𝐀𝐚𝐝𝐫𝐢𝐤𝐚𝐚 𝐋𝐞𝐠𝐚𝐥 𝐒𝐞𝐫𝐯𝐢𝐜𝐞𝐬 (𝐀𝐋𝐒)

Tag: #CESTAT

CESTAT Chennai Overturns Confiscation and Penalty on Import of Second-Hand Digital Multifunction Machines
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 24.02.2026

CESTAT Chennai Overturns Confiscation and Penalty on Import of Second-Hand Digital Multifunction Machines

Adv Ravi Shekhar Jha

This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.

In a landmark decision, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Chennai, has delivered justice to M/s. Jaya Trading Company in a long-standing legal battle concerning the import of second-hand digital multifunction print and copying machines. The case, which dates back to 2009, has finally been resolved in favor of the appellant, setting a precedent for similar cases in the future.

Background of the Case

M/s. Jaya Trading Company, a Delhi-based importer and trader of second-hand digital multifunction print and copying machines, filed a Bill of Entry No. 321038 on September 29, 2009, at Chennai Port for a consignment of old and used machines. The goods were declared at a value of EUR 16,490/- (C&F) based on the supplier’s invoice. However, the Customs Department ordered a first-check examination and valuation by an approved Chartered Engineer, who appraised the value at EUR 20,923/- (C&F). To avoid demurrage and detention charges, the company accepted the enhanced value for assessment and paid the duty, while disputing the licensing objection raised by the Department.

The Additional Commissioner of Customs passed an Order-in-Original on October 9, 2009, rejecting the declared value, adopting the Chartered Engineer’s valuation, and confiscating the goods under Section 111(d) of the Customs Act read with Section 3(3) of the Foreign Trade (Development and Regulation) Act (FTDR Act). The order also imposed a redemption fine of ₹4,49,000/- and a penalty of ₹1,50,000/- under Section 112(a) of the Customs Act.

Legal Proceedings

The Appellant filed an appeal on January 29, 2010, before the Commissioner of Customs (Appeals-II), Chennai. Although the appeal was admitted and heard on merits in April 2010, it remained pending due to similar cases being under consideration by the Hon’ble Madras High Court. The High Court later ruled in favor of importers in cases such as City Office Equipment and Sai Graphics Systems, holding that second-hand digital multifunction print and copying machines were freely importable prior to June 5, 2012, and that the amendment to Para 2.17 of the Foreign Trade Policy was prospective.

Despite this settled legal position, the Commissioner (Appeals) rejected the Appellant’s appeal in May 2016, citing limitation issues and treating the date of dispatch as the date of service. This decision was made without examining the merits of the case or providing notice to the Appellant.

CESTAT Chennai’s Final Order 

The case was brought before the CESTAT Chennai, where the Appellant challenged the rejection of their appeal on the grounds of limitation and the legality of the confiscation, redemption fine, and penalty imposed by the Customs Department.

After a thorough examination of the case records, statutory provisions, and relevant case laws, the Tribunal delivered its final order on February 19, 2026. The key findings and rulings are as follows:
1. Appeal Not Barred by Limitation: The Tribunal held that the Commissioner (Appeals) erred in rejecting the appeal on the ground of limitation. Section 128 of the Customs Act, 1962, clearly states that the limitation period is to be calculated from the date of communication of the order, not the date of dispatch. Since the Appellant received the Order-in-Original on November 3, 2009, and filed the appeal on January 29, 2010, the appeal was well within the condonable period. The rejection of the appeal after six years without notice was deemed legally unsustainable and violative of natural justice.
2. Importability of Second-Hand Digital Multifunction Machines: The Tribunal reaffirmed the legal position established by the Hon’ble Madras High Court that second-hand digital multifunction print and copying machines were freely importable under Para 2.17 of the Foreign Trade Policy prior to June 5, 2012. The restriction introduced on this category of goods was prospective and did not apply to imports made in September 2009.
3. Confiscation Under Section 111(d): The Tribunal found that the confiscation of goods under Section 111(d) of the Customs Act was unsustainable, as the imported goods were freely importable at the time of import.
4. Valuation and Section 111(m): The Tribunal observed that the enhancement of value was based solely on the Chartered Engineer’s estimation, without any evidence of undervaluation, forged invoices, or suppression. As such, confiscation under Section 111(m) was not warranted.
5. Redemption Fine and Penalty: Since the goods were not liable for confiscation, the Tribunal held that the redemption fine under Section 125 and penalty under Section 112(a) of the Customs Act were also unsustainable. The import was made under a bona fide belief, supported by the prevailing policy and judicial pronouncements, with no evidence of mens rea or contumacious conduct.
Conclusion

The CESTAT Chennai’s decision to set aside the impugned orders and allow the appeal on merits is a significant victory for M/s. Jaya Trading Company. The Tribunal’s ruling not only provides relief to the Appellant but also reinforces the settled legal position regarding the importability of second-hand digital multifunction print and copying machines prior to June 5, 2012.

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Source: CESTAT Chennai

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February 24, 2026
CESTAT Mumbai Confirms IGST rate of 18% for imported monitors
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 24.02.2026

CESTAT Mumbai Confirms IGST rate of 18% for imported monitors

Adv Ravi Shekhar Jha

This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai, recently delivered a significant judgment in the case of M/s Wipro GE Healthcare Pvt. Ltd. vs Commissioner of Customs (Import), Mumbai-III. This case revolved around the classification and applicable Integrated Goods and Services Tax (IGST) rate on imported “LCD HB Colour Monitors without Stand, of size 19 inch,” which were intended for use with medical equipment such as ultrasound machines, X-ray machines, CT scanners, and MRI systems.

Background of the Case

The appellants, M/s Wipro GE Healthcare Pvt. Ltd., imported LCD monitors through the Air Cargo Complex in Mumbai between December 2018 and February 2021. They classified these monitors under Customs Tariff Heading (CTH) 8528 and self-assessed the IGST payable at 18%, as applicable to computer monitors under Serial Nos. 383C and 384 of Schedule-III to Notification No. 01/2017-Integrated Tax (Rate) dated 28.06.2017.

