𝐀𝐚𝐝𝐫𝐢𝐤𝐚𝐚 𝐋𝐞𝐠𝐚𝐥 𝐒𝐞𝐫𝐯𝐢𝐜𝐞𝐬 (𝐀𝐋𝐒)

Tag: #CESTAT

CESTAT Delhi Overturns Export Duty Demand
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 28.10.2025

CESTAT Delhi Overturns Export Duty Demand

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

In a significant ruling, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, has set aside the impugned order passed by the Commissioner of Customs (Adjudication), New Delhi, in a case involving export duty on iron ore fines. This decision not only reinforces judicial discipline but also clarifies key aspects of customs law, particularly regarding the assessment of shipping bills and the determination of Fe content in iron ore fines.

Background of the Case

The case revolved around four appeals filed by M/s Disha Realcon Pvt. Ltd., Appellants, and M/s S.M. Ayat Niryat Pvt. Ltd. The appellants challenged the confirmation of export duty demands and penalties imposed by the Commissioner of Customs (Adjudication). The dispute stemmed from the Directorate of Revenue Intelligence (DRI) alleging that the appellants evaded export duty by splitting consignments into multiple shipping bills and availing exemptions for iron ore fines with Fe content below 58%.

The DRI proposed recalculating the Fe content of the exported iron ore fines on a dry basis, contrary to the Supreme Court’s ruling in Union of India vs. Gangadhar Narsingdas Aggarwal and the Central Board of Excise and Customs (CBEC) Circular No. 04/2012-Cus, which mandated Fe content determination on a wet basis.

Key Issues Addressed

The Tribunal examined two critical issues:
1. Assessment of Multiple Shipping Bills Together: The Tribunal clarified that the Customs Act does not empower officers to assess multiple shipping bills together. Each shipping bill must be assessed individually, and the classification, valuation, and determination of parameters like Fe content must be done separately for each shipping bill. The Tribunal emphasized that the issuance of a single Bill of Lading for goods covered under multiple shipping bills does not justify their combined assessment.
2. Determination of Fe Content: The Tribunal reaffirmed the Supreme Court’s decision in Gangadhar Narsingdas, which held that Fe content in iron ore fines must be determined on a wet basis, considering all impurities, including moisture. The Commissioner’s decision to calculate Fe content on a dry basis was deemed a violation of judicial discipline and CBEC’s directives.
Key Findings

The Tribunal made the following observations:
- The Customs Act does not allow the assessment of multiple shipping bills together.
- Exporters are within their rights to file multiple shipping bills for goods exported in the same vessel.
- The Fe content of iron ore fines must be determined on a wet basis, as per the Supreme Court’s ruling and CBEC’s Circular.
- The Commissioner of Customs (Adjudication) erred in assessing Fe content on a dry basis and in combining multiple shipping bills for assessment.
Outcome

The Tribunal set aside the impugned order dated November 30, 2022, and allowed all four appeals with consequential reliefs to the appellants. This decision is a significant victory for exporters and reinforces the importance of adhering to judicial precedents and established legal principles.

Implications of the Ruling

This landmark judgment has far-reaching implications for exporters and the customs authorities:
1. Reaffirmation of Judicial Discipline: The Tribunal’s decision underscores the importance of adhering to Supreme Court rulings and CBEC directives, ensuring consistency and fairness in the application of customs laws.
2. Clarity on Shipping Bill Assessments: The ruling clarifies that each shipping bill must be assessed individually, preventing arbitrary practices of combining multiple shipping bills for reassessment.
3. Standardization of Fe Content Determination: By upholding the wet basis method for determining Fe content, the Tribunal has provided clarity and consistency for exporters dealing with iron ore fines.
Conclusion

The CESTAT’s decision in this case is a testament to the importance of upholding judicial discipline and ensuring fair treatment of exporters under the law. It serves as a reminder to customs authorities to adhere to established legal principles and precedents while assessing duties and penalties. This ruling is a significant step towards ensuring transparency and fairness in India’s customs framework, fostering trust and confidence among exporters.

Source: CESTAT Delhi

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October 28, 2025
CESTAT Mumbai- No Service Tax Liability on Foreign Bank Charges under Reverse Charge Mechanism
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 28.10.2025

CESTAT Mumbai- No Service Tax Liability on Foreign Bank Charges under Reverse Charge Mechanism

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

In a significant ruling, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai, has delivered a judgment in favor of ICICI Bank Limited, setting aside service tax demands imposed by the Commissioner of Service Tax-I/IV, Mumbai. This decision, issued on October 23, 2025, addresses a long-standing dispute regarding the applicability of service tax under the Reverse Charge Mechanism (RCM) on foreign bank charges in export/import transactions.

