𝐀𝐚𝐝𝐫𝐢𝐤𝐚𝐚 𝐋𝐞𝐠𝐚𝐥 𝐒𝐞𝐫𝐯𝐢𝐜𝐞𝐬 (𝐀𝐋𝐒)

Tag: #CESTAT

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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Ravi Shekhar Jha – Advocate, Bar Council of Delhi
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
CESTAT Delhi Sets Aside Duty and Penalties in EOU Marble Import Dispute
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 30.04.2026

CESTAT Delhi Sets Aside Duty and Penalties in EOU Marble Import Dispute

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 delivered a significant judgment involving M/s United Natural Stone, a 100% Export Oriented Unit (EOU) based in Udaipur, Rajasthan, and several associated individuals. The case revolved around customs duty assessments, alleged violations of export regulations, and the imposition of substantial penalties. This article provides a detailed overview of the case, its background, key legal issues, arguments from both sides, and the final outcome.

Background of the Case

United Natural Stone operates as a 100% EOU, importing marble blocks duty-free under the Foreign Trade Policy (FTP) and manufacturing marble products for export. The company, along with its partners and associated firms, faced allegations from the Customs Department of violating the ‘Actual User Condition’ of the exemption notification by diverting imported marble blocks to the domestic market instead of using them for export production.

Key Allegations
- United imported 15,104.1 MT of marble blocks duty-free between 2016 and 2020.
- During a factory search in January 2020, a shortage of 8,351.58 MT of marble blocks was discovered.
- The Customs Department claimed these blocks were sold domestically, and that exported marble slabs were made from indigenous marble, not imported blocks.
- The department demanded customs duty on the entire imported quantity and imposed penalties on United and several individuals under sections 114A and 114AA of the Customs Act.
Legal Proceedings and Arguments

Appellants’ Submissions
- Jurisdiction: The defense argued that only the Directorate General of Foreign Trade (DGFT) should handle FTP violations, not Customs.
- StockVerification: They challenged the method used to calculate shortages, citing measurement inconsistencies and processing losses.
- Evidence: The defense highlighted the lack of concrete evidence for clandestine removal, such as buyer identification, transport records, or a money trail.
- ExportDocumentation: They asserted that all exports through third parties were made from indigenous marble, supported by exporter statements.
- ProceduralIssues: The defense criticized the denial of cross-examination rights and the improper admission of statements as evidence under section 138B of the Customs Act.
Revenue’s Submissions
- ExportRecords: The department presented export invoices and purchase orders showing exports of ‘Fantasy Brown’ marble, allegedly of Indian origin.
- FinancialTransactions: Evidence of payments and e-way bills suggested diversion and sale of imported marble blocks.
- OriginofMarble: The department relied on internet sources to claim ‘Harmony Brown’ marble is exclusive to India, supporting their case that imported marble was diverted.
Tribunal’s Findings and Decision

Key Issues Decided
1. DutyDemand: The tribunal found that 6,752.56 MT of marble blocks were still in stock and not diverted, so no duty could be demanded on this quantity. For the remaining 8,351.58 MT, the tribunal ruled that reliance on internet sources and unverified statements was insufficient to prove diversion. The demand for duty was set aside.
2. Penalties: The tribunal held that penalties under sections 114A and 114AA require evidence of collusion, misstatement, or intentional use of false documents. Since imports were made legitimately and no such evidence was found, all penalties were set aside.
3. ProceduralCompliance: The tribunal emphasized the importance of proper evidentiary procedures, including compliance with section 138B for admitting statements.
Final Outcome
- The impugned order was set aside.
- All seven appeals were allowed, and the penalties and duty demands were annulled.
Implications for Export Oriented Units

This judgment underscores the need for:
1. ProperEvidence: Regulatory authorities must rely on concrete evidence, not internet sources or unverified statements, to establish violations.
2. ProceduralFairness: Compliance with legal procedures for admitting evidence and allowing cross-examination is critical.
3. ClearJurisdiction: FTP violations should be handled by the appropriate authority (DGFT), not Customs, unless clear evidence of customs law violations exists.
Conclusion

The United Natural Stone case is a landmark in customs law, highlighting the importance of due process, evidentiary standards, and jurisdictional clarity. It provides valuable lessons for EOUs, exporters, and regulatory authorities alike.

