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CESTAT Chennai- Transaction Value Rejection and Penalty Imposition Declared Unsustainable in Customs Valuation Dispute
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 19.11.2025

CESTAT Chennai- Transaction Value Rejection and Penalty Imposition Declared Unsustainable in Customs Valuation Dispute

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 significant ruling, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Chennai, has set aside the impugned order in a case involving allegations of undervaluation of imported goods. The appeals, filed by M/s. Tirupati Chemicals, M/s. Shyam Petrochem Industries, M/s. Gokulka Trade Links Pvt. Ltd., and Mr. Anurag Agarwal, challenged the findings of the Commissioner of Customs, Tuticorin, and raised critical questions about the rejection of transaction value, penalties, and procedural lapses. The decision, pronounced on November 18, 2025, marks a pivotal moment in customs law and valuation disputes.

Background of the Case

The appellants, engaged in importing calcium grease, residual wax, and slack wax, faced allegations of undervaluation based on investigations conducted by the Directorate of Revenue Intelligence (DRI). The investigations included searches and seizures at the appellants’ offices and residences, but no incriminating evidence was found. Despite this, a common Show Cause Notice (SCN) was issued, proposing differential duty demands, penalties, and redemption fines.

The appellants contested the SCN, arguing that the allegations were based on third-party investigations and price databases, which did not constitute contemporaneous import prices. They also highlighted procedural lapses, including the failure to follow the Customs Valuation Rules, 2007, and the improper invocation of extended limitation periods.

Key Issues Addressed by CESTAT

The tribunal considered several critical issues, including:
1. Rejection of Transaction Value: The tribunal found that the rejection of transaction value was not in accordance with the Customs Valuation Rules, 2007. The reliance on price databases and third-party investigations lacked evidentiary support and did not meet the requirements of Rule 12.
2. Extended Limitation Period: The tribunal held that the invocation of the larger period of limitation was unjustified, as there was no evidence of suppression or misrepresentation by the appellants.
3. Penalties and Redemption Fines: Penalties under Sections 112, 114A, and 114AA were deemed unsustainable due to the lack of evidence supporting undervaluation or intentional use of false information.
4. Procedural Lapses: The tribunal criticized the adjudicating authority for failing to provide cogent reasons for rejecting the transaction value and for relying on inconclusive reports and unrelated investigations.
Observations and Rationale

The tribunal emphasized the importance of adhering to the Customs Valuation Rules, 2007, and the principles laid down by the Hon’ble Supreme Court in Century Metal Recycling Pvt. Ltd. vs. Union of India. It noted that the burden of proof for undervaluation rests with the Revenue, which failed to substantiate its allegations. The tribunal also highlighted the procedural safeguards under Rule 12, which require a proper inquiry and reasonable doubt before rejecting transaction value.

Outcome

The CESTAT set aside the impugned order and allowed the appeals with consequential benefits. The tribunal’s decision underscores the need for fairness, transparency, and adherence to legal procedures in customs valuation disputes.

Implications of the Ruling

This landmark decision has far-reaching implications for importers and the customs administration. It reinforces the principle that transaction value cannot be rejected arbitrarily and that procedural lapses can render an adjudication order unsustainable. Importers can take solace in the fact that the burden of proof lies with the Revenue, and any allegations must be backed by concrete evidence.

Conclusion

The CESTAT Chennai’s ruling is a testament to the importance of upholding the rule of law and ensuring justice in customs disputes. It serves as a reminder to authorities to adhere to established procedures and evidentiary standards while safeguarding the rights of importers. This decision will undoubtedly set a precedent for similar cases in the future, promoting a fair and transparent customs regime.

Source: CESTAT Chennai

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November 19, 2025
CESTAT Delhi Sets Aside Penalties and Confiscation in E-Rickshaw Import Classification Dispute
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 18.11.2025

CESTAT Delhi Sets Aside Penalties and Confiscation in E-Rickshaw Import Classification Dispute

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, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, has delivered a significant verdict in favor of M/s. Soni E Vehicle Pvt. Ltd., its Managing Director, Professional Exim (Customs House Agent), and its G-Card holder Appellant. The judgment, pronounced on November 17, 2025, has set aside the penalties imposed by the Principal Commissioner of Customs (Preventive), New Delhi, in a case involving the classification of imported goods.

Background of the Case

The case revolved around the import of various parts of e-rickshaws by M/s. Soni E Vehicle Pvt. Ltd., a manufacturer of e-rickshaws since 2013. The customs department alleged that the company had misclassified imported goods as spare parts of e-rickshaws instead of incomplete e-rickshaws in CKD/SKD condition, which attract higher customs duty. The department claimed that the company had evaded duty by misclassifying the goods under different Customs Tariff Headings (CTH).