Background of the Case

The appeals filed by ICICI Bank Limited challenged three Orders-in-Original issued by the Commissioner of Service Tax-I/IV, Mumbai. These orders demanded service tax, interest, and penalties for the periods between July 2012 and June 2017. The dispute revolved around whether Indian banks, acting as intermediaries for exporters and importers, should be considered recipients of services provided by foreign banks and, consequently, liable to pay service tax under RCM.

The Department argued that foreign banks deduct charges for processing import/export documents and remittances, and Indian banks, as recipients of these services, are liable to pay service tax under Notification No. 30/2012-Service Tax dated June 20, 2012.

Key Issues in the Case 

The Tribunal identified two primary issues for determination:
1. Whether Indian banks are the recipients of services in export/import transactions involving the transfer/exchange of documents and money on behalf of their client exporters/importers.
2. Whether Indian banks are liable to pay service tax on foreign bank charges under the Reverse Charge Mechanism.
Arguments Presented

Appellant’s Arguments:
- ICICI Bank argued that they act as advising banks for Indian exporters and facilitate transactions but are not recipients of services from foreign banks.
- The foreign bank charges are deducted from the remittance amount and paid by the exporter/importer directly, not by the Indian bank.
- The bank emphasized that there is no flow of consideration from the Indian bank to the foreign bank, which is a necessary condition for service tax liability under RCM.
- The bank cited several precedents, including the State Bank of Bikaner & Jaipur case, which held that Indian banks are not liable for service tax on foreign bank charges under RCM.
Revenue’s Arguments:
- The Department contended that Indian banks are recipients of services provided by foreign banks and are liable to pay service tax under RCM.
- They relied on a Trade Notice issued by the Chief Commissioner, Central Excise, Mumbai Zone-I, which clarified that Indian banks should pay service tax on foreign bank charges.
Tribunal’s Observations and Decision

After hearing both sides and reviewing the case records, the Tribunal concluded that Indian banks are not the recipients of services provided by foreign banks in export/import transactions. The Tribunal relied heavily on the precedent set by the State Bank of Bikaner & Jaipur case, which established that Indian banks merely act as facilitators for their clients and do not receive services from foreign banks.

The Tribunal also referred to the Madras High Court’s judgment in the BGR Energy Systems Limited case, which clarified that the liability to pay service tax on foreign bank charges lies with the exporter/importer, not the Indian bank.

Final Verdict

The Tribunal ruled that the service tax demands, interest, and penalties imposed on ICICI Bank Limited were not legally sustainable. Consequently, the impugned orders were set aside, and the appeals filed by ICICI Bank Limited were allowed.

Key Takeaways
1. No Service Tax Liability for Indian Banks: Indian banks acting as intermediaries in export/import transactions are not considered recipients of services from foreign banks and are not liable to pay service tax under RCM for foreign bank charges.
2. Precedents Matter: The Tribunal’s decision was heavily influenced by previous rulings, particularly the State Bank of Bikaner & Jaipur case and the BGR Energy Systems Limited judgment.
3. Clarity on RCM Applicability: The judgment reinforces the principle that service tax under RCM is applicable only when there is a clear flow of consideration from the service recipient to the service provider.
Conclusion

This landmark decision provides much-needed clarity on the taxability of foreign bank charges in export/import transactions. It is a significant relief for Indian banks, as it exempts them from service tax liability under RCM for such charges. The ruling also underscores the importance of legal precedents and the need for clear guidelines in interpreting tax laws. This case will undoubtedly serve as a reference point for similar disputes in the future.

Source: CESTAT Mumbai

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October 28, 2025
CESTAT Kolkata Dismissed DRI’s Allegations of Fe Content Manipulation
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 27.10.2025

CESTAT Kolkata Dismissed DRI’s Allegations of Fe Content Manipulation

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

In a significant ruling, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Eastern Zonal Bench, Kolkata, has rejected the appeal filed by the Revenue against M/s Kashvi Power and Steel Pvt. Limited (KPSPL) in Customs Appeal No. 75043 of 2022. The case revolved around allegations of export duty evasion by mis-declaring the iron content (‘Fe’) in iron ore fines exported by KPSPL through Paradip Port, Odisha.

Background of the Case

M/s KPSPL, engaged in trading iron ore in domestic and international markets, was accused of evading export duty by misrepresenting the iron content in their shipments. According to the Directorate of Revenue Intelligence (DRI), KPSPL allegedly manipulated test reports to declare lower iron content (‘Fe’) in their shipments, thereby claiming a nil export duty rate for iron ore fines with less than 58% Fe content. The investigation revealed that KPSPL had exported iron ore fines through multiple shipping bills between 2016 and 2018, allegedly splitting consignments to avoid paying the higher export duty of 30% applicable to iron ore fines with Fe content above 58%.

