Tag: #CESTAT

CESTAT Mumbai Allows Customs Duty Exemption on Dowtherm Heat Transfer Fluid Under SHIS Scheme

Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 26.09.2026

CESTAT Mumbai Allows Customs Duty Exemption on Dowtherm Heat Transfer Fluid Under SHIS Scheme

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), Mumbai has held that Dowtherm RP Heat Transfer Fluid/Dowtherm A Heat Transfer Fluid, used for the initial charging and continuous operation of a Continuous Polycondensation (CP) Plant for manufacturing polyester products, falls within the definition of “capital goods” and is consequently eligible for Customs duty exemption under Notification No. 104/2009-Customs dated 14 September 2009.

Setting aside the Commissioner’s order, the Tribunal held that the thermic fluids fulfilled the statutory requirements of the Status Holders Incentive Scrip (SHIS) Scheme under the Foreign Trade Policy and that Customs was not justified in denying the exemption merely because the goods were chemicals falling under Chapter 29 or were described as inputs under SION.

Background of the Dispute

Wellknown Polyesters Limited was engaged in manufacturing Polyester Filament Yarn (PFY), Polyester Oriented Yarn (POY), Fully Drawn Yarn (FDY), Draw Textured Yarn (DTY) and polyester chips at its Daman manufacturing facility.
For its manufacturing operations, the company had imported a Continuous Polycondensation Plant from Oerlikon Barmag under an EPCG authorisation during April–July 2012. The plant was imported without thermic fluid.
Subsequently, the company imported 3,01,296 kg of Dowtherm RP Heat Transfer Fluid/Dowtherm A Heat Transfer Fluid, valued at approximately ₹9.86 crore, through Bills of Entry filed in October 2012. Customs duty involved was approximately ₹2.55 crore.
Instead of paying the duty in cash, Wellknown Polyesters utilised eight SHIS scrips issued by the DGFT under the Status Holders Incentive Scrip Scheme and claimed exemption under Notification No. 104/2009-Customs. The goods were initially cleared by Customs extending the exemption.

DRI Objects to SHIS Benefit

The Directorate of Revenue Intelligence (DRI), Ahmedabad Zonal Unit subsequently initiated an investigation on the ground that Notification No. 104/2009-Customs permitted duty-free import of capital goods, whereas Dowtherm heat-transfer fluid was, according to the Department, not capital goods.
DRI also relied upon the Standard Input Output Norms (SION), under which Dowtherm/Therminol and heat-transfer oil were identified as permitted inputs for manufacture of Polyester Partially Oriented Yarn and Polyester Filament Yarn. The Department therefore treated the material as an input rather than capital goods.
A Show Cause Notice dated 14 May 2013 consequently demanded approximately ₹2.55 crore Customs duty with interest under Section 28(1) of the Customs Act, 1962, besides proposing confiscation under Section 111(o) and penalty under Section 112(a).
The Commissioner confirmed the duty demand and interest but refrained from confiscating the goods because they were no longer physically available and did not impose the proposed penalty. Wellknown Polyesters challenged that order before CESTAT.

Appellant: Thermic Fluid Was Integral to Continuous Polycondensation Plant

The appellant argued that although the CP Plant and thermic fluid had been imported separately, both were required to operate together.
The thermic fluid was charged into the heaters, piping and vessels and thereafter continuously circulated in a closed loop between the heaters and reactors. The polyester polycondensation process required temperatures of approximately 270°C–300°C under high vacuum, making the thermic fluid critical for providing precise high-temperature heat while maintaining low system pressure.
The appellant relied upon the definition of “capital goods” under the Foreign Trade Policy and Notification No. 104/2009-Customs, arguing that it was broad enough to cover goods required directly or indirectly for manufacture, including items necessary for the initial setting up and functioning of plant and machinery.
It also relied upon CBEC’s earlier clarification concerning transformer oil, under which oil required for filling/topping up a transformer was considered part of the equipment because the transformer could not function without it.

Revenue: Chemical Falling Under Chapter 29 Cannot Be Capital Goods

The Department maintained that the imported thermic fluid was a chemical classifiable under Chapter 29 and therefore could not be regarded as plant, machinery, equipment or an accessory.
The Commissioner’s reasoning was that even though the chemical was indirectly used in manufacturing, its nature did not change into that of plant, machinery, equipment or accessories. The Department also relied upon the fact that SION treated Dowtherm as an input/raw material for polyester production.
CESTAT was therefore required to decide whether denial of the exemption under Notification No. 104/2009-Customs for the October 2012 imports was legally sustainable.

CESTAT Examines SHIS Scheme and Definition of ‘Capital Goods’

The Tribunal examined the Foreign Trade Policy 2009–2014 and observed that the objective of the SHIS Scheme was to promote investment in technology upgradation.
Paragraph 3.17.5 of the FTP permitted Duty Credit Scrips to be used for import of inputs or goods, including capital goods, subject to the stipulated conditions. More importantly, the FTP defined “capital goods” broadly as plant, machinery, equipment or accessories required directly or indirectly for manufacture or production, including specified items such as refractories for initial lining and catalysts for initial charge.
Notification No. 104/2009-Customs, issued under Section 25(1) of the Customs Act, 1962, similarly exempted capital goods and specified components/spares/parts imported against SHIS Duty Credit Scrips from Customs duties, subject to its conditions.
CESTAT found the definition of “capital goods” under the Customs notification and the FTP to be substantially identical.

Thermic Fluid Critical to Functioning of CP Plant

The Tribunal accepted the technical evidence concerning the role played by Dowtherm in the Continuous Polycondensation Plant.
It observed that the thermic fluid enabled the plant to provide precise high-temperature heat while maintaining low pressure, thereby permitting efficient continuous polycondensation and energy-efficient manufacture of high molecular weight polyester.
On that basis, CESTAT concluded that the imported goods fulfilled the statutory requirements of the SHIS Scheme.
A particularly important factual finding arose from the Chartered Engineer’s Certificate. Out of the total 3,01,296 kg of imported thermic fluid, 2,92,920 kg—approximately 97.2%—was used as a one-time/initial charge in the CP Plant’s Electric Thermal Oil Heater Boiler.
The fluid thereafter enabled continuous high-temperature operation at very low pressure for the polycondensation process.
The technical diagrams reproduced on pages 13–15 of the order further illustrate the closed-loop recirculation of Dowtherm between the thermic-fluid heater and CP Plant, the stages of polyester manufacture where heat transfer is required, and the Electric Thermal Oil Heater Boiler arrangement.

Capitalisation in Books Also Supported Appellant

CESTAT additionally noted that the imported thermic fluid had been capitalised in Wellknown Polyesters’ books of account, as certified by its Chartered Accountants on 29 May 2026.
The Tribunal regarded this financial treatment as further evidence supporting the appellant’s case that the imported goods were treated as capital goods.