The Principal Commissioner of Customs (Preventive) passed an order on August 20, 2020, confirming the reassessment of duty, imposing penalties under sections 112(a)(ii) and 114A of the Customs Act, and confiscating the goods with an option to pay redemption fines.

Key Allegations and Findings

The customs department alleged that the appellant had imported incomplete e-rickshaws in unassembled or disassembled condition, which should have been classified under CTH 8703 (complete e-rickshaws) instead of CTH 8708 (parts of e-rickshaws). The department relied heavily on an office order dated March 12, 2014, issued by the Joint Commissioner of Customs, which outlined the criteria for classifying e-rickshaws in CKD/SKD condition.

The Principal Commissioner concluded that the appellant had imported incomplete e-rickshaws based on the presence of three essential components—transmission, axle, and chassis—in the import consignments. Penalties were imposed on the appellants, including the Customs House Agent and its G-Card holder, for alleged complicity in the misclassification.

Tribunal’s Observations and Judgment 

After hearing the submissions from both sides, the Tribunal found several flaws in the Principal Commissioner’s order:
1. Misinterpretation of Office Order: The Tribunal noted that the office order dated March 12, 2014, clearly stated that if the motor and two other essential components were missing, the goods should be classified as parts under CTH 8708. Since the appellant did not import the motor, the goods could not be classified as incomplete e-rickshaws under CTH 8703.
2. Reliance on Unsubstantiated Evidence: The Tribunal observed that the Principal Commissioner relied on the statement of Anuj Sharma under section 108 of the Customs Act and a Chartered Engineer’s report without following the procedure under section 138B of the Customs Act, which requires examination and cross-examination of witnesses.
3. Presumption-Based Liability: The Tribunal held that liability cannot be based on presumptions, such as the number of parts imported being sufficient to assemble a fixed number of e-rickshaws. The conditions set out in the office order for classifying goods as e-rickshaws in CKD/SKD condition were not satisfied.
4. Extended Period of Limitation: The Tribunal ruled that the extended period of limitation under section 28(4) of the Customs Act could not be invoked for the 13 previous Bills of Entry, as there was no evidence of deliberate suppression of facts with the intent to evade duty.
5. No Misclassification: The Tribunal found that the appellant had correctly described the goods in the Bills of Entry, and the issue was merely one of classification. Therefore, penalties under sections 112(a)(ii) and 114A of the Customs Act were unwarranted.
Final Verdict

The Tribunal set aside the impugned order dated August 20, 2020, and allowed all four appeals filed by the appellants. The penalties imposed on M/s. Soni E Vehicle Pvt. Ltd., Appellant, Professional Exim, and Appellant were revoked, and the demands for duty under the 13 previous Bills of Entry were also quashed.

Key Takeaways

This judgment highlights the importance of adhering to established guidelines and procedures in customs cases. It underscores that liability cannot be based on presumptions or unsubstantiated evidence and that the extended period of limitation requires proof of deliberate suppression of facts with the intent to evade duty.

The decision is a significant win for importers, emphasizing the need for fair and transparent adjudication processes. It also serves as a reminder to customs authorities to ensure that their findings are based on concrete evidence and proper interpretation of rules and orders. This case will likely serve as a precedent for similar disputes in the future, reinforcing the principle that classification disputes should be resolved based on clear guidelines and not on assumptions.

Source: CESTAT Delhi

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November 18, 2025
CESTAT Hyderabad Overturns Foreign Currency Confiscation

ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 18.11.2025

CESTAT Hyderabad Overturns Foreign Currency Confiscation

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 Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Hyderabad, has ruled in favor of the appellant, in a case involving the confiscation of foreign currency. The judgment, delivered by Hon’ble Member (Judicial), highlights critical legal principles and procedural lapses that led to the decision.

Case Background

The case originated from an incident on September 30, 2000, when Appellant, an 80-year-old retired professor from JNTU Hyderabad, was intercepted by CISF officers at the airport while traveling to London. During a security check, foreign currency amounting to USD 36,405 was found in his hand baggage. The currency was inventoried and handed over to Customs Authorities, who subsequently seized it, alleging that it was smuggled.

The appellant explained that he had legally earned the foreign currency while working in the USA after his retirement and had brought it to India for personal expenses. He claimed to have kept the remaining currency in a Federal Bank locker and was carrying it back to the USA to address a family medical emergency. He also stated that he was unaware of the Reserve Bank of India (RBI) regulations regarding foreign currency.