A Show Cause Notice (SCN) was issued to KPSPL, demanding differential export duty of ₹17.59 crore, along with interest and penalties. However, the Principal Commissioner of Customs (Preventive), Bhubaneswar, dropped the proceedings, citing unsustainable evidence. Aggrieved by this decision, the Revenue filed an appeal with the CESTAT.

Key Issues in the Appeal

The Revenue raised several points in its appeal, including:
1. The Adjudicating Authority (AA) relied solely on test reports from the Central Revenue Control Laboratories (CRCL), Kolkata, and disregarded test reports from private testing agencies.
2. The AA allegedly ignored the analysis of Fe content conducted at the discharge port in China by the China Entry-Exit Inspection and Quarantine Bureau (CIQ).
3. The AA failed to consider the alleged manipulation of test reports and splitting of consignments by KPSPL.
Tribunal’s Observations and Ruling 

After hearing both sides and reviewing the evidence, the Tribunal upheld the findings of the Adjudicating Authority and rejected the Revenue’s appeal. The key observations and conclusions were:
1. Reliability of Test Reports: The Tribunal emphasized that the CRCL test reports, based on samples drawn by Customs authorities in the presence of KPSPL representatives, were more credible than private lab reports. It cited the Supreme Court’s decision in Steer Overseas Pvt. Ltd. v. Commissioner [2022 (381) E.L.T. A34 (S.C.)], which held that private lab reports based on samples drawn without Customs oversight cannot override CRCL reports.
2. Valuation of Goods: The Tribunal found no evidence of suppression or misdeclaration of Fe content by KPSPL. The declared values in the shipping bills matched the final invoices and bank realization certificates (BRCs), indicating no undervaluation.
3. Discharge Port Analysis: The Tribunal ruled that the CIQ test reports from the discharge port in China were irrelevant for customs duty assessment, as the contracts between KPSPL and its overseas buyers were based on load port test results.
4. Alleged Manipulation of Consignments: The Tribunal found no substantial evidence to support the Revenue’s claim that KPSPL had manipulated test reports or artificially split consignments to evade export duty.
Refund of Deposited Amount 

During the investigation, KPSPL had deposited ₹2.5 crore towards potential duty liability. With the Tribunal ruling in favor of KPSPL, it ordered the refund of the deposited amount along with applicable interest.

Conclusion

This ruling highlights the importance of adhering to established procedures for sample collection and testing in customs cases. The Tribunal’s decision underscores the credibility of CRCL test reports over private lab analyses and reinforces the principle that adjudication must be based on substantial evidence rather than mere allegations. The case serves as a reminder to exporters about the importance of accurate self-assessment under the Customs Act, 1962, while also emphasizing the need for the Revenue to follow due process and present credible evidence in cases of alleged duty evasion.

Source: CESTAT Kolkata

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October 27, 2025
CESTAT Mumbai Clarifies ‘Similar Goods’ Criteria under FTP for EOU DTA Clearances
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 25.10.2025

CESTAT Mumbai Clarifies ‘Similar Goods’ Criteria under FTP for EOU DTA Clearances

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

In a significant judgment, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai, has ruled in favor of Pentair Water India Private Limited, a 100% Export Oriented Unit (EOU), in a long-standing dispute with the Commissioner of Central Excise & Service Tax, Goa. The case revolved around the classification of goods, eligibility for concessional excise duty, and compliance with the Foreign Trade Policy (FTP) for Domestic Tariff Area (DTA) clearances.

Background of the Case

Pentair Water India Private Limited, engaged in the manufacture and export of components for industrial water treatment and filtration systems, faced allegations from the Department of Central Excise & Service Tax, Goa. The Department claimed that the company had misclassified its products and violated provisions of the FTP by clearing goods to the DTA at concessional excise duty rates under Notification No. 23/2003-C.E. dated 31.03.2003 and Notification No. 12/2012-C.E. dated 17.03.2012. The Department also alleged that the goods cleared to the DTA were not “similar goods” as required under Para 6.8(a) of the FTP.

The dispute covered the period from 2008 to 2015, with the Department demanding differential duty and imposing penalties on the company. Pentair Water India Private Limited challenged the orders, asserting that their DTA clearances complied with all legal provisions, including the FTP and excise duty notifications.