However, during a post-clearance audit, the Customs Department raised objections to this classification. The department argued that the monitors were not designed for use with computers or Automatic Data Processing (ADP) machines but were specifically designed for use with medical equipment. As a result, the department proposed reclassifying the monitors under a different tariff heading, which would attract a higher IGST rate of 28% under Serial No. 154 of Schedule-IV of the same notification.

Show Cause Notices (SCNs) were issued to the appellants, demanding differential customs duty and proposing penalties and confiscation of goods. The Original Authority upheld the department’s classification and confirmed the demand for additional IGST. However, upon appeal, the Commissioner of Customs (Appeals) set aside the original orders and remanded the matter back to the original authority for fresh adjudication.

Key Issues in the Case

The primary issue before the Tribunal was to determine the correct classification and IGST rate applicable to the imported monitors. Additionally, the Tribunal had to decide whether the Commissioner (Appeals) was justified in remanding the matter to the original authority, especially when a similar case involving Philips India Limited vs Commissioner of Customs (Import), ACC, Mumbai had already been conclusively decided by the Tribunal and upheld by the Hon’ble Supreme Court.

Arguments Presented

Appellant’s Arguments:
1. Precedent from Philips India Case: The appellants argued that the facts of their case were identical to the Philips India Limited case, where the Tribunal had ruled in favor of the assessee, classifying similar monitors under CTH 8528 5200 and applying an IGST rate of 18%.
2. Error in Remanding the Case: The appellants contended that the Commissioner (Appeals) erred in treating the Tribunal’s decision in the Philips India Limited case as “additional evidence” under Rule 5 of the Customs (Appeals) Rules, 1982. They argued that judicial decisions are not “documentary evidence” but binding precedents that should have been applied directly.
3. Compliance with Notification: The appellants demonstrated that the imported monitors met the criteria for the concessional IGST rate under Serial Nos. 383C and 384 of Notification No. 01/2017-IT(Rate), as they were classifiable under sub-heading 8528 52 and were capable of being connected to ADP machines.
Respondent’s Arguments:

The Revenue argued that the Commissioner (Appeals) was correct in remanding the matter to the original authority for fresh adjudication, as the Tribunal’s decision in the Philips India Limited case was not available during the original proceedings.

Tribunal’s Observations and Decision

After hearing both sides and reviewing the case records, the Tribunal made the following observations:
1. Identical Case Already Decided: The Tribunal noted that the facts of the present case were identical to the Philips India Limited case, which had been conclusively decided by the Tribunal and upheld by the Hon’ble Supreme Court. The issue was no longer res integra.
2. Judicial Precedent is Binding: The Tribunal emphasized that judicial decisions are not “additional evidence” under Rule 5 of the Customs (Appeals) Rules, 1982. It cited judgments from the Hon’ble High Courts of Telangana and Bombay, which clarified that court decisions are binding and not subject to the procedural requirements for admitting additional evidence.
3. Error in Remanding the Case: The Tribunal held that the Commissioner (Appeals) should have decided the matter on merits, following the binding precedent set by the Tribunal in the Philips India Limited case. The remand was deemed unnecessary and incorrect.
4. Finality of the Issue: The Tribunal reiterated that the IGST rate of 18% was appropriate for the imported monitors, as per the settled position of law established in the Philips India Limited case and upheld by the Supreme Court.
Final Order

The Tribunal set aside the impugned orders of the Commissioner (Appeals) and allowed the appeals in favor of M/s Wipro GE Healthcare Pvt. Ltd. The decision reaffirmed the importance of judicial discipline and the binding nature of precedents in ensuring consistency and fairness in legal proceedings.

Key Takeaways
1. Judicial Precedents Are Binding: The case highlights the importance of adhering to established judicial precedents to maintain consistency and avoid unnecessary litigation.
2. Classification of Goods: The decision underscores the significance of accurate classification of goods for determining applicable tax rates, especially in cases involving specialized equipment.
3. Legal Interpretation of Evidence: The Tribunal clarified that court judgments cannot be treated as “additional evidence” under Rule 5 of the Customs (Appeals) Rules, 1982, as they are binding legal precedents.
Conclusion

The judgment in the M/s Wipro GE Healthcare Pvt. Ltd. case is a landmark decision that reinforces the principles of judicial discipline and the binding nature of precedents. It serves as a reminder to adjudicating authorities to consider settled legal positions and avoid unnecessary remands, ensuring a more efficient and fair resolution of disputes. This case also provides valuable insights into the complexities of customs classification and the application of IGST rates, particularly for specialized goods like medical equipment.

Source: CESTAT Mumbai

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February 24, 2026
CESTAT Mumbai Overturns Customs Valuation
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 23.02.2026

CESTAT Mumbai Overturns Customs Valuation

Adv Ravi Shekhar Jha

This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai, recently delivered a significant judgment in the case of Kumar Mahendra Exim vs. Commissioner of Customs (Imports), Mumbai (Customs Appeal No. 86769 of 2016). This case highlights critical aspects of customs valuation, reassessment, and the importance of adhering to legal provisions under the Customs Act, 1962, and the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.

Background of the Case

The appellant, M/s Kumar Mahendra Exim, filed a Bill of Entry (B/E) No. 9278749 dated 11.02.2013 for the clearance of imported goods declared as “Knitted Fabrics” under Customs Tariff Item (CTI) 6006 4200. The declared value was USD 2.80 per kg, amounting to a total value of USD 61,917.80 for 22,113.5 kgs of goods imported from China. However, during the assessment, the Customs Department enhanced the unit value to USD 4.60 per kg based on a DRI (Directorate of Revenue Intelligence) Alert Circular dated 09.05.2011, which indicated under-valuation of fabrics imported from China. Consequently, the appellant paid a differential duty of Rs. 5,75,345/-.

Feeling aggrieved by the enhancement of the declared value, the appellant filed an appeal before the Commissioner of Customs (Appeals), arguing that the rejection of the declared value was contrary to the provisions of Section 17(5) of the Customs Act, 1962, and Rule 12 of the Customs Valuation Rules, 2007. The Commissioner (Appeals) rejected the appeal, stating that the assessment of the Bill of Entry was not appealable and directed the appellant to approach the lower authority for a speaking order.