Despite providing bank statements and other evidence to support his claims, the Adjudicating Authority ordered the absolute confiscation of the foreign currency and imposed penalties. The First Appellate Authority upheld this decision, prompting the appellant to approach the CESTAT.

Key Arguments and Legal Provisions 

The appellant’s counsel argued that the foreign currency was not concealed and was legally acquired during his stay in the USA. He cited Section 6(4) and (5) of the Foreign Exchange Management Act (FEMA), 1999, which allows individuals to hold, own, transfer, or invest in foreign currency acquired while residing outside India. Additionally, the counsel pointed out that foreign currency is not a “notified item” under Section 123 of the Customs Act, placing the burden of proof on the Revenue to establish that the currency was obtained from unauthorized sources.

Another critical argument was the lack of jurisdiction of the investigating officer. The appellant’s counsel highlighted that, as per Notification S.O. 1156(E) dated December 26, 2000, only officers of Customs and Central Excise not below the rank of Deputy Commissioner are authorized to investigate such cases under FEMA. In this case, the investigation and statement recording were conducted by a Superintendent of Customs, which violated the legal provisions.

Tribunal’s Observations and Final Order

After hearing both parties and reviewing the evidence, the Tribunal found that the investigation was conducted by an officer who lacked the jurisdiction to do so. It emphasized that while empowered officers can seek assistance from subordinates, substantive powers such as seizure and statement recording cannot be delegated.

The Tribunal also noted that the appellant had provided sufficient evidence to prove the legal acquisition of the foreign currency, including bank statements from the USA. It ruled that the Revenue failed to establish that the currency was smuggled or obtained from unauthorized sources. Furthermore, the Tribunal referred to previous judgments, including the CESTAT Kolkata Bench decision in Appellant Vs The Commissioner of Customs (Airport and Administration), Kolkata, which emphasized that absolute confiscation is unwarranted when the offense is not proven and the individual is unaware of the regulations.

In light of these findings, the Tribunal allowed the appeal and granted consequential reliefs to the appellant.

Key Takeaways

This judgment underscores the importance of adhering to procedural requirements and respecting the jurisdictional authority of investigating officers. It also highlights the need for the Revenue to provide concrete evidence when alleging smuggling or unauthorized acquisition of foreign currency. The case serves as a reminder that justice prevails when the rule of law is upheld. Appellant’s victory is a testament to the importance of presenting a strong legal defense and the role of the judiciary in ensuring fairness and justice. This decision will undoubtedly serve as a precedent for similar cases in the future, reinforcing the principles of due process and legal compliance.

Source: CESTAT Hyderabad

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November 18, 2025
High Court of Karnataka Upholds CESTAT Ruling and Dismisses Revenue Appeals in Customs Duty Dispute
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 17.11.2025

High Court of Karnataka Upholds CESTAT Ruling and Dismisses Revenue Appeals in Customs Duty Dispute

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.

On September 16, 2025, the High Court of Karnataka at Bengaluru delivered a significant judgment in the Customs Appeals (CSTA No. 4 of 2021, CSTA No. 1 of 2022, and CSTA No. 2 of 2022) filed by the Commissioner of Customs, Bengaluru, against M/s. 3M India Limited and its representatives. The appeals challenged the common Final Order Nos. 20343-20345/2020, dated March 20, 2020, passed by the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Bengaluru.

Background of the Case

The case revolved around the import of surgical and medical products, including Micropore surgical tapes, by M/s. 3M India Limited. The Directorate of Revenue Intelligence (DRI) alleged that the company had misdeclared these products as “Skin Barrier Micropore Surgical Tapes” to avail the concessional customs duty under Notification No. 21/2002-Cus, dated March 1, 2002. The notification provides a reduced duty rate for certain goods used in ostomy surgery cases.

The Revenue issued a show-cause notice under Section 28 of the Customs Act, 1962, invoking the extended limitation period under sub-section (4) of Section 28, which applies in cases of collusion, willful misstatement, or suppression of facts. The order-in-original imposed penalties and interest on M/s. 3M India Limited and its representatives, holding them liable for misdeclaration and ineligible duty exemptions.

M/s. 3M India Limited challenged the order before the CESTAT, which ruled that the imported products were not eligible for exemption under the notification but also held that the extended limitation period was not applicable due to the lack of evidence of willful misstatement or suppression of facts. The Revenue subsequently filed appeals before the High Court.

