Tag: #Bombay High Court

ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 09.02.2026

“Appeals- Decided cases related to Customs Advance Ruling”

​​ ​​  ​  ​ ​​ ​ ​

Summary: Customs Advance Ruling

This short Article will revolve around the Customs Advance Ruling and decided “Appeal” affirming the principle of natural justice and prevailing customs law.

The legal provisions dealing with advance rulings in Customs matters are contained in Chapter V-B of the Customs Act, 1962. This chapter was significantly revised through the Finance Act, 2018.

A new Section 28EA was introduced to establish the “Customs Authority for Advance Rulings (CAAR) through the Finance Act, 2018. This provision authorizes the Central Board of Indirect Taxes and Customs (CBIC) to appoint officers of the rank of Principal Commissioner or Commissioner of Customs as the Customs Authority for Advance Rulings, through a notification.

Further, the amended Section 28M states that the CAAR will follow procedures as prescribed by the government. In line with this, CBIC issued the Customs Authority for Advance Rulings Regulations under Notification No. 01/2021-Customs (N.T.) dated 04.01.2021, which was later amended by Notification No. 63/2022-Customs (N.T.) dated 20.07.2022.

These new regulations replaced the earlier 2005 Procedure Regulations of the Authority for Advance Rulings (Customs, Central Excise and Service Tax), which had previously governed jurisdiction, application formats, and procedural aspects of advance rulings under the law.

Jurisdiction:

The jurisdiction of the two authorities shall be determined as per below

S.No.	Customs Authority for Advance Rulings	Jurisdiction to hear applications for Advance Rulings (State-wise and Union territory-wise, etc.)
1	Customs Authority for Advance Rulings, New Delhi.	Jammu & Kashmir, Himachal Pradesh, Punjab, Chandigarh, Uttar Pradesh, NCT of Delhi, Haryana, Uttarakhand, Bihar, Jharkhand, West Bengal, Andaman and Nicobar Islands, Sikkim, Odisha, Rajasthan, Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Tripura and Ladakh.
2	Customs Authority for Advance Rulings, Mumbai.	Andhra Pradesh, Telangana, Karnataka, Kerala, Lakshadweep, Puducherry, Tamil Nadu, Gujarat, Dadra and Nagar Haveli and Daman and Diu, Maharashtra, Goa, Madhya Pradesh and Chhattisgarh.

Applicants from Outside India can also apply for an Advance Ruling under Regulation 6 (2) of the Customs Authority for Advance Rulings Regulations, 2021 but only to the Principal Bench in New Delhi. The Extract of sub-clause 2 is reproduced below-

“The jurisdiction shall be determined in terms of the address provided by the applicant while making the application, and the Authority for an applicant providing an address other than that of within the territory of India, shall be the Authority situated at ²[New Delhi.]”.

Statutory Provisions:

Customs Authority for Advance Rulings Regulations, 2021

Notification No. 01/2021-Cus (N.T.) dated 4-1-2021 amended by Notification No. 63/2022-Cus (N.T.) dated 20-7-2022. It came into effect from the date of publication in the official Gazette.

In exercise of the powers conferred by section 157 read with sub-section (1) of section 28H, sub-section (1) of section 28KA and sub-section (1) of section 28M of the Customs Act, 1962 (52 of 1962) and in supersession of the Authority for Advance Rulings (Customs, Central Excise and Service Tax) Procedure Regulations, 2005.

Section-28H: Application for Advance Ruling

(1) An applicant desirous of obtaining an advance ruling under this Chapter may make an application in such form and in such manner ¹[and accompanied by such fee] as may be prescribed, stating the question on which the advance ruling is sought.

(2) The question on which the advance ruling is sought shall be in respect of-

(a) classification of goods under the Customs Tariff Act, 1975 (51 of 1975);

(b) applicability of a notification issued under sub-section (1) of section 25, having a bearing on the rate of duty;

(c) the principles to be adopted for the purposes of determination of value of the goods under the provisions of this Act.

²[(d) applicability of notifications issued in respect of tax or duties under this Act or the Customs Tariff Act, 1975 (51 of 1975) or any tax or duty chargeable under any other law for the time being in force in the same manner as duty of customs leviable under this Act or the Customs Tariff Act;]

³[(e) determination of origin of the goods in terms of the rules notified under the Customs Tariff Act, 1975 (51 of 1975) and matters relating thereto.]

⁴[(f) any other matter as the Central Government may, by notification, specify.]