The appellant then approached the Tribunal, which remanded the matter to the original authority, directing it to pass a speaking order. The original authority subsequently issued an Order-in-Original dated 27.11.2014, rejecting the declared transaction value and reassessing the value at USD 4.60 per kg under Rule 4 of the Customs Valuation Rules, 2007. The appellant challenged this order before the Commissioner (Appeals), who upheld the original authority’s decision. This led to the present appeal before the Tribunal.

Key Issues in the Case

The Tribunal identified two primary issues for determination:
1. Was the enhancement of the declared value legally sustainable? 
  - The appellant argued that the enhancement was arbitrary and not based on proper evidence. They contended that the data of contemporaneous imports was not shared with them, and there was no proof that the declared value was not the “actual price paid or payable” for the imported goods.
  - The appellant also cited previous judgments, such as Sedna Impex Pvt. Ltd. vs. Commissioner of Customs, Faridabad and Surbhit Impex Pvt. Ltd. vs. Commissioner of Customs (Import), Nhava Sheva, where similar enhancements based on DRI alerts were rejected.
2. Did the reassessment comply with the legal provisions of Section 14 of the Customs Act, 1962, and the Customs Valuation Rules, 2007? 
  - The Tribunal examined whether the reassessment followed the sequential methodology prescribed under Rules 3 to 9 of the Customs Valuation Rules, 2007.
Tribunal’s Observations and Judgment 

After carefully analyzing the submissions and legal provisions, the Tribunal made the following observations:
1. Violation of Legal Provisions:
  - The Tribunal noted that the proper officer did not follow the sequential methodology prescribed under Rules 3 to 9 of the Customs Valuation Rules, 2007. Specifically, Rule 4, which deals with the transaction value of identical goods, was not applied correctly. The comparison of values at the “same commercial level” and “substantially the same quantity” was not examined, which is a mandatory requirement under Rule 4.
2. Non-Adherence to Principles of Natural Justice:
  - The Tribunal observed that the department did not issue a show-cause notice or provide the appellant with an opportunity for a personal hearing before enhancing the declared value. This was a clear violation of the principles of natural justice.
3. Lack of Evidence:
  - The department failed to provide evidence that the declared value was not the actual price paid or payable for the imported goods. The Tribunal emphasized that valuation cannot be done arbitrarily based on general alerts or assumptions.
4. Precedents:
  - The Tribunal referred to similar cases, such as Surbhit Impex Pvt. Ltd., where the enhancement of declared value based on DRI alerts was deemed unsustainable due to the lack of reasonable cause to reject the transaction value.
Final Order

The Tribunal concluded that the impugned order passed by the Commissioner of Customs (Appeals) was not legally sustainable. It set aside the order and allowed the appeal in favor of the appellant, M/s Kumar Mahendra Exim.

Key Takeaways

This case underscores the importance of adhering to the legal framework for customs valuation and reassessment. Some key lessons include:
1. Adherence to Legal Provisions:
  - Customs authorities must strictly follow the provisions of Section 14 of the Customs Act, 1962, and the Customs Valuation Rules, 2007, when reassessing the value of imported goods.
2. Principles of Natural Justice:
  - Importers must be given a fair opportunity to justify their declared value, and any enhancement must be supported by concrete evidence. Failure to issue a show-cause notice or provide a personal hearing violates the principles of natural justice.
3. Evidence-Based Valuation:
  - The rejection of declared value must be based on credible evidence, such as data on contemporaneous imports of identical goods. Arbitrary reliance on general alerts or assumptions is not permissible.
4. Precedents Matter:
  - Previous judgments play a crucial role in shaping the interpretation of legal provisions. Importers and customs authorities should consider relevant case laws to ensure compliance.
Conclusion

The judgment in the Kumar Mahendra Exim case serves as a reminder of the need for transparency, fairness, and adherence to legal procedures in customs valuation and reassessment. It highlights the importance of protecting the rights of importers while ensuring that customs authorities act within the bounds of the law. This case is a significant milestone in the evolution of customs law in India and provides valuable insights for importers, legal practitioners, and policymakers.

Source: CESTAT Mumbai

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February 23, 2026
CESTAT Chennai Sets Aside Penalty on Chartered Accountant
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 21.02.2026

CESTAT Chennai Sets Aside Penalty on Chartered Accountant

Adv Ravi Shekhar Jha

This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.

In a significant judgment, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Chennai, has set aside penalties imposed on Chartered Accountant under Section 112(a) of the Customs Act, 1962. This decision, delivered on February 19, 2026, highlights the importance of due diligence in professional practices while also emphasizing the need for a fair assessment of liability in cases involving alleged abetment of customs duty evasion.

Background of the Case

The case revolves around two appeals filed by appellant, a Chartered Accountant and partner at M/s. Rana & Shah Associates, Surat. The appeals were filed to challenge the Orders-in-Original No. 24497/2014 and 24494/2014, issued by the Commissioner of Customs, Chennai, on March 27, 2014, and March 26, 2014, respectively. These orders imposed penalties of ₹3,00,000 and ₹2,00,000 on Appellant under Section 112(a) of the Customs Act, 1962.

The penalties were imposed on the grounds that Appellant had issued certificates certifying the consumption of raw materials and production capacity of installed machinery for two firms—M/s. Minerva Tex Fab and M/s. N.S. Textiles, both based in Surat. These certificates were allegedly used by the firms to obtain Advance Authorizations from the Directorate General of Foreign Trade (DGFT) for duty-free import of goods. However, the imported goods were later found to have been diverted to the local market in Bangalore, violating the conditions of the Advance Authorizations and rendering the goods liable for confiscation under Sections 111(d) and 111(o) of the Customs Act, 1962.

Appellant’s Defense

Represented by Advocate, Appellant argued that he had issued the certificates in good faith and without any knowledge of their misuse. He contended that the certificates were issued free of charge at the request of his friend, Advocate, who claimed they were required for bank loan purposes. Appellant further stated that he had verified the documentary evidence provided to him, including PAN numbers, Small Scale Industries (SSI) registration, rental agreements, and books of accounts, before issuing the certificates. He emphasized that Chartered Accountants are not required to physically verify premises or machinery for issuing such certificates.

