-Customs. This created hurdles for exporters seeking redemption of their Advance Authorisations during the specified period. ​

    To address these issues, the DGFT had earlier issued Notification No. 33/2015-2020 on October 13, 2017, modifying Para 4.14 of the Foreign Trade Policy (FTP) 2015-2020. ​ This notification extended exemptions from payment of duties, including IGST and Compensation Cess, for physical exports under the AA Scheme, subject to a pre-import condition. ​ However, the pre-import condition was later withdrawn through DGFT Notification No. ​ 53/2015-2020 on January 10, 2019, following the issuance of Customs Notification No. ​ 01/2019-Customs.

    Supreme Court Judgment and Subsequent Actions

    Union of India & ORS.  ​vs Cosmo Films Limited

    The Supreme Court of India set aside the Gujarat High Court’s judgment, which had declared the ‘pre-import condition’ in the Foreign Trade Policy (FTP) and customs notifications as arbitrary and unreasonable. The court upheld the validity of the ‘pre-import condition’ introduced by Notification No. 79/2017-Customs and Notification No. ​ 33/2015-2020, stating that it was within legislative discretion and not arbitrary. It emphasized that tax exemptions and refunds are statutory privileges, not constitutional rights, and that economic policies can involve phased implementation and experimentation. The court also ruled that the removal of the ‘pre-import condition’ through a later notification could not be applied retrospectively. ​ While allowing the Revenue’s appeals, the court directed the respondents (exporters) to claim refunds or input tax credit for duties paid during the interim period, subject to verification by the jurisdictional commissioner. ​

    The Hon’ble Supreme Court, in its judgment dated April 28, 2023, upheld the Revenue’s appeal and directed that affected parties be allowed to claim refunds or input tax credit (ITC) wherever applicable. ​ In response, the Customs Authorities issued Circular No. ​ 16/2023-Customs on June 7, 2023, and the DGFT followed suit with Trade Notices No. ​ 07/2023-24 and No. ​ 27/2023, issued on June 8, 2023, and September 25, 2023, respectively. ​

    Key Clarifications in Policy Circular No. ​ 07/2025-26

    To further streamline the process and address exporters’ concerns, the DGFT has clarified the following points regarding the issuance of Export Obligation Discharge Certificates (EODC):

    1. Payment of IGST in Cash: Exporters who paid IGST in cash at the time of clearing import consignments under the AA Scheme during the specified period will not face any hindrance in obtaining their EODC, provided all other requirements are met. ​
    2. Non-Availing of Duty Exemptions: Exporters who did not avail exemptions from IGST, Compensation Cess, or other levies (except Basic Customs Duty) are eligible for EODC issuance. ​
    3. Compliance with Pre-Import Conditions: Exporters who adhered to the prescribed pre-import and other procedural requirements under the AA Scheme will not face delays in EODC issuance. ​

    Conclusion

    This clarification by the DGFT is a welcome move for exporters who were impacted by the earlier provisions of Rule 96(10) of the CGST Rules. ​ By addressing the concerns and providing clear guidelines, the government has ensured smoother processes for the redemption of Advance Authorisations. Exporters are encouraged to review the circular and ensure compliance with the outlined conditions to facilitate the timely issuance of their EODCs.

    Source: DGFT, Supreme Court

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  • Supreme Court Quashes Customs Proceedings Against Subsequent Purchaser in Porsche Import

    Supreme Court Quashes Customs Proceedings Against Subsequent Purchaser in Porsche Import

    ALO Law Office- IDT Tax I Arbitration I Litigation

    Date: 10.11.2025

    Supreme Court Quashes Customs Proceedings Against Subsequent Purchaser in Porsche Import

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

    In a landmark judgment delivered on November 27, 2024, the Supreme Court of India ruled in favor of Appellant, quashing the High Court’s decision and the proceedings initiated against him under the Customs Act, 1962. The case revolved around the import of a Porsche Carrera car and the subsequent demand for unpaid customs duty amounting to Rs. ​ 17,92,847.

    Background of the Case

    The case began in 2002 when a Porsche Carrera car was imported by one Seller. ​ The car was later sold to another individual in 2003, and subsequently purchased by Appellant in October 2004. In 2007, the Customs Department issued a Show-Cause Notice to the importer, the first possessor, and the appellant, alleging deliberate misdeclaration of the car’s model and year of manufacture, tampering with the chassis number, and evasion of customs duty. ​

    The Commissioner of Customs, Cochin, confirmed the demand for customs duty and ordered the confiscation of the car, offering an option for redemption upon payment of a fine and the differential duty. ​ However, Appellant challenged this order before the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), which ruled in his favor, stating that he was a bona fide purchaser and not involved in the import or misdeclaration of the car. ​

    High Court’s Decision ​

    The Customs Department appealed the CESTAT ruling before the High Court of Kerala, which overturned the Tribunal’s decision. The High Court held that the payment of short-levied customs duty was a necessary consequence of redeeming the confiscated goods under Section 125 of the Customs Act. ​ It ruled that Appellant, as a subsequent purchaser, was liable to pay the customs duty. ​

    Supreme Court’s Judgment

    Aggrieved by the High Court’s decision, Appellant approached the Supreme Court. After hearing arguments from both sides, the Supreme Court ruled in favor of the appellant. The Court observed the following key points:

    1. Definition of Importer: The Court clarified that under Section 2(26) of the Customs Act, an importer includes the owner or beneficial owner of goods only during the period between importation and clearance for home consumption. ​ Since Appellant was not the importer and had no involvement in the importation process, he could not be held liable for customs duty. ​
    2. Ownership Under Motor Vehicles Act: The Court noted that the car was not registered in Appellant’s name under the Motor Vehicles Act, 1988. ​ Legally, the ownership remained with the original importer. ​ Therefore, Choksey could not be considered the owner of the vehicle under Section 125 of the Customs Act. ​
    3. Liability of Possessor: The Court rejected the argument that Appellant, as the possessor of the car, could be held liable for customs duty. ​ It emphasized that liability under Section 125(1) arises only when the owner of the goods is unknown, which was not the case here. ​

    Final Verdict

    The Supreme Court quashed the High Court’s judgment, the Show-Cause Notices, and all proceedings against Appellant, restoring the CESTAT’s order in his favor. The Court clarified that the Customs Department could proceed against the original importer, who remained the legal owner of the car. ​

    Key Takeaways

    This judgment underscores the importance of distinguishing between importers and subsequent purchasers under the Customs Act. ​ It also highlights the interplay between the Customs Act and the Motor Vehicles Act in determining ownership and liability. ​ The ruling serves as a significant precedent for cases involving bona fide purchasers and customs duty disputes.

    Conclusion

    The Supreme Court’s decision in favor of Appellant is a victory for justice and a reminder of the importance of adhering to legal definitions and procedures. It reinforces the principle that subsequent purchasers cannot be held liable for the actions of importers, provided they had no involvement in the importation process. ​ This case will undoubtedly have a lasting impact on similar disputes in the future.

    Source: Supreme Court

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  • Supreme Court on the Arbitration & Conciliation Act, 1996 (A&C)

    Supreme Court on the Arbitration & Conciliation Act, 1996 (A&C)

    ALO Law Office- IDT Tax I Arbitration I Litigation

    Date: 08.11.2025

    Supreme Court on the Arbitration & Conciliation Act, 1996 (A&C)

    This Article has been written by Shri Ravi Shekhar Jha, Advocate 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.

    Recent Landmarks, Contract Act interplay, and what they mean for commercial arbitration ​

    1) The statutory frame (A&C Act Γ— Contract Act)

    • Consent & separability. Arbitration rests on contract formation under the Indian Contract Act, 1872 (offer/acceptance, free consent, lawful object/consideration). The arbitration clause is separable from the underlying contract (A&C s.16); even when the main contract is challenged, the clause can survive.
    • Party autonomy, neutrality, minimal court intervention. A&C ss.5, 7, 8, 11, 12, 18, 34, 37; the 2015/2019/2021 amendments tightened neutrality (s.12(5)), nudged institutional appointments (s.11), narrowed β€œpublic policy” and β€œpatent illegality” review (s.34), and introduced a fraud/corruption stay to enforcement (s.36(3) proviso, 2021).
    • Contract Act β€œfilters”. Clauses that are unconscionable or in restraint of legal proceedings (s.23/s.28) are policed through A&C provisions on equal treatment (s.18) and independence (s.12). The Court now reads constitutional equality into appointment schemes in standard-form public contracts.

    2) Landmark Supreme Court judgments (late-2023 to 2025)

    A. 7-Judge Bench β€” In Re: Interplay between Arbitration Agreements under the A&C Act, 1996 and the Indian Stamp Act, 1899 (13 Dec 2023)

    Issue. Is an arbitration clause in an unstamped/insufficiently stamped agreement void/inoperative at the pre-referral stage?
    Held. Not void ab initio. Non-stamping affects admissibility, not existence/validity of the arbitration agreement. Courts at s.8/s.11 stage should ordinarily refer to arbitration; any stamp duty objection can be cured in the arbitral process. This overruled N.N. Global (2023).
    Arguments noted. Parties relying on Contract Act theory of consensual bargain + separability urged that stamping is a fiscal curable defect; the opposing side pressed β€œno contract without stamp”.
    Principles. (i) separability; (ii) kompetenz-kompetenz; (iii) pro-arbitration minimal judicial review at referral stage.
    Commercial impact. No more pre-arbitration derailments on technical stamp objections; faster references and lower front-end risk.

    B. Constitution Bench β€” Cox & Kings Ltd v SAP India Pvt Ltd (6 Dec 2023): Group of Companies doctrine (GoC)

    Issue. Can non-signatory affiliates be bound to arbitration by conduct/participation in a single economic transaction?
    Held. Yes, in limited circumstances. The Court clarified and affirmed the GoC doctrine: look at common intention, participation in negotiation/performance, composite transaction, and mutuality of claims. Not a back-door to rope in every affiliate; it’s a fact-intensive inquiry.
    Arguments. Pro-GoC: modern commerce uses multi-entity structures; consent can be inferred from conduct. Anti-GoC: Contract Act requires privity/express assent.
    Principles. Consent remains the lodestar; Contract Act privity yields where objective indicia of consent exist.
    Impact. Better alignment of multi-party disputes with a single forum, fewer parallel litigations.

    C. Five-Judge Bench β€” Unilateral appointments & curated panels (8 Nov 2024; 2024 INSC 857)

    Issue. Are clauses letting one party (often a PSU) unilaterally appoint the sole arbitrator or restrict the other party to a curated panel valid?
    Held. No. The Court reaffirmed TRF/Perkins and disapproved Voestalpine/CORE to the extent they enabled one-sided control. Such clauses offend equality (A&C s.18) and independence (s.12(5)), and may be unconscionable under Contract Act s.23.
    Arguments.

    • Challengers: one-sided curation breeds bias; equality must exist at appointment.
    • Defenders: party autonomy permits agreed procedures; state needs vetted panels.
      Principles. Procedural equality and neutrality are non-derogable; waiver only post-dispute (s.12(5) proviso).
      Impact. Standard PSU/SoE clauses need re-drafting; expect more court-appointed neutrals or truly joint panel mechanisms.