Key Questions of Law

The High Court addressed several substantial questions of law, including:
1. Whether the Tribunal erred in accepting additional evidence during the appeal.
2. Whether the extended limitation period under Section 28(4) of the Customs Act was applicable.
3. Whether penalties under Section 114A of the Customs Act were justified.
4. Whether the judgment of the CESTAT Chennai Bench in a similar case was correctly decided.
5. Whether the respondent’s earlier consignments were cleared under self-assessment or physical examination.
High Court’s Findings

The High Court dismissed the appeals, providing detailed reasoning for its decision:
1. Acceptance of Additional Evidence: The Court found no merit in the Revenue’s objection to the Tribunal accepting additional evidence, as the evidence ultimately supported the Revenue’s case.
2. Extended Limitation Period: The Court upheld the CESTAT’s finding that the extended limitation period under Section 28(4) was not applicable. It emphasized that the threshold for invoking extended limitation is high and requires evidence of deliberate and willful misstatement or suppression of facts. The Court noted that the respondent had been importing similar products for years, and the Revenue had previously cleared these goods without objection, creating a reasonable belief that the exemption was valid.
3. Penalty Under Section 114A: Since the extended limitation period was not applicable, the corresponding penalty under Section 114A was also deemed unjustified.
4. Judgment of CESTAT Chennai Bench: The Court declined to comment on the correctness of the CESTAT Chennai Bench’s decision, as it was not under appeal in this case.
5. Self-Assessment vs. Physical Examination: The Court found no evidence of perversity in the CESTAT’s factual finding that earlier consignments were physically examined and cleared by the Revenue. It rejected the Revenue’s claim that the goods were cleared under self-assessment.
Conclusion

The High Court’s judgment underscores the importance of adhering to procedural requirements and evidentiary standards when invoking extended limitation periods under the Customs Act. It also highlights the significance of consistent past practices by the Revenue in determining the applicability of exemptions. This case serves as a reminder to both importers and the Revenue to ensure clarity and accuracy in declarations and assessments, as well as the need for robust evidence when alleging willful misstatement or suppression of facts. The dismissal of the Revenue’s appeals reinforces the principle that a mere change in interpretation or classification cannot retroactively constitute willful misstatement or suppression of facts.

Source: Karnataka High Court

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November 17, 2025
Madras High Court Quashes Customs Orders on Wheat Gluten Import Under DFIA
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 17.11.2025

Madras High Court Quashes Customs Orders on Wheat Gluten Import Under DFIA

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 Madras High Court, in a significant ruling on October 15, 2025, quashed multiple orders issued by the Additional Commissioner of Customs, Chennai II Commissionerate, regarding the import of Wheat Gluten under Duty-Free Import Authorisation (DFIA). The judgment, delivered by Honourable Justice, addressed a series of writ petitions filed by M/s. Parry Enterprises India Limited and M/s. Fame Shipping Agency, challenging the orders that denied duty exemption on imported Wheat Gluten.

Background of the Case

M/s. Parry Enterprises India Limited, engaged in importing and trading Wheat Gluten, and its licensed Custom Broker, M/s. Fame Shipping Agency, filed writ petitions against the Additional Commissioner of Customs. The dispute arose when the petitioners imported Wheat Gluten under DFIA, claiming exemption from customs duty as per a notification dated September 11, 2009. The DFIA was issued for the export of biscuits, and the petitioners argued that Wheat Gluten qualifies as Wheat Flour under the same classification.

The Customs Department, however, contended that Wheat Gluten is not covered under the DFIA license, which only allows the import of Wheat Flour. Consequently, the Department issued show-cause notices, demanding duty, cess, and penalties, and sought to confiscate the imported goods.

Petitioners’ Argument

The petitioners argued that the issue of whether Wheat Gluten qualifies as Wheat Flour had already been settled by the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) in multiple cases, including Uni Colloids Impex Pvt Ltd. vs. Commissioner of Customs (2014) and Unibourne Food Ingredients LLP vs. Commissioner of Customs, Mundra (2022). In these cases, CESTAT had consistently held that Wheat Gluten is classified as Wheat Flour with specific technical characteristics and is eligible for duty exemption under DFIA.

The petitioners contended that the Customs Department was bound by the decisions of CESTAT and could not take an independent view contrary to the established precedent.

Respondent’s Stand

The Customs Department argued that the petitioners were not entitled to the exemption as Wheat Gluten was not covered under the DFIA license. They further stated that the Department had not appealed against the CESTAT decisions due to monetary limits, but this did not preclude them from raising the issue in other cases. The Department also argued that the petitioners had an alternative remedy of appeal and questioned the maintainability of the writ petitions.