The appellant also pointed out that the Advance Authorizations were issued by the DGFT three months before he issued the certificates, making it impossible for the certificates to have been used to obtain the licenses. He argued that the responsibility for verifying the genuineness of the documents submitted for Advance Authorizations lay with the issuing officer at the DGFT, not with him.

Revenue’s Argument

The Revenue, represented by Authorized Representative, argued that Appellant had issued certificates without verifying the existence of the units or machinery. The certificates were later used by M/s. Minerva Tex Fab and M/s. N.S. Textiles to obtain Advance Authorizations for importing goods under the actual user condition, which were subsequently diverted to the local market. The Revenue contended that Appellant’s actions facilitated the fraudulent activities of the two firms, making him liable for penalties under Section 112(a) of the Customs Act, 1962.

Tribunal’s Observations and Judgment 

After hearing both sides and reviewing the evidence, the Tribunal concluded that the penalties imposed on Appellant were not justified. The key points of the judgment are as follows:
1. No Evidence of Collusion or Abetment: The Tribunal found no evidence to suggest that Appellant had colluded with M/s. Minerva Tex Fab or M/s. N.S. Textiles to facilitate their fraudulent activities. The certificates were issued based on documentary evidence provided to him, and there was no indication that he knowingly aided or abetted the illegal importation and diversion of goods.
2. Timing of Certificates: The Tribunal noted that the Advance Authorizations were issued by the DGFT three months before Appellant issued the certificates. This timeline clearly demonstrated that the certificates were not used to obtain the licenses.
3. Professional Negligence: While the Tribunal acknowledged that Appellant had acted negligently in issuing the certificates without adequate verification, it emphasized that negligence alone does not attract penalties under Section 112(a) of the Customs Act, 1962. The section requires evidence of abetment or direct involvement in the illegal activities, which was absent in this case.
4. Precedents: The Tribunal referred to the judgment of the Hon’ble Bombay High Court in Mahesh P. Patel vs. The Commissioner of Customs (EP) [2018 (12) TMI 883 – Bombay High Court], which held that mere issuance of certificates without due diligence does not constitute abetment under Section 112(a) of the Customs Act, 1962.
5. Leniency and Future Conduct: While setting aside the penalties, the Tribunal advised Appellant to exercise greater caution in issuing certificates in the future to avoid similar situations.
Conclusion

The CESTAT’s decision to exonerate Appellant underscores the importance of distinguishing between professional negligence and active abetment in cases involving customs duty evasion. While the Tribunal acknowledged the appellant’s lack of due diligence, it ruled that the requirements of Section 112(a) of the Customs Act, 1962 were not met, as there was no evidence of collusion or direct involvement in the illegal activities.

Source: CESTAT Chennai

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February 21, 2026
CESTAT Delhi- Thermal Printers Classified as Medical Equipment Under CTI 9018
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 21.02.2026

CESTAT Delhi- Thermal Printers Classified as Medical Equipment Under CTI 9018

Adv Ravi Shekhar Jha

This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.

In a significant ruling, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, delivered a judgment on February 20, 2026, addressing the classification of thermal printers imported by M/s AGFA Healthcare India Pvt. Ltd. The case revolved around whether these printers should be classified under Customs Tariff Item (CTI) 9018 90 99, as medical diagnostic equipment, or under CTI 8443 32 90, as general printing machinery.

Background of the Case

M/s AGFA Healthcare India Pvt. Ltd., a company engaged in trading and distributing medical equipment, imported various models of thermal printers, including Drystar 5301, Drystar 5302, Drystar 5503, and Drystar Axys, between July 1, 2017, and March 31, 2019. These printers were used to produce high-quality medical films for diagnostic purposes in hospitals, medical laboratories, and colleges. The company classified these printers under CTI 9018 90 99, which covers instruments and appliances used in medical sciences, and availed exemptions under Notification No. 50/2017-Customs.

However, the Directorate of Revenue Intelligence (DRI) initiated investigations and argued that the printers should be classified under CTI 8443 32 90, which pertains to general printing machinery. The DRI contended that the printers did not perform diagnostic functions and were capable of connecting to Automatic Data Processing (ADP) machines or networks, making them general-purpose printers. Consequently, the DRI issued a show-cause notice proposing reclassification and demanded differential duty, interest, and penalties under various sections of the Customs Act, 1962.

Key Issues in the Case

The primary issue before the Tribunal was the classification of the imported thermal printers. The department argued that the printers were general-purpose printing machinery, while the appellant contended that they were specifically designed for medical diagnostic purposes and should be classified under CTI 9018 90 99.

Arguments Presented

Appellant’s Arguments:
1. Burden of Proof: The appellant argued that the burden of proving reclassification lies with the department, which failed to provide sufficient evidence.
2. Medical Use: The thermal printers were specifically designed for medical sciences, capable of producing diagnostic-quality images on heat-sensitive medical films. These printers were integral to the diagnostic process.
3. Technical Evidence: The appellant presented technical literature, product brochures, and expert declarations from medical professionals and engineers to substantiate their claim that the printers were medical diagnostic equipment.
4. Legal Precedents: The appellant cited previous judgments where goods specifically designed for medical use were classified under Chapter 90, even if they shared general characteristics with items in other chapters.
Department’s Arguments:
1. General Printing Machinery: The department argued that the printers were not exclusively used for medical diagnostics and could connect to ADP machines or networks, making them general-purpose printers.
2. Extended Limitation Period: The department justified invoking the extended period of limitation under Section 28(4) of the Customs Act, citing misdeclaration and suppression of facts by the appellant.
3. Penalties and Interest: The department defended the imposition of penalties and interest, asserting that the appellant intentionally misclassified the goods to evade higher customs duties.
Tribunal’s Observations and Decision 

