Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation
Date: 01.05.2026
CESTAT Bangalore Ruled on Proper Classification of Scientific Instruments under Customs Tariff Act
This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .
The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) Bangalore recently adjudicated a significant case involving ITC Limited and the classification of scientific instruments imported for research and development. The dispute centered on whether these instruments should be classified under Customs Tariff Heading (CTH) 9032 or 9027, impacting the applicable duties and compliance requirements.
Background of the Case
ITC Limited, a DSIR-certified research facility, imported a set of scientific instruments including a Monodisperse Aerosol Generator, Aerodynamic Particle Sizer, Electrical Neutralizer, and Aerosol Diluter. These instruments are integral to the physical and chemical analysis of aerosols, a process essential for ITC’s R&D activities. The company declared the goods under CTH 9027, which covers instruments for physical or chemical analysis, and paid the corresponding duties.
Customs Department’s Allegation
The Customs Department alleged mis-declaration, reclassifying the goods under CTH 9032, which pertains to instruments for measuring or controlling variables like temperature, pressure, or humidity. This reclassification led to a demand for differential duty, interest, and penalties under Section 114A of the Customs Act, 1962. The department also invoked the extended period of limitation, claiming suppression or willful misstatement by ITC Limited.
ITC Limited’s Defense
ITC Limited argued that:
The imported instruments function together as a system for physical and chemical analysis, not for measurement or control as defined under CTH 9032.
The goods were appropriately described and classified in the Bill of Entry, matching the supplier’s commercial invoice and HS code.
The issue was interpretational, not a case of suppression or willful misstatement.
The extended period of limitation was wrongly invoked, as there was no evidence of evasion or concealment.
Legal Provisions and Precedents
Chapter 90 of the Customs Tariff Act: CTH 9027 covers instruments for physical or chemical analysis, while CTH 9032 is for instruments measuring or controlling specific variables.
Chapter Note 3 and Section XVI Note 4: When a combination of machines contributes to a clearly defined function, classification should follow the function.
Supreme Court Precedents: Multiple judgments, including Pahwa Chemicals Pvt. Ltd. vs. CCE, emphasized that extended limitation requires proof of willful misstatement or suppression.
Tribunal’s Findings
The Tribunal found that:
The aerosol generator and related instruments are used for generating and analyzing aerosols, not for measurement or control as per CTH 9032.
The system does not operate in isolation and lacks mechanisms to measure or control parameters independently.
The classification under CTH 9027 is appropriate, and the department’s invocation of extended limitation was unsustainable.
The penalty and demand raised by the department were set aside.
Outcome
The appeal was allowed, and the impugned order was set aside. ITC Limited received consequential relief, affirming the correct classification under CTH 90278090.
Key Takeaways for Importers
Accurate Classification: Ensure goods are classified based on their actual function and use, supported by documentation.
Documentation: Maintain clear records, including commercial invoices and technical descriptions, to support classification.
Legal Awareness: Understand relevant tariff headings and legal notes to avoid disputes.
Responding to Allegations: In case of misclassification allegations, demonstrate bona fide intent and absence of suppression.
This case highlights the importance of precise classification and robust documentation in customs compliance for scientific instruments.
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation
Date: 28.04.2026
Special Provisions for Perishable and Prohibited Goods u/s 110 of the Customs Act, 1962
This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email idΒ intelconsul@gmail.com . Β
The Customs Act, 1962 is the cornerstone of Indiaβs border management, regulating the import, export, and handling of goods.
Over the years, the Government has issued a series of notifications to address the unique challenges posed by certain goods, especially those that are perishable, depreciate quickly, or are valuable and require special handling.
This article explains these notifications, their evolution, and the legal framework under Sections 110 and 110A of the Customs Act, with special reference to prohibited goods.
Evolution of Notifications: Goods Subject to Special Provisions
The Central Government, under Section 110(1A) of the Customs Act, periodically specifies goods that may be disposed of or handled differently due to their nature.
Photographic films, medicines, zip fasteners, gold/silver bullion/coin
Expanded scope
1993
7/93-Customs
Further amendments
Continued expansion
1995
10/95-Customs
Conveyance (vehicles)
Substitution
1996
12/96-Customs
Currency (Indian & Foreign)
Value concerns
1998
90/98-Customs
Ball bearings, cellular phones
Technological goods
2004
20/2004-Customs
Software, goods not provisionally released within one month
Digital / Procedural
2005
32/2005-Customs
Petroleum products, Red Sander
Environmental / Economic
2008
25/2008-Customs
Sandalwood
Valuable goods
These notifications ensure that such goods do not deteriorate or lose value while in customs custody.
Section 110 of the Customs Act, 1962: Seizure of Goods
Section 110 empowers Customs officers to seize goods suspected of being smuggled or violating customs laws.
Key Provisions
Seizure Authority β Officers may seize goods, documents, or items liable for confiscation.
Time Limits β Goods must be released or confiscation proceedings initiated within the prescribed period.
Special Provisions under Section 110(1A) β Goods specified by notification may be disposed of under special rules.
Disposal of Goods β Perishable, fast depreciating, or valuable goods may be disposed of to prevent loss.
Section 110A: Provisional Release of Seized Goods
Section 110A allows provisional release of seized goods, documents, or things subject to:
Payment of duty, penalties, or fines
Furnishing of security or bond
Other conditions imposed by Customs authorities
This provision helps importers and exporters minimize business disruption during pending proceedings.