Key Issues in the Case 

The Tribunal examined three critical issues:
1. Whether the DTA clearances violated Para 6.8(a) of the FTP.
2. Whether the revised classification of goods under Tariff Item 8421 9900 was legally sustainable.
3. Whether the differential duty demands and penalties imposed were justified.
Tribunal’s Observations and Ruling 

After hearing both sides and reviewing the case records, the Tribunal made the following key observations:
1. Classification of Goods: The Tribunal held that the goods in question, such as code line vessels, filter valve assemblies, RO systems, and water filtration systems, were appropriately classifiable under Tariff Item 8421 2190 as “filtering or purifying machinery and apparatus for water, other than household type.” The Department’s attempt to classify these goods as “parts” under Tariff Item 8421 9900 was deemed unsustainable.
2. Eligibility for Concessional Duty: Since the goods were classified under Tariff Item 8421 2190, the Tribunal ruled that Pentair Water India was eligible for concessional excise duty under Notification No. 12/2012-C.E. dated 17.03.2012.
3. Compliance with FTP: The Tribunal found that the company’s DTA clearances complied with Para 6.8(a) of the FTP. The goods cleared to the DTA were “similar goods” as defined under the Customs Valuation Rules, and the company had not exceeded the overall entitlement of 50% of the FOB value of exports. The Tribunal also noted that the Development Commissioner, the competent authority for implementing the FTP, had not raised any objections to the DTA clearances.
4. Extended Period of Limitation: The Tribunal rejected the Department’s claim of suppression or misrepresentation of facts, noting that Pentair Water India had regularly submitted returns and was audited by various authorities. Therefore, the invocation of the extended period of limitation was deemed unjustified.
Final Verdict

The Tribunal set aside the impugned orders dated 30.01.2015 and 04.11.2016, ruling that the demands and penalties imposed on Pentair Water India were not legally sustainable. The appeals filed by the company were allowed with consequential benefits, while the appeal filed by the Revenue was dismissed.

Implications of the Judgment

This landmark ruling reinforces the importance of adhering to the principles of classification under the Central Excise Tariff Act and the FTP. It also highlights the significance of the Development Commissioner’s role in determining compliance with the FTP. The judgment sets a precedent for other EOUs facing similar disputes, emphasizing the need for a clear and consistent interpretation of legal provisions. Pentair Water India’s victory is a testament to the importance of maintaining proper documentation, adhering to legal provisions, and challenging unjustified demands. This case serves as a reminder to businesses to stay vigilant and ensure compliance with all applicable laws and regulations while protecting their rights.

Source: CESTAT Mumbai

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October 25, 2025
CESTAT Delhi Allows Amendment of Bills of Entry under Section 149
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 24.10.2025

CESTAT Delhi Allows Amendment of Bills of Entry under Section 149

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

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, recently delivered a significant judgment in the case of M/s Celkon Impex Pvt. Ltd. vs. Principal Commissioner of Customs. This decision, encapsulated in Final Order No. 51605-51608/2025, has set a precedent for the interpretation and application of Section 149 of the Customs Act, 1962, concerning the amendment of Bills of Entry.

Background of the Case

M/s Celkon Impex Pvt. Ltd., the appellant, imported mobile phones between August 2014 and June 2015, classifying them under Customs Tariff Heading 8517 of the Customs Tariff Act, 1975. At the time of filing the Bills of Entry, the appellant did not claim the benefit of a concessional 1% Additional Duty of Customs under Notification No. 12/2012-CE dated 17.03.2012. Later, relying on the Supreme Court’s decision in SRF Limited vs. Commissioner of Customs, Chennai, the appellant filed an application under Section 149 of the Customs Act to amend the Bills of Entry and claim the concessional duty.

The Deputy Commissioner of Customs allowed the amendment and ordered reassessment under Section 17(4) of the Customs Act. However, the department challenged this decision, and the Commissioner (Appeals) overturned the Deputy Commissioner’s order, stating that the assessment of the Bills of Entry had become final since the appellant had paid the higher duty without protest.

Key Legal Issues

The case revolved around two major legal questions:
1. Whether the appellant could invoke Section 149 of the Customs Act to amend the Bills of Entry after the goods had been cleared for home consumption.
2. Whether the appellant could claim the benefit of the Supreme Court’s judgment in SRF Limited despite having paid higher Additional Duty without protest.
Tribunal’s Observations and Decision 