Accordingly, the Bench held:

“the impugned goods are covered under the definition of ‘capital goods’”
and were therefore eligible for exemption under Notification No. 104/2009-Customs.

CESTAT Relies on Reliance Communications Infrastructure

The Tribunal found support in Reliance Communications Infrastructure v. Commissioner of Customs, 2009 (240) E.L.T. 461 (Tri.-Bang.).
In that case, a Gas Suppression System included HFC 227 EA gas. The Tribunal had held that Customs could not dissect an integrated system and treat the gas required for its functioning as a mere consumable when the EPCG licence covered the complete system.
CESTAT applied the same reasoning to the thermic fluid, observing that where a material is essential to the functioning of the plant, its character cannot be determined merely by isolating it from the system in which it operates.

Transformer Oil Analogy Applied to Dowtherm

CESTAT also referred to CBEC Circular No. 344/60/97-CX dated 22 October 1997, concerning transformer oil.
The circular recognised that a transformer cannot function without transformer oil and that the equipment cannot be regarded as complete without the oil filled into it.
Applying the same analogy, CESTAT held that if the Continuous Polycondensation Plant cannot function without thermic fluid, the fluid has to be treated as part of the plant, notwithstanding the absence of a specific Customs clarification concerning thermic fluid.

Cases Cited by Wellknown Polyesters

The appellant relied upon several judicial authorities in support of its interpretation of capital goods:

S. No.	Case	Citation
1	Reliance Communications Infrastructure v. Commissioner of Customs	2009 (240) E.L.T. 461 (Tri.-Bang.)
2	Commissioner of Central Excise, Coimbatore v. Jawahar Mills	2001 (132) E.L.T. 3 (S.C.)
3	Bharti Airtel Limited v. Commissioner of Central Excise, Pune	2025 (391) E.L.T. 3 (S.C.)
4	Chief Commissioner of Central Goods and Service Tax & Ors. v. Safari Retreats Private Limited & Ors.	2024 SCC OnLine SC 2691
5	Scientific Engineering House (P) Ltd. v. Commissioner of Income Tax, Andhra Pradesh	(1986) 1 SCC 11

These authorities are expressly recorded in the appellant’s submissions.
Of these, the final reasoning expressly discusses and applies Reliance Communications Infrastructure.

Final Decision: Wellknown Polyesters Wins Appeal

CESTAT concluded that the Commissioner’s order denying the benefit of Notification No. 104/2009-Customs dated 14 September 2009 by refusing to treat Dowtherm RP/Dowtherm A Heat Transfer Fluid as capital goods “does not stand the scrutiny of law.”

The Tribunal consequently set aside the Order-in-Original dated 7 October 2016 and allowed Wellknown Polyesters’ appeal in its favour.

The ruling is significant for the interpretation of capital goods under export-promotion schemes, particularly where a material may chemically resemble an input or consumable but is technically required as an initial charge and thereafter continuously circulates as an integral part of plant operation.

It also demonstrates that classification of an item as a chemical under Chapter 29, or its description as an “input” under SION for a different regulatory purpose, is not by itself determinative of whether it can qualify as capital goods under the specific language and objective of an exemption notification.

Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

Source: CESTAT Mumbai

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September 26, 2026

CESTAT Chennai: Vitamin Feed Premixes Classifiable as Animal Feed Preparations Under CTH 2309
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 25.09.2026

CESTAT Chennai: Vitamin Feed Premixes Classifiable as Animal Feed Preparations Under CTH 2309

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 .

In a significant ruling concerning the customs classification of feed-grade vitamins and animal nutrition preparations, the CESTAT Chennai has set aside a Customs order seeking to classify imported Vitamin E 50% Feed Grade, Vitamin B2 80% Feed Grade and Vitamin C 35% Feed Grade under CTH 2936 instead of CTH 2309.

The Tribunal held that, in the absence of a chemical examiner’s report establishing that the imported products were pure chemicals or separate chemically defined organic compounds falling under Chapter 29, the Department had failed to discharge the burden necessary to sustain its proposed classification. Consequently, the benefit of classification was required to go to the importer, Provimi Animal Nutrition India Pvt. Ltd.