Prohibited Goods under the Customs Act
Prohibited goods are those whose import or export is banned by law.
Examples
Dangerous drugs
Psychotropic substances
Certain wildlife products
Counterfeit currency
Goods banned for environmental or health reasons
Handling
Strict seizure and confiscation
Disposal as per Government procedure
Swift and secure handling
Conclusion
The Customs Act, through Sections 110 and 110A along with various notifications, provides a robust framework for managing perishable, valuable, and prohibited goods.
It safeguards Indiaβs borders, protects public health and safety, and prevents loss of value of goods in Customs custody.
Importers, exporters, and Customs officials should remain updated on these provisions to ensure compliance and efficient handling.
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation
Date: 14.04.2026
Customs Seizure Under Section 110 of the Customs Act, 1962
This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email idΒ intelconsul@gmail.com . Β
ββ ββ ββ β βββ β β
The Customs Act, 1962, governs the procedures for the seizure and provisional release of goods suspected to be liable for confiscation.ο»Ώο»Ώ This article delves into the legal framework, case summaries, and the importance of recording reasons to believe during the seizure process.
Legal Framework: Section 110 of the Customs Act, 1962
Section 110 of the Customs Act, 1962, empowers customs officers to seize goods if they have “reason to believe” that the goods are liable for confiscation.ο»Ώο»Ώ The provision also includes:
Sub-section (1): Allows the proper officer to seize goods if they have reason to believe the goods are liable for confiscation.
Proviso to Sub-section (1): If it is not practicable to seize the goods, the officer may serve an order on the owner, prohibiting them from removing, parting with, or dealing with the goods without prior permission.
Sub-section (2): Specifies that if no notice is issued under Section 124(a) within six months of seizure, the goods must be returned to the person from whom they were seized. This period can be extended by the Principal Commissioner or Commissioner of Customs for up to six additional months, provided reasons are recorded in writing.
Importance of “Reasons to Believe” in Seizure Cases
The phrase “reasons to believe” is a critical element in the seizure process under Section 110. It requires the proper officer to record valid reasons before seizing goods. This ensures transparency and accountability in the exercise of seizure powers.
Key Guidelines from Instruction No. 01/2017-Customs
The Central Board of Excise and Customs issued Instruction No. 01/2017-Customs on February 8, 2017, emphasizing:
Mandatory Recording of Reasons: Proper officers must pass an appropriate order (seizure memo/order) clearly mentioning the reasons to believe that the goods are liable for confiscation.
Panchnama Cannot Replace Seizure Memo: The Delhi High Court ruled that a panchnama, being a statement by witnesses, cannot be considered an order under Section 110.
Timely Issuance of Show Cause Notices: Even if goods are provisionally released, the stipulated time period for issuing show cause notices under Section 110(2) must be strictly adhered to.
4.Sheo Nath Singh v. Appellate Assistant Commissioner of Income Tax, Calcutta
Court Name:Β Supreme Court
Diary No:Β 379/1967
Summary:
The Supreme Court ruled that the Income-tax Officer’s reasons for issuing notices under Section 34(1-A) of the Income-tax Act, 1922, were insufficient and self-contradictory, failing to meet the statutory requirements.
The court clarified that “reason to believe” must be based on reasonable grounds and supported by relevant material, not mere suspicion or rumor, and that the Income-tax Officer would act without jurisdiction if these conditions were not met.
The courts have consistently emphasized that the recording of reasons to believe is a prerequisite for a valid seizure under Section 110.ο»Ώ Merely citing sections of the Customs Act without providing material information or evidence does not fulfill this requirement.ο»Ώ Additionally, panchnama documents, which are statements by witnesses, cannot substitute for a seizure memo.ο»Ώο»Ώ
Key Observations from Case Law:
Worldline Tradex Case: The panchnama is not an order under Section 110.
Krishna Kali Traders Case: Panchnama cannot be read into the seizure memo.
Ashoke Das Case: The absence of recorded reasons in the seizure memo renders it invalid.
Conclusion
The legal framework under Section 110 of the Customs Act, 1962, and subsequent judicial interpretations highlight the importance of adhering to procedural requirements during the seizure of goods. Proper officers must ensure that reasons to believe are clearly recorded in the seizure memo, and panchnama documents should not be used as a substitute for this requirement. Failure to comply with these guidelines can lead to the quashing of seizure memos, as demonstrated in the cases discussed above.
Source: CBIC, Delhi High Court, Patna High Court, Supreme Court
Aadrikaa Law Offices (ALO)- Customs I Trade Compliance I IDT Tax I Arbitration I Litigation
Date: 04.02.2026
βIntellectual Property Laws are protected under Indian Customs Border Control Lawsβ
Adv Ravi Shekhar Jha
This Article has been written by Advocate Ravi Shekhar Jha- BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.comor on his Mobile +91-9999005379.