    D. Section 34: set-aside, severance & limited β€œmodification” themes β€” Gayatri Balasamy v ISG Novasoft Technologies Ltd & batch (30 Apr 2025)

    Questions. Scope of s.34 intervention; can courts partially set aside (sever), correct clerical/computational errors, and adjust post-award interest without re-writing merits?
    What the Court did.

    • Re-maps s.34: public policy confined; patent illegality for domestic awards only; no merits re-appreciation.
    • Severance is intrinsic to s.34(2)(a)(iv) proviso β€” courts may excise only the bad part and preserve the rest.
    • Recognizes a narrow window to correct clerical/computational errors and, in limited circumstances, to recalibrate post-award interest while remaining within s.34 guardrailsβ€”without converting s.34 into an appellate re-hearing.
      Arguments.
    • For a wider power: β€œthe greater power to set aside includes the lesser to vary”; comparative seats allow calibrated fixes.
    • Against: Project Director, NHAI v M. Hakeem (2021) disallowed modification; only legislature can expand remedies.
      Takeaway. Courts cannot re-adjudicate, but may sever invalid portions and make limited corrections that keep within s.34’s text (not a merits review). Useful in construction/infra awards with multiple segregable claims.

    3) How these rulings interlock with the Contract Act in commercial disputes

    • Consent & privity (ss.10, 13–19, 23). Cox & Kings aligns modern privity analysis with objective consent across a composite commercial matrix; affiliates who negotiated/performed or benefitted can’t later plead non-signatory status when the facts show assent by conduct.
    • Unconscionability/public policy (s.23). The 2024 Constitution Bench grounds neutral appointments in equality and public policy; boilerplate β€œsole arbitrator by employer/PSU” provisions risk invalidation as procedurally unconscionable.
    • Illegality/fraud (ss.23, 17). The 2021 amendment to s.36(3) A&C permits automatic stay of enforcement if the arbitration agreement/contract/award appears induced by fraud/corruptionβ€”a direct cross-over from Contract Act invalidating factors into the enforcement stage.
    • Stamping is not contract-killing. The 7-Judge ruling treats stamping as a curable admissibility issue, preventing Contract Act β€œexistence” objections from being misused to stall references.

    4) Practical drafting & litigation playbook (post-2023)

    1. Appointment clauses. Avoid one-party curation or unilateral appointment. Provide joint nomination or neutral institution with open panels. Cite s.12(5)/s.18; anything else risks being struck down.
    2. Stamping hygiene. Don’t panic at referral: proceed to arbitration and cure stamping as directed; don’t burn time at s.11 on fiscal technicalities.
    3. Multi-party deals. If affiliates are integral to negotiation/performance, record their role; that evidence supports GoC joinder later.
    4. Section 34 strategy. Frame challenges narrowly: target jurisdictional overreach or non-arbitrable slices, seek severance of the bad portion, and limit prayer to clerical/interest corrections where appropriateβ€”do not invite re-hearing on facts.

    5) One-page case synopses (for ready citation)

    (i) 7-JB Stamping β€” In Re: Interplay… (2023)

    Summary. Unstamped/under-stamped agreements do not kill arbitration clauses; referral courts should not conduct mini-trials on stamp duty. Stamp issues can be addressed after reference.
    Ruling. Referral allowed; earlier contrary view overruled.
    Key law. A&C ss.8, 11, 16; Stamp Act; separability/kompetenz.

    (ii) Group of Companies β€” Cox & Kings v SAP India (2023)

    Summary. Clarifies when non-signatories can be bound: intention, participation, composite transaction, interdependence of agreements.
    Ruling. GoC affirmed; fact-intensive consent test.
    Key law. A&C s.7; Contract Act consent doctrines.

    (iii) Unilateral appointment/panels β€” Constitution Bench (2024 INSC 857)

    Summary. Unilateral appointment or one-sided curated panels violate equality (s.18) and independence (s.12(5)); ties into Contract Act s.23 unconscionability.
    Ruling. Such clauses impermissible; TRF/Perkins reaffirmed; contrary strands disapproved.
    Key law. A&C ss.11, 12(5), 18, Fifth/Seventh Schedules; Art.14.

    (iv) Section 34 mapping β€” Gayatri Balasamy v ISG Novasoft & batch (2025)

    Summary. Re-states narrow s.34 review; permits severance of invalid portions (s.34(2)(a)(iv) proviso), clarifies limited clerical/computation fixes and tailored post-award interest adjustments, without merits re-appreciation.
    Ruling. Severance and limited corrections allowed; no appellate rehearing.
    Key law. A&C ss.31, 33, 34, 37, 43; Ssangyong line preserved.

    6) Legislative touchpoints to keep in view

    • 2015 (Act 3 of 2016): neutrality via s.12(5) (Seventh Schedule), narrowed public policy, patent illegality ground for domestic awards.
    • 2019: institutional appointments (s.11 route), timelines refined.
    • 2021: s.36(3) provisoβ€”automatic stay where prima facie fraud/corruption taints the agreement/contract/award. These provisions colour s.8/s.11 referrals and s.34/s.36 enforcement arguments.

    Bottom line for commercial arbitration

    The Court has de-clogged referrals (stamping), modernised consent analysis (GoC), insisted on neutral appointments (no unilateral/panel strangleholds), and stabilised s.34 practice (sever the bad; correct the obvious; do not retry the case). Draft your clauses to share appointment power, anticipate multi-entity realities, and litigate s.34 with surgical precision.