High Court’s Observations and Judgment

Justice rejected the Customs Department’s arguments and emphasized the importance of judicial discipline. The Court held that the Customs Department is bound by the decisions of higher appellate authorities, such as CESTAT, unless those decisions are overturned by a competent court. The Court referred to the Supreme Court’s judgment in Union of India vs. Kamlakshi Finance Corporation Ltd. (1991), which established that revenue officers must follow the orders of appellate authorities unreservedly.

The Court also dismissed the argument regarding the maintainability of the writ petitions, stating that the bar on entertaining writ petitions due to alternative remedies is not absolute, especially when the jurisdiction of the authority passing the orders is challenged.

Key Takeaways from the Judgment
1. Binding Nature of CESTAT Decisions: The Court reiterated that decisions of appellate authorities like CESTAT are binding on assessing officers unless overturned by a higher court.
2. Judicial Discipline: The judgment emphasized the importance of judicial discipline in ensuring consistency and fairness in the administration of tax laws.
3. Writ Petition Maintainability: The Court clarified that the availability of an alternative remedy does not bar the High Court from exercising its jurisdiction under Article 226 of the Constitution, particularly when the authority’s jurisdiction is in question.
4. Wheat Gluten Classification: The Court upheld CESTAT’s consistent stance that Wheat Gluten falls under the same classification as Wheat Flour and is eligible for duty exemption under DFIA.
Conclusion

This landmark judgment by the Madras High Court is a significant win for importers and exporters, as it reinforces the binding nature of CESTAT decisions and provides clarity on the classification of Wheat Gluten under DFIA. The ruling also underscores the judiciary’s role in ensuring that administrative authorities adhere to established legal precedents, thereby preventing undue harassment of businesses and ensuring consistency in the application of tax laws.

Source: Madras High Court

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November 17, 2025
CESTAT Kolkata Upholds Late Fine Waiver for Importer Amid COVID-19 and System Errors
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 17.11.2025

CESTAT Kolkata Upholds Late Fine Waiver for Importer Amid COVID-19 and System Errors

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 significant decision, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Eastern Zonal Bench, Kolkata, has upheld the order of the Commissioner of Customs (Appeals) to waive late fines imposed on M/s. Shalimar Wires Industries Limited. This ruling comes as a relief to the respondent, who faced challenges due to systemic errors and the unprecedented disruptions caused by the COVID-19 pandemic.

Background of the Case

M/s. Shalimar Wires Industries Limited, engaged in the importation of Polyester Monofilament Yarn and Polyamide (Nylon) Monofilament Yarn, filed four advance Bills of Entry on December 1, 2021, for consignments imported from the United Kingdom. However, due to the global pandemic and financial constraints, the company was unable to pay the duty on time. When they attempted to regularize the Bills of Entry in January 2022, they discovered that the entries were no longer available in the ICEGATE system due to a systemic error.

The Customs House Agent (CHA) was advised by ICEGATE to re-assess the Bills of Entry and file fresh ones. Consequently, new Bills of Entry were filed on January 19, 2022, but the system automatically imposed a late fine of ₹4,65,000/- for each case. The respondent requested a waiver of the late fine, citing the Supreme Court’s order in RE: COGNIZANCE FOR EXTENSION OF LIMITATION, which extended the limitation period due to the pandemic. Despite this, the Deputy Commissioner of Customs rejected the request for a full waiver, reducing the fine to the duty amount instead.

Decision by the Commissioner of Customs (Appeals) 

On appeal, the Commissioner of Customs (Appeals) ruled in favor of the respondent, setting aside the late fine. The Commissioner noted that the delay was caused by a systemic error in the ICEGATE system and the challenges posed by the COVID-19 pandemic. The Commissioner also highlighted the Supreme Court’s decision to extend the limitation period during the pandemic, which supported the respondent’s case.

Revenue’s Appeal to CESTAT 

The Revenue challenged the Commissioner’s decision, arguing that the late fine was automatically calculated by the EDI system and that the delay was due to the respondent’s inaction in regularizing the Bills of Entry within the stipulated 30-day period. They contended that the late fine was justified and should not have been waived entirely.

CESTAT’s Final Ruling

After hearing both sides, the Tribunal upheld the Commissioner of Customs (Appeals)’ decision to waive the late fine. The Tribunal observed that the disappearance of the advance Bills of Entry from the ICEGATE system was due to a systemic error, and the respondent could not be held accountable for this issue. Furthermore, the Tribunal acknowledged the challenges posed by the COVID-19 pandemic, referencing the Supreme Court’s ruling that extended the limitation period from March 15, 2020, to February 28, 2022.

