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Tag: #CESTAT

  • CESTAT Mumbai Ruled Charging Case for Hearing Aids as Accessory, Not Static Converter

    CESTAT Mumbai Ruled Charging Case for Hearing Aids as Accessory, Not Static Converter

    Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

    Date: 20.04.2026

    CESTAT Mumbai Ruled Charging Case for Hearing Aids as Accessory, Not Static Converter

    This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email idΒ intelconsul@gmail.com . Β 

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    The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) Mumbai recently delivered a significant judgment in the case of Sonova Hearing India Pvt Ltd. This case revolved around the customs classification and duty assessment of imported charging cases for hearing aids. The outcome not only impacts Sonova but also sets a precedent for the import and classification of similar medical device accessories in India.

    Background of the Case

    Between October 2018 and August 2023, Sonova Hearing India Pvt Ltd imported 247 consignments of charging cases for hearing aids. These were cleared under Customs Tariff Item 9021 9010 as “parts and accessories of hearing aids,” attracting a Basic Customs Duty (BCD) of 7.5% as per Notification No. 50/2017-Cus. However, the Commissioner of Customs (Import), ACC, Mumbai, reassessed these imports under Tariff Item 8504 4030 (“Electrical Transformer, static converter, and inductors”), which carries a higher BCD of 20%.

    This reclassification led to a demand for additional duty amounting to β‚Ή1,18,93,367, along with interest, penalty, and a redemption fine of β‚Ή1 crore. Sonova challenged this order before the CESTAT Mumbai.

    Key Arguments

    Sonova’s Position

    • Nature of the Charging Case: Sonova argued that the imported charging cases did not include a power supply or battery.Β They functioned solely as a medium between a wall plug adapter (which converts AC to DC) and the hearing aids.Β The charging case itself did not convert power or store energy.
    • Classification as Accessory: The company maintained that these cases are accessories specifically designed for hearing aids and should be classified under Tariff Item 9021 9010, not as static converters or battery chargers.
    • No Suppression or Misdeclaration: Sonova highlighted that all Bills of Entry were assessed and, in some cases, physically examined by customs officers, who accepted the declared classification.Β Thus, there was no suppression of facts or intent to evade duty.
    • Extended Period and Penalties: The invocation of the extended period for demand, as well as the imposition of penalties and redemption fine, was challenged as being legally unsustainable.

    Customs Department’s Position

    • Product Catalogue and Description: The department argued that product catalogues and website data described the imported goods as including a battery and charger, suggesting the imports were more than just empty cases.
    • Subsequent Classification: They pointed out that Sonova had later classified similar goods under Tariff Item 8504, implying acceptance of the department’s position.

    Tribunal’s Analysis and Findings

    • Burden of Proof: The Tribunal reiterated that the burden to prove a change in classification lies with the department.Β The original classification by the importer must be discarded only with sufficient evidence.
    • Physical and Documentary Evidence: Examination of the imported goods, Bills of Entry, and a Chartered Engineer’s certificate confirmed that the charging cases did not contain any power conversion mechanism or battery.Β The power adapter and charger were domestically sourced, not imported.
    • Accessory, Not Converter: The Tribunal found that the charging case merely served as a holder and interface for charging hearing aids, not as a static converter or battery charger.Β The product literature and physical inspection supported this conclusion.
    • No Suppression or Misdeclaration: Since customs officers had assessed and examined the goods, and all facts were disclosed, there was no suppression or misdeclaration.Β The extended period for demand and penalties was not justified.

    Final Order and Implications

    The CESTAT Mumbai set aside the order of the Commissioner of Customs, restoring the original classification under Tariff Item 9021 9010. The demand for additional duty, penalties, and redemption fine was quashed.

    Key Takeaways

    • Correct Classification is Crucial: Importers must ensure accurate classification, but the burden to prove a change lies with customs authorities.
    • Accessory vs. Converter: Accessories that do not perform power conversion or storage should not be classified as static converters or battery chargers.
    • Transparency in Import Declarations: Full disclosure and cooperation with customs can protect importers from allegations of suppression or misdeclaration.