    References (primary):

    • In Re: Interplay between Arbitration Agreements… (7-JB, 13 Dec 2023).
    • Cox & Kings Ltd v SAP India Pvt Ltd (CB, 6 Dec 2023).
    • Constitution Bench on unilateral appointments & curated panels (8 Nov 2024; 2024 INSC 857).
    • Gayatri Balasamy v ISG Novasoft Technologies Ltd & batch (30 Apr 2025) β€” s.34/severance/limited corrections.

    Source: Supreme Court

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  • Supreme Court Clarifies Timing and Applicability of Customs Duty Notifications

    Supreme Court Clarifies Timing and Applicability of Customs Duty Notifications

    ALO Law Office- IDT Tax I Arbitration I Litigation

    Date: 05.11.2025

    Supreme Court Clarifies Timing and Applicability of Customs Duty Notifications

    This Article has been written by Shri Ravi Shekhar Jha, Advocate 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 Supreme Court of India recently delivered a landmark judgment in the case of Union of India & Ors. vs. M/S G S Chatha Rice Mills & Anr. ​ (Civil Appeal No. 3249 of 2020), which has significant implications for importers, exporters, and the government. The case revolved around the timing and applicability of a notification issued under Section 8A of the Customs Tariff Act, 1975, which increased customs duty on goods imported from Pakistan to 200%. ​ This judgment provides clarity on how notifications under the Customs Tariff Act are to be applied and whether they can have retrospective effect. ​

    Background of the Case

    On February 14, 2019, a terrorist attack occurred in Pulwama, leading to heightened tensions between India and Pakistan. ​ In response, the Indian government issued a notification under Section 8A of the Customs Tariff Act on February 16, 2019, increasing the customs duty on all goods originating from or exported by Pakistan to 200%. ​ The notification was published in the e-Gazette at 20:46:58 hours on the same day. ​

    However, earlier on February 16, 2019, several importers had already presented their bills of entry for home consumption under Section 46 of the Customs Act, 1962. ​ These bills of entry were self-assessed based on the prevailing rate of duty before the notification was issued. ​ The customs authorities later sought to reassess these bills of entry and apply the enhanced duty rate retroactively, leading to a legal challenge by the importers. ​

    Key Legal Questions ​

    The case raised several important legal questions:

    1. When does a notification under Section 8A of the Customs Tariff Act take effect? ​ Is it from the time it is published in the e-Gazette or from the start of the day it is issued? ​
    2. Can such a notification apply retrospectively to transactions completed earlier on the same day? ​
    3. Does the principle of disregarding fractions of a day apply to notifications under Section 8A? ​

    Supreme Court’s Observations

    The Supreme Court, in its detailed judgment, addressed these questions and provided clarity on the timing and applicability of notifications under Section 8A of the Customs Tariff Act.

    1. Nature of the Notification ​

    The Court clarified that a notification issued under Section 8A is a form of delegated legislation. ​ While it has the force of law, it is not equivalent to a “Central Act” or “Regulation” as defined under the General Clauses Act, 1897. ​ Therefore, Section 5(3) of the General Clauses Act, which allows Central Acts to take effect from the expiration of the previous day, does not apply to such notifications. ​

    2. Timing of Notification ​

    The Court emphasized that the notification under Section 8A takes effect only from the time it is published in the e-Gazette. ​ In this case, the notification became effective at 20:46:58 hours on February 16, 2019. It cannot apply to bills of entry presented before this time. ​ The Court noted that the exact time of publication in the e-Gazette is critical in determining the enforceability of such notifications, especially in the era of electronic governance. ​

    3. Retrospectivity

    The Court held that Section 8A does not empower the Central Government to issue notifications with retrospective effect. ​ The enhanced rate of duty can only apply prospectively, starting from the time of publication. ​ The Court emphasized that delegated legislation does not have retrospective effect unless explicitly authorized by the parent statute. ​

    4. Reassessment

    The Court ruled that the customs authorities could not reassess bills of entry that were presented and self-assessed before the notification was published. ​ The rate of duty applicable at the time of presentation of the bill of entry is final and cannot be altered retroactively. ​ The Court also clarified that the power of reassessment under Section 17(4) of the Customs Act cannot be used to apply a new rate of duty to transactions that were completed before the notification was issued. ​

    Key Takeaways from the Judgment

    1. Publication Time Matters: The Supreme Court highlighted the importance of the exact time of publication in the e-Gazette for determining the enforceability of notifications. ​ In this case, the notification took effect only from 20:46:58 hours on February 16, 2019, and could not apply to transactions completed earlier that day. ​
    2. No Retrospective Effect: Delegated legislation, such as notifications under Section 8A, cannot have retrospective effect unless explicitly authorized by the parent statute. ​ This ensures that importers are not unfairly penalized for transactions completed before the notification was issued. ​
    3. Legal Certainty for Importers: The judgment reinforces the principle that importers are entitled to rely on the rate of duty in force at the time of presenting their bills of entry. ​ This provides much-needed transparency and predictability in tax administration. ​
    4. Impact of Electronic Governance: The Court acknowledged the evolving role of technology in regulatory governance. ​ With the shift to electronic systems for filing bills of entry and publishing notifications, the timing of publication has become a critical factor in determining the applicability of laws. ​

    Implications of the Judgment

    This judgment has far-reaching implications for importers, exporters, and the government. It ensures that importers are not subjected to sudden and retrospective changes in duty rates, protecting their rights and fostering trust in the legal system. It also emphasizes the importance of precise timing in the publication of notifications, particularly in the digital age. ​

    For the government, the judgment serves as a reminder to ensure timely publication of notifications and to avoid retrospective application of laws unless explicitly authorized by the parent statute. It also highlights the need for clear and consistent regulatory frameworks that align with modern technological advancements. ​

    Conclusion

    The Supreme Court’s decision in this case is a significant step forward in ensuring fairness and clarity in the application of fiscal laws, particularly in the context of international trade. By upholding the principle of prospective application of delegated legislation and emphasizing the importance of publication timing, the Court has reinforced the need for transparency and predictability in tax administration. ​

    This judgment will undoubtedly serve as a precedent for future cases involving the timing and applicability of notifications under fiscal laws, ensuring that the rights of importers and exporters are protected while maintaining the integrity of the legal system.