ββ ββ β β ββ β
Summary: Customs and Intellectual Property Rights (IPRs)
This short Article provides an overview of the Indian Customs’ measures for protecting Intellectual Property Rights (IPRs) at the border. β It outlines the procedures, laws, and rules for IPR registration, enforcement, interdiction, determination, and disposal of infringing goods. β
Key Points
Types of IPRs Protected by Customs β
Trademarks Act, 1999 β
Patents Act, 1970 β
Geographical Indications of Goods (Registration and Protection) Act, 1999 β
Copyright Act, 1957 β
Designs Act, 2000 β
Customs Interdiction of Infringing Goods β
Legal Basis: Section 11 of the Customs Act empowers the Central Government to prohibit import/export of goods violating IPRs. β
Notification: Notification No. β 51/2010-Cus. (NT) prohibits the import of goods infringing IPRs. β
Conditions: Prohibition is subject to the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 enforced through M.F. (D.R.) Notification No. 47/2007-Cus. (N.T.) dated 8th May, 2007 as amended.
Rule 2. Definitions.
(a) “goods infringing intellectual property rights” means any goods which are made, reproduced, put into circulation or otherwise used in breach of the intellectual property laws in India or outside India and without the consent of the right holder or a person duly authorized to do so by the right holder;
(b) “intellectual property” means a copyright as defined in the Copyright Act, 1957, trade mark as defined in the Trade Marks Act,1999, 1 [* * * *] design as defined in the Designs Act, 2000 and geographical indications as defined in the Geographical Indications of Goods (Registration and Protection) Act, 1999;
(c) “Intellectual property law” means the Copyright Act, 1957, the Trade Marks Act,1999, 1 [* * * *] the Designs Act, 2000 or the Geographical Indications of Goods (Registration and Protection) Act, 1999;
(d) “right holder” means a natural person or a legal entity, which according to the laws in force is to be regarded as the owner of protected intellectual property right, its successors in title, or its duly authorized exclusive licensee as well as an individual, a corporation or an association authorized by any of the aforesaid persons to protect its rights.
Registration certificate or proof of ownership. β
Demand draft details/Online Payment through ICEGATE Portal/Payment Proof of INR 2000.00 only
Power of Attorney in the name of the Right Holder or the Authorized representative. β
Statement of exclusivity. β
Digital images of genuine and infringing goods. β
IEC code. β
Description of geographical indications (if applicable). β
Indemnity Bond
Protects Customs authorities from liability for detaining goods suspected of infringement. β
General Bond vs. Centralized Bond
General Bond: Requires consignment-specific bonds for each interdiction. β
Centralized Bond: A running bond applicable across India, with a single Bond Registration Number (BRN) for all rights registered by the rights holder. β
Detention of Suspected Infringing Goods β
Notification: Customs informs the importer and rights holder of the detention. β
Action by Rights Holder:
Join proceedings within 5 days. β
Inspect goods and take action within 10 working days (extendable by 10 more days). β
Provide necessary bonds and evidence of infringement.
Maximum Detention Period for deciding the matter: 10 working days for regular goods; 3 working days for perishable goods. (Rule 7)
Rule 11. Disposal of infringing goods:
(1) Where upon determination by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, it is found that the goods detained or seized have infringed intellectual property rights, and have been confiscated under section 111(d) of the Customs Act, 1962 and no legal proceedings are pending in relation to such determination, the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, shall, destroy the goods under official supervision or dispose them outside the normal channels of commerce after obtaining ‘no objection’ or concurrence of the right holder or his authorized representative :
Provided that if the right holder or his authorized representative does not oppose or react to the mode of disposal as proposed by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, within twenty working days after having been informed, or within such extended period as may have been granted by the Commissioner at the request of the right holder, not exceeding another twenty working days, he shall be deemed to have concurred with the mode of disposal as proposed by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be :
Provided further that the costs toward destruction, demurrage and detention charges incurred till the time of destruction or disposal, as the case may be, shall be borne by the right holder.
(2) There shall not be allowed the re-exportation of the goods infringing intellectual property rights in an unaltered state.
(3) The Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, may on his own, or at the request of the right holder, retain samples of goods infringing intellectual property rights prior to their destruction or disposal and provide the same to the right holder or importer if such samples are needed as evidence in pending or future litigation.
Rule 12. Exclusion of baggage and De-minimis Imports:
Goods of a non-commercial nature contained in personal baggage or sent in small consignments intended for personal use of the importer are not subject to the above Rules.
Ex Officio Action β
Customs can suspend clearance of goods on its own initiative if there is prima facie evidence of infringement. Or at the written request of the Rights holder, as the case maybe.
Rights holder must comply with recordable requirements within 5 days. β
Post-Detention Procedure
Show Cause Notice: Issued to the importer and shared with the rights holder. β
Adjudication: Includes importerβs reply and personal hearing. β
Confiscation: If goods are found infringing, they are confiscated. β
Disposal/Destruction of Infringing Goods β
Process: Confiscated goods are destroyed or disposed of outside normal commerce channels. β
Rights Holder’s Consent: Required for destruction/disposal. β
Samples: Provided to the rights holder upon request. β
Informing Customs of Infringing Consignments β
Rights holders can notify Customs via email, fax, or post at the relevant Customs Station or Risk Management Division. β
This Short Article serves as a comprehensive guide for rights holders, Customs officers, importers, and other stakeholders involved in IPR enforcement at Indian borders. 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.
On October 1, 2025, the Ministry of Finance (Department of Revenue) issued Notification No. 63/2025-Customs (N.T. β), introducing amendments to the earlier notification [No. β 26/2022-Customs (N.T.) β]. This notification, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii), brings significant changes to the Customs Act, 1962, particularly concerning Section 110 and its sub-sections. In this blog, we will delve into the details of the notification, explore the relevant sections of the Customs Act, and discuss case law related to Section 110.