The Classification Dispute: CTH 2309 vs CTH 2936

Provimi imported goods described as:
- Vitamin E 50% Feed Grade
- Vitamin B2 80% Feed Grade
- Vitamin C 35% Feed Grade
- The importer classified these products under CTH 2309, covering “preparations of a kind used in animal feeding.”
- Customs disagreed. The Department considered CTH 2309 to be general in nature and took the view that CTH 2936, covering provitamins, vitamins and their derivatives, was the more specific heading under Rule 3(a) of the General Rules for Interpretation (GRI).
- According to Revenue, CTH 2309 applies to products presented in a form suitable for use as animal food supplements, whereas the imported vitamins were essentially inputs or raw materials requiring further processing before being incorporated into aquatic, poultry or cattle feed.
- The Department therefore proposed classification under CTH 2936, attracting 7.5% Basic Customs Duty under Sl. No. 185 of Notification No. 50/2017-Customs and 18% IGST under Sl. No. 40 of Schedule III of Notification No. 1/2017-IGST.
Customs Raises ₹58.83 Lakh Differential Duty Demand
- A Show Cause Notice dated 8 March 2024 proposed rejection of Provimi’s classification, reclassification under CTH 2936, denial of the relevant notification benefits and recovery of ₹58,83,019 as short-levied duty, along with confiscation and penalties.
- The Commissioner of Customs (Audit), Chennai subsequently confirmed the proposals through Order-in-Original No. 108625/2024 dated 16 August 2024, leading Provimi to approach CESTAT.
Provimi: Products Are Specifically Formulated for Animal Feed
- Provimi argued that the imported goods were essentially animal-feed preparations and appropriately fell under Chapter Heading 2309.
- The company relied upon the WCO’s HSN Explanatory Notes to Heading 23.09, particularly the category covering preparations used in making complete feeds or supplementary feeds.
- It also argued that the goods were designed exclusively for animal use, contained specifically tailored additives, were labelled accordingly and were supplied only to businesses engaged in animal feed and animal husbandry.
- The importer further contended that Chapter 29 primarily covers separate chemically defined compounds, whereas its imported products were not pure vitamins and contained additives intended to make them suitable specifically for animal nutrition.
Department: High-Concentration Vitamins Are Raw Materials, Not Animal Feed
- Revenue countered that the imported products contained vitamins in concentrations ranging from 35% to 80% and could not themselves be directly consumed by animals.
- The Department argued that they were merely inputs/raw materials for manufacturing animal feed, rather than animal feed or feed supplements themselves.
- It relied particularly on Commissioner of Customs CGO v. Sonam International Shop No. 9, 2020 (10) TMI 120 – Allahabad High Court, where the High Court considered high-concentration vitamins in the context of classification under Heading 2309.
- Revenue also referred to the Constitution Bench decision in Commissioner of Customs (Import) v. Dilip Kumar and Company & Ors., AIR 2018 SC 3606 in support of its position concerning the interpretation of exemption/classification jurisprudence and earlier reliance on Sun Export Corporation.
CESTAT Applies Supreme Court’s 2026 Welkin Foods Ruling
- A major feature of the Tribunal’s analysis was the Supreme Court’s recent judgment in Commissioner of Customs (Import) v. Welkin Foods, 2026 INSC 19.
- CESTAT noted that Welkin Foods comprehensively examined customs classification principles, including the role of:
- GRI 1, tariff headings and statutory notes, HSN Explanatory Notes, the common/trade parlance test, and the relevance of end use.
- The Supreme Court had emphasised that GRI 1 is the fundamental starting point for customs classification. Classification must first be determined according to the terms of the headings and the relevant Section and Chapter Notes.
- Only where goods cannot be classified through GRI 1 and the applicable legal notes should the subsequent rules be considered sequentially.
Common Parlance Test Cannot Override Technical Tariff Provisions
- Provimi had argued that, in common and trade parlance, the products were understood as animal-feed supplements.
- CESTAT, applying Welkin Foods, held that the common or trade parlance test has to be applied restrictively in the modern HSN-based classification system.
- The Tribunal observed that the terminology employed in Chapters 23 and 29 is scientific and technical. Consequently, the tariff provisions must primarily be interpreted technically rather than simply according to the manner in which the goods are marketed or commercially described.
- It further observed that an importer relying on a trade-parlance meaning must produce satisfactory evidence supporting that meaning.
End Use, However, Was Relevant
- While limiting the common-parlance argument, CESTAT found that end use could legitimately be considered in the present classification dispute.
- Heading 2309 itself refers to preparations “of a kind used in animal feeding,” while Heading 2936 deals with vitamins and their derivatives used primarily as vitamins.
- The language of the competing headings therefore permitted consideration of use or adaptation as part of the classification exercise.
Chapter 23 Does Not Exclude Products Merely Because They Are of Chemical Origin
- Revenue also argued that Heading 2309 covered products obtained from the processing of vegetable or animal materials, whereas Provimi’s products were chemicals.
- CESTAT rejected a blanket exclusion on that basis.
- The Tribunal held that the relevant Chapter Note is inclusive and does not exclude products of chemical origin if they otherwise satisfy the description compatible with Chapter 23.
- This finding is important because it prevents the mere chemical origin of a product from automatically determining classification under Chapter 29.
Crucial Evidentiary Gap: No Chemical Examiner’s Report

The decisive weakness in Revenue’s case was the absence of technical evidence.

CESTAT observed that it did not have the benefit of an expert chemical test report prepared at the time of import to establish whether the products were:

separate chemically defined organic compounds, capable of classification under Chapter 29; or

preparations of a kind used in animal feeding, falling under Chapter 23.
- The Certificates of Analysis submitted by Provimi also did not contain the considered opinion of a technical expert capable of conclusively resolving this question.
- Provimi maintained that the imported vitamins were not pure vitamins but were formulated with various additives specifically for animal-feed applications, altering their suitability and making them intended for animal nutrition.
HSN Notes Recognise Premixes Under Heading 2309

CESTAT then examined the HSN Explanatory Notes because it found the HSN and Customs Tariff entries under Chapter 23 to be sufficiently aligned.

The HSN Notes divide the relevant Heading 23.09 preparations into three broad categories:

HSN category Description
A Complete feed
B Preparations supplementing/balancing farm-produced feeds
C Preparations used in making complete or supplementary feeds
- The Tribunal observed that the disputed goods were not complete feed or feed supplements falling within categories A or B. However, category C specifically concerns “preparations” used in making such feeds, commonly known in trade as premixes.
- This was significant because a product need not necessarily be directly fed to an animal in order to fall within the broader scope of Heading 2309.
Government Circular Identified Products as “Vitamin Premixes (Feed Grade)”
- Provimi also relied upon a circular dated 21 December 2022 issued by the Department of Animal Husbandry and Dairying, Ministry of Fisheries, Animal Husbandry and Dairying.
- The Tribunal recorded that the very products involved in the dispute—Vitamin E 50% Feed Grade, Vitamin B2 80% Feed Grade and Vitamin C 35% Monophosphate Feed Grade—were expressly mentioned as “Vitamin Premixes (Feed Grade)” in that document.
CESTAT Also Examines Meaning of “Premix”
- The Tribunal referred to the Customs Advance Ruling in In Re: BASF India Ltd., (2024) 24 Centax 401 (A.A.R.-Cus.-Mum.).
- That ruling discussed premixes as complex mixtures of vitamins, minerals, trace elements and other feed additives incorporated into compound feed, and explained that such premixtures are not themselves intended for direct feeding to animals.
- This was relevant to Revenue’s argument that the products could not fall under Heading 2309 merely because they were not capable of being directly consumed by animals.
Burden to Establish Reclassification Lies on Customs
- CESTAT ultimately treated the burden of proof as decisive.
- Referring to Union of India v. Garware Nylons Ltd., 1996 (87) E.L.T. 12 (S.C.) and HPL Chemicals Ltd. v. Commissioner of Central Excise, Chandigarh, 2006 (197) E.L.T. 324 (S.C.), the Tribunal reiterated that when Revenue seeks a particular classification, it must establish that the goods are taxable under the classification proposed by it.
- Because there was no Chemical Examiner’s certificate establishing whether the goods were pure chemicals, mixture concentrates or premixes, Revenue had failed to discharge that burden.
- CESTAT therefore held that the benefit of classification must go to the appellant.
B.V. Bio Corp Decision Supports Classification Under CTH 23099090
- The Tribunal also relied on its coordinate-bench ruling in B.V. Bio Corp Private Limited v. Commissioner of Customs (NS-I), 2024 (4) TMI 1173 – CESTAT Mumbai.
- That case concerned imported products containing vitamins and provitamins in concentrations ranging from 2.7% to 100%.
- The Mumbai Bench had concluded that the goods were classifiable under Tariff Item 23099090 and that classification under Heading 2936 was not legally sustainable.
- The judgment further records that the B.V. Bio Corp position was affirmed, with the goods being treated as animal-feed preparations appropriately classified under Tariff Item 23099090, having regard to Circular No. 188/22/96-CX dated 26 March 1996.
Duty, Interest, Confiscation and Penalty Fall with Classification Demand
- Once Revenue failed to sustain the proposed classification under CTH 2936, CESTAT held that the consequential duty demand, interest, fine and penalty could not survive.
- Provimi had separately challenged confiscation and penalty under Sections 111, 125 and 114A of the Customs Act, 1962, arguing inter alia that a bona fide classification claim did not amount to misdeclaration.
Final Decision: Provimi’s Appeal Allowed
- CESTAT set aside the impugned Order-in-Original and allowed Provimi’s appeal to the limited extent decided in the classification proceedings, with consequential relief as available under law.
- The Tribunal, however, made an important qualification regarding Provimi’s separate refund claim. Issues such as refund that were not part of the original proceedings were not adjudicated in this appeal and would have to be pursued separately in accordance with law.
- Thus, while Provimi succeeded in overturning the Department’s reclassification and consequential demand, the order should not be read as having independently sanctioned the refund claimed by the company.
Key Takeaway