    Conclusion

    This ruling provides clarity on the classification of charging cases for hearing aids and reinforces the importance of evidence-based customs assessments. It is a significant win for Sonova and sets a helpful precedent for the medical device industry in India.

    Source: CESTAT Mumbai

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  • CESTAT Kolkata Quashes IGST Demand on Tea Pruning Machines

    CESTAT Kolkata Quashes IGST Demand on Tea Pruning Machines

    Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

    Date: 20.04.2026

    CESTAT Kolkata Quashes IGST Demand on Tea Pruning Machines

    This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email idΒ intelconsul@gmail.com . Β 

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    Tea Spares (India), a Kolkata-based importer of agricultural machinery, recently secured a significant legal victory before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata. The case revolved around the correct classification and assessment of Integrated Goods and Services Tax (IGST) on imported tea pruning machines and their spare parts. This article provides a detailed overview of the dispute, the legal arguments, and the final outcome, offering valuable insights for importers and stakeholders in the agricultural machinery sector.

    Background of the Case

    Sumitra Devi Kejriwal, proprietor of Tea Spares (India), imported tea plucking/pruning machines and their spare parts in 2017, filing two Bills of Entry for clearance. The goods were self-assessed and classified under Customs Tariff Heading (CTH) 8432, which covers agricultural, horticultural, or forestry machinery for soil preparation or cultivation. IGST was paid at 12% as per the applicable entry in Schedule-II of IGST Notification No.1/2017.

    The Dispute: IGST Rate and Classification

    During a post-clearance audit, customs authorities claimed that IGST should have been levied at 18% (Schedule-III, Entry 453) instead of 12%. A Demand cum Show Cause Notice was issued in 2021, nearly four years after the import, seeking recovery of the alleged short levy along with interest and penalties. The authorities invoked the extended period of limitation, alleging suppression of facts.

    Legal Arguments

    Appellant’s Position

    • No Suppression or Misstatement:Β The appellant argued that all facts were disclosed, and the goods were classified and assessed transparently.
    • Correct Classification:Β The machines were classified under CTH 8432, and the corresponding IGST rate was paid.
    • Jurisdictional Challenge:Β The appellant contended that IGST recovery under Section 28(4) of the Customs Act was beyond jurisdiction, as IGST is not a ‘duty’ specified under the Act.

    Department’s Position

    • Residual Classification:Β Customs authorities argued that the goods did not have a specific entry in the IGST schedules and should be classified under the residual entry, attracting 18% IGST.
    • Extended Limitation:Β The department invoked the extended period for issuing the show cause notice, citing suppression.

    Tribunal’s Findings and Decision

    The Tribunal examined the classification and the legal basis for the IGST rate:

    • Classification Accepted:Β The adjudicating authority had accepted the classification under CTH 8432, and the department did not challenge this in the show cause notice.
    • No Evidence of Suppression:Β There was no evidence of misstatement or suppression by the importer, making the extended limitation period inapplicable.
    • Jurisdictional Clarity:Β The Tribunal clarified that the same tariff entry must apply for both Basic Customs Duty and IGST, and the department’s attempt to use a different entry for IGST was unsustainable.
    • Appropriate IGST Rate Paid:Β The importer had paid the correct IGST rate as per the classification.

    Outcome

    The Tribunal set aside the order of the Commissioner (Appeals), upheld the adjudicating authority’s decision, and allowed the appeal. The demand for additional IGST, interest, and penalties was dropped.

    Key Takeaways for Importers

    • Transparent Classification Matters:Β Accurate self-assessment and classification can protect importers from retrospective demands.
    • Timely Action by Authorities:Β Authorities must issue show cause notices within the prescribed limitation period and provide evidence for any allegations of suppression.
    • Consistency in Tariff Application:Β The same tariff heading should be used for both customs duty and IGST, ensuring legal consistency.

    Conclusion

    This case sets an important precedent for importers of agricultural machinery, especially those dealing with specialized equipment like tea pruning machines. It underscores the importance of correct classification, transparent documentation, and timely action by customs authorities. Importers should ensure their goods are properly classified and assessed to avoid disputes and retrospective demands.

    Source: CESTAT Kolkata

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  • CESTAT Chandigarh Sets Aside Onerous Bank Guarantee for Provisional Release

    CESTAT Chandigarh Sets Aside Onerous Bank Guarantee for Provisional Release

    Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

    Date: 15.04.2026

    CESTAT Chandigarh Sets Aside Onerous Bank Guarantee for Provisional Release

    This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email idΒ intelconsul@gmail.com . Β 

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    The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) Chandigarh recently delivered a significant order in the case of M/s Savirama Traders versus the Principal Commissioner of Customs, Ludhiana.Β This case revolves around the import of Areca Nuts from Sri Lanka, the classification of these goods under Indian customs law, and the conditions imposed for their provisional release after seizure. The decision provides important insights into customs procedures, the role of laboratory testing, and the balance between revenue protection and fair treatment of importers.

    Background of the Case

    • Importer:Β M/s Savirama Traders, New Delhi
    • Goods:Β Areca Nuts (Betel Nuts), 27,000 kg, imported from Sri Lanka
    • Declared Classification:Β CTH 08028090 (Areca Nuts)
    • Declared Value:Β Rs. 1,51,63,761
    • Customs Duty Involved:Β Rs. 7,58,188
    • Seizure:Β Goods seized on 01.09.2025 under Section 110 of the Customs Act, 1962
    • Provisional Release Order:Β Required a bond for the full value and a bank guarantee of Rs.Β 1,63,64,732

    Sequence of Events

    1. Import and Declaration:Β Savirama Traders filed a Bill of Entry declaring the goods as Areca Nuts under CTH 08028090, seeking duty exemption under the India-Sri Lanka Free Trade Agreement (ISFTA).
    2. Verification:Β The Certificate of Origin from Sri Lanka was verified as authentic.
    3. Laboratory Testing:
      • Samples sent to CRCL, New Delhi, which reported the goods as “roasted areca nut” and unfit for human consumption due to excess damaged nuts.
      • The importer disagreed and requested re-testing by an FSSAI-notified lab.
      • CRCL’s second report again classified the goods as “roasted areca nut.”
      • National Food Laboratory, Ghaziabad, however, found the goods fit for human consumption.
    4. Customs Allegation:Β Customs alleged mis-declaration, claiming the goods should be classified as “roasted areca nuts” under CTH 2008, not CTH 0802, and denied duty exemption.
    5. Show Cause Notice:Β Customs issued a notice demanding Rs. 74,24,178 in duty and proposing penalties.
    6. Provisional Release:Β The importer sought provisional release due to the perishable nature of the goods.Β Customs allowed release but imposed a high-value bond and bank guarantee.
    7. Appeal:Β Savirama Traders appealed, arguing the conditions were arbitrary and the CRCL report unreliable.

    Key Legal Issues

    1.Β Classification of Goods

    • Customs’ View:Β The goods were “roasted areca nuts” (CTH 2008), not eligible for ISFTA duty exemption.
    • Importer’s View:Β The goods were “raw areca nuts” (CTH 0802), eligible for exemption.
    • Laboratory Reports:Β Conflicting reports from CRCL (not fit for consumption, roasted) and National Food Laboratory (fit for consumption).

    2.Β Reliability of Laboratory Testing

    • CRCL’s report was based on visual inspection and not conducted by a food analyst.
    • National Food Laboratory, an FSSAI-approved lab, followed proper procedures and found the goods fit for consumption.
    • The Tribunal and courts have held that FSSAI-approved lab results should be given preference.

    3.Β Conditions for Provisional Release

    • Customs imposed both a bond and a high-value bank guarantee, citing CBIC Circular No.Β 35/2017-Cus.
    • The Tribunal found these conditions arbitrary and unreasonable, especially since the circular had been struck down by courts.

    Tribunal’s Findings and Decision

    • On Laboratory Reports:Β The CRCL report was not reliable as it was not conducted by a food analyst and was based on visual inspection.Β The National Food Laboratory’s report, being FSSAI-approved, was preferred.
    • On Classification:Β The Tribunal noted that classification should be based on General Rules for Interpretation, Section Notes, and Chapter Notes, not just visual inspection.
    • On Provisional Release Conditions:Β The requirement of a bank guarantee was found to be arbitrary and unreasonable.Β The Tribunal ordered the release of goods subject to the bond but without the need for a bank guarantee.
    • On Precedents:Β The Tribunal relied on recent High Court judgments, including the Bombay and Madras High Courts, which emphasized the primacy of FSSAI lab reports and the need for reasonable conditions in provisional release.

    Implications and Takeaways

    • For Importers:Β This case underscores the importance of insisting on FSSAI-approved laboratory testing and challenging arbitrary customs conditions.
    • For Customs Authorities:Β The decision highlights the need to follow due process, rely on statutory lab reports, and avoid imposing unreasonable conditions that can be struck down by courts.
    • For Legal Practitioners:Β The case provides a roadmap for contesting similar disputes, especially regarding classification and provisional release of perishable goods.

    Conclusion

    The Savirama Traders case is a landmark in balancing the interests of revenue protection and fair trade. It clarifies the role of laboratory testing, the process of classification, and the limits of customs authorities in imposing conditions for provisional release. The Tribunal’s order not only provided relief to the importer but also set important precedents for future cases involving agricultural imports and customs procedures.

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    Source: CESTAT Chandigarh

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  • CESTAT Delhi Overturns Penalties and Confiscation on Imported Watches

    CESTAT Delhi Overturns Penalties and Confiscation on Imported Watches

    Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

    Date: 15.04.2026

    CESTAT Delhi Overturns Penalties and Confiscation on Imported Watches

    This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email idΒ intelconsul@gmail.com . Β 

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    Richemont India Pvt. Ltd., a prominent distributor of luxury watches in India, recently faced a significant legal challenge regarding customs duty, confiscation, and penalties imposed by customs authorities. This article provides a detailed overview of the case, the arguments presented, and the final decision by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), New Delhi.

    Background of the Case

    Richemont India Pvt. Ltd. imports and sells watches from renowned brands owned by the Richemont group. The company acts as the authorized distributor in India, selling imported watches to unrelated authorized dealers on a principal-to-principal basis. Once sold, Richemont claims it has no control over the dealers’ operations, including pricing decisions.

    The Dispute

    The Department of Revenue Intelligence (DRI) initiated an investigation based on intelligence about imported watches. During searches at authorized dealers’ premises, it was discovered that:

    • MRP (Retail Sale Price) tags on some watches had been changed.
    • Some watches lacked MRP tags altogether.
    • MRP printing machines and unprinted tag rolls were found, suggesting possible manipulation of price tags.

    The DRI alleged that Richemont India revised the RSP (Retail Sale Price) upwards after import, but did not pay the corresponding differential Countervailing Duty (CVD) on the revised prices. The department argued that under section 4A of the Central Excise Act and related rules, the revised RSP should be used for CVD assessment.

    Show Cause Notice and Adjudication

    A show cause notice was issued to Richemont India, proposing:

    • Assessment of CVD based on the upwardly revised RSP.
    • Demand for differential customs duty of Rs. 4,47,394/- plus interest.
    • Confiscation of watches and imposition of penalties under various sections of the Customs Act.

    The Joint Commissioner upheld the department’s position, confirming the demand, confiscation, and penalties. Richemont appealed, but the Commissioner (Appeals) also upheld the order.

    Arguments Presented

    Richemont India’s Defense

    • Correct Duty Paid:Β Richemont argued it paid the correct CVD at the time of import based on the declared RSP.
    • No Control Over Dealers:Β Once watches were sold, Richemont had no control over subsequent price revisions by dealers.
    • Legal Precedents:Β Cited cases where importers were not held liable for post-import price changes by dealers.
    • No Evidence of Tampering:Β Claimed no evidence showed Richemont altered or had knowledge of MRP changes.
    • Penalty Not Justified:Β Argued penalties cannot be imposed without evidence of willful suppression or intent to evade duty.

    Department’s Position

    • Revised RSP Originated from Richemont:Β Internal communications and price lists showed Richemont circulated revised prices to dealers.
    • Duty Short Paid:Β The revised RSP applied to unsold stock, making differential CVD payable.
    • Suppression of Facts:Β Richemont failed to disclose the possibility of RSP revision at import, justifying penalties and extended limitation period.

    Tribunal’s Findings and Decision

    The Tribunal carefully examined the evidence and arguments:

    • No Evidence of Richemont’s Involvement:Β There was no proof Richemont altered or had knowledge of MRP changes after selling watches to dealers.
    • Legal Precedents Support Richemont:Β The cited cases confirmed that importers are not liable for post-import price changes by unrelated dealers.
    • Statement of Director Not Sufficient:Β The director’s statement was not considered relevant as proper legal procedures were not followed.
    • Demand and Penalties Not Justified:Β Since the demand for differential duty was unsustainable, penalties under section 114A could not be upheld.

    Final Order

    The Tribunal set aside the impugned order, allowing Richemont India’s appeal. The demand for differential duty, confiscation, and penalties were not sustained.

    Conclusion

    This case highlights the complexities of customs duty assessment for imported goods, especially when pricing changes occur post-import. The Tribunal’s decision reinforces the principle that importers cannot be held liable for price revisions made by unrelated dealers after the goods have been sold.Β It also underscores the importance of clear evidence and proper legal procedures in customs disputes.

    Source: CESTAT Delhi

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  • CESTAT Chennai Reinforces Principle of Substantive Compliance in SAD Refund Claims

    CESTAT Chennai Reinforces Principle of Substantive Compliance in SAD Refund Claims

    Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

    Date: 14.04.2026

    CESTAT Chennai Reinforces Principle of Substantive Compliance in SAD Refund Claims

    This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email idΒ intelconsul@gmail.com . Β 

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    The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Chennai recently issued a significant ruling in the case of M/s Akshay Impex versus the Commissioner of Customs, Chennai II Commissionerate. This case revolved around the rejection of refund claims for Special Additional Duty (SAD) under Notification No. 102/2007-Cus. The tribunal’s decision sheds light on the interpretation of procedural compliance versus substantive compliance in the context of exemption notifications. This article provides a detailed analysis of the case, the arguments presented, and the tribunal’s final ruling.

    Background of the Case

    M/s Akshay Impex, the appellant, filed two refund claims under Notification No. 102/2007-Cus dated September 14, 2007. The claims sought refunds for SAD paid during the import of goods, which were later sold in the domestic market with VAT/Sales Tax paid. The refund claims were rejected by the Deputy Commissioner of Customs on October 8, 2012, citing non-compliance with paragraph 2(b) of the notification. This paragraph mandates that sales invoices must include an endorsement stating that no credit of SAD is admissible to the buyer.

    The appellant challenged the rejection, arguing that they had complied with the substantive requirements of the notification, including payment of SAD, VAT, and submission of supporting documents such as Bills of Entry, duty payment challans, VAT returns, and Chartered Accountant certificates. However, the Commissioner of Customs (Appeals) upheld the rejection, leading the appellant to file an appeal with the CESTAT.

    Key Issues in the Case

    The tribunal identified the central issue as whether the appellant had complied with the conditions prescribed under paragraph 2(b) of Notification No. 102/2007-Cus. Specifically, the tribunal examined:

    1. Whether the sales invoices contained the required endorsement regarding the non-admissibility of SAD credit.
    2. Whether discrepancies in invoice formats and typographical presentation justified the rejection of the refund claims.

    Arguments Presented

    Appellant’s Submissions

    The appellant, represented by Advocate, argued the following:

    • Documentary Evidence:Β The appellant provided original copies of Bills of Entry, TR-6 challans, sales invoices, VAT returns, and Chartered Accountant certificates to establish compliance with the notification.
    • Endorsement Compliance:Β The sales invoices included the required declaration, although there were minor typographical and formatting variations.
    • Substantial Compliance:Β The appellant emphasized that procedural variations should not override the substantive compliance with the notification’s conditions.

    Respondent’s Submissions

    The respondent, represented by Authorized Representative, argued:

    • Mandatory Compliance:Β The endorsement required under paragraph 2(b) of the notification is mandatory and must be strictly adhered to.
    • Discrepancies in Invoices:Β Differences in invoice formats and the absence of identical endorsements raised doubts about compliance.

    Tribunal’s Findings

    The tribunal carefully examined the submissions and evidence presented by both sides. Key observations included:

    1. Substantive Compliance:Β The appellant had paid SAD at the time of import, sold the goods in the domestic market with VAT/Sales Tax paid, and provided sufficient documentation to establish correlation between imports and sales.
    2. Purpose of the Endorsement:Β The endorsement under paragraph 2(b) is intended to prevent buyers from availing credit for SAD, thereby avoiding double benefits.Β The tribunal found no evidence that buyers had availed such credit.
    3. Procedural Variations:Β The discrepancies in invoice formats were deemed procedural and did not affect the substantive compliance with the notification.
    4. Judicial Precedents:Β The tribunal referred to previous rulings, including those by the Hon’ble Supreme Court and High Courts, which emphasized the distinction between substantive conditions and procedural requirements.

    Final Decision

    The tribunal concluded that the appellant had substantially complied with the conditions of Notification No. 102/2007-Cus. The rejection of the refund claims based solely on procedural discrepancies in invoice formats was deemed legally unsustainable. Consequently, the tribunal set aside the Order-in-Appeal Nos. 292 & 293/2014 dated February 21, 2014, and allowed the refund claims of Rs. 2,51,046 and Rs. 2,63,572 with consequential relief as per law.

    Key Takeaways

    1. Substantive vs. Procedural Compliance:Β The ruling underscores the importance of distinguishing between substantive compliance and procedural lapses in exemption notifications.
    2. Documentary Evidence:Β Comprehensive documentation, including Bills of Entry, VAT returns, and Chartered Accountant certificates, plays a crucial role in establishing compliance.
    3. Judicial Precedents:Β The tribunal’s reliance on previous rulings highlights the importance of consistency in interpreting exemption notifications.

    Conclusion

    The Akshay Impex case serves as a landmark decision in the realm of customs law, particularly in the interpretation of Notification No. 102/2007-Cus. It reinforces the principle that procedural discrepancies should not overshadow substantive compliance, especially when the intent and purpose of the notification are fulfilled. Importers and legal practitioners can draw valuable insights from this case to ensure proper compliance and safeguard their rights to claim refunds under similar notifications.

    Source: CESTAT Chennai

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  • CESTAT Chandigarh Allows Provisional Release of Allegedly Prohibited Goods

    CESTAT Chandigarh Allows Provisional Release of Allegedly Prohibited Goods

    Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

    Date: 14.04.2026

    CESTAT Chandigarh Allows Provisional Release of Allegedly Prohibited Goods

    This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email idΒ intelconsul@gmail.com . Β 

    ​​ ​​   ​​ ​ ​​​  ​ ​

    The case of M/s Global Copier System vs. Commissioner of Customs, Ludhiana, heard by the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Chandigarh, revolves around the seizure and classification of imported second-hand multifunctional printing machines. This legal dispute highlights the complexities of Indian customs and trade laws, particularly concerning import restrictions, compliance requirements, and the provisional release of seized goods.

    Background of the Case

    M/s Global Copier System, the appellant-importer, filed an appeal against the order passed by the Commissioner of Customs (Appeals), Ludhiana, which upheld the rejection of their request for the provisional release of 230 second-hand Highly Specialized Equipment (HSE) Digital Multi-Function Print and Copying Machines.Β These machines were valued at Rs. 40,17,969 and classified under CTE 84333100.

    The appellant had filed a Bill of Entry for the clearance of these goods on July 29, 2025.Β However, during the examination, it was found that the appellant lacked the necessary import authorization from the Directorate General of Foreign Trade (DGFT) and registration with the Bureau of Indian Standards (BIS).Β A Chartered Engineer’s report concluded that the imported goods were multifunctional devices and not HSE, leading to their seizure on August 14, 2025, under the belief that they were liable for confiscation.

    Key Arguments by the Appellant

    The appellant, represented by legal counsel, presented the following arguments:

    1. Exemption from BIS Registration: The appellant argued that the CRO 2012 exempts HSE from BIS registration requirements, and the imported goods should qualify for this exemption.
    2. Freely Importable Goods: According to the ITC HS classification, the imported goods are categorized as “freely importable,” and no notification explicitly prohibits their import.
    3. Foreign Chartered Engineer’s Certification: The foreign Chartered Engineer had classified and valued the goods at the time of export, and the local Chartered Engineer did not provide sufficient reasons to refute this classification.
    4. Precedents Supporting Provisional Release: The appellant cited multiple cases where courts had allowed provisional release of goods under similar circumstances, emphasizing that provisional release is permissible even for goods deemed prohibited.
    5. Legal Provisions: Section 110A of the Customs Act allows for the provisional release of seized goods, and the impugned order failed to provide evidence of fraud or concealment by the appellant.

    Key Arguments by the Respondent

    The Commissioner of Customs, Ludhiana, represented by the Authorized Representative, countered the appellant’s claims with the following points:

    1. Non-Compliance with Import Regulations: The appellant failed to obtain the required DGFT authorization and BIS registration, rendering the goods prohibited under Section 2(33) of the Customs Act.
    2. Exemption Not Applicable: The exemption under S.O. 2844 (E) applies only to HSE, and the local Chartered Engineer’s report confirmed that the imported goods were multifunctional devices, not HSE.
    3. Legal Precedents: The respondent argued that the cases cited by the appellant were not applicable due to differences in facts and circumstances.

    CESTAT’s Observations and Final Order

    After hearing both sides, the tribunal made the following observations:

    1. Provisional Release Under Section 110A: The tribunal emphasized that Section 110A of the Customs Act allows for the provisional release of seized goods, irrespective of whether they are deemed prohibited.
    2. Adjudication Required for Prohibition: The tribunal noted that the categorization of goods as prohibited is subject to adjudication, and the mere act of seizure does not establish the goods as prohibited.
    3. Precedents Supporting Provisional Release: The tribunal referred to various judgments, including those by the High Courts of Delhi, Madras, and Telangana, which upheld the right to provisional release under similar circumstances.
    4. Conditions for Provisional Release: The tribunal concluded that the impugned goods could be released provisionally, subject to the following conditions:
      • Payment of applicable duty on the imported goods.
      • Submission of a bond equivalent to the value of the imported goods.
      • Submission of a bank guarantee equivalent to 30% of the applicable duty.

    Conclusion

    The case of M/s Global Copier System vs. Commissioner of Customs, Ludhiana, underscores the importance of adhering to import regulations while also highlighting the legal provisions for provisional release of seized goods.

    The tribunal’s decision to allow provisional release, subject to specific conditions, reflects a balanced approach that considers both compliance with trade laws and the rights of importers. This case serves as a significant precedent for similar disputes in the future, emphasizing the need for clear adjudication before categorizing goods as prohibited.

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    Source: CESTAT Chandigarh

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  • CESTAT Delhi Holds Marketing & Sponsorship Expenses Not Includible in Assessable Value

    CESTAT Delhi Holds Marketing & Sponsorship Expenses Not Includible in Assessable Value

    Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

    Date: 13.04.2026

    CESTAT Delhi Holds Marketing & Sponsorship Expenses Not Includible in Assessable Value

    This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email idΒ intelconsul@gmail.com . Β 

    ​​ ​​   ​​ ​ ​​​  ​ ​

    The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) in New Delhi recently delivered a significant judgment in the case of M/s Indo Rubber and Plastic Works versus the Commissioner of Customs, Inland Container Depot, Tughlakabad, New Delhi.Β This case revolved around the valuation of imported sports goods branded as ‘Li Ning’ and the inclusion of marketing and promotional expenses in the customs valuation.

    Background of the Case

    M/s Indo Rubber and Plastic Works, a proprietary concern, is engaged in manufacturing sports goods under its own brand name, ‘Vicky,’ and importing and distributing ‘Li Ning’ branded sports goods from M/s Sunlight Sports Pte.Β Ltd., Singapore. The appellant entered into a distribution agreement with Sunlight Sports on January 1, 2010, which included provisions for marketing, advertising, and promotion of ‘Li Ning’ products within India.

    Under Article 7 of the agreement, the appellant was responsible for bearing all costs related to marketing, advertising, and promotions within the assigned territory.Β Additionally, Sunlight Sports entered into sponsorship agreements with entities such as the Karnataka Badminton Association (KBA) and prominent badminton player P.V.Β Sindhu, which involved providing sports equipment and sponsorships to promote the ‘Li Ning’ brand.

    The Dispute

    The Revenue authorities investigated the valuation of ‘Li Ning’ branded goods imported from Singapore between February 2012 and March 2015.Β A show-cause notice was issued in February 2017, alleging that the marketing, advertising, sponsorship, and promotional expenses incurred by the appellant were a condition of sale and should be included in the value of the imported goods under Rule 10(1)(e) of the Customs Valuation Rules, 2007.

    The key allegations included:

    • The appellant undertook promotional activities for ‘Li Ning’ branded products as per Article 7 of the distribution agreement.
    • Sponsorship agreements signed by Sunlight Sports were represented in India through the appellant.
    • Some sponsorship agreements were signed by the appellant’s manager on behalf of Sunlight Sports.
    • The appellant failed to provide a clear bifurcation of marketing expenses between ‘Li Ning’ and ‘Vicky’ brands.
    • The marketing expenses were deemed a condition of sale, making them includable in the customs valuation.

    The Revenue authorities argued that the appellant’s marketing expenses were a condition of sale and invoked the extended period of limitation, alleging suppression of facts and intent to evade customs duty.

    Appellant’s Defense

    The appellant contested the allegations, arguing:

    1. No Payments on Behalf of Sunlight Sports: The appellant claimed that they did not pay any amount on behalf of Sunlight Sports and that the marketing expenses were incurred independently as part of their responsibility for sales promotion within India.
    2. Post-Import Activity: The appellant argued that the marketing and promotional expenses were post-import activities and not a condition of sale.
    3. Arms-Length Transactions: The appellant emphasized that the transactions were conducted at arm’s length and that the parties were not related.
    4. No Fixed Obligation: The appellant highlighted that the distribution agreement did not specify any fixed amount or percentage of the invoice value to be spent on marketing and promotion.
    5. Precedents: The appellant cited rulings from the Supreme Court and CESTAT, including the Toyota Kirloskar Motor Pvt.Β Ltd. and Richemont India Pvt. Ltd. cases, to argue that post-import expenses are not includable in the transaction value.
    6. Extended Limitation Period: The appellant contended that the extended period of limitation was not applicable as there was no suppression of facts or intent to evade duty.

    CESTAT’s Final Decision

    After considering the arguments, the Tribunal ruled in favor of the appellant, stating:

    • The marketing and promotional expenses incurred by the appellant were post-import activities and not a condition of sale.
    • The distribution agreement did not impose any fixed obligation on the appellant to incur specific marketing expenses as a precondition for the sale of goods.
    • The appellant was not related to Sunlight Sports, and the transactions were conducted at arm’s length.
    • The extended period of limitation was not applicable as there was no suppression of facts or intent to evade duty.

    The Tribunal set aside the impugned order, allowing the appeal and granting consequential benefits, including a refund of the amount deposited during the investigation, along with applicable interest.

    Key Takeaways

    1. Customs Valuation Rules: Rule 10(1)(e) of the Customs Valuation Rules, 2007, applies only when marketing and promotional expenses are a condition of sale.
    2. Post-Import Activities: Expenses incurred for marketing and promotion after the importation of goods are not includable in the customs valuation.
    3. Extended Limitation Period: The extended period of limitation under the Customs Act requires evidence of suppression of facts or intent to evade duty.
    4. Precedents Matter: Previous rulings, such as those in the Toyota Kirloskar and Richemont India cases, play a crucial role in determining the applicability of customs valuation rules.

    Conclusion

    The Indo Rubber CESTAT Delhi case highlights the importance of understanding the nuances of customs valuation rules and the distinction between pre-import and post-import activities. It serves as a precedent for importers and distributors, emphasizing the need for clear agreements and proper documentation to avoid disputes with Revenue authorities.

    This judgment reinforces the principle that marketing and promotional expenses incurred independently by the importer are not necessarily includable in the customs valuation of imported goods.

    Connected Matter

    CESTAT Delhi – Import Valuation Cannot Include Advertising or Management Fees

    Source: CESTAT Delhi

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  • CESTAT Mumbai Sets Aside Rejection of β‚Ή27.5 Lakh ADD Refund

    CESTAT Mumbai Sets Aside Rejection of β‚Ή27.5 Lakh ADD Refund

    Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