After considering the arguments and evidence, the Tribunal ruled in favor of M/s AGFA Healthcare India Pvt. Ltd. The key observations and conclusions were:
1. Classification Under CTI 9018: The Tribunal held that the thermal printers imported by the appellant were specifically designed for medical diagnostic purposes. They were capable of producing diagnostic-quality images on medical films, which are essential for accurate diagnosis in radiology. The printers were deemed medical equipment and classified under CTI 9018 90 99.
2. Burden of Proof: The Tribunal emphasized that the burden of proving reclassification lies with the department. In this case, the department failed to provide evidence that the printers were not used for medical diagnostics, while the appellant presented substantial technical and expert evidence supporting their claim.
3. Legal Precedents: The Tribunal referred to previous judgments, including Westfort Hi-Tech Hospital Ltd. vs. Commissioner of Customs, Cochin and Prosoya Industries Ltd. vs. Collector of Customs, New Delhi, which established that goods specifically designed for medical use should be classified under Chapter 90.
4. Extended Limitation Period: The Tribunal found that the department’s invocation of the extended period of limitation under Section 28(4) of the Customs Act was not justified, as the appellant had not engaged in suppression of facts or misdeclaration.
5. Penalties and Interest: Since the demand for differential duty was set aside, the penalties and interest imposed on the appellant and its manager, were also quashed.
Implications of the Judgment 

This landmark decision has significant implications for the classification of goods under the Customs Tariff Act. It reinforces the principle that goods specifically designed for medical use should be classified under Chapter 90, even if they share general characteristics with items in other chapters. The ruling also underscores the importance of technical evidence and expert opinions in determining the classification of goods.

For businesses importing medical equipment, this judgment serves as a reminder to maintain detailed documentation and technical specifications to substantiate their claims during customs assessments. It also highlights the need for the department to provide concrete evidence when challenging the classification of goods.

Conclusion

The CESTAT’s decision in favor of M/s AGFA Healthcare India Pvt. Ltd. is a victory for businesses importing specialized medical equipment. It sets a precedent for the classification of goods under the Customs Tariff Act and provides clarity on the importance of technical evidence in such cases. This ruling is a testament to the importance of a fair and thorough examination of facts and evidence in resolving disputes related to customs classification.

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Source: CESTAT Delhi

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February 21, 2026
CESTAT Mumbai Upholds Nil Duty Classification for Cisco Interface Modules
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 20.02.2026

CESTAT Mumbai Upholds Nil Duty Classification for Cisco Interface Modules

Adv Ravi Shekhar Jha

This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai, recently delivered a significant judgment in the case of Commissioner of Customs, Mumbai (Air Cargo Import) vs. M/s. Reliance Corporate IT Park Ltd.. This case revolved around the classification of the imported product, “Interface Module (Part No. N7K-M348XP-25L) for Cisco Nexus 7000 series Ethernet Switch,” under the Customs Tariff Act, 1962. The decision, issued on February 13, 2026, has set a precedent for similar disputes in the future.

Background of the Case

The dispute arose when M/s. Reliance Corporate IT Park Ltd. imported the Interface Module for Cisco Nexus 7000 series Ethernet Switch and classified it under Customs Tariff Item (CTI) 8517 7010, which attracts a Basic Customs Duty (BCD) rate of ‘Nil’. However, the Customs Department reclassified the goods under CTI 8517 6290, which carries a different duty rate. The department did not issue a speaking order as required under Section 17(5) of the Customs Act, 1962, leading the respondent to file an appeal before the Commissioner of Customs (Appeals).

The Commissioner (Appeals) upheld the classification under CTI 8517 7010 and remanded the matter back to the original authority for re-assessment. Dissatisfied with this decision, the Revenue filed an appeal before the CESTAT.

Key Issue: Classification of Imported Goods 

The central issue in this case was the correct classification of the imported goods. The respondents argued that the Interface Module for Cisco Nexus 7000 series Ethernet Switch should be classified under CTI 8517 7010, while the Revenue contended that it should fall under CTI 8517 6290.

Tribunal’s Decision 

The Tribunal referred to its earlier decision in the case of Commissioner of Customs, (Air Cargo Import), Mumbai vs. Reliance Jio Infocomm Ltd., where the classification of similar goods under CTH 8517 7010 was upheld. This decision was further reinforced by the Hon’ble Supreme Court, which dismissed the Revenue’s appeal against the Tribunal’s order.

Given the established precedent, the Tribunal concluded that the classification of the imported goods under CTI 8517 7010 was correct. The appeal filed by the Revenue was dismissed, and the impugned order of the Commissioner (Appeals) was sustained.

Implications of the Judgment

This judgment is significant for several reasons:
1. Clarity on Classification: The decision provides clarity on the classification of Interface Modules for Cisco Nexus 7000 series Ethernet Switches under the Customs Tariff Act, ensuring consistency in future cases.
2. Precedent Value: The Tribunal’s reliance on its previous decision and the Supreme Court’s dismissal of the Revenue’s appeal solidifies the legal standing of the classification under CTI 8517 7010.
3. Importance of Speaking Orders: The case highlights the importance of issuing speaking orders under Section 17(5) of the Customs Act, 1962, during re-assessment. Failure to do so can lead to disputes and appeals.
4. Impact on Importers: Importers of similar goods can now rely on this judgment to classify their products under CTI 8517 7010, potentially benefiting from the ‘Nil’ BCD rate.
Conclusion

The CESTAT’s decision in this case underscores the importance of adhering to established legal precedents and proper procedures in customs classification disputes. By upholding the classification under CTI 8517 7010, the Tribunal has provided much-needed clarity and consistency for importers and the Customs Department alike. This judgment is a testament to the role of judicial bodies in resolving complex trade and tariff issues, ensuring fairness and transparency in the process.

Source: CESTAT Mumbai

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February 20, 2026
CESTAT Chennai Sets Aside Reclassification of PVC Resin
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 20.02.2026

CESTAT Chennai Sets Aside Reclassification of PVC Resin

Adv Ravi Shekhar Jha

This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) Chennai recently delivered a significant judgment in the case of M/s Krishna Marketing vs. The Commissioner of Customs, Chennai II Commissionerate. This case revolved around the classification of imported goods and the principles of natural justice, setting a precedent for similar disputes in the future. Below, we delve into the details of the case and the implications of the Tribunal’s decision.