Source: CESTAT Delhi

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April 30, 2026
CESTAT Ahmedabad Upholds Export Valuation and DEPB Benefits
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 30.04.2026

CESTAT Ahmedabad Upholds Export Valuation and DEPB Benefits

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), Ahmedabad, recently delivered a significant judgment involving Adani Exports Limited and several associated companies. The case revolved around allegations of overvaluation of exports, fraudulent claims of export benefits, and the subsequent appeals by the Revenue against orders favoring the respondents. This article provides a comprehensive overview of the case, the legal arguments, and the implications of the tribunal’s decision.

Background of the Case

The Directorate of Revenue Intelligence (DRI) initiated investigations based on intelligence that various companies, including Adani Exports Ltd., had overvalued their exports of CD ROMs. The alleged intent was to fraudulently obtain excess DEPB/DEEC credits, which allow duty-free imports, thereby causing a loss to the exchequer. The investigation covered exports made during 1998 and 1999 and implicated several companies and individuals linked to the Adani Group.

Key allegations included:
- Export of junk CDs declared as software at grossly inflated values.
- Availing DEPB credits far in excess of what was admissible (e.g., Rs. 11.92 crore claimed, only Rs. 72 lakh admissible).
- Utilization of these credits for duty-free imports, resulting in revenue loss.
Legal Proceedings and Arguments

Revenue’s Position

The Revenue argued that:
1. The adjudicating authority failed to consider the merits and distinguishing facts of the case.
2. The DRI had documentary evidence (invoices, US Customs reports, etc.) supporting the re-determined, lower value of the exported goods.
3. The method of re-determination in this case differed from previous cases, making prior judgments inapplicable.
4. Admissions of overvaluation by some parties before the Settlement Commission supported the Revenue’s case.
Respondents’ Defense

The respondents, represented by legal counsel, countered that:
1. The issue was already settled by CESTAT and upheld by the Supreme Court in similar cases (Colourtex, Crown International, Advance Exports).
2. The exported goods, their valuation, and the method of assessment were identical to those in the settled cases.
3. The Ministry of Finance’s Circular No. 69/97-Cus clarified that FOB values within 150% of the manufacturer’s price should be accepted without further enquiry. The values in question fell within this range.
4. The DGFT (licensing authority) had already dropped show cause notices regarding overvaluation, confirming the legitimacy of the DEPB credits issued.
Tribunal’s Findings

The CESTAT bench, after reviewing submissions and records, made several key observations:
- The facts and legal issues were identical to those in previously adjudicated cases, where the transaction values were accepted as genuine and the exporters were found eligible for DEPB benefits.
- The Ministry of Finance’s guidelines were followed, and the declared values did not exceed the permissible limits.
- The DGFT had not cancelled the DEPB licenses, and customs authorities could not unilaterally declare them invalid without such action from the licensing authority.
- The Revenue’s appeals did not present new grounds or evidence sufficient to overturn the adjudicating authority’s orders.
Final Order

The tribunal upheld the orders in favor of Adani Exports Ltd. and other respondents, dismissing the Revenue’s appeals. The key takeaways from the order include:
- Once the transaction value is deemed fair and exports are genuine, the eligibility for DEPB entitlements stands.
- The issue is no longer res integra (i.e., it has been conclusively settled by higher courts).
- Valid DEPB scrips used for imports cannot be challenged by customs authorities unless cancelled by the DGFT.
Implications and Significance

This ruling reinforces the principle that settled legal positions, especially those upheld by the Supreme Court, must be respected by all authorities. It also clarifies the roles of customs and licensing authorities in export incentive schemes and provides exporters with greater certainty regarding the treatment of their export benefits.

Conclusion

The CESTAT Ahmedabad’s decision in the Adani Exports case marks a reaffirmation of established legal principles regarding export valuation and entitlement to export benefits. It underscores the importance of consistency in administrative actions and the finality of judicial decisions, providing clarity for exporters and regulatory authorities alike.

Connected Matter

CESTAT Ahmedabad Sets Aside Duty Demand in FPS Scrip

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Source: CESTAT Ahmedabad

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April 30, 2026