Regulation 2. Definitions. – In these regulations, unless the context otherwise requires-

(a) “Act” means the Customs Act, 1962 (52 of 1962);

(b) “authorized representative”, –

(i) in relation to an applicant means an authorized representative as defined in sub-section (2) of section 146A of the Act;

(ii) in relation to a Principal Commissioner or Commissioner, means a person –

(A) authorized in writing by the Principal Commissioner or Commissioner to act as an authorized representative; or

(B) appointed by the Central Government as authorized representative or authorized by the Central Board of Indirect Taxes and Customs to appear, plead and act for the Principal Commissioner or Commissioner in any proceeding before the Authority;

(c) “petition” means any petition of interlocutory, incidental or ancillary nature or representation filed in a pending or disposed of application;

(d) “Principal Commissioner or Commissioner”, in respect of an application, means-

(i) the Principal Commissioner or Commissioner of Customs, specified in the application; or

(ii) ¹[*  *  *  *  *];

(e) “Secretary” means an officer, not below the rank of Assistant Commissioner of Customs or Assistant Commissioner of Central Tax designated as Secretary by the ²[Authority];

(f) “section” means section of the Act;

(g) words and expressions used in these regulations and not defined but defined in the Act shall have same meanings respectively assigned to them in the Act.

Regulation 9. Appeal against advance ruling-

The Principal Commissioner or Commissioner ¹[is] authorized to file appeal against the advance ruling in terms of sub-section (1) of section 28KA.

Section 28KA: Appeal

(1) Any officer authorized by the Board, by notification, or the applicant may file an appeal to the ²[High Court] against any ruling or order passed by the Authority, within sixty days from the date of the communication of such ruling or order.

Provided that where the [High Court] is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the period so specified, it may allow a further period of thirty days for filing such appeal.

Appeals Jurisdiction lies with the High Court of the State where the Appellant is located or from the High Court of the State from where the Advance Ruling Application was filed. The High Courts jurisdiction is reproduced below again Authority wise.

S.No.	Customs Authority for Advance Ruling	Jurisdiction of Appeal against Advance Ruling in High Courts of the respective state as per below
1	CAAR New Delhi	Jammu & Kashmir, Himachal Pradesh, Punjab, Chandigarh, Uttar Pradesh, NCT of Delhi, Haryana, Uttarakhand, Bihar, Jharkhand, West Bengal, Andaman and Nicobar Islands, Sikkim, Odisha, Rajasthan, Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Tripura and Ladakh.
2	CAAR Mumbai	Andhra Pradesh, Telangana, Karnataka, Kerala, Lakshadweep, Puducherry, Tamil Nadu, Gujarat, Dadra and Nagar Haveli and Daman and Diu, Maharashtra, Goa, Madhya Pradesh and Chhattisgarh.

Appeals against Customs Authority for Advance Rulings (CAAR) orders are primarily governed by the Customs Act, 1962 (Section 28KA), requiring an appeal to be filed in the High Court within 60 days. While typically a statutory remedy, such orders can also be challenged under Writ Jurisdiction (Articles 226/227) on grounds of violation of natural justice, lack of jurisdiction, or for being arbitrary. 

Key Points:

• Statutory Appeal: Under Section 28KA of the Customs Act, 1962, any party (applicant or Principal Commissioner/Commissioner of Customs) aggrieved by the advance ruling can appeal to the High Court.
• Writ Jurisdiction (Article 226): Although a statutory remedy exists, High Courts may entertain a Writ Petition if the ruling is against principles of natural justice, the authority acted without jurisdiction, or if the ruling is illegal.
• Time Limit: The appeal or writ must typically be filed within 60 days from the date of communication of the ruling.
• Supreme Court Access: Further appeals against the High Court’s order can be made to the Supreme Court via Special Leave Petition (SLP) under Article 136 of the Constitution.
• Finality: The ruling is binding on the applicant and the customs authorities unless there is a change in law or facts. 

Writ jurisdiction is generally an exception used when statutory remedies are ineffective or not applicable, rather than a direct substitute for the statutory appeal process, according to legal precedents. 

There are few but important High Court decisions where parties challenged orders of the Customs Authority for Advance Rulings (CAAR) / earlier AAR (Customs) through writ petitions under Articles 226/227. Since CAAR is a quasi-judicial authority and the Act does not provide a statutory appeal, High Courts are the primary forum for challenge.