Background of the Case

The appellant, M/s Krishna Marketing, imported a product called ‘Polyvinyl Chloride (PVC) Suspension Resin SP 660’ from Thailand. The appellant classified the product under Customs Tariff Heading (CTH) 39042110/39042190 as ‘Other Poly (Vinyl Chloride); Non-Plasticised: Poly (Vinyl Chloride) Resins.’ This classification allowed the appellant to avail a concessional Basic Customs Duty (BCD) rate of 2% under the ASEAN-India Free Trade Area Preferential Trade Agreement, as per Notification No. 046/2011-Customs dated 01.06.2011.

However, the Revenue authorities challenged this classification, relying on a test report issued by the Central Institute of Plastics Engineering & Technology (CIPET) for a different importer. Based on this report, the Revenue proposed reclassification of the goods under CTH 39041090, which would deny the appellant the concessional duty benefit. Consequently, a Show Cause Notice was issued, and the Adjudicating Authority confirmed the reclassification and raised a demand for additional duty.

First Appeal and Issues Raised 

Aggrieved by the decision, the appellant filed a first appeal before the Commissioner of Customs (Appeals). The appellant argued that the reliance on the CIPET test report was improper, as the report was not provided to them for rebuttal. They contended that this violated the principles of natural justice, as they were not given a fair opportunity to present their case. Despite these arguments, the Commissioner (Appeals) upheld the demand of duty, stating that the reproduction of the relevant portion of the CIPET report in the Show Cause Notice was sufficient.

The Tribunal’s Observations 

The case was then brought before the CESTAT Chennai Regional Bench. The Tribunal, comprising Hon’ble Member – Judicial and Member – Technical, heard arguments from both sides on 09.09.2025 and delivered its decision on 19.02.2026.

The Tribunal made the following key observations:
1. Violation of Natural Justice: The Tribunal emphasized that the principles of natural justice are fundamental to any quasi-judicial proceeding. It stated that no person should be condemned unheard, and the failure to provide the CIPET test report to the appellant was a clear violation of these principles. The Tribunal noted that mere reproduction of the report in the Show Cause Notice does not suffice as a fair opportunity for rebuttal.
2. Merits of Classification: The Tribunal referred to its previous decisions in similar cases, including Arun Industries vs. Commissioner of Customs and M/s. Arun Polymers vs. Commissioner of Customs. In these cases, the Tribunal had ruled that the classification under CTH 39042110/39042190 was correct, as it was a specific entry for ‘Poly (Vinyl Chloride) Resins,’ whereas CTH 39041090 was a general entry for ‘Others.’ The Tribunal reiterated that specific entries in the tariff schedule take precedence over general ones, as per Rule 3(a) of the General Rules for the Interpretation of Import Tariff Schedule.
Final Decision

Based on the above observations, the Tribunal concluded that the impugned order was unsustainable. It set aside the Order-in-Appeal and allowed the appeal with consequential benefits as per the law. The Tribunal’s decision reaffirmed the importance of adhering to the principles of natural justice and the proper application of tariff classification rules.

Key Takeaways
1. Adherence to Natural Justice: This case highlights the importance of providing a fair opportunity to the affected party in quasi-judicial proceedings. The failure to furnish the CIPET test report to the appellant was deemed a violation of natural justice, which ultimately led to the setting aside of the impugned order.
2. Importance of Specific Tariff Classification: The Tribunal’s reliance on previous decisions underscores the principle that specific tariff entries should be preferred over general ones. This ensures consistency and fairness in the classification of imported goods.
3. Precedent for Future Cases: The judgment serves as a precedent for similar disputes involving tariff classification and the reliance on external reports. It reinforces the need for transparency and fairness in customs proceedings.
Conclusion

The decision in Customs Appeal No. 40336 of 2016 is a landmark ruling that upholds the principles of natural justice and provides clarity on tariff classification. It serves as a reminder to both importers and customs authorities about the importance of following due process and ensuring that all parties have access to relevant evidence. This case will undoubtedly have a lasting impact on the interpretation of customs laws and the resolution of classification disputes in India.

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Source: CESTAT Chennai

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February 20, 2026
BIS not required for Spare Parts Import, CESTAT Delhi sets aside confiscation & penalty
ALO Law Office- IDT Tax I Arbitration I Litigation

Date:19.02.2026

BIS not required for Spare Parts Import, CESTAT Delhi sets aside confiscation & penalty

Adv Ravi Shekhar Jha

This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), New Delhi, recently delivered its judgment on Customs Appeal No. 50356 of 2025, filed by Criticallog India Private Limited against the order passed by the Commissioner of Customs (Appeals). This case sheds light on the complexities of customs regulations, import declarations, and the interpretation of laws governing the import of goods into India. Below, we delve into the details of the case, the arguments presented, and the final verdict.

Background of the Case

Criticallog India Private Limited, a technology-driven logistics company specializing in end-to-end logistics solutions, filed an appeal against the order dated September 25, 2024, issued by the Commissioner of Customs (Appeals). The appeal was in response to an earlier order dated May 24, 2024, passed by the Deputy Commissioner of Customs. The case revolved around the import of goods, specifically ‘Memory’ and ‘Power Supply’ items, under a Bill of Entry filed dated March 8, 2024, Under CTH 85423200, 85044090.

The appellant imports spares for warranty replacement under delivered duty paid items, exclusively for specific end customers. These goods are controlled by the US Government and are authorized for export only to the country of ultimate destination for use by the identified end users.

Key Issues in the Case

The dispute primarily revolved around two categories of imported goods: ‘Memory’ and ‘Power Supply.’ The Deputy Commissioner had alleged misdeclaration of the quantity and classification of the imported goods, leading to confiscation orders, penalties, and duty demands. The Commissioner (Appeals) partly allowed the appellant’s appeal, reducing the redemption fine and releasing certain goods, but upheld the confiscation and penalties for others.

Memory

The department alleged that the appellant had misdeclared the quantity of ‘Memory’ items, stating that 21 items were imported, whereas the actual quantity was 59. The appellant argued that the Chartered Engineer’s report was erroneous, as it counted individual components instead of considering them as parts of a single unit. The appellant provided a detailed explanation supported by a letter from the supplier and photographs of the imported goods, which clarified the correct method of counting the components.