Key Highlights of Notification No. 63/2025-Customs (N.T.) β
The notification amends the principal notification [No. β 26/2022-Customs (N.T.) β], which was originally published on March 31, 2022, and subsequently amended multiple times. β The latest amendments are as follows:
Amendments to Serial Number 6:
In column (3), item (vi) and its entries have been substituted with: “(vi) Sub-sections (1), (3), and (5) of Section 110”. β
Amendments to Serial Number 7:
In column (3), item (xiv) and its entries have been substituted with: “(xiv) Sub-sections (1), (3), and (5) of Section 110”. β
These changes clarify the applicability of specific sub-sections of Section 110 of the Customs Act, 1962, which deals with the seizure of goods, documents, and things. β
Latest amendment introduced through Notification No. 63/2025-Customs (N.T. β).
Circular No. β 07/2022-Customs
The Circular No. β 07/2022-Customs, issued by the Ministry of Finance, Government of India, on March 31, 2022, outlines amendments to the Customs Act, 1962, introduced through the Finance Act, 2022. β Key changes include modifications to Section 2(34) for assigning functions to customs officers, inclusion of officers from DRI, Audit, and Preventive formations under Section 3, and the insertion of new sub-sections (1A), (1B), (4), and (5) under Section 5 to clarify the assignment of functions and jurisdiction. A new Section 110AA has been added to ensure that the original officer retains jurisdiction for further actions after inquiries or audits.
Understanding Section 110 of the Customs Act, 1962 β
Section 110 of the Customs Act, 1962, outlines the provisions related to the seizure of goods, documents, and other items by customs authorities. The relevant sub-sections are as follows:
Sub-section (1): Empowers a proper officer to seize goods, documents, or things if there is a reasonable belief that they are liable for confiscation under the Customs Act.
Sub-section (3): Specifies the procedure for issuing a notice to the owner of the seized goods, requiring them to show cause why the goods should not be confiscated.
Sub-section (5): Provides the conditions under which seized goods may be released provisionally to the owner, subject to furnishing a bond or security.
These provisions ensure that customs authorities can take necessary action against goods suspected of violating customs laws while safeguarding the rights of the owners.
Sub-section (34) of Section 2 of the Customs Act, 1962 β
Sub-section (34) of Section 2 defines the term “proper officer”. It states: “Proper officer”, in relation to any functions to be performed under this Act, means the officer of customs who is assigned those functions by the Board or the Commissioner of Customs.”
This definition is crucial as it determines the authority of customs officers to act under various provisions of the Customs Act, including Section 110.
Overview of Sections 3, 4, and 5 of the Customs Act, 1962
Section 3: Officers of Customs This section specifies the classes of officers of customs, including Chief Commissioners, Commissioners, Joint Commissioners, Deputy Commissioners, Assistant Commissioners, and other officers. It establishes the hierarchy and roles within the customs department.
Section 4: Appointment of Officers of Customs Under this section, the Central Government is empowered to appoint officers of customs. It also allows the government to authorize certain officers to exercise the powers and discharge the duties of customs officers.
Section 5: Powers of Officers of Customs β Section 5 outlines the powers of customs officers, which include exercising authority under the Customs Act. β Sub-sections (1A), (4), and (5) of this section were referenced in the recent notification, emphasizing the delegation of powers to proper officers for specific functions. β
Case Law Related to Section 110: Proper Officer and Seizure of Goods
In M/s. Nikom Copper and Conductors Pvt. β Ltd. vs. Union of India and Others, the petitioner challenged the seizure of imported copper goods by the Directorate of Revenue Intelligence (DRI), alleging the seizure was illegal and lacked “reason to believe” as required under Section 110 of the Customs Act. β Bombay High Court ruled in favor of the petitioner, quashing the seizure memo and declaring the cancellation of amendments to the bills of entry invalid due to procedural violations. The Court ordered the release of the goods to the petitioner upon payment of duties and completion of formalities. β
Conclusion
The recent amendments introduced by Notification No. β 63/2025-Customs (N.T.) β aim to streamline the application of Section 110 of the Customs Act, 1962, by specifying the relevant sub-sections. β These changes reinforce the role of proper officers in ensuring compliance with customs laws while safeguarding the rights of individuals. Additionally, the provisions under Sections 3, 4, and 5 of the Customs Act provide a robust framework for the appointment and empowerment of customs officers.β
ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 31.08.2025
The Canon India Saga- The Judgement & the journey going forward
β β β β 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.
Introduction
The jurisprudence surrounding the powers of the Directorate of Revenue Intelligence (DRI) under the Customs Act, 1962 has undergone dramatic shifts in recent years. The Supreme Courtβs ruling in Canon India Pvt. Ltd. v. Commissioner of Customs (2021) appeared to decisively curtail DRIβs jurisdiction to issue show cause notices (SCNs) under Section 28. Yet, in Commissioner of Customs v. Canon India Pvt. Ltd. (2024 Review), the Court reversed course, validating DRIβs authority subject to statutory assignment. This oscillation, coupled with legislative intervention in 2022, has produced a recalibrated enforcement regime with profound implications for importers, exporters, and the Stateβs investigative machinery.