Key High Court Cases Challenging Customs Advance Rulings

Amazon Wholesale India Pvt. Ltd. vs Customs Authority for Advance Rulings (Delhi High Court, 07 August 2024)

1. Introduction

This judgment of the Delhi High Court deals with an important dispute relating to classification of smart devices under the Customs Tariff. The case arose from appeals filed by Amazon Wholesale India Pvt. Ltd. against advance rulings issued by the Customs Authority for Advance Rulings (CAAR).

At the heart of the dispute was a simple but legally significant question:
Are Amazon Echo devices merely speakers, or are they communication devices?

The answer to this question determined the applicable tariff heading and eligibility for customs duty exemption.

2. Background of the Dispute

2.1 Parties

• Appellant: Amazon Wholesale India Pvt. Ltd.
• Respondent: Customs Authority for Advance Rulings (CAAR)

2.2 Products Involved

The classification dispute concerned three Amazon devices:

• Echo Dot (5th Generation)
• Echo Dot (5th Generation with Clock)
• Echo Pop

Amazon approached CAAR to obtain certainty regarding tariff classification before import.

2.3 Decision of CAAR

CAAR classified the devices as loudspeakers under CTH 8518 22 10.

Amazon disagreed and argued that the devices should instead fall under CTH 8517 62 90, which covers equipment used for transmission and reception of data.

This difference in classification had major duty implications, which led Amazon to challenge the ruling before the Delhi High Court.

3. Core Legal Issue

The main question before the Court was:

What is the true nature of Amazon Echo devices?

Are they:

• Simple audio output devices (speakers), or
• Multifunction smart communication devices?

The answer depended on how customs law treats multifunction and composite machines.

4. Relevant Legal Provisions

The Court relied on several key provisions of customs law and tariff interpretation rules.

4.1 Customs Tariff Headings

Two competing entries were examined:

CTH 8517

• Covers devices used for receiving, converting and transmitting data, voice or images.

CTH 8518

• Covers loudspeakers, headphones and audio equipment.

The classification depended on which description better captured the real character of the devices.

4.2 Rules for Interpretation of Tariff

The Court applied the General Rules for Interpretation (GRI):

• Specific description prevails over general description.
• Composite goods must be classified based on their essential character.

4.3 Section Note on Composite Machines

A very important rule applied by the Court states that when a machine performs multiple functions, it must be classified according to its principal function.

This principle became the foundation of the entire judgment.

5. Key Legal Principles Applied

5.1 Principal Function Test

The Court emphasised that when a product performs several functions, classification must be based on its main purpose.

The Echo devices:

• Respond to voice commands
• Connect to the internet
• Communicate with cloud services
• Transmit and receive data

These features showed that the devices are primarily communication tools, not just speakers.

5.2 End Use Cannot Decide Classification

The Revenue argued that when disconnected from the internet, the devices behave like speakers.

The Court rejected this argument and clarified an important principle:

The way a product might be used cannot override its design and core functionality.

The Court observed that these devices were never intended to be used as ordinary speakers.

5.3 Recognition of Technological Convergence

The Court described the devices as examples of technological convergence.

This means one device performing the roles of multiple traditional devices such as:

• Speaker
• Assistant
• Communication device
• Information tool

Because of this convergence, it would be incorrect to classify them using outdated product categories.

5.4 Importance of Global Classification Consistency

India follows the global Harmonised System of Nomenclature (HSN).

The Court highlighted the need for classification to align with international practices in order to maintain uniformity in global trade.

6. Earlier Judgments Relied Upon

The Court relied on important Supreme Court and High Court precedents.

6.1 Carrier Aircon Case

The Supreme Court held that classification must depend on the primary function of the product, not the industry in which it is used.

This case reinforced the idea that end-use is not decisive.

6.2 Xerox India Case

This case involved multifunction printer-scanner-copier machines.

The Supreme Court ruled that such devices must be classified according to their dominant function.

This precedent strongly supported Amazon’s argument.

6.3 Earlier Amazon Echo Judgment (2023)

The Delhi High Court had already examined similar Echo devices earlier and held them to be communication devices.

The Court stated that this earlier decision was binding on CAAR.

7. Court’s Observations

7.1 CAAR Ignored Binding Precedent

The Court noted that the advance ruling was issued before the earlier High Court judgment on Echo devices.

Therefore, CAAR did not consider a binding precedent that directly addressed the issue.

7.2 Wireless Capability Not Enough for Speaker Classification

The government argued that the addition of the word “wireless” in the tariff heading for speakers supported classification under CTH 8518.

The Court disagreed and clarified that:

Just because a speaker can work wirelessly does not mean every wireless device is a speaker.