    Source: Supreme Court

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  • β€œSC Reinforces Attorney-Client Privilege: Summoning Lawyers for Client Information Held Illegal”

    β€œSC Reinforces Attorney-Client Privilege: Summoning Lawyers for Client Information Held Illegal”

    ALO Law Office- IDT Tax I Arbitration I Litigation

    Date: 01.11.2025

    β€œSC Reinforces Attorney-Client Privilege: Summoning Lawyers for Client Information Held Illegal”

    This Article has been written by Shri Ravi Shekhar Jha, Advocate 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.

    Supreme Court Upholds Advocate-Client Privilege

    2025 INSC 1275 | In Re: Summoning Advocates by Investigating Agencies

    Background of the Case

    The Supreme Court of India, taking suo motu cognizance, addressed a fundamental question: Can investigating agencies summon an advocate to disclose information about a client or case he represents?

    The case originated when an advocate was summoned under Section 179 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023 to provide details about a bail matter he handled. The Gujarat High Court dismissed his plea, leading to the present intervention by the Supreme Court.

    Core Legal Issue

    Whether the investigating agency can compel an advocate to divulge client communications or case details β€” and if such summons violates Section 132 of the Bhartiya Sakshya Adhiniyam (BSA), 2023, which codifies the doctrine of attorney-client privilege.

    Key Legal Provisions Discussed

    • Section 132 BSA (2023): Protects confidential communication between advocates and clients.
    • Section 179 BNSS (2023): Empowers officers to summon witnesses.
    • Section 528 BNSS (2023): Provides for judicial oversight of such summons.
    • Articles 19(1)(g), 20(3), 21 & 22(1) – Constitutional protection of professional rights, liberty, and the right to legal counsel.
    • Rule 11, Bar Council of India Rules (1975): Mandates advocates to maintain confidentiality and act with integrity.

    Arguments & Perspectives

    Bar Associations & Advocates

    • Summoning advocates infringes the right to practice and attorney-client confidentiality.
    • Disclosure without client consent violates Section 132 BSA and may lead to professional misconduct.
    • Judicial oversight is essential before any summons is issued.

    State & Union of India

    • No advocate can be summoned merely for rendering a legal opinion or appearing for a client.
    • If an advocate participates in an illegal act, the privilege does not apply.
    • The statutory framework under BNSS & BSA already provides sufficient safeguards.

    Court’s Observations: Role of an Advocate

    The Court eloquently reaffirmed the noble role of lawyers as:

    • Guardians of liberty and officers of justice, not mere agents of clients.
    • Bound by trust, confidence, and confidentiality.
    • Essential to ensuring the rule of law and protection of rights.

    β€œThe position of trust the advocate occupies vis-Γ -vis his client cannot be put to test by any attempt to breach professional confidence.”
    β€” Justice K. Vinod Chandran

    Exceptions to Privilege under Section 132 BSA

    1. Client’s express consent.
    2. Communication made in furtherance of an illegal purpose.
    3. Observation of a crime or fraud during engagement.
    4. Non-professional communications (outside the course of legal engagement).
    5. In-house counsel exclusion β€” salaried corporate lawyers are not covered.

    Comparative Jurisprudence

    The Court cited global precedents to reinforce the principle:

    • Greenough v. Gaskell (UK, 1833) β€” Privilege essential for justice.
    • US v. Upjohn & Co. (1979) β€” Ensures full disclosure between client and lawyer.
    • Minister of National Revenue v. Duncan Thompson (Canada, 2016) β€” Privilege as a principle of fundamental justice.
    • Akzo Nobel v. European Commission (2010) β€” Exclusion of in-house counsel privilege.

    Judgment Highlights

    1. Investigating agencies cannot summon advocates merely for client or case details.
    2. Any summons must explicitly mention the exception invoked under Section 132 BSA.
    3. Prior written approval of a superior officer (not below the rank of Superintendent of Police) is mandatory.
    4. Advocates have a right to challenge such summons under Section 528 BNSS.
    5. Privilege extends to legal consultations, even outside pending cases.
    6. Documents & digital devices may be produced before a court, but confidentiality must be protected.

    Final Ruling

    β€œThe power to summon under Sections 175 & 179 BNSS is not the power to destroy the sanctity of attorney-client communications so long as the constitutional courts stand.”

    The Court held the summons issued in the present case illegal, as it sought β€œtrue details of facts and circumstances of the case” from the advocate β€” a direct violation of Section 132 BSA and the constitutional right to effective legal representation.

    Impact & Legal Significance

    • Reinforces Rule of Law and independence of the Bar.
    • Prevents coercive misuse of investigative powers.
    • Clarifies that privilege is client-centric, yet advocates can assert it.
    • Promotes judicial accountability through Section 528 BNSS oversight.
    • Draws a balance between investigation and professional confidentiality.

    Conclusion

    The Supreme Court’s 2025 decision in In Re: Summoning Advocates marks a watershed moment for the legal profession β€” reaffirming that the advocate-client relationship is sacred, and confidentiality is the cornerstone of justice. While exceptions exist for illegality and fraud, the Court’s message is clear:

    No lawyer should be made to betray the trust that forms the soul of legal representation.