The ruling reinforces an important principle in customs classification disputes: Customs cannot sustain reclassification merely by asserting that an alternative tariff heading is more specific. When the proposed classification depends upon the chemical composition and technical character of imported goods, Revenue must produce adequate technical evidence to discharge its burden of proof.

For feed-grade vitamins and premixes, the decision also recognises that Heading 2309 is not confined to products directly consumed by animals.

Preparations used in making complete or supplementary feeds can fall within its scope, subject to their objective characteristics, composition, HSN guidance and supporting technical evidence.

Connected Matter

CESTAT Chennai: Customs Cannot Reclassify 226 Auto Parts Without Product-Wise Evidence

Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

Source: CESTAT Chennai

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September 25, 2026
CESTAT Chennai on Refund of Excess Export Duty and Limitation under Section 27 of the Customs Act, 1962
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 08.09.2026

CESTAT Chennai on Refund of Excess Export Duty and Limitation under Section 27 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 id intelconsul@gmail.com .

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) Chennai recently delivered a significant judgment in the case of JSW Steel Ltd. vs. Commissioner of Customs, addressing the complex issue of export duty refunds and the application of statutory time limits. This article provides a detailed analysis of the case, its background, legal arguments, and the Tribunal’s final decision, offering valuable insights for exporters and legal professionals alike.

Case Background

JSW Steel Ltd. exported “Non Alloy Steel Slabs Export Prime Steel” under four shipping bills in June and July 2008. At the time, export duty was levied at 15% ad valorem, as per Notification No.66/2008-Cus. The company paid export duty based on the Free on Board (FOB) value declared in the shipping bills.

However, a subsequent CBEC Circular (No.18/2008-Cus dated 10.11.2008) clarified that until 31.12.2008, the FOB price should be treated as the cum-duty price for export duty computation. This clarification revealed that JSW Steel had overpaid export duty. Consequently, JSW filed a refund claim for Rs.1,61,96,066/- on 30.01.2009.

Chronology of Legal Proceedings
1. Initial Rejection: The refund claim was initially rejected as time-barred under Section 27 of the Customs Act, 1962.
2. First Appeal: The Commissioner (Appeals) allowed JSW’s appeal, holding that Section 27’s time limit did not apply.
3. Tribunal Remand: On Revenue’s appeal, the Tribunal remanded the case for reconsideration of facts and the applicability of Section 27.
4. Refund Sanctioned: The original authority, after reassessment, sanctioned the refund, recognizing the excess payment and the applicability of the CBEC Circular.
5. Revenue’s Appeal: The Commissioner (Appeals) again held the refund claim as time-barred, prompting JSW to appeal to CESTAT Chennai.
Key Legal Issues

1. Limitation Period for Refund Claims
- JSW’s Argument: The limitation period should run from the date of reassessment (21.09.2015), not the original payment date, as the excess payment was only recognized after the CBEC Circular and subsequent reassessment.
- Revenue’s Argument: The relevant date is the original payment date, making the refund claim time-barred under Section 27.
2. Nature of the Excess Payment
- JSW contended that the excess amount was not “duty” as defined under the Act, since it was collected without authority of law, and thus not subject to Section 27’s limitation.
3. Interest on Refund
- JSW also sought interest on the refunded amount, arguing that the delay was due to departmental actions.
Tribunal’s Analysis and Findings

A. Applicability of Section 27 Limitation
- The Tribunal held that the cause of action for refund arose only upon reassessment on 21.09.2015, when the excess payment was officially recognized.
- The refund application, though filed earlier, was linked to the reassessment, and thus not time-barred.
- The Tribunal rejected arguments to bypass Section 27 using the Limitation Act or Article 265 of the Constitution, citing the Supreme Court’s decision in Mafatlal Industries Ltd. v. Union of India.
B. Assessment and Reassessment
- The Tribunal clarified that the Note dated 21.09.2015 constituted a valid reassessment under Section 2(2) of the Customs Act.
- Only the excess amount, not reflected in the original assessment, was subject to refund upon reassessment.
C. Interest on Refund
- Interest under Section 27A is payable from three months after the date of reassessment (21.09.2015), not from the original refund application date.
- This aligns with the Supreme Court’s ruling in Ranbaxy Laboratories Ltd. v. Union of India.
Final Order and Implications
- The Tribunal set aside the impugned order of the Commissioner (Appeals) and restored the original order sanctioning the refund of Rs.1,61,96,066/- to JSW Steel Ltd.
- Interest is to be paid from 22.12.2015 (three months after reassessment) until the date of actual refund.
- The decision reinforces the principle that refund claims linked to reassessment are not time-barred from the original payment date, providing clarity for exporters facing similar issues.
Conclusion

The CESTAT Chennai’s decision in the JSW Steel Ltd. case sets an important precedent for the treatment of export duty refunds, particularly regarding the limitation period and the recognition of reassessment as the trigger for refund claims. Exporters and legal practitioners should carefully consider this ruling when dealing with similar disputes, ensuring that refund applications are aligned with the latest assessments and departmental clarifications.

Connected Matter

Gujarat High Court Order on IGST Refunds for Exporters

Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

Source: CESTAT Chennai

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September 8, 2026
CESTAT Kolkata Orders 12% Interest to Berger Paints on Customs Refund
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 23.07.2026

CESTAT Kolkata Orders 12% Interest to Berger Paints on Customs Refund

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 .

A recent order by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata, has set a significant precedent in customs refund jurisprudence. The case involved M/s. Berger Paints India Limited and the Department of Customs, focusing on the rate of interest applicable to refunds of amounts deposited during investigations.

Background of the Case

Berger Paints India Limited imported mixed xylene isomers between 2011 and 2014, classifying them under Customs Tariff Heading 2902.44.00. The goods were warehoused and later cleared for home consumption after duty payment. Subsequently, the Directorate of Revenue Intelligence (DRI) initiated an investigation, contending that the goods should be classified under a different heading (2707), resulting in a duty difference of Rs. 7,44,493. Berger Paints deposited this amount ‘under protest’ in 2014.