Power Supply

The dispute regarding the ‘Power Supply’ items centered on the requirement of a Bureau of Indian Standards (BIS) license. The Deputy Commissioner had ordered the absolute confiscation of one ‘Power Supply’ item, citing the absence of a valid BIS license. The appellant contended that the item was a spare part for warranty replacement and, as per the Ministry of Electronics and Information Technology’s FAQ, spare parts are not subject to the Compulsory Registration Order unless notified separately as independent products.

Arguments Presented

Appellant’s Submissions
1. Misdeclaration of Quantity: The appellant argued that the Chartered Engineer had miscalculated the quantity of ‘Memory’ items by counting individual components instead of considering them as parts of a single unit. The appellant provided evidence from the supplier, including photographs and a detailed explanation, to support their claim.
2. Misclassification: The appellant contended that the alleged misclassification of ‘Memory’ items was irrelevant, as the rate of duty remained unchanged, making the charge of misdeclaration inconsequential.
3. BIS License for Power Supply: The appellant argued that the ‘Power Supply’ items were spare parts for warranty replacement and, as per the Ministry’s guidelines, did not require a BIS license.
Department’s Submissions
1. Quantity Misdeclaration: The department argued that the appellant had previously admitted to a valuation mistake, making the supplier’s letter unreliable.
2. Misclassification: The department maintained that misdeclaration is punishable, even if it does not impact the rate of duty.
3. BIS License Requirement: The department asserted that the appellant failed to prove that the ‘Power Supply’ items were spares and not standalone units, which would require a valid BIS license.
Final Judgment

After considering the submissions from both parties, the Tribunal delivered its judgment on February 18, 2026. The key points of the judgment are as follows:
1. Memory: The Tribunal found merit in the appellant’s explanation regarding the miscalculation of the quantity of ‘Memory’ items. The communication from the supplier, supported by photographs, clearly demonstrated that the Chartered Engineer had erroneously counted individual components instead of considering them as parts of a single unit. The Tribunal set aside the Commissioner (Appeals)’ order upholding the Deputy Commissioner’s decision on misdeclaration, duty demand, and confiscation of goods.
2. Power Supply: The Tribunal held that the Commissioner (Appeals) erred in ordering the confiscation of one ‘Power Supply’ item and imposing a penalty. It was clarified that spare parts for warranty replacement are not subject to the Compulsory Registration Order, as per the Ministry’s guidelines. The Tribunal set aside the confiscation and penalty imposed on the ‘Power Supply’ item.
Conclusion

The judgment in Customs Appeal No. 50356 of 2025 highlights the importance of accurate documentation and clear communication in import transactions. It also underscores the need for authorities to thoroughly examine evidence and explanations provided by appellants before arriving at conclusions. The Tribunal’s decision to set aside the orders of the Commissioner (Appeals) and the Deputy Commissioner serves as a reminder of the importance of fairness and due diligence in adjudicating customs disputes.

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Source: CESTAT Delhi

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February 19, 2026
CESTAT Ahmedabad Sets Aside Duty Demand in FPS Scrip
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 19.02.2026

CESTAT Ahmedabad Sets Aside Duty Demand in FPS Scrip

Adv Ravi Shekhar Jha

This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), West Zonal Bench at Ahmedabad, recently delivered a significant judgment in the matter of Customs Appeals No. 10182, 10183, and 10552 of 2024. The case revolved around the alleged misclassification of goods exported under the Focus Market Scheme (FPS) and the subsequent imposition of duty and penalties by the Additional Commissioner of Customs, Mundra. The judgment, pronounced by Hon’ble Member (Judicial), on February 18, 2026, has set a precedent in the interpretation of Section 28AAA of the Customs Act, 1962, and the applicability of penalties under Sections 114(iii) and 114AA.

Background of the Case

The case originated from a Show Cause Notice (SCN) issued by the Directorate of Revenue Intelligence (DRI) on July 2, 2020, to M/s Rishabh Salvage Energy Pvt. Ltd. under Section 28AAA of the Customs Act, 1962. The SCN alleged that the company had misclassified the goods exported under the FPS scheme to claim undue benefits. The goods, described as industrial salt under CTH 2501 0090, were alleged to be common salt falling under CTH 2501 0010, which does not qualify for FPS benefits.

The DRI argued that the company had obtained FPS scrips from the Directorate General of Foreign Trade (DGFT) based on misrepresentation. Consequently, penalties and duty demands were imposed on M/s Rishabh Salvage Energy Pvt. Ltd., its director, and their custom broker, M/s Soham Logistics Pvt. Ltd.

Key Arguments Presented

The appellants contested the allegations, presenting the following key arguments:
1. Classification of Goods: M/s Rishabh Salvage Energy Pvt. Ltd. argued that the exported salt was industrial salt, not common salt, as it contained added anti-caking agents, silica, and iodine. They further stated that the salt was examined by the Department of Salt, which issued an Export Worthiness Certificate.
2. Validity of FPS Scrips: The appellants emphasized that the FPS scrips were issued by the DGFT after reviewing all relevant shipping bills and product classifications. They argued that the DGFT had not canceled the scrips, and as per Circular No. 334/1/2012-TRU dated June 1, 2012, action for recovery of duty can only be initiated after the DGFT cancels the scrips.
3. Precedents and Legal Framework: The appellants relied on previous judgments, including the case of Commissioner of Customs Mumbai-I vs Adani Ports Limited (2024) and Munjal Shova Limited vs CCE & ST-Delhi-IV (2022), to argue that penalties and duty demands cannot be imposed unless the scrips are proven to be fraudulent or canceled by the DGFT.
Tribunal’s Observations and Final Decision

After carefully considering the arguments and evidence presented by both sides, the Tribunal made the following observations:
- The DGFT had not initiated any action to cancel the FPS scrips issued to M/s Rishabh Salvage Energy Pvt. Ltd., which meant the scrips were still valid.
- The lower authorities had acted prematurely by issuing the SCN and imposing penalties without the cancellation of the scrips, which is a prerequisite for such actions as per the Board’s Circular.
- The case of Munjal Shova Limited was not applicable in this matter, as the FPS scrips in question were not proven to be fraudulent or forged.
Based on these findings, the Tribunal ruled in favor of the appellants, setting aside the duty demand, penalties, and redemption fines imposed by the lower authorities. The appeals were allowed, and consequential relief was granted to all parties involved.