7.3 Real Nature of the Devices

The Court concluded that these devices are designed mainly to:

• Receive and process voice commands
• Communicate with cloud servers
• Transmit and receive data

Sound output is only one of many functions and not the dominant one.

8. Final Decision of the Court

The Delhi High Court ruled in favour of Amazon.

Key Outcomes

1. The advance rulings issued by CAAR were set aside.
2. The devices were held to be classifiable under CTH 8517 62 90.
3. Amazon was declared eligible for customs duty exemption under Notification No. 57/2017-Customs.

9. Key Takeaways from the Judgment

1. Smart Devices Are Communication Devices

Modern smart devices cannot be classified using outdated categories meant for traditional products.

2. Principal Function is the Deciding Test

When a product performs multiple functions, its main purpose determines classification.

3. Advance Rulings Must Follow Court Judgments

CAAR must follow decisions of the jurisdictional High Court.

4. Strengthening of Digital Economy Jurisprudence

The judgment reflects how customs law is adapting to new technology.

10. Conclusion

This decision is an important milestone in customs classification of smart technology products.

The Delhi High Court recognised the reality of modern digital devices and confirmed that smart speakers are far more than simple audio equipment.

The ruling provides clarity for importers and strengthens the legal framework for classification of multifunction technology products in India.

Amazon WholeSale Delhi High Court Judgement

“Delhi High Court Sets Aside Customs Authority Ruling on SFP Module Classification: A Case Analysis”

Case Title: Nokia Solutions and Networks India Private Limited vs. Customs Authority for Advance Rulings, New Delhi & Others

Case Number:
CUSAA 40/2025 & CM APPL. 4834/2025
CUSAA 41/2025 & CM APPL. 4835/2025

Case Summary:

The case involved two appeals filed by Nokia Solutions and Networks India Private Limited under Section 28KA of the Customs Act, challenging the rulings of the Customs Authority for Advance Rulings dated 26th September 2024. The primary issue was the classification of Small Form Factor Pluggable (SFP) modules—whether they should be classified as parts of machinery under Customs Tariff Heading (CTH) 8517 7990 or as apparatus/machines under CTH 8517 6290. The appellant argued that the issue was already settled by previous rulings of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) and the Supreme Court, which classified SFP modules as parts under CTH 8517 7990. The High Court reviewed the previous rulings and held that the impugned rulings were unsustainable, allowing the appeals.

Legal Principles Considered:

1. Principle of Res Judicata:

The court acknowledged that res judicata does not apply to taxation matters but emphasized that the classification of SFP modules had already been settled in previous rulings and accepted by the Department.

• Consistency in Classification:

The court stressed that differential classification of identical goods at different locations would undermine the purpose of the Customs Tariff Act and lead to unnecessary litigation.

Statutory Provisions Considered:

1. Section 28KA of the Customs Act: Governs appeals against rulings of the Customs Authority for Advance Rulings.
2. Customs Tariff Act, 1975: Specifically, the classification under CTH 8517 7990 and CTH 8517 6290.
3. Customs Notifications: Notification Nos. 24/2005 and 57/2017, which provide exemptions for goods classified under certain headings.

Case Citations Referred with Summary:

1. Commissioner of Customs-Mumbai (Air Cargo Import) vs. Reliance Jio Infocomm Ltd. (CESTAT Order dated 29th July 2022):
   1. The CESTAT Mumbai Bench upheld the classification of SFP modules as parts under CTH 8517 7090 (now 8517 7990). It emphasized that the goods were exempted from Basic Customs Duty under relevant notifications and rejected the Department’s attempt to classify them as “Other Machines” under CTH 8517 6290.
   1. The Supreme Court dismissed the Department’s appeal against this order on 27th February 2023, confirming the classification.
2. IBM India Private Limited vs. Commissioner of Customs (Import):
   1. The CESTAT Mumbai Bench ruled that SFP modules are classifiable under CTH 8517 7090 (now 8517 7990) and eligible for duty exemption under Notification No. 57/2017.
   1. The Supreme Court dismissed the Department’s appeal against this order on 6th January 2025.

Order Passed:

The High Court of Delhi set aside the impugned rulings of the Customs Authority for Advance Rulings dated 26th September 2024. It held that SFP modules are classifiable under Entry 8517 7990 and entitled to applicable exemptions. Both appeals were allowed, and all pending applications were disposed of.

Nokia Solutions and Networks India Private Limited- Delhi High Court Judgement  

Legal Analysis of Apple India Pvt Ltd vs. Customs Authority for Advance Rulings & Ors: A Case Study on Advance Rulings and Jurisdictional Challenges

Case Title: Apple India Pvt Ltd vs. Customs Authority for Advance Rulings & Ors.