In 2017, the adjudicating authority confirmed the demand and appropriated the deposit as duty. Berger Paints appealed to CESTAT, which ruled in their favor in January 2025, setting aside the demand. The Department’s appeal to the Supreme Court was dismissed in September 2025.

The Refund Dispute

Following the Supreme Court’s dismissal, Berger Paints sought a refund of the deposited amount, along with interest at 12% per annum. The authorities refunded the principal with 6% interest, prompting Berger Paints to appeal for the higher rate.

Legal Arguments
- Appellant’s Position: Berger Paints cited several precedents, including the Supreme Court’s decision in ITC Ltd. and the Calcutta High Court’s rulings in Madura Coats Private Limited and Rajendra Kumar Jain, which directed payment of 12% interest on delayed refunds of investigation deposits.
- Department’s Position: The Department argued that 6% interest was appropriate, referencing various High Court decisions and a 2014 government notification fixing the rate at 6% for certain refunds.
Tribunal’s Analysis and Decision

The Tribunal examined the legal landscape and emphasized the binding nature of the jurisdictional High Court’s decisions. It noted:
1. The Calcutta High Court, in Rajendra Kumar Jain (2024), held that in the absence of a statutory provision fixing the interest rate for investigation deposit refunds, 12% interest is payable.
2. The 6% rate notification applies only from its date of effect and does not cover periods prior to its issuance.
3. The Tribunal is bound to follow the jurisdictional High Court’s interpretation when there is a conflict among High Courts.
Accordingly, the Tribunal set aside the order granting only 6% interest and directed that Berger Paints be paid interest at 12% per annum on the refunded amount.

Key Takeaways for Importers and Legal Practitioners
1. Jurisdictional High Court Rulings Prevail: When conflicting High Court decisions exist, the Tribunal must follow the ruling of the High Court with jurisdiction over the case.
2. Interest on Investigation Deposits: In the absence of a statutory provision, higher interest (12%) may be awarded on refunds of amounts deposited during investigations, as per prevailing High Court judgments.
3. Notification Applicability: Government notifications fixing interest rates apply prospectively and do not affect periods before their issuance.
Conclusion

The CESTAT Kolkata’s order in favor of Berger Paints India Limited reinforces the importance of jurisdictional High Court decisions in customs matters and clarifies the applicable interest rate on refunds of investigation deposits. This ruling provides valuable guidance for importers and legal professionals dealing with similar disputes.

Source: CESTAT Kolkata

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July 23, 2026
CESTAT Chandigarh Sets Aside Penalty on Customs Broker in High-Profile Cigarette Smuggling
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 03.07.2026

CESTAT Chandigarh Sets Aside Penalty on Customs Broker in High-Profile Cigarette Smuggling

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 .

A recent decision by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) Chandigarh has significant implications for customs brokers and the enforcement of penalties under the Customs Act, 1962. The case involved the seizure of prohibited cigarettes concealed within a consignment of dry dates and the subsequent imposition of a penalty on the customs broker, Shri Amandeep Singh Bagri, proprietor of Mojos Impex International. This article provides a detailed overview of the case, the legal arguments, and the Tribunal’s reasoning in setting aside the penalty.

Background of the Case
- Consignment Details: On 13 May 2021, M/s Shreyans Appearls & Leatherites, Ludhiana, filed a Bill of Entry for 1120 bags of dry dates, valued at Rs. 19,04,892, through customs broker Shri Amandeep Singh Bagri.
- Discovery of Concealed Goods: During examination on 19 May 2021, customs officers discovered cartons of prohibited cigarettes (brands: ESSE, Benson & Hedges, Gudang Garam) concealed behind layers of dry dates. The cigarettes were not declared in the import documents and lacked statutory health warnings, violating Indian regulations.
- Legal Action: The goods were seized under Section 110 of the Customs Act, 1962, and investigations led to a show cause notice against the customs broker for alleged violations under Regulation 10 of the Customs Brokers Licensing Regulations (CBLR), 2018.
Proceedings and Penalty
- Original Penalty: The adjudicating authority imposed a penalty of Rs. 10,00,000 on Shri Amandeep Singh Bagri under Section 112(a)(i) of the Customs Act, 1962, for acts or omissions rendering goods liable for confiscation under Section 111.
- Appeal and Dismissal: The customs broker appealed, but the Commissioner (Appeals), CGST, Ludhiana, upheld the penalty.
Key Legal Arguments

Appellant’s Contentions
1. No Mens Rea or Evidence of Guilty Mind: The customs broker argued that previous proceedings had already cleared him of any intentional wrongdoing or negligence. The Commissioner of Customs had earlier revoked the suspension of his license, finding no evidence of mens rea or direct involvement in the smuggling.
2. No Specific Violation of CBLR Cited: The show cause notice did not specify which regulation of the CBLR was violated, and no penalty was imposed under the CBLR itself.
3. Improper Application of Section 112: The penalty under Section 112(a)(i) requires a direct act or omission that renders goods liable for confiscation under Section 111. The appellant argued that there was no such finding or allegation against him.
4. Supporting Case Law: The appellant cited several CESTAT decisions, including M/s Exim Services vs. CC, Ludhiana, and P.S. Bedi & Company vs. CC, which established that penalties under Section 112 require clear findings of acts or omissions leading to confiscation.
Department’s Position
- The department maintained that the customs broker failed in his duties under the CBLR and supported the penalty imposed.
Tribunal’s Analysis and Decision
- No Evidence of Broker’s Involvement: The Tribunal found no corroborative evidence that the customs broker had knowledge of or connived in the misdeclaration. The broker acted as a facilitator based on documents provided by the importer.
- No Violation Under Section 111: The Tribunal noted that neither the show cause notice nor the orders recorded any act or omission by the broker that rendered the goods liable for confiscation under Section 111.
- Improper Penalty Application: Both lower authorities focused on alleged CBLR violations but did not impose penalties under the CBLR. The Tribunal emphasized that Section 112 penalties require a direct link to acts or omissions under Section 111, which was absent in this case.
- Precedent Followed: The Tribunal relied on prior decisions, reiterating that penalties cannot be imposed on customs brokers without clear findings of culpable conduct.
Final Outcome

The CESTAT Chandigarh set aside the penalty of Rs. 10,00,000 imposed on Shri Amandeep Singh Bagri, holding that the penalty was not legally sustainable in the absence of evidence linking the broker’s actions to the confiscation of goods.