The Tribunal concluded that the delay in filing the Bills of Entry was not due to any fault of the respondent and that the Commissioner (Appeals) had rightly set aside the late fine. Consequently, the appeals filed by the Revenue were rejected.

Key Takeaways
1. Systemic Errors and Accountability: The Tribunal emphasized that importers cannot be penalized for delays caused by errors in the customs system, such as the unavailability of advance Bills of Entry in the ICEGATE system.
2. Impact of COVID-19: The decision highlights the importance of considering the challenges posed by the pandemic, including financial constraints and operational disruptions, when assessing compliance with regulatory timelines.
3. Judicial Precedent: The Tribunal relied on the Supreme Court’s ruling on the extension of limitation periods during the pandemic, reinforcing the principle of fairness in extraordinary circumstances.
4. Role of Proper Officers: The Tribunal clarified that proper officers have the authority to waive late fines in cases where delays are not willful and are caused by genuine reasons.
Conclusion

This ruling by the CESTAT serves as a reminder of the importance of considering systemic errors and external factors, such as the COVID-19 pandemic, when enforcing regulatory compliance. It underscores the need for fairness and flexibility in addressing cases where delays are beyond the control of importers. The decision is a significant step in ensuring that businesses are not unduly penalized for circumstances outside their control, fostering a more equitable and supportive environment for trade and commerce.

Source: CESTAT Kolkata

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November 17, 2025
CESTAT Kolkata Overturns Rs. 56.7 Lakh Customs Duty Demand and Upholds Correct Classification
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 15.11.2025

CESTAT Kolkata Overturns Rs. 56.7 Lakh Customs Duty Demand and Upholds Correct Classification

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 significant ruling, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Eastern Zonal Bench, Kolkata, has delivered a favorable judgment for M/s. B.M. Jain & Sons Pvt. Ltd., a company engaged in the import of Dioctyl Phthalate (DOP). The case revolved around the classification of imported goods and the applicability of concessional duty rates under Notification No. 152/2009-CUS dated 31.12.2009.

Background of the Case

The dispute arose when the Directorate of Revenue Intelligence (DRI) alleged that the company had misdeclared Dioctyl Orthophthalate (Ortho DOP) as Dioctyl Phthalate (DOP) and classified it under Customs Tariff Heading (CTH) 29173920 to avail concessional duty benefits. The DRI issued a Show Cause Notice (SCN) demanding differential duty of Rs. 56,71,510/- along with interest and penalties, claiming that the goods should have been classified under CTH 29173200.

The Commissioner of Customs (Port) upheld the DRI’s findings, confirming the demand and imposing penalties. Aggrieved by this decision, M/s. B.M. Jain & Sons Pvt. Ltd. filed an appeal before the CESTAT.

Key Arguments by the Appellant 
1. Historical Classification: The appellant argued that they had been importing the same goods for years under CTH 29173920 without any objections from the Customs Department. They continued this classification even after the 2018 Budget, which deleted the specific tariff entry for Dioctyl Phthalate under CTH 29173920.
2. Scientific Classification: The appellant contended that the classification of goods should be based on their scientific and technical name, not commercial or market parlance. They emphasized that no samples or tests were conducted by the department to substantiate the claim that the goods were Dioctyl Orthophthalate.
3. Tariff Changes Post-Budget 2018: The appellant highlighted that after the 2018 Budget, the goods should still be classified under the new entry for Dioctyl isophthalate and Dioctyl terephthalate under CTH 29173920, as they continued to import the same product from the same supplier.
4. Finality of Bills of Entry: The appellant argued that all Bills of Entry were self-assessed and cleared under customs supervision. Since the department did not appeal against the final assessment of these Bills of Entry, the proceedings initiated through the SCN were invalid.
CESTAT’s Observations and Ruling

After hearing both sides, the Tribunal made the following observations:
1. Classification of Goods: The Tribunal held that the goods imported by the appellant were rightly classifiable under CTH 29173920, as there was no evidence to prove that the goods were Dioctyl Orthophthalate. The deletion of the tariff entry for Dioctyl Phthalate in the 2018 Budget did not imply that the goods should be reclassified under CTH 29173200.
2. Concessional Duty Benefits: The Tribunal confirmed that the appellant was eligible for the concessional duty benefits under Notification No. 152/2009-CUS dated 31.12.2009.
3. Lack of Evidence: The department failed to conduct tests or provide evidence to support its claim that the goods were misdeclared. The Tribunal emphasized that classification should be based on scientific and technical names, not market parlance.
4. Invalid Proceedings: The Tribunal referred to the Supreme Court judgment in ITC Limited v. CCE, Kolkata-IV [2019(368) E.L.T. 216(SC)] and held that without filing an appeal against the final assessment of the Bills of Entry, the proceedings initiated through the SCN were non-est.
Final Verdict