The Tribunal analyzed the submissions made by both parties and referred to several landmark judgments, including SRF Limited, Dimension Data India, and Sony India. The key takeaways from the judgment are:
1. Amendment of Bills of Entry under Section 149: The Tribunal emphasized that Section 149 of the Customs Act allows for amendments to Bills of Entry even after goods have been cleared for home consumption, provided the amendment is based on documentary evidence that existed at the time of clearance. This interpretation aligns with the decisions of the Bombay High Court and Telangana High Court, which have upheld the right of importers to seek amendments under Section 149.
2. Finality of Assessment: The Tribunal rejected the Commissioner (Appeals)’ view that the payment of higher Additional Duty without protest rendered the assessment final. It held that the appellant could still seek amendments in the Bills of Entry under Section 149 to claim the benefit of the Supreme Court’s judgment in SRF Limited.
3. Precedents Supporting the Appellant: The Tribunal referred to its earlier decisions in Akshar Telecom Pvt. Ltd. and Vivo Mobile India Pvt. Ltd., which supported the appellant’s contention that amendments under Section 149 are permissible for claiming duty benefits.
Implications of the Judgment

This judgment is a significant development in customs law, as it reinforces the principle that importers can seek amendments to Bills of Entry under Section 149 of the Customs Act, even after goods have been cleared for home consumption. It also clarifies that the payment of higher duty without protest does not preclude an importer from claiming benefits under relevant notifications, provided the conditions of the notification are satisfied.

The decision is a win for importers, as it provides clarity on the legal remedies available for amending Bills of Entry and claiming refunds under Section 27 of the Customs Act. It also underscores the importance of adhering to the principles laid down by the Supreme Court in cases like SRF Limited and ITC Ltd., ensuring that justice is served in cases of incorrect duty assessments.

Conclusion

The CESTAT’s decision in the M/s Celkon Impex Pvt. Ltd. case is a landmark ruling that upholds the rights of importers to seek amendments in Bills of Entry under Section 149 of the Customs Act. By setting aside the Commissioner (Appeals)’ order, the Tribunal has reaffirmed the importance of following established legal precedents and ensuring fair treatment for importers. This judgment will undoubtedly serve as a guiding light for similar cases in the future, promoting clarity and consistency in the application of customs laws.

Source: CESTAT Delhi

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October 24, 2025
CESTAT Mumbai Sets Aside Customs Order Denying Refund of Special Additional Duty (SAD)

ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 23.10.2025

CESTAT Mumbai Sets Aside Customs Order Denying Refund of Special Additional Duty (SAD)

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

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Mumbai, recently delivered a significant judgment in the case of Fibre Bond Industries vs. Commissioner of Customs (NS-III), addressing the issue of refund claims for Special Additional Duty (SAD) under Section 3(5) of the Customs Tariff Act, 1975. This decision, marked as Final Order No. 86686/2025, has far-reaching implications for importers and traders dealing with SAD refunds.

Background of the Case

The appellant, Fibre Bond Industries, had imported PVC-coated fabric under three bills of entry dated December 2011. The company paid ₹2,60,793 as SAD, a duty levied under Section 3(5) of the Customs Tariff Act, 1975. Subsequently, the company sought a refund of the SAD after selling the imported goods, as per the provisions of Notification No. 102/2007-Cus dated 14th September 2007. However, the Deputy Commissioner rejected the refund claim, citing the limitation period under Section 27 of the Customs Act, 1962. This decision was upheld by the Commissioner of Customs (Appeals), Mumbai-II.

Key Arguments and Legal Precedents 

The appellant argued that the refund claim was filed within one year of the sale of goods, as prescribed by the notification, and that the limitation period under Section 27 of the Customs Act, 1962, should not apply. The appellant relied on the Larger Bench decision in Ambey Sales vs. Commissioner of Customs, Ludhiana [2024 (6) TMI 257 – CESTAT – Chandigarh-LB], which clarified that the time limit for filing SAD refund claims under the notification is not applicable.

The Tribunal also referred to the Delhi High Court’s judgment in Sony India Pvt. Ltd vs. Commissioner of Customs, New Delhi [2014 (304) ELT 660 (Del.) ], which held that imposing a limitation period not contemplated by the statute is ultra vires.

Tribunal’s Observations and Decision 

The Tribunal emphasized that SAD is a levy designed to counterbalance state taxes on imported goods, ensuring a level playing field for domestic and imported goods. It noted that the refund mechanism is a machinery provision to implement this exemption post-clearance. Therefore, imposing a limitation period unrelated to the statutory provisions of Section 3(5) of the Customs Tariff Act, 1975, is unjustified.

The Tribunal concluded that the appellant, having sold the imported goods and discharged the appropriate state taxes, was eligible for the refund. It set aside the impugned order and allowed the appeal, reaffirming the principle that refund claims should not be denied based on an arbitrary limitation period.

Implications of the Judgment

This decision is a significant win for importers and traders, as it reinforces the principle that refund claims for SAD cannot be denied based on limitations not explicitly stated in the statute. It provides clarity on the “relevant date” for filing refund claims, ensuring that importers can claim refunds within one year of the sale of goods, as per the notification.