Implications for Customs Brokers
- Due Diligence Affirmed: The ruling underscores the importance of due diligence by customs brokers but also protects them from penalties in the absence of evidence of intentional wrongdoing.
- Clear Findings Required: Authorities must establish a direct link between a broker’s actions and the liability of goods for confiscation before imposing penalties under Section 112.
Conclusion

This decision reinforces the principle that penalties under the Customs Act must be based on clear evidence and specific findings. Customs brokers are not automatically liable for the actions of importers unless there is proof of their involvement or negligence.

The case serves as a crucial reference for future disputes involving customs brokers and the enforcement of penalties under Indian customs law.

Source: CESTAT Chandigarh

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July 3, 2026
CESTAT Delhi Resolves Customs Classification Dispute for Aircraft Generators
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 12.05.2026

CESTAT Delhi Resolves Customs Classification Dispute for Aircraft Generators

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) in New Delhi recently adjudicated a significant dispute involving Interglobe Aviation Ltd. and the Customs Department regarding the classification and customs valuation of aircraft components—specifically, integrated drive generators (IDG) and starter generators. This article provides a detailed overview of the legal proceedings, technical aspects, and the Tribunal’s final decision.

Background of the Case

Interglobe Aviation, a major airline operator, imports aircraft and their parts for maintenance and repair. The dispute arose over the classification of IDGs and starter generators under the Customs Tariff Act, which directly impacts the applicable customs duty and Integrated Goods & Services Tax (IGST) rates.
- Appellants: Interglobe Aviation Ltd. and C.G. Logistics Ltd. (Customs House Agent)
- Respondent: Principal Commissioner of Customs, Air Cargo Complex (Import), New Delhi
- Key Issue: Whether IDGs and starter generators should be classified under Customs Tariff Heading (CTH) 8501 (Electric motors and generators) or CTH 8511 (Electrical ignition or starting equipment for internal combustion engines)
Technical Overview of the Components

Integrated Drive Generator (IDG)
- Provides primary electrical power to aircraft systems.
- Installed on the engine gearbox pad, combining a brushless AC generator and a Constant Speed Drive (CSD).
- Maintains constant frequency and voltage output, ensuring reliable power for critical systems like lighting and air conditioning.
Starter Generator
- Attached to the engine gearbox, serving dual functions:
  - Starter: Operates as a DC motor to start the engine.
  - Generator: Once the engine is running, generates DC voltage (30V, 12kW) for various aircraft components.
- Essential for starting turboprop/turbofan engines and sustaining engine operation during ignition.
Customs Classification Dispute

Appellant’s Position
- Claimed classification under CTH 8501 (Electric motors and generators), which allowed for a lower IGST rate (18%) and exemption from basic customs duty.
- Argued that the goods are not used with spark-ignition or compression-ignition internal combustion engines, but with gas turbine engines (turboprop/turbofan), which are distinct.
- Cited U.S. Cross Ruling NY 842759 and previous Tribunal decisions supporting classification under CTH 8501.
Department’s Position
- Asserted classification under CTH 8511, referencing HSN Explanatory Notes that cover electrical starting or ignition equipment for internal combustion engines of any kind, including aircraft engines.
- Claimed that turboprop/turbofan engines are a type of internal combustion engine, thus IDGs and starter generators fall under CTH 8511.
- Imposed higher IGST rate (28%) and penalties for alleged misclassification.
Legal Proceedings and Orders
- Audit and Show Cause Notices: The department issued audit letters and show cause notices, raising demands and proposing penalties for misclassification.
- Principal Commissioner’s Orders: Confirmed demands and penalties, classifying the goods under CTH 8511.
- Appeals: Interglobe Aviation and C.G. Logistics challenged the orders before CESTAT.
Tribunal’s Analysis and Decision

Key Findings
1. Technical Distinction: Gas turbine engines (turboprop/turbofan) are fundamentally different from spark-ignition and compression-ignition internal combustion engines. CTH 8411 specifically covers gas turbines, while CTH 8511 is limited to generators used with spark/compression ignition engines.
2. Correct Classification: IDGs and starter generators are electrical generators used with gas turbine engines, not spark/compression ignition engines. Therefore, they are classifiable under CTH 8501, not CTH 8511.
3. Revenue Neutrality: The change in classification from CTH 8502 to CTH 8501 was revenue neutral, as both attracted the same IGST rate during the relevant period.
4. Extended Limitation Period: The extended period of limitation for raising demands was not correctly invoked, as mere misclassification does not imply intent to evade duty.
5. Penalties: Penalties under sections 114A and 117 of the Customs Act were not sustainable, as there was no willful misstatement or suppression of facts.
Final Order
- The Tribunal set aside the orders of the Principal Commissioner, allowing all appeals.
- Confirmed that IDGs and starter generators imported by Interglobe Aviation are to be classified under CTH 8501.
- Penalties imposed on Interglobe Aviation and C.G. Logistics were revoked.
Implications for the Aviation Industry

This decision clarifies the classification of aircraft electrical components, ensuring correct application of customs duties and IGST. It also underscores the importance of technical distinctions in tariff interpretation and protects importers from unwarranted penalties for genuine classification disputes.

Conclusion

The CESTAT ruling in favor of Interglobe Aviation sets a precedent for the classification of integrated drive generators and starter generators, emphasizing the need for precise technical and legal analysis in customs matters. Importers and customs brokers should carefully assess the nature of aircraft components to ensure compliance and avoid unnecessary litigation.

Source: CESTAT Delhi

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May 12, 2026
CESTAT Mumbai Orders Interest on Delayed Customs Refund from Original Refund Application Date
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 11.05.2026

CESTAT Mumbai Orders Interest on Delayed Customs Refund from Original Refund Application Date

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 .

In a significant decision, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) Mumbai delivered a judgment in favor of PNP Polytex Pvt Ltd regarding the grant of interest on delayed customs duty refunds. This article provides a detailed overview of the case, the legal issues involved, the Tribunal’s reasoning, and the broader implications for importers and the customs administration.

Background of the Case

The dispute traces back to 2003, when PNP Polytex Pvt Ltd imported PVC coated cloth and paid various duties, including a 5% duty under Goods of Special Importance (GSI). Later, the company discovered that, as per Notification No. 7/2003-CE dated 01.03.2003, the GSI duty was not applicable to their imports. Consequently, PNP Polytex filed appeals against the assessment of seventeen Bills of Entry, which were decided in their favor by the Commissioner (Appeals) on 31.03.2004. The company was granted consequential relief, and the department’s review petition was rejected.

In 2004, PNP Polytex filed seventeen refund applications totaling Rs. 48.28 lakhs. Despite repeated follow-ups and submission of documents, the refund process was marred by delays, deficiency memos, and requests for resubmission of documents over the next 14 years.