Canon India (Customs) β 2021 vs 2024
Item
2021 decision
2024 review decision
Case & date
M/s Canon India Pvt. Ltd. v. Commissioner of Customs, Civil Appeal No. 1827/2018 and batch (decided 9-Mar-2021)
Commissioner of Customs v. M/s Canon India Pvt. Ltd., Review Petition No. 400/2021 (judgment dated 7-Nov-2024)
Core question
Whether DRI officers are βthe proper officerβ competent to issue SCNs under S28(4) after clearance by jurisdictional customs officers.
Whether Canon-2021 erred; whether DRI and certain other officers are βproper officersβ for S28; validity/effect of later statutory changes/validations.
Holding (short)
DRI not βthe proper officerβ to issue S28(4) notices; SCNs by ADG-DRI set aside.
Review allowed; DRI are proper officers for S28 (subject to assignment via notifications). Canon-2021βs reasoning corrected; validation of past SCNs upheld.
Key statutory provisions discussed
S2(34) (definition of βproper officerβ); S6 (entrustment to other govt officers); S28(4) (extended-period SCN); linkage emphasized to S17 (assessment). Court read S28 power as confined to the officer who handled assessment/re-assessment.
S2(34) (incl. post-2022 text linking assignment to S5); SS3β5 (classes/appointment/powers of customs officers); S6 (distinct from S2(34)/S5 assignment); S17 & S28 (no mandatory inter-dependence for jurisdiction under S28); S110AA (inserted 2022; prospective scheme); S28(11) (Validation Act 2011); S97, Finance Act 2022 (validation of past actions).
Notifications & Circulars considered / reproduced
β’ Notif. 17/2002-Cus (N.T.), 07-03-2002 (appointing ADG-DRI as Commissioner of Customs). β’ Notif. 40/2012-Cus (N.T.), 02-05-2012 (assignment table incl. S28 to DC/AC and above). β’ Context: exemption Notif. 2005 + amending 15/2012 for DSICs (background facts).
Appointments / assignment β’ Notif. 19/90-Cus (N.T.), 26-04-1990 (DRI appointed as customs officers; later superseded). β’ Notif. 17/2002-Cus (N.T.), 07-03-2002 (superseding earlier; DRI appointments). β’ Notif. 44/2011-Cus (N.T.), 06-07-2011 (assigning βproper officerβ functions incl. SS17 & 28 to DRI); amendments: 53/2012, 43/2019; rescinded/superseded by 25/2022-Cus (N.T.) aligned with Finance Act 2022. β’ Notif. 40/2012-Cus (N.T.), 02-05-2012 (assignment table). β’ Notif. 60/2015-Cus (N.T.), 04-06-2015 (common adjudicating authorityβdelegation to Principal DG, DRI). Circulars β’ Circular 4/99-Cus, 15-02-1999 (DRI may issue SCNs in cases they investigate; adjudication by jurisdictional officers). β’ Circular 18/2015-Cus, 09-06-2015 (guidelines on common adjudicator after Notif. 60/2015). β’ Circular 44/2011-Cus, 23-11-2011 (referred to alongside 4/99).
Treatment of earlier case-law
Relied heavily on Sayed Ali (2011) to insist that the S28 βproper officerβ must be the officer vested with S17 assessment; read S6 as the only entrustment route.
Explains Sayed Ali did not involve DRI with proper assignments; treats its S17βS28 βlinkageβ as erroneous/obiter; sets aside Delhi HCβs Mangali Impex; affirms Bombay HCβs Sunil Gupta on S28(11) validation.
Reasoning snapshot
β’ Notif. 40/2012 issued under S2(34) was held ultra vires (since S2(34) only defines; entrustment must be under S6). β’ Thus ADG-DRI lacked authority to issue S28(4) SCN.
β’ Distinguishes assignment of βproper officerβ functions (S2(34) read with S5) from entrustment under S6 (for non-customs officers). β’ Confirms multiple proper officers can exist if functions are properly assigned by notification; no statutory need that the S28 officer must be the S17 assessor (pre-S110AA). β’ Notes post-2022 amendments (to SS2,3,5 and S110AA) and Section 97 validating earlier SCNs; upholds constitutionality of S97.
Outcome / effect
SCNs by DRI quashed; ripple effect invalidated many DRI SCNs.
Review allows departmentβs plea; DRI recognized as proper officers for S28 where assigned; S97 Finance Act 2022 validation upheld; Mangali Impex overruled; Sunil Gupta approved.
A. Legal provisions canvassed
2021 (Canon-I): S2(34); S6; S28(4); linkages to S17 (assessment); reliance on Sayed Ali (2011).
Exemption notifications (factual background): 2005 exemption notification (the judgment text references No. 20/2005/25/2005) as amended by 15/2012 for digital still image video cameras. (India Budget)
2024 review judgment
Notif. 19/90-Cus (N.T.), 26-04-1990; superseded by Notif. 17/2002-Cus (N.T.), 07-03-2002 (appointment of DRI as officers of customs).
Notif. 44/2011-Cus (N.T.), 06-07-2011 (assigns βproper officerβ functions incl. SS17 & 28 to DRI); amended by 53/2012 & 43/2019; superseded by 25/2022-Cus (N.T.).
Notif. 40/2012-Cus (N.T.), 02-05-2012 (assignment table; to be read with SS4/5).