    Source: Supreme Court

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  • Understanding the Legal Landscape of Importing Second-Hand Digital Multifunction Devices in India

    Understanding the Legal Landscape of Importing Second-Hand Digital Multifunction Devices in India

    ALO Law Office- IDT Tax I Arbitration I Litigation

    Date: 01.11.2025

    Understanding the Legal Landscape of Importing Second-Hand Digital Multifunction Devices in India

    This Article has been written by Shri Ravi Shekhar Jha, Advocate 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 importation of second-hand Digital Multifunction Devices (MFDs) has been a contentious issue in India, with various legal and regulatory challenges faced by importers. ​ Recent judgments from the High Court of Madras and the Supreme Court of India have provided clarity on the matter, particularly regarding the provisional release of these goods under Section 110A of the Customs Act, 1962. ​

    The Background

    MFDs, which are highly specialized equipment used for printing, copying, and scanning, have been subject to scrutiny by the Customs Department. ​ The primary concerns revolve around their categorization under import/export regulations, which classify items as prohibited, restricted, or freely importable. ​ While importers argue that MFDs are freely importable, the Customs Department and other government bodies, such as the Ministry of Electronics and Information Technology (MEITY) and the Ministry of Environment, Forest and Climate Change (MoEFCC), have raised objections, claiming that these goods are restricted or prohibited.

    Key Legal Developments

    Provisional Release Under Section 110A of the Customs Act ​

    Section 110A allows for the provisional release of seized goods during investigation or adjudication. ​ This provision aims to prevent financial losses and operational delays for importers while ensuring that the Customs Department can continue its investigation. ​ Importers are required to execute a bond or provide a bank guarantee to cover potential duties, fines, or penalties. ​

    Madras High Court Judgments ​

    In a landmark judgment dated 10th July 2025 (WP No. 29418 of 2024), the Madras High Court ruled in favor of importers, stating that MFDs qualify as Highly Specialized Equipment (HSE) under Clause 8 of the Compulsory Registration Order (CRO), 2021. The court emphasized that MFDs weighing more than 80 kg and imported in less than 100 units per model per year are exempt from the application of CRO, 2021. ​ The court also clarified that the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016, do not prohibit the import of MFDs, provided the required documents are submitted to the Customs Authorities.

    Tanish Enterprises vs Commissioner of Customs– WP No. 29418 of 2024

    The case involves importers seeking provisional release of second-hand digital multifunction devices (MFDs) detained by the Customs Department, which claimed the goods were restricted or prohibited. ​ The petitioners argued that MFDs are freely importable as Highly Specialized Equipment (HSE) under the Compulsory Registration Order (CRO), 2021, and Foreign Trade Policy (FTP), 2023. The court ruled in favor of the petitioners, directing the Customs Department to provisionally release the goods under Section 110A of the Customs Act, 1962, subject to conditions, while leaving the final adjudication open. ​

    Key Points:

    1. Issue: Whether second-hand MFDs are freely importable or restricted items requiring BIS certification and DGFT authorization. ​
    2. Petitioners’ Claim: MFDs qualify as Highly Specialized Equipment (HSE) and are exempt from restrictions under CRO, 2021, and FTP, 2023. ​
    3. Respondents’ Claim: MFDs are restricted or prohibited items requiring compliance with BIS, DGFT, and environmental regulations. ​
    4. Court’s Ruling: Directed provisional release of MFDs under Section 110A of the Customs Act, subject to conditions, and left final adjudication open. ​
    5. Precedents: Previous rulings by the Madras High Court, Telangana High Court, and Supreme Court upheld the free importability of MFDs. ​
    6. Provisional Release: Allows importers to access goods while investigations continue, preventing financial losses due to detention. ​

    ​HD Printers vs Commissioner of Customs- Writ Petition No.39010 of 2025 and W.M.P.No.43694 of 2025

    The case involves M/s. HD Printers, represented by its proprietor Mr. Jagan Kumar, filing a writ petition under Article 226 of the Constitution of India. The petitioner sought a Writ of Mandamus directing the Customs Department to allow the provisional release of 120 units of second-hand digital multifunction print and copying machines. ​ These machines were imported and submitted for clearance with the required documentation, including a report from a DGFT-approved Chartered Engineer. ​ The Customs Department had initially refused to release the goods, citing restrictions under the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 (HOW Rules). ​ However, the court referred to a previous judgment (W.P.No.29418 of 2024) and ruled that the case was covered under the earlier order, which allowed provisional release of similar goods. ​ The court directed the Customs Department to release the goods provisionally, subject to conditions and final adjudication. ​

    Key Points:

    1. Petitioner: M/s. HD Printers. ​
    2. Respondents: Commissioner, Additional Commissioner, and Deputy Commissioner of Customs, Chennai. ​
    3. Issue: Provisional release of 120 second-hand digital multifunction print and copying machines. ​
    4. Legal Basis: Article 226 of the Constitution of India and Section 110A of the Customs Act, 1962. ​
    5. Customs Department’s Argument: Machines classified as “other wastes” under HOW Rules, 2016, requiring prior permission for import. ​
    6. Court’s Decision: Directed provisional release of goods within four weeks, subject to conditions and final adjudication.
    7. Reference Case: W.P.No.29418 of 2024, which allowed provisional release of similar goods.
    8. Provisional Release Conditions: Execution of a simple bond for 100% of the enhanced value and payment of applicable GST.
    9. Final Adjudication: Customs Department retains the right to reverse the provisional release order during final adjudication. ​

    Maruti Enterprises vs Commissioner of Customs- WP No. 35987 of 2025

    The case involves M/s. Maruti Enterprises, represented by its proprietor Gautam Sharma, filing a writ petition under Article 226 of the Constitution of India for the issuance of a writ of mandamus. ​ The petitioner seeks the provisional release of two consignments of second-hand digital multifunction print and copying machines (MFDs) imported by them. ​ The petitioner claims that the goods were examined by a DGFT-approved Chartered Engineer, who provided a report to the Customs Officer. ​ Despite this, the Customs Department proceeded to forfeit the goods. ​ The petitioner argues that the issue is covered by a previous order of the Madras High Court, which allowed the provisional release of similar goods under Section 110A of the Customs Act, 1962.