Implications of the Judgment

This landmark decision has significant implications for exporters and the customs authorities:
1. Reaffirmation of Legal Principles: The judgment reinforces the principle that penalties and duty demands under Section 28AAA of the Customs Act cannot be imposed unless the DGFT cancels the scrips. This ensures that exporters are not penalized prematurely without proper legal grounds.
2. Protection for Exporters: The Tribunal’s decision provides clarity and protection to exporters who obtain FPS scrips in good faith. It emphasizes the importance of due process and prevents arbitrary actions by customs authorities.
3. Guidance for Future Cases: The judgment serves as a guiding precedent for similar cases, ensuring that the customs authorities adhere to established legal procedures and respect the decisions of the DGFT.
Conclusion

The CESTAT Ahmedabad’s decision in the Customs Appeals No. 10182, 10183, and 10552 of 2024 is a testament to the importance of adhering to legal procedures and respecting the validity of instruments issued by the DGFT. By setting aside the penalties and duty demands, the Tribunal has upheld the rights of the appellants and provided much-needed clarity on the application of Section 28AAA of the Customs Act. This judgment is a significant step towards ensuring fairness and transparency in customs adjudication processes.

Connected Matter

CESTAT Ahmedabad Upholds Export Valuation and DEPB Benefits

Source: CESTAT Ahmedabad

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February 19, 2026
CESTAT Chennai Sets Aside Massive Undervaluation in Confectionery Imports

ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 18.02.2026

CESTAT Chennai Sets Aside Massive Undervaluation in Confectionery Imports

Adv Ravi Shekhar Jha

This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Chennai recently delivered a significant judgment on February 17, 2026, addressing 26 customs appeals arising from Order-in-Original No. 70307/2019 dated July 29, 2019. This case involved allegations of misdeclaration, under-invoicing, misuse of Import Export Codes (IECs), and improper customs classification of imported goods. The judgment, delivered by Hon’ble Member Technical and Hon’ble Member Judicial, has set a precedent in customs law and clarified several critical issues.

Background of the Case

The case revolved around M/s. Nakshatra International Food Co. (NIFCO), a proprietorship firm owned by Appellant, and other related parties. NIFCO was accused of importing confectionery items such as jellies, puddings, wafers, toffees, candies, chocolates, biscuits, juices, and coffee in retail packs/cartons between 2008 and 2013 through Chennai and Mumbai ports. The Department alleged that NIFCO had misdeclared and under-invoiced the import price and retail sales price (RSP), misclassified certain items, and misused IECs of other entities for imports.

The case involved 566 Bills of Entry, with 388 imports made directly by NIFCO and 178 imports allegedly made using four other IECs. The Department also seized goods worth Rs. 1.46 crore and several incriminating documents, including electronic media, during investigations.

Key Issues Addressed 

The Tribunal addressed several critical issues in its judgment:

A. Legality of Joint or Several Demand of Customs Duties 

The Tribunal held that customs duties cannot be demanded jointly or severally from multiple parties unless it is proven that the goods were imported jointly. In this case, NIFCO was a proprietorship firm, and appellant, as the sole proprietor, was the only legally accountable importer for the 388 Bills of Entry filed under NIFCO’s IEC. The Tribunal also clarified that the concept of “beneficial owner” introduced in 2017 could not be applied retrospectively to imports made between 2008 and 2013.

B. Re-determination of Transaction Values 

The Tribunal found that the rejection of declared transaction values under Rule 12 of the Customs Valuation Rules (CVR), 2007, was not legally sustainable. The Department failed to comply with the mandatory two-step verification process under Rule 12, which requires the proper officer to communicate the grounds for doubting the declared value in writing and provide the importer an opportunity to respond. Furthermore, the Tribunal held that the reliance on proforma invoices to re-determine transaction values was unsustainable, as proforma invoices are merely quotations and not enforceable contracts.

C. Issues Related to RSP and MRP Stickers 

The Tribunal addressed allegations of non-affixing, tampering, and misdeclaration of RSP/MRP stickers. It held that the goods were cleared from customs areas with MRP stickers affixed, as confirmed by statements from CHAs and compliance with FSSAI regulations. The Tribunal also ruled that post-import tampering or altering of MRP stickers by distributors constitutes “manufacturing” under the Central Excise Act, 1944, and any duty recovery should be initiated under excise laws, not customs laws.

D. Admissibility of Electronic Evidence 

The Tribunal found discrepancies in the serial numbers of the seized hard disks and those analyzed by the forensic agency. It also noted the absence of mandatory certification under Section 138C of the Customs Act, 1962, which governs the admissibility of electronic evidence. As a result, the electronic printouts relied upon by the Department were deemed inadmissible.

E. Compliance with Section 138B 

The Tribunal emphasized the importance of adhering to Section 138B of the Customs Act, 1962, which governs the admissibility and relevancy of statements recorded under Section 108. It held that the adjudicating authority failed to conduct chief examinations and denied cross-examination, rendering the reliance on statements legally untenable.

F. Customs Classification 

The Tribunal ruled that the burden of proof for determining the correct customs classification lies with the Department. In the absence of credible evidence, the Tribunal upheld the declared customs classification for the disputed items.

G. Legality of Corrigendum and Revenue Appeals 

The Tribunal found that the corrigendum issued by the adjudicating authority to impose penalties on certain CHAs was not legally tenable, as it went beyond correcting typographical or arithmetical errors. The Tribunal also dismissed the Revenue’s appeals seeking redemption fines and penalties, citing the absence of physical goods for confiscation and lack of evidence of active involvement or mens rea on the part of the CHAs.

Conclusion

The CESTAT Chennai’s judgment in this case is a landmark decision that reinforces the principles of natural justice and adherence to statutory procedures in customs law. By setting aside the impugned Order-in-Original in its entirety, the Tribunal has provided clarity on several contentious issues, including the legality of joint or several demands, re-determination of transaction values, admissibility of electronic evidence, and penalties on CHAs.

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Source: CESTAT Chennai

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February 18, 2026