Key Legal Issue: Entitlement to Interest on Delayed Refund

The central issue before the Tribunal was not the legality of the refund itself, but the period from which interest on the refunded amount should be calculated. The department granted interest only from 20.03.2018 (three months after the last clarification was provided in December 2017) until the refund was sanctioned on 01.11.2018. PNP Polytex contended that interest should be paid from three months after the original refund applications were filed in June 2004, as per Section 27A of the Customs Act, 1962.

Timeline of Events
- 2003: Import of goods and payment of duties, including GSI.
- 2004: Appeals filed and decided in favor of PNP Polytex; refund applications submitted.
- 2004–2018: Multiple deficiency memos, repeated submissions, and prolonged departmental delays.
- 01.11.2018: Refund of Rs. 38,94,277 sanctioned (after re-assessment).
- 2021: Commissioner (Appeals) confirms interest only from 2018.
- 2026: CESTAT Mumbai modifies the order, granting interest from three months after the original refund application date.
Tribunal’s Reasoning and Findings

The Tribunal, led by Member Judicial, made several critical observations:
- Acknowledgment of Timely Filing: The Tribunal found that PNP Polytex had filed all seventeen refund applications within the stipulated period in 2004, and these were duly acknowledged by the customs department.
- Departmental Delays: The Tribunal criticized the department for issuing deficiency memos at intervals of several years and for not processing the refund applications in a timely manner, despite having all necessary documents, including Chartered Accountant certificates, on multiple occasions.
- Statutory Mandate: Section 27A of the Customs Act, 1962, clearly states that if a refund is not made within three months of the application, interest must be paid from the expiry of that period until the date of refund.
- Judicial Precedents: The Tribunal relied on Supreme Court decisions (e.g., Ranbaxy Laboratories Ltd. v. Union of India, Hamdard (Waqf) Laboratories case) which held that interest is payable from three months after the date of the original refund application, not from the date of subsequent clarifications or document submissions, unless the application was found deficient and returned within ten working days.
- No Valid Deficiency Memo: Since the department did not issue a valid deficiency memo or return the application within the prescribed period, the Tribunal held that the interest must be calculated from three months after the original application date.
The Final Order

The CESTAT Mumbai allowed the appeal and modified the Commissioner’s order, directing the customs department to pay interest at the applicable rate on the refunded amount from three months after 02.06.2004 (the date of the original refund applications) until the date of refund (01.11.2018). The department was ordered to pay the interest within two months of receiving the order.

Implications and Takeaways
- For Importers: This ruling reinforces the right of importers to timely refunds and interest on delayed payments, provided their applications are complete and acknowledged.
- For Customs Administration: The decision underscores the importance of prompt processing of refund claims and adherence to statutory timelines. Delays and repeated deficiency memos without valid grounds can result in financial liability for interest.
- Legal Clarity: The judgment clarifies that the date of the original, acknowledged refund application is crucial for calculating interest, unless the department promptly identifies and communicates deficiencies.
Conclusion

The CESTAT Mumbai’s decision in the PNP Polytex case is a landmark for importers seeking justice in delayed refund matters. It highlights the need for administrative efficiency and strict compliance with statutory provisions, ensuring that taxpayers are not penalized for departmental inaction. Importers facing similar issues can rely on this precedent to claim their rightful interest on delayed refunds.

Source: CESTAT Mumbai

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May 11, 2026
Madras High Court Clarifies Jurisdiction on Export Incentives
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 09.05.2026

Madras High Court Clarifies Jurisdiction on Export Incentives

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 .

Seaswan Shipping & Logistics recently secured a favorable judgment from the Madurai Bench of the Madras High Court in a case involving customs classification, export incentives under the MEIS scheme, and penalties imposed by customs authorities. This article unpacks the legal dispute, the arguments presented, and the implications for exporters and customs brokers in India.

Background of the Case
1. Parties Involved:
  - Appellant: Seaswan Shipping & Logistics, a licensed Customs Broker operating in Chennai and Tuticorin.
  - Respondent: The Commissioner of Customs, Tuticorin.
2. Nature of Dispute:
  - Seaswan filed shipping bills for the export of machine-made safety matches for multiple exporters between 2017 and 2019, including M/s. Shivam Exports.
  - The goods were classified under CTSH36050090, and exporters claimed benefits under the MEIS (Merchandise Exports from India Scheme).
  - MEIS scrips worth Rs. 11,47,617 were issued by DGFT based on the FOB value of Rs. 5,73,80,848.
Customs Department’s Allegations
- Customs authorities alleged that the wrong classification (CTSH36050090 instead of CTSH36050010) led to excess MEIS benefits.
- Notices were issued to exporters and Seaswan, seeking penalties under Sections 114 and 114AA of the Customs Act for alleged contraventions.
- The adjudicating authority imposed a penalty of Rs. 10 lakhs on both the exporter and the customs broker.
Legal Proceedings and Arguments
1. Appeal to CESTAT:
  - Seaswan appealed to the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), which reduced the penalty to Rs. 1 lakh under Section 114AA and set aside the penalty under Section 114(III).
2. High Court Appeal:
  - Seaswan challenged the CESTAT order, arguing:
    
    The classification was based on exporter instructions and accepted by customs officers.
    
    MEIS benefits are granted by DGFT, not customs authorities.
    
    No proceedings were initiated by DGFT regarding the classification or MEIS scrips.
    
    Mens rea (intent) is required for penalty under Section 114AA, and mere error does not constitute wilful misstatement.
3. Customs Department’s Stand:
  - Claimed intentional misclassification and revenue loss.
  - Asserted justification for penalty due to alleged wilful misstatement.
Court’s Analysis and Key Legal Findings
1. Jurisdiction:
  - Only DGFT can grant or revoke MEIS scrips; customs authorities cannot initiate action regarding MEIS benefits unless DGFT objects.
  - The MEIS scrips issued by DGFT were valid and not revoked.
2. Mens Rea and Penalty:
  - Mere mis-description does not imply intent (mens rea) required for penalty under Section 114AA.
  - Seaswan acted as an agent, and wilful intent was absent.
3. Relevant Precedents:
  - The court cited Supreme Court and Kerala High Court judgments, emphasizing that unless the licensing authority (DGFT) finds misrepresentation or breaches, customs authorities cannot deny benefits or impose penalties.
Final Judgment and Implications
- The High Court set aside the CESTAT order and allowed Seaswan’s appeal, answering all substantial questions of law in favor of the appellant.
- The judgment clarifies that:
  1. Export incentives like MEIS are under DGFT’s jurisdiction.
  2. Customs authorities cannot penalize exporters or brokers for classification errors unless DGFT initiates action.
  3. Penalties require proof of wilful intent, not mere mistakes.
What This Means for Exporters and Customs Brokers
- Strengths:
  - Clear separation of powers between DGFT and customs authorities.
  - Protection against arbitrary penalties for classification errors.
- Risks:
  - Intentional misclassification can still attract penalties if proven.
- Opportunities:
  - Exporters and brokers should ensure accurate classification and maintain documentation to defend against allegations.
Conclusion

This landmark judgment reinforces the importance of proper jurisdiction and intent in customs and export incentive cases. Exporters and customs brokers can take confidence in the legal protections clarified by the court, but must remain vigilant in compliance and documentation.