    The court referred to the earlier judgment, which clarified that MFDs are not prohibited items under the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016, and are freely importable. ​ The court directed the Customs Department to grant provisional release of the goods within four weeks, subject to conditions as per the Customs Act, 1962. ​ The provisional release is subject to final adjudication, and the Customs Department retains the authority to reverse the provisional release order during the final adjudication process. ​

    Key Points:

    1. Petitioner: M/s. Maruti Enterprises. ​
    2. Respondents: Commissioner, Additional Commissioner, and Deputy Commissioner of Customs, Chennai. ​
    3. Issue: Provisional release of two consignments of second-hand digital multifunction print and copying machines. ​
    4. Legal Basis: Section 110A of the Customs Act, 1962, and Article 226 of the Constitution of India. ​
    5. Court’s Reference: Previous Madras High Court order in WP No. ​ 29418 of 2024, which allowed provisional release of similar goods.
    6. Court’s Decision: Directed the Customs Department to grant provisional release within four weeks, subject to conditions under the Customs Act, 1962. ​
    7. Provisional Release Conditions: Subject to final adjudication, and the Customs Department may reverse the provisional release order during the final adjudication process. ​
    8. No Costs: The court disposed of the writ petition without imposing any costs. ​

    Supreme Court Endorsement ​

    The Supreme Court upheld the decision of the Telangana High Court, which had granted provisional release of MFDs under similar circumstances. ​ This decision reinforced the stance that MFDs are freely importable and eligible for provisional release. ​

    Atul Commodities Pvt. Ltd. & Ors. vs Commissioner of Customs- Civil Appeal Nos. 5259/2007, 3226/2007 and 3977/2007

    The case revolves around whether second-hand photocopying machines imported by M/s Atul Commodities Pvt. ​ Ltd. in January 2005 were “freely importable” as capital goods under the Foreign Trade Policy (FTP) 2004-09 or required a license for import. ​ The Kerala High Court had ruled that such imports required a license, relying on policy circulars issued by the Directorate General of Foreign Trade (DGFT). ​ However, the Supreme Court held that the DGFT circulars were clarificatory and not amendatory, and only the Central Government had the authority to amend the FTP under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992. ​ The Court ruled that second-hand photocopying machines were “capital goods” and were freely importable under the FTP 2004-09. ​ The Supreme Court allowed the appeal of M/s Atul Commodities Pvt. Ltd. and dismissed the appeals filed by the Department. ​

    Key Points:

    1. Issue: Whether second-hand photocopying machines imported in January 2005 were freely importable as “capital goods” or required a license under the FTP 2004-09. ​
    2. High Court Decision: Kerala High Court ruled that the imports required a license, relying on DGFT circulars.
    3. Supreme Court Decision: The Supreme Court held that DGFT circulars were clarificatory, not amendatory, and only the Central Government could amend the FTP under Section 5 of the Foreign Trade Act, 1992. ​
    4. Outcome: The Supreme Court ruled that second-hand photocopying machines were “capital goods” and were freely importable under FTP 2004-09. ​ The judgment of the Kerala High Court was set aside, and the Tribunal’s decision favoring M/s Atul Commodities Pvt. ​ Ltd. was restored.
    5. Final Verdict: M/s Atul Commodities Pvt. ​ Ltd. won the case, and the Department’s appeals were dismissed. ​

    Recent Judgments

    Subsequent cases, such as WP No. ​ 39010 of 2025 and WP No. 35987 of 2025, have followed the precedent set by the Madras High Court and the Supreme Court. These judgments have consistently directed the Customs Department to grant provisional release of MFDs, subject to conditions such as the execution of a bond and payment of applicable GST.

    Notification on Special Economic Zones (Fourth Amendment) Rules, 2024 ​

    The document is a notification issued by the Ministry of Commerce and Industry, Department of Commerce, dated June 20, 2024. ​ It announces the Special Economic Zones (Fourth Amendment) Rules, 2024, which amend the Special Economic Zones Rules, 2006. ​ The amendments focus on rule 18, sub-rule (4), clause (d), specifically modifying the provisions related to reconditioning, repair, and re-engineering activities within Special Economic Zones (SEZs). ​

    Key changes include:

    1. Reconditioning, repair, and re-engineering are permitted under the condition that exports must have a one-to-one correlation with imports, and all processed products must be exported. ​
    2. Non-hazardous metal and metal-alloy wastes generated from these activities may be sold in the Domestic Tariff Area (DTA) under certain conditions:
    3. The waste must be in metallic, non-dispersible form without contaminants listed under Basel No. ​ B1010 in Part D of Schedule III of the Hazardous and Other Wastes Rules, 2016. ​
    4. Sale in the DTA is subject to payment of applicable customs duty and treated as import. ​
    5. Such sales are allowed only to actual users or traders authorized by the State Pollution Control Board on a one-time basis. ​
    6. Verification of specified documents by Customs Authority is required. ​

    The rules come into effect upon publication in the Official Gazette. ​ The notification also references previous amendments to the principal rules, last updated on June 6, 2024. ​