The Tribunal set aside the impugned order, ruling that the demand for differential duty, interest, and penalties was unsustainable. The appeal filed by M/s. B.M. Jain & Sons Pvt. Ltd. was allowed with consequential relief as per law.

Key Takeaways

This judgment underscores the importance of adhering to scientific and technical classifications in customs matters. It also highlights the significance of finality in the assessment of Bills of Entry and the need for substantial evidence to support allegations of misdeclaration. The ruling is a major relief for M/s. B.M. Jain & Sons Pvt. Ltd. and sets a precedent for similar cases in the future. It serves as a reminder to businesses and authorities alike to ensure proper procedures and evidence-based actions in customs disputes.

Source: CESTAT Kolkata

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November 15, 2025
Oppo Mobiles Wins Customs Duty Exemption Case on PCBA Components
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 14.11.2025

Oppo Mobiles Wins Customs Duty Exemption Case on PCBA Components

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 significant ruling, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), New Delhi, delivered its final verdict on the case of M/s Oppo Mobiles India Pvt. Ltd. vs. Principal Commissioner of Customs (Import) on November 13, 2025. This case revolved around the denial of customs duty exemption for the import of microphones and receivers used in the manufacture of Printed Circuit Board Assemblies (PCBA) for cellular mobile phones.

Background of the Case

M/s Oppo Mobiles India Pvt. Ltd., a leading manufacturer of cellular mobile phones, filed an appeal against the order dated June 15, 2020, passed by the Principal Commissioner of Customs, ACC (Imports), New Delhi. The order rejected Oppo’s claim for exemption from customs duty on microphones and receivers imported for PCBA manufacturing and imposed a demand for differential duty, interest, and penalties for the period between February 2, 2018, and July 6, 2019.

The appellant argued that microphones and receivers are integral parts of PCBA, which is used in the manufacturing of mobile phones. They claimed exemption under Serial No. 6 of Notification No. 57/2017-Customs, dated June 30, 2017, and its subsequent amendments. However, the department contended that microphones and receivers were excluded from the exemption under the amendment notifications issued on February 2, 2018, and April 2, 2018, and that the amendment notification dated July 6, 2019, was retrospective in nature.

Key Issues in the Case

The primary dispute revolved around whether microphones and receivers imported for PCBA manufacturing were eligible for customs duty exemption under the relevant notifications during the period from February 2, 2018, to July 6, 2019. The department argued that these items were excluded from the exemption, while Oppo maintained that the amendments did not alter the original exemption for microphones and receivers used in PCBA manufacturing.

Tribunal’s Observations and Ruling 

After a detailed examination of the case, the Tribunal made the following key observations:
1. Amendment Notifications Did Not Alter Serial No. 6: The Tribunal noted that the amendment notifications dated February 2, 2018, and April 2, 2018, did not modify Serial No. 6 of the original Notification No. 57/2017-Customs. Microphones and receivers imported for PCBA manufacturing were still eligible for exemption under this entry.
2. Retrospective Application of July 6, 2019 Notification: The Tribunal rejected the department’s claim that the amendment notification dated July 6, 2019, was retrospective. It emphasized that Section 25(4) of the Customs Act clearly states that notifications issued under Section 25(1) are prospective unless explicitly stated otherwise. The Tribunal also referred to the Tax Research Unit’s communication dated July 5, 2019, which confirmed the prospective nature of the notification.
3. Expert Opinion and Evidence: The Tribunal criticized the Principal Commissioner for relying on personal knowledge and information from the internet to conclude that microphones and receivers were not part of PCBA. It highlighted the importance of expert opinions and authentic evidence, such as the Chartered Engineer’s certificate submitted by Oppo, which confirmed that microphones and receivers are integral components of PCBA.
4. Precedents: The Tribunal referred to previous rulings, including Vivo Mobile India Pvt. Ltd. vs. Commissioner, Customs, New Delhi and InterGlobe Aviation Limited vs. Commissioner of Customs, New Delhi, to support its decision. These cases emphasized the prospective nature of notifications and the importance of expert evidence in determining the classification of goods.
Final Verdict

The Tribunal concluded that the amendment notifications dated February 2, 2018, and April 2, 2018, did not affect the exemption for microphones and receivers used in PCBA manufacturing. It also held that the July 6, 2019 notification was prospective and could not be applied to the disputed period. Consequently, the Tribunal set aside the Principal Commissioner’s order, including the demand for differential customs duty, interest, and penalties, and allowed Oppo’s appeal.