Notif. 60/2015-Cus (N.T.), 04-06-2015 (common adjudicating authorityβdelegation to Principal DG, DRI).
Circular 4/99-Cus, 15-02-1999 (DRI to issue SCNs they investigate; adjudication by field formations).
Who can issue S28 SCNs? β’ 2021: Only the officer who did (re)assessment under S17 (or was otherwise assigned) could issue S28 SCNβDRIβs SCNs were invalid. β’ 2024: The Act does not require the S28 SCN issuer to be the same person who did S17 assessment (pre-S110AA). What matters is a valid assignment of S28 functions to that officer via proper notifications (read S2(34) with S5; S6 is for non-customs officers). DRI officers were validly appointed/assigned.
Effect of later legislation β’ S110AA (2022) prospectively ties issuance of S28 SCN to the proper officer assigned to conduct S17 assessments; it doesnβt retrospectively invalidate earlier practice. β’ S97, Finance Act 2022 validated past SCNs; SC upheld its constitutionality and clarified scope vis-Γ -vis S28(11) & Explanation-2.
Companion High Court rulings β’ Delhi HC (Mangali Impex) set aside; Bombay HC (Sunil Gupta) approved.
Practical takeaways for customs disputes (post-2024)
Jurisdictional objections to DRI SCNs (pre-2022) now generally fail if the Department shows valid appointment & assignment via the above notifications.
For SCNs issued after 31-Mar-2022, consider S110AA: the issuing officer must be the assigned S17 officer; challenges should scrutinize post-2022 assignment orders.
Validation under S97 Finance Act 2022 covers past SCNs; constitutional challenges were rejected in the review.
1. Scope of the Review
The Supreme Court in 2024 was deciding a review petition against its earlier 2021 ruling. Its focus was:
Whether the 2021 reasoning (that DRI officers were not βproper officersβ) was legally sustainable, and
Whether the post-2011 Validation Act (S28(11)) and Finance Act 2022 (S97) covered past SCNs.
Because of this limited scope, the Court concentrated on notifications and circulars that existed at the time of the disputed SCNs (2005β2015 era), and the validating provisions enacted later, not on fresh notifications meant to operate prospectively.
2. Temporal Relevance
Notifications 25/2022 and 26/2022 (N.T.) were issued after 31-03-2022, expressly to align officer-assignments with the newly inserted S110AA (Finance Act 2022).
Circular 07/2022-Cus (N.T.) clarified field implementation under the new law.
Since the SCNs in dispute in Canon India dated back years earlier, the Court treated these 2022 instruments as not directly applicable to the lis (dispute) before it. Instead, the Court examined:
older appointment/assignment notifications (17/2002, 40/2012, 44/2011, 60/2015, etc.), and
The 2024 judgment did consider S110AA and S97 of Finance Act 2022 in detail. Those provisions themselves were the statutory foundation upon which Notifications 25/2022 & 26/2022 and Circular 07/2022 were based. Thus, by upholding S97 and clarifying S110AAβs prospective effect, the Court implicitly accepted the validity of the 2022 notification/circular regime, without needing to cite each by number.
4. Judicial Practice
The Supreme Court often:
Cites only those notifications/circulars that form the crux of the dispute or which were argued before it.
Leaves out subsequent administrative instruments if their effect is prospective or merely implementational.
The 2024 bench emphasized that post-31.03.2022 SCNs would fall under S110AA and fresh notifications, but it was not ruling on thoseβso it found no need to reproduce or analyze 25/2022, 26/2022, or Circular 07/2022.
In short: The 2024 Supreme Court judgment did not consider those specific 31-03-2022 notifications and circular because they were prospective instruments implementing S110AA, while the Courtβs task was to decide the validity of pre-2022 SCNs and the scope of validation under S97. Their effect was implicitly acknowledged, but not directly adjudicated.
Thatβs a very important concern. After the Canon India litigation saga and the March 2022 amendments, the powers of DRI officers have indeed been regularized, but they are not βunlimitedβ or unchecked. Let me explain in detail:
1. What changed in 2022?
Finance Act, 2022 inserted Section 110AA into the Customs Act, 1962. β It mandates that the same βproper officerβ who is assigned functions of assessment under Section 17 will also have jurisdiction to issue show cause notices under Section 28.
To operationalize this:
Notification 25/2022-Cus (N.T.) and 26/2022-Cus (N.T.) (31-03-2022) were issued. They re-assigned functions clearly to DRI, Audit, Preventive, and Commissionerates, ensuring statutory backing.
Circular 07/2022-Cus (31-03-2022) gave field-level guidance, clarifying how officers should exercise powers under the new framework.
This effectively plugged the βjurisdictional defectβ highlighted in Canon India (2021).
2. Checks on DRI powers post-2022
Even with these notifications, DRI officers are not beyond scrutiny:
(a) Statutory Limitation
Section 110AA ties issuance of SCNs to proper assignment; DRI can only act if lawfully assigned by notification.
Their jurisdiction flows strictly from Sections 2(34), 3, 5, 6, and 110AA read with the assignment notifications.
(b) Validation but Prospective Guardrails
The Supreme Court in 2024 (Canon India Review) upheld the validity of past SCNs via Section 97 of Finance Act 2022, but also emphasized that going forward, the post-2022 assignment regime applies.
This means future SCNs can be challenged if issued contrary to Section 110AA or without proper assignment.