The judgment also highlights the importance of judicial precedents in resolving disputes and upholding the rights of taxpayers. By relying on decisions from the Larger Bench and the Delhi High Court, the Tribunal has set a strong precedent for future cases involving SAD refunds.

Conclusion

The Fibre Bond Industries vs. Commissioner of Customs (NS-III) case is a landmark decision that underscores the importance of adhering to statutory provisions and established legal precedents. It provides much-needed clarity on the refund mechanism for SAD and ensures that importers are not unfairly denied their rightful claims. This judgment is a step forward in promoting fairness and transparency in customs law, benefiting the trading community at large.

Source: CESTAT Mumbai

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October 23, 2025
CESTAT Chennai Rejects DRI’s Allegations of Misdeclaration and Undervaluation for Betel Nut Imports
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 22.10.2025

CESTAT Chennai Rejects DRI’s Allegations of Misdeclaration and Undervaluation for Betel Nut Imports

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

In a significant ruling, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Chennai, has set aside the impugned order passed by the Commissioner of Customs, Chennai-IV Commissionerate, in the case concerning M/s. Ruby Overseas and its partner. The case revolved around allegations of misdeclaration of the country of origin (COO) and undervaluation of imported betel nuts to evade customs duty under the SAARC Preferential Trade Arrangement (SAPTA). This decision highlights the importance of adhering to procedural requirements and evidentiary standards in customs investigations and adjudications.

Background of the Case

The appellants, M/s. Ruby Overseas and its partner, were accused of importing Indonesian-origin betel nuts through Bangladesh while fraudulently obtaining Certificates of Origin (COO) to claim duty benefits under Notification No. 105/1999. The investigation alleged that the goods were undervalued and routed through Bangladesh to evade customs duty. Based on these findings, the Commissioner of Customs issued Show Cause Notices (SCNs) proposing the rejection of declared values, denial of SAPTA benefits, confiscation of goods, and imposition of penalties.

Key Issues in the Case

The Tribunal identified three critical factors that formed the crux of the dispute:
1. Validity of the COO Certificate: Whether the COO certificate issued by Bangladesh was fraudulently obtained and whether the minimum value addition criteria under SAPTA were met.
2. Evidentiary Value of Electronic Records: Whether electronic evidence retrieved during the investigation complied with Section 138C of the Customs Act, 1962, and Section 65B of the Indian Evidence Act.
3. Evidentiary Value of Statements: Whether statements from key individuals, who were not cross-examined, could be relied upon.
Key Findings of the Tribunal
1. Validity of COO Certificate: The Tribunal noted that the investigation did not declare the COO certificate invalid or forged. However, the adjudicating authority alleged that the certificates were fraudulently procured without verifying the authenticity of the certificates with the Bangladesh authorities, as required under the Customs Tariff (Determination of Origin of Goods under the Agreement on SAARC Preferential Trading Arrangement) Rules, 1995. The Tribunal emphasized that the COO certificate must be honored unless proven fraudulent through proper verification procedures. The failure to verify the certificates rendered the allegations unsustainable.
2. Evidentiary Value of Electronic Records: The Tribunal held that electronic evidence relied upon in the investigation was inadmissible as it lacked certification under Section 138C of the Customs Act, 1962, which is mandatory for the admissibility of electronic records. Citing landmark judgments, the Tribunal reiterated that electronic evidence must be accompanied by a certificate from a responsible person to be admissible.
3. Evidentiary Value of Statements: The Tribunal found that statements from key individuals could not be relied upon as they were not subjected to cross-examination despite the appellant’s request. The Tribunal emphasized that cross-examination is a critical procedural safeguard, especially when statements are detrimental to the appellant.
Conclusion

The Tribunal concluded that the rejection of the COO certificate, the revaluation of goods, and the denial of SAPTA benefits were procedurally flawed. The lack of admissible evidence and failure to follow verification procedures undermined the case. Consequently, the impugned order was set aside, and the appellants were granted consequential relief.

Implications of the Ruling

This decision underscores the importance of procedural integrity and evidentiary standards in customs adjudication. It serves as a reminder to authorities to adhere to established rules and verification processes while investigating and adjudicating cases. The ruling also reinforces the principle that allegations must be substantiated with credible and admissible evidence.

Final Thoughts

The CESTAT Chennai’s ruling is a landmark decision that upholds the principles of justice and due process. It highlights the need for transparency and accountability in customs investigations and sets a precedent for similar cases in the future. This case serves as a valuable reference for importers, legal practitioners, and policymakers in understanding the nuances of customs law and the importance of procedural compliance.