Key Takeaways

This landmark judgment underscores several critical aspects of customs law:
1. Importance of Notification Language: The Tribunal emphasized that the language of a notification determines its applicability. Unless explicitly stated, notifications under Section 25(1) of the Customs Act are prospective.
2. Role of Expert Evidence: The ruling highlighted the significance of relying on expert opinions and authentic evidence rather than personal knowledge or unverified information.
3. Impact on the Mobile Manufacturing Industry: The decision is expected to have a positive impact on mobile manufacturers, as it clarifies the scope of customs duty exemptions for components used in PCBA manufacturing.
This case serves as a reminder of the importance of precise interpretation of notifications and the need for robust evidence in customs disputes. It also reinforces the principle that amendments to notifications cannot be applied retrospectively unless explicitly stated.

Source: CESTAT Delhi

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November 14, 2025
CESTAT Allahabad Ruled in Favor of CMA CGM Logistics Park and Orders Refund of Cost Recovery Charges

ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 13.11.2025

CESTAT Allahabad Ruled in Favor of CMA CGM Logistics Park and Orders Refund of Cost Recovery Charges

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 Customs, Excise & Service Tax Appellate Tribunal (CESTAT) Regional Bench in Allahabad has ruled in favor of CMA CGM Logistics Park Dadri Pvt Ltd, granting them a refund of ₹3,13,16,626 paid as Cost Recovery Charges (CRC) for the period between April 2009 and November 2015. This decision marks a significant milestone in the ongoing debate surrounding the legality of CRC levied by the Customs Department.

Background of the Case

The case stems from CMA CGM Logistics Park Dadri Pvt Ltd’s role as a Custodian of the Container Freight Station (CFS) at Dadri, Uttar Pradesh, since 2005. The company had been paying CRC for customs staff deployed at its facility, as per CBEC Circular No. 52/97-CUS dated 17.10.1997. However, the appellant sought exemption from CRC payments, citing Circular No. 13/2009-CUS dated 23.03.2009, which allowed exemptions for certain custodians.

Despite repeated requests for exemption, the Customs Department granted relief only from November 3, 2015, leaving the period from April 2009 to November 2015 uncovered. This led CMA CGM Logistics Park Dadri Pvt Ltd to file a writ petition, which eventually resulted in the High Court of Allahabad granting them liberty to challenge the Commissioner of Customs’ order through a statutory appeal under Section 129A of the Customs Act, 1962.

Key Arguments and Tribunal Findings

During the hearing, the appellant’s counsel, argued that the exemption from CRC should be granted retrospectively from the date of the application, as supported by the Gujarat High Court’s decision in Adani Ports & Special Economic Zone Ltd vs Union of India. She emphasized that the exemption should not be limited to the date of the order but should cover the period from the application date.

The Tribunal also considered the Andhra Pradesh High Court’s ruling in CBEC vs GMR Hyderabad International Airport Limited, which declared the levy of CRC as ultra vires the Customs Act, 1962. The High Court had ruled that there was no express statutory provision under the Act authorizing the recovery of CRC, making the collection of such charges unlawful.

The Tribunal concluded that the impugned order passed by the Commissioner of Customs was unsustainable. It held that the appellant was entitled to a refund of all CRC payments made during the disputed period, as the levy of CRC was not supported by any statutory provision.

Implications of the Judgment

This judgment has far-reaching implications for custodians of Container Freight Stations, Inland Container Depots, and other facilities where customs staff are deployed. The Tribunal’s decision reinforces the principle that no charges or taxes can be imposed without explicit statutory authorization. It also sets a precedent for other custodians who may have been subjected to similar charges without legal backing.

Conclusion

The ruling in favor of CMA CGM Logistics Park Dadri Pvt Ltd is a significant victory for businesses operating in the logistics and freight sector. It underscores the importance of adhering to legal frameworks and provides clarity on the issue of Cost Recovery Charges. This decision not only ensures justice for the appellant but also paves the way for a more transparent and fair regulatory environment in the customs domain.

Source: CESTAT Allahabad

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November 13, 2025
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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November 12, 2025