    Key Takeaways for Importers

    Provisional Release: Importers can seek provisional release of detained goods under Section 110A of the Customs Act, provided they fulfill the conditions set by the Customs Department. ​

    Exemption Criteria: MFDs that meet the criteria for HSE under Clause 8 of CRO, 2021, are exempt from the application of the order. ​ Importers must ensure their goods weigh more than 80 kg and are imported in less than 100 units per model per year. ​

    Compliance with HOW Rules: Importers must submit the required documents as per Schedule VIII of the HOW Rules to the Customs Authorities at the time of import. ​

    Final Adjudication: Provisional release does not guarantee the final outcome. ​ The Customs Department retains the authority to reverse the provisional release order during final adjudication. ​

    Conclusion

    The legal clarity provided by the courts is a significant relief for importers of second-hand MFDs. ​ However, it is crucial for importers to ensure compliance with all regulatory requirements and maintain proper documentation to avoid complications during the import process. As the legal landscape continues to evolve, staying updated on relevant judgments and notifications is essential for smooth business operations.

    Source: Supreme Court, Madras High Court

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  • Case Compilation on Indian Customs Law- Pro Industry cases

    Case Compilation on Indian Customs Law- Pro Industry cases

    ALO Law Office- IDT Tax I Arbitration I Litigation

    Date: 20.09.2025

    Case Compilation on Indian Customs Law- Pro Industry cases

    A Comprehensive compilation of Pro-Industry decided cases based upon CESTAT Tribunal, Supreme Court, and various High Court Decisions

    Prepared for Legal Professionals, Importers, Exporters, Customs Brokers, Freight Forwarders, and Industry Stakeholders.

    The document is designed with users in mind:

    – Legal Professionals and Advocates: to strengthen arguments, identify precedents, and analyze emerging jurisprudential trends.

    – Importers and Exporters: to understand compliance obligations, permissible reliefs, and potential liabilities in customs operations.

    – Customs House Agents and Freight Forwarders: to better appreciate their responsibilities, liabilities, and avenues for defense in proceedings.


    – Industry Stakeholders and Policy Analysts: to observe how judicial interpretation influences trade policy, customs procedures, and dispute resolution frameworks.


    The compilation thus stands as a practical handbook for trade compliance, litigation strategy, and informed decision-making.

    Link has been provided for Readers/Users for the source Judicial Orders, which directly opens the source PDF document.

    This Case Compilation has been written by Shri Ravi Shekhar Jha, Advocate 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.

    Sources Referred: CESTAT, Supreme Court, Delhi High Court, Madras High Court, Bombay High Court, High Court of Kerala, High Court of Punjab and Haryana

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  • Supreme Court of India Sets Aside Gauhati High Court Judgment on Time-Barred Tax Assessments​

    Supreme Court of India Sets Aside Gauhati High Court Judgment on Time-Barred Tax Assessments​

    ALO Law Office- IDT Tax I Arbitration I Litigation

    Date: 19.09.2025

    Supreme Court of India Sets Aside Gauhati High Court Judgment on Time-Barred Tax Assessments​ ​

    This Article has been written by Shri Ravi Shekhar Jha, Advocate 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 Supreme Court of India has overturned a judgment by the Gauhati High Court concerning the reassessment of time-barred tax cases under the Assam General Sales Tax Act, 1993. ​ The ruling, delivered on September 11, 2025, in the case of M/S Shiv Steels vs. The State of Assam & Ors. ​, has significant implications for the interpretation of fiscal statutes and the powers of tax authorities. ​

    Background of the Case

    The dispute revolved around the reassessment of tax liabilities for the years 2003-2004, 2004-2005, and 2005-2006. ​ Initially, the assessments were declared time-barred under Section 19 of the Assam General Sales Tax Act, 1993, which prescribes strict time limits for completing assessments and reassessments. ​ However, the revenue department later obtained the sanction of the Commissioner and invoked Section 21 of the Act to conduct fresh assessments within an extended limitation period. ​

    The appellant, M/S Shiv Steels, challenged the fresh assessments, arguing that they were invalid and beyond the permissible time limits. ​The Gauhati High Court dismissed the appellant’s writ petition, holding that the reassessment was valid under Section 21, as the Commissioner had granted prior sanction.

    Source: Supreme Court

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  • Supreme Court- Crude Degummed Soyabean Oil Not an Agricultural Product

    Supreme Court- Crude Degummed Soyabean Oil Not an Agricultural Product

    ALO Law Office- IDT Tax I Arbitration I Litigation

    Date: 16.09.2025

    Supreme Court- Crude Degummed Soyabean Oil Not an Agricultural Product​ ​ ​ Β 

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

    In a landmark judgment delivered on May 14, 2025, the Supreme Court of India allowed the appeal of Noble Resources and Trading India Private Limited (formerly Andagro Services Pvt. ​ Ltd.) against the Union of India and others. ​ The case revolved around the classification of crude degummed soyabean oil and its eligibility for duty exemption under the Export-Import (EXIM) Policy of 2002-2007. ​

    Background of the Case

    Noble Resources, a two-star export house, had imported crude degummed soyabean oil under a duty-free credit entitlement (DFCE) certificate issued as per the EXIM Policy. The company claimed exemption from customs duty under Notification No. ​ 53/2003-Cus. dated April 1, 2003. ​ However, the customs department denied the exemption, arguing that crude degummed soyabean oil was an agricultural product and thus excluded from the benefits of the notification. ​

    The Assistant Commissioner of Customs, in an order dated January 9, 2007, upheld the department’s view and demanded duties amounting to Rs. ​ 1,00,38,321. This decision was later affirmed by the Gujarat High Court in 2019. ​ Noble Resources then approached the Supreme Court.

    Source: Supreme Court

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