Case Number: Writ Petition (L) No. 13340 of 2025

Case Summary:

The case revolves around the classification of Apple Watch Bands imported by Apple India Pvt Ltd. The petitioner challenged two orders:

1. CAAR Order (10 March 2025): Declined to entertain the renewal application for the Advance Ruling of 2016, which classified Apple Watch Bands under CTH 8517 7090, citing the pendency of a show cause notice issued by the 2nd Respondent on 27 December 2024.
2. Adjudication Order (25 March 2025): Issued by the Additional Commissioner of Customs, reclassifying the Apple Watch Bands under CTH 9113 2010 for the period 1 April 2021 to 22 December 2021, contrary to the 2016 Advance Ruling.

The petitioner argued that the 2016 Advance Ruling was valid and binding until 30 March 2025, and the show cause notice issued on 27 December 2024 was without jurisdiction. The petitioner also contended that the CAAR’s refusal to entertain the renewal application was based on an incorrect interpretation of Section 28-I(2)(a) of the Customs Act, 1962.

Legal Principles Considered:

Binding Nature of Advance Rulings: The court emphasized that an Advance Ruling remains valid and binding for the specified period unless explicitly revoked or modified.

1. Jurisdictional Challenges: The court examined whether the CAAR could decline to entertain a renewal application based on proceedings initiated after the application was filed.
2. Principles of Natural Justice: The court reiterated the importance of considering all contentions raised by the parties and providing a reasoned order.

Statutory Provisions Considered:

1. Section 28-I of the Customs Act, 1962: Governs the procedure for receiving and deciding applications for Advance Rulings, including renewal applications.
2. Section 28-I(2)(a): Specifies that the CAAR shall not allow an application where the question raised is already pending before any officer of customs, the Appellate Tribunal, or any court.

Case Citations Referred:

1. Hyosung Corporation vs. Authority for Advance Rulings (2016) 382 ITR 371: The Delhi High Court held that the question raised in an application for Advance Ruling must be pending before the relevant authority as of the date of filing the application, not the date of its consideration.
2. SRICO Projects Pvt Ltd vs. Telangana State Authority for Advance Ruling (2022) 106 G.S.T.R. 247 (Tel): The Telangana High Court ruled that proceedings initiated after the filing of an application for Advance Ruling cannot bar the authority from considering the application.
3. General Motors India Private Limited vs. State of Maharashtra (2024) 12 TMI 728 BHC: This Court held that the pendency of proceedings must be determined as of the date of filing the application for Advance Ruling.
4. Mohinder Singh Gill & Anr vs. The Chief Election Commissioner, New Delhi & Ors (1978) 1 SCC 405: The Supreme Court held that the validity of a statutory order must be judged based on the reasons mentioned in the order itself and cannot be supplemented by fresh reasons later.

Order Passed:

1. The CAAR’s order dated 10 March 2025, concerning the Apple Watch Bands, was quashed and set aside. The CAAR was directed to decide the petitioner’s renewal application dated 14 November 2024 afresh on its merits and in accordance with the law, ensuring compliance with the principles of natural justice.
2. The adjudication order dated 25 March 2025 was quashed and set aside. The matter was remanded to the 2nd Respondent for fresh disposal of the show cause notice dated 27 December 2024. The adjudicating authority was directed to consider all contentions raised by the petitioner, including the binding effect of the 2016 Advance Ruling and the impact of the decision in Isha Exim (2023 SCC OnLine Bom 2700).
3. All contentions of all parties were left open for consideration by the CAAR and the 2nd Respondent.

This case highlights the importance of adhering to statutory provisions governing Advance Rulings and the necessity of considering all contentions raised by parties in adjudication proceedings. It also underscores the principle that statutory orders must be judged based on the reasons explicitly stated within the order itself.

Apple India Pvt Ltd- Delhi High Court Judgement

Cases

•  Amazon Wholesale India Pvt. Ltd. v. CAAR, Delhi High Court (2024).

•  Apple India Pvt. Ltd. v. CAAR, Bombay High Court (2025).

•  Nokia Solutions & Networks India Pvt. Ltd. v. CAAR, Delhi High Court (2025).

Listen to this on our #YouTube Channel

Source: Delhi High Court, Bombay High Court

Disclaimer

Write to us at office@aadrikaalaw.com

Tel: +91-11-4999 2707 I +91-9999005379

www.aadrikaalaw.com