(c) Procedural Safeguards
DRI must comply with natural justice (notice, reply, hearing).
SCNs are adjudicated by jurisdictional Commissioners/Principal Commissioners, not by DRI itself, preventing them from being βjudge in their own cause.β
Circular 07/2022 reinforces this segregation of roles.
(d) Judicial Oversight
Courts and CESTAT remain open to review whether DRI officers exceeded statutory assignment, acted mala fide, or violated procedural safeguards.
Writ petitions under Article 226/227 and appeals under Section 129A (CESTAT) and Section 130 (High Court) continue to act as a check.
3. Practical Position Going Forward
Yes, DRI has regained legal authority (as βproper officersβ), but their powers are not unfettered.
The 2022 notifications and circulars give them jurisdiction, but also bind them within the statutory scheme of Sections 17, 28, and 110AA.
Any SCN post-2022 must be tested for:
Correct assignment in the relevant notification;
Compliance with limitation under Section 28;
Observance of natural justice.
Conclusion: DRI officersβ powers will not go unchecked under Notifications 25/2022, 26/2022, and Circular 07/2022. These instruments regularize and define their jurisdiction, but checks still exist through Section 110AA, adjudication by separate authorities, and judicial review.
The Canon India Saga: Judicial U-Turn, Legislative Response, and the Recalibration of DRI Powers under the Customs Act, 1962
I. The 2021 Decision: Curtailing DRI Jurisdiction
In its 9 March 2021 judgment, the Supreme Court held that officers of DRI were not βproper officersβ under Section 28 of the Act.
The Court relied on Section 2(34) (defining βproper officerβ) and Section 6 (entrustment of functions to other government officers) to conclude that only the officer who originally assessed goods under Section 17 could subsequently reopen or reassess liability under Section 28.
Notifications such as Notification No. 40/2012-Cus (N.T.), issued to empower DRI, were held ultra vires, since Section 2(34) was merely definitional and could not serve as a source of power.
In effect, all SCNs issued by DRI under Section 28(4) were rendered invalid.
The judgmentβs reasoning was strongly influenced by Union of India v. Sayed Ali (2011), which had emphasized a close nexus between the assessing officer and the officer reopening the assessment.
II. Legislative Response: Finance Act, 2022
The 2021 ruling created widespread disruption in anti-evasion enforcement. Parliament responded promptly through the Finance Act, 2022, which introduced two pivotal reforms:
Section 110AA (prospective): mandated that the βproper officerβ assigned the functions of assessment under Section 17 would also have jurisdiction to issue notices under Section 28. This tied jurisdiction to statutory assignment rather than to the original assessing officer.
Section 97, Finance Act 2022 (retrospective): validated all past actions of DRI and similar officers, curing the jurisdictional defect identified in Canon 2021.
To operationalize these amendments, the Government issued:
Notification No. 25/2022-Cus (N.T.) and 26/2022-Cus (N.T.) (both dated 31-03-2022), re-assigning assessment and demand functions across Customs Commissionerates, DRI, Audit, and Preventive formations.
Circular No. 07/2022-Cus (31-03-2022), clarifying procedural aspects of SCN issuance and adjudication under the new regime.
III. The 2024 Review Decision: A Judicial Recalibration
In its 7 November 2024 judgment, the Supreme Court allowed the Departmentβs review petitions, effectively reversing the 2021 ruling.
Assignment vs. Entrustment: The Court distinguished between assignment of functions (Sections 2(34) read with 3, 4, and 5) and entrustment of functions (Section 6). Since DRI officers were duly appointed and their functions assigned through statutory notifications (17/2002, 44/2011, 40/2012, 60/2015), they qualified as βproper officers.β
Rejection of Section 17β28 Nexus: The earlier insistence that the officer under Section 28 must be the same officer who assessed under Section 17 was held erroneous, save for the prospective effect of Section 110AA.
Validation: The Court upheld the constitutionality of Section 97, Finance Act 2022, thereby retrospectively validating past SCNs.
Precedents Revisited:Mangali Impex (Delhi High Court), which had invalidated DRI notices, was expressly overruled, while Sunil Gupta (Bombay High Court) was approved.
Thus, the Court restored DRIβs jurisdiction while acknowledging the legislative guardrails introduced in 2022.
IV. The Status of Notifications and Circulars
It is noteworthy that Notifications 25/2022, 26/2022 and Circular 07/2022 were not expressly discussed in the 2024 judgment. This was deliberate:
The Courtβs task in review was confined to pre-2022 SCNs and the effect of retrospective validation.
Since the 2022 instruments were prospective, their role was implicitly recognized but not adjudicated upon.
Accordingly, future SCNs will be governed by Section 110AA and these notifications, while past SCNs stand validated by Section 97 of Finance Act, 2022.
V. Will DRI Powers Go Unchecked?
Concerns about unchecked investigative powers must be balanced against statutory safeguards:
Statutory Assignment β DRIβs jurisdiction flows strictly from notifications issued under Sections 3, 5, and 110AA; it cannot act beyond assigned functions.
Separation of Roles β While DRI investigates and issues SCNs, adjudication lies with jurisdictional Commissioners, ensuring impartiality.
Natural Justice and Limitation β Section 28 prescribes limitation periods and procedural fairness, binding on DRI.