Source: CESTAT Chennai

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October 22, 2025
CESTAT Kolkata Sets Aside Confiscation and Penalty in Pre-Shipment Inspection
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 21.10.2025

CESTAT Kolkata Sets Aside Confiscation and Penalty in Pre-Shipment Inspection

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

In a landmark decision, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Eastern Zonal Bench, Kolkata, has ruled in favor of M/s. Jai Salasar Balaji Industries Private Limited, setting aside the confiscation of imported goods and the imposition of penalties by the Principal Commissioner of Customs (Port), Kolkata. This judgment, delivered on October 16, 2025, has significant implications for importers dealing with metallic waste and scrap.

Background of the Case

The case revolved around the import of “Low Nickel Turning Scrap (1.30 Nickel)” from Belgium by M/s. Jai Salasar Balaji Industries Private Limited. The consignment, weighing 261.850 MT, was inspected at Duisburg, Germany, by M/s. Melt Enterprise Ltd., a DGFT-approved Pre-Shipment Inspection Agency (PSIA). The inspection confirmed that the consignment was free from hazardous materials, explosives, and radiation levels exceeding natural background.

However, the Customs Department raised concerns over a discrepancy between the port of loading (Antwerp, Belgium) and the place of inspection (Duisburg, Germany). The department deemed the Pre-Shipment Inspection Certificate (PSIC) invalid, citing non-compliance with the Handbook of Procedures, 2023, and Foreign Trade Policy, 2023. Consequently, the consignment was confiscated under Section 111(d) of the Customs Act, 1962, with a redemption fine of Rs. 10,00,000/- and a penalty of Rs. 15,00,000/- imposed under Section 112(a)(i) of the Act.

Key Issues in the Appeal 

The appellant challenged the confiscation and penalties, arguing that the PSIC issued by M/s. Melt Enterprise Ltd. was valid and complied with the requirements of Para 2.51 of the Handbook of Procedures, 2023. The appellant contended that there is no legal stipulation mandating that pre-shipment inspection must occur at the port of loading/shipment. The inspection at Duisburg, an inland port and logistics hub, was necessary as the goods were transported to Antwerp for shipment to India.

The Revenue argued that the PSIC was invalid as it was not issued from the country of origin, citing Public Notice No. 46/(2015-2020) dated January 14, 2022, which mandates inspection at the country of origin.

CESTAT’s Observations and Ruling 

After hearing both sides, the Tribunal made the following observations:
1. Validity of PSIC: The Tribunal noted that the PSIC issued by M/s. Melt Enterprise Ltd. was genuine and complied with the requirements of Para 2.51 of the Handbook of Procedures, 2023. The certificate confirmed that the consignment was free from hazardous, radioactive, or explosive materials, fulfilling the primary objective of the PSIC requirement.
2. No Prohibition on Inspection Location: The Tribunal clarified that there is no legal requirement for pre-shipment inspection to be conducted exclusively at the port of loading/shipment. The inspection at Duisburg, Germany, was valid as it ensured compliance with safety standards.
3. Post-Shipment Inspection Findings: The Tribunal emphasized that the post-shipment inspection conducted at the port of discharge confirmed the consignment’s compliance with all prescribed safety parameters, further validating the genuineness of the PSIC.
4. Confiscation and Penalty: The Tribunal held that the procedural deficiency in the PSIC did not amount to a violation of the Customs Act, 1962, or the Foreign Trade Policy, 2023. As such, the confiscation of goods and imposition of redemption fine and penalty were deemed unsustainable.
Final Order

The Tribunal passed the following order:
1. The confiscation of goods under Section 111(d) of the Customs Act, 1962, was set aside.
2. The redemption fine of Rs. 10,00,000/- and penalty of Rs. 15,00,000/- imposed under Section 112(a)(i) of the Customs Act, 1962, were also set aside.
3. The Revenue was directed to release the detained consignment immediately, subject to payment of applicable customs duties.
Implications of the Judgment 

This decision is a significant win for importers, as it clarifies the legal requirements for pre-shipment inspection certificates and emphasizes the importance of ensuring compliance with safety standards over procedural technicalities. The Tribunal’s ruling reinforces the principle that procedural lapses should not lead to the confiscation of goods or imposition of penalties if the primary objectives of the law are met.

The judgment also highlights the need for clarity in regulatory provisions to avoid unnecessary disputes and delays in the clearance of goods. Importers can now breathe a sigh of relief, knowing that genuine efforts to comply with safety standards will be recognized and upheld by the judiciary.