Source: Madras High Court

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May 9, 2026
CESTAT Mumbai Upholds Uzbekistan Origin, Rejects Revenue’s Attempt to Reclassify Goods as Iranian for ADD Levy
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 01.05.2026

CESTAT Mumbai Upholds Uzbekistan Origin, Rejects Revenue’s Attempt to Reclassify Goods as Iranian for ADD Levy

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 .

Keltech Energies Ltd. recently secured a significant victory at the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai, in a case involving the import of ammonium nitrate. The dispute centered on the country of origin of the imported goods and the imposition of anti-dumping duties (ADD), with far-reaching implications for importers and customs authorities alike.

Background of the Case

Keltech Energies Ltd. imported ammonium nitrate, declaring Uzbekistan as the country of origin in seventeen Bills of Entry. The company provided a Country of Origin Certificate and sought exemption from ADD under Notification No. 44/2017-Customs (ADD) dated 12.09.2017. However, the customs authorities rejected the declared origin, treating the goods as Iranian and reassessed the imports, demanding Rs. 2,75,43,267/- in duty, imposing penalties, and confiscating the goods.

Key Issues and Arguments

1. Country of Origin Dispute
- Keltech’s Position: The goods were manufactured in Uzbekistan, transported by road to Bandar Abbas, Iran (as Uzbekistan is landlocked), then shipped to Jebel Ali, Dubai, before arriving in India. Keltech submitted a valid Country of Origin Certificate and supporting documents, including purchase orders, invoices, and certificates from relevant authorities.
- Customs’ Position: Authorities alleged mis-declaration, relying on statements and electronic evidence (such as WhatsApp chats) to claim the goods originated from Iran, thus subject to ADD.
2. Evidence and Investigation
- Keltech argued that the authorities failed to investigate or verify the authenticity of the Country of Origin Certificate. There was no allegation or proof that the certificate was forged or manipulated.
- The customs authorities relied on statements and electronic evidence, but these were not corroborated or authenticated as required under Section 138C of the Customs Act.
3. Principles of Natural Justice
- Keltech highlighted that no cross-examination was offered for key statements relied upon by customs, violating principles of natural justice.
- The company also pointed out discrimination, referencing another case where similar demands were dropped against another importer on identical grounds.
Tribunal’s Findings
- The CESTAT found that Keltech’s documentary evidence, including the Country of Origin Certificate, invoices, and transport documents, was credible and unrefuted.
- The tribunal criticized customs authorities for relying on uncorroborated statements and unauthenticated electronic evidence, failing to subject primary evidence to proper scrutiny.
- The lack of cross-examination and verification of the certificate was deemed a serious procedural lapse.
- The tribunal noted discrimination in the treatment of Keltech compared to other importers.
Final Order and Relief
- The CESTAT set aside the customs authority’s order, allowing Keltech’s appeal and granting consequential relief.
- The tribunal emphasized the importance of proper investigation, adherence to legal procedures, and respect for documentary evidence in customs disputes.
Implications for Importers and Customs Authorities
1. Strengthening Documentary Evidence: Importers should ensure robust documentation, including valid certificates and transport records, to support their claims.
2. Procedural Fairness: Customs authorities must adhere to principles of natural justice, including offering cross-examination and verifying primary evidence.
3. Legal Scrutiny of Electronic Evidence: Electronic evidence must be authenticated and corroborated as per legal requirements.
4. Consistency in Decision-Making: Authorities should avoid discriminatory practices and ensure uniform application of law.
Conclusion

The Keltech Energies Ltd. case underscores the critical role of documentary evidence and procedural fairness in customs disputes. The CESTAT’s decision sets a precedent for importers facing similar challenges and highlights the need for customs authorities to conduct thorough, unbiased investigations.

Source: CESTAT Mumbai

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May 1, 2026
CESTAT Bangalore Ruled on Proper Classification of Scientific Instruments under Customs Tariff Act
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:
1. The imported instruments function together as a system for physical and chemical analysis, not for measurement or control as defined under CTH 9032.
2. The goods were appropriately described and classified in the Bill of Entry, matching the supplier’s commercial invoice and HS code.
3. The issue was interpretational, not a case of suppression or willful misstatement.
4. 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:
1. The aerosol generator and related instruments are used for generating and analyzing aerosols, not for measurement or control as per CTH 9032.
2. The system does not operate in isolation and lacks mechanisms to measure or control parameters independently.
3. The classification under CTH 9027 is appropriate, and the department’s invocation of extended limitation was unsustainable.
4. 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
1. Accurate Classification: Ensure goods are classified based on their actual function and use, supported by documentation.
2. Documentation: Maintain clear records, including commercial invoices and technical descriptions, to support classification.
3. Legal Awareness: Understand relevant tariff headings and legal notes to avoid disputes.
4. 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.

Connected Matter

Supreme Court reaffirms strict interpretation of ‘Suppression of Facts’ u/s 11A of Central Excise Act

Source: CESTAT Bangalore

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May 1, 2026

HSN category	Description
A	Complete feed
B	Preparations supplementing/balancing farm-produced feeds
C	Preparations used in making complete or supplementary feeds

Tag: #CESTAT

CESTAT Mumbai Allows Customs Duty Exemption on Dowtherm Heat Transfer Fluid Under SHIS Scheme

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CESTAT Chennai: Vitamin Feed Premixes Classifiable as Animal Feed Preparations Under CTH 2309

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CESTAT Chennai on Refund of Excess Export Duty and Limitation under Section 27 of the Customs Act, 1962

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CESTAT Kolkata Orders 12% Interest to Berger Paints on Customs Refund

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CESTAT Chandigarh Sets Aside Penalty on Customs Broker in High-Profile Cigarette Smuggling

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CESTAT Delhi Resolves Customs Classification Dispute for Aircraft Generators

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CESTAT Mumbai Orders Interest on Delayed Customs Refund from Original Refund Application Date

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Madras High Court Clarifies Jurisdiction on Export Incentives

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CESTAT Mumbai Upholds Uzbekistan Origin, Rejects Revenue’s Attempt to Reclassify Goods as Iranian for ADD Levy

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CESTAT Bangalore Ruled on Proper Classification of Scientific Instruments under Customs Tariff Act

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