Judicial Oversight β Writ jurisdiction under Article 226 and appeals under Sections 129A and 130 act as systemic checks on arbitrary exercise.
Thus, the new framework strengthens enforcement while embedding institutional and judicial safeguards.
VI. Conclusion
The Canon India saga exemplifies the dynamic interplay between judicial pronouncement, legislative correction, and administrative implementation.
The 2021 judgment underscored the dangers of empowering investigative agencies without statutory clarity.
The 2022 amendments created a prospective framework under Section 110AA and retrospectively validated past SCNs under Section 97.
The 2024 review judgment restored balance by recognizing DRIβs jurisdiction but within the bounds of statutory assignment.
Going forward, litigation will likely shift from jurisdictional challenges to questions of procedural compliance, limitation, and fairness in adjudication. For taxpayers and counsel, the message is clear: the battle has moved from βwhetherβ DRI can issue SCNs, to βhowβ those SCNs are exercised under law.
Editorial Note: The Canon India trajectoryβfrom invalidation, to legislative intervention, to judicial recalibrationβis a striking illustration of how revenue enforcement, judicial oversight, and legislative sovereignty co-evolve. For customs law in India, it marks the end of jurisdictional uncertainty and the beginning of a new era of substantive procedural scrutiny.
Source: Canon-2021 judgment (9-Mar-2021) β Supreme Court of India (Reportable) & Canon-2024 review judgment (7-Nov-2024) β Supreme Court of India (Reportable)
ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 02.05.2025
CESTAT New Delhi- SVB Loading Rejected as Legally Unsustainable
The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, allowed the appeal of M/s Rays Engineering Works against the re-assessment of customs duty on imported goods. The Tribunal held that the enhancement of assessable value based on 13% “SVB loading” was illegal and violative of Section 17(5) of the Customs Act, 1962.
Background:
The appellant declared the value of goods at US$ 1.25/kg for slew gear and US$ 0.67/kg for bucket tooth.
The Assessing Officer enhanced the declared value by 13% citing SVB loading, without issuing a speaking order under Section 17(5).
Appellant paid the enhanced duty but did not provide written acceptance of the reassessment.
This Article has been written by Shri Ravi Shekhar Jha, Advocate Delhi High Court based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.
ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 02.05.2025
CESTAT Bangalore held that there was no justification to reject the transaction value
The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Regional Bench Bangalore, has allowed the appeal filed by M/s K V Joshy & C K Paul against the re-determined customs valuation of imported refillable plastic gas lighters from China. In Final Order No. 20531/2025 dated 30 April 2025, the Tribunal ruled that the rejection of transaction value was unjustified due to lack of comparable imports and procedural lapses.
Case Background:
The appellants imported refillable plastic gas lighters under Bill of Entry No. 8950081 dated 17.04.2015.
Customs authorities alleged undervaluation based on email communications and proforma invoices showing higher values for different branded products.
The Adjudicating Authority re-determined the value and imposed penalties. The Commissioner (Appeals) later upheld the reassessment but set aside penalty under Section 114AA.
The matter reached CESTAT challenging the basis for rejecting declared values.
This Article has been written by Shri Ravi Shekhar Jha, Advocate Delhi High Court based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.
ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 29.04.2025
CESTAT Kolkata Rules in Favor of La Opala RG Ltd. on SHIS Duty Benefit Dispute
The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Kolkata, ruled in favor of M/s. La Opala RG Ltd., quashing a duty demand of nearly Rs. 58 lakh raised by Customs for imports made under the Status Holder Incentive Scrip (SHIS) scheme.
Background:
M/s. La Opala RG Ltd., a prominent glassware manufacturer, imported key manufacturing inputs such as Crucible Pots, Pot Rings, Abrasive Belts, PVA Wheels, Bevelling Cones, and Refractories between December 2012 and February 2015. These imports were made under 12 SHIS scrips via 14 Bills of Entry.
Subsequently, the Directorate of Revenue Intelligence (DRI) issued a Show Cause Notice alleging that:
The imported items were not capital goods or directly related to previously imported capital goods.
SHIS scrips were misused to debit duty beyond the permissible 10% of the total scrip value.
The adjudicating authority confirmed a customs duty demand of Rs. 57,94,958 with interest and equal penalty under Section 114A of the Customs Act, 1962.
This Article has been written by Shri Ravi Shekhar Jha, Advocate Delhi High Court based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.
ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 28.04.2025
CESTAT Kolkata emphasized that minor administrative errors without dishonest intent should not result in penal consequences
The Eastern Zonal Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata, delivered an important ruling on 17th April 2025, dismissing an appeal filed by the Revenue against M/s. Nalini Bandhu Ray & Sons, a licensed Customs Broker.
Case Background:
M/s. Nalini Bandhu Ray & Sons filed a Bill of Entry for the importer M/s Lalwani Ferro Alloys based on instructions and documentation provided by their client.
Later, it emerged that the consignee name had been changed by the overseas supplier to M/s QVC International Pvt. Ltd., but this change was not communicated to the Customs Broker.
The Revenue alleged a violation of Regulation 10(e) of the Customs Broker Licensing Regulations, 2018 for failing to exercise due diligence.
This Article has been written by Shri Ravi Shekhar Jha, Advocate Delhi High Court based on his interpretation of the law. He can be reached at his email idΒ intelconsul@gmail.comΒ or on his Mobile +91-9999005379.