Source: CESTAT Kolkata

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October 21, 2025
CESTAT Delhi Sets Aside Over-Valuation Allegation
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 20.10.2025

CESTAT Delhi Sets Aside Over-Valuation Allegation

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

In a significant ruling, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, delivered its final verdict on the Customs Appeal No. 50025 of 2020 on October 16, 2025. The case revolved around allegations of overvaluation of export goods by Isgec Heavy Engineering Ltd., a leading manufacturer and exporter of heavy engineering goods, including boilers and sugar plants. The company had sought to quash the order passed by the Commissioner of Customs (Appeals), which upheld the Joint Commissioner’s decision to impose fines and penalties for alleged overvaluation of goods.

Background of the Case

Isgec Heavy Engineering Ltd. entered into contracts with foreign buyers for the supply of heavy engineering goods. These contracts stipulated a lump sum payment for the goods, without specifying individual component costs. Due to the massive size of the goods, the company exported them in partial shipments, with invoices raised on a pro-rata basis. However, discrepancies arose between the Free on Board (FOB) values declared in the shipping bills and the values declared in ARE-1 forms prepared by supporting manufacturers. This led to the seizure of goods exported under 16 shipping bills and the issuance of a show-cause notice alleging overvaluation and improper duty drawback claims.

Key Issues in the Case

The primary issue was whether Isgec Heavy Engineering Ltd. had intentionally overvalued the export goods to claim higher duty drawback benefits. The customs authorities argued that the FOB values declared in the shipping bills were inflated compared to the values in the ARE-1 forms, and re-determined the transaction value under Rule 5 of the Customs Valuation (Determination of Value of Exported Goods) Rules, 2007. This led to a reduction in the duty drawback amount and the imposition of fines and penalties under Sections 114 and 114AA of the Customs Act.

Tribunal’s Observations and Decision 

After hearing arguments from both sides, the Tribunal made several key observations:
1. FOB Value Cannot Be Modified by Customs Authorities: The Tribunal emphasized that the FOB value is a product of negotiations between the buyer and seller and cannot be modified by a stranger to the contract, including customs authorities. The principle of “privity of contract” protects the agreed-upon transaction value.
2. Duty Drawback on FOB Value: The Tribunal clarified that duty drawback under Section 75 of the Customs Act is calculated as a percentage of the FOB value declared in the shipping bills. Customs authorities cannot re-determine the FOB value to alter the duty drawback amount.
3. Costs Added to FOB Value: The Tribunal accepted the appellant’s explanation that the difference between the ARE-1 value and the FOB value was due to additional costs such as marketing expenses, transportation, pre-shipment costs, warranty obligations, design charges, and profit margins.
4. Statements Under Section 108 of the Customs Act: The Tribunal ruled that statements made under Section 108 of the Customs Act could not be relied upon as evidence since the provisions of Section 138B were not complied with.
5. Fine and Penalties: The Tribunal set aside the imposition of fines under Section 125 and penalties under Sections 114 and 114AA of the Customs Act, stating that the allegations of overvaluation were not substantiated.
Final Verdict

The Tribunal concluded that the FOB value declared by Isgec Heavy Engineering Ltd. was valid and could not be rejected or re-determined by customs authorities. Consequently, the order passed by the Commissioner (Appeals) was set aside, and the appeal was allowed in favor of the appellant.

Source: CESTAT Delhi

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October 20, 2025
CESTAT Chennai Allows Refund Claim Despite Procedural Lapse in Compliance with Customs Notification

ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 16.10.2025

CESTAT Chennai Allows Refund Claim Despite Procedural Lapse in Compliance with Customs Notification

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

In a significant ruling, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Chennai, recently addressed a dispute involving M/s. N.R. Colours Ltd. and the Commissioner of Customs, Chennai. The case revolved around the rejection of a refund claim for Special Additional Duty (SAD) under Notification No. 102/2007-Customs. The Tribunal’s decision sheds light on the interpretation of procedural compliance and the broader principles of justice in refund claims.

Background of the Case

M/s. N.R. Colours Ltd. filed a refund claim for Rs. 3,10,795/- on February 26, 2014, under Notification No. 102/2007-Customs, which allows for the refund of 4% SAD paid on imported goods, provided certain conditions are met. The claim pertained to the import of goods such as “Pentacrythritol Mono Grade, MHEC, and Re-dispersable Emulsion Powder” under seven bills of entry.

The refund claim was rejected by the adjudicating authority and subsequently by the Commissioner of Customs (Appeals-II) on the grounds that the sales invoices submitted by the appellant did not contain the mandatory endorsement as required under para 2(b) of the notification. This endorsement states that “no credit of Additional Duty of Customs shall be admissible” on the goods sold.

Source: CESTAT Chennai

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October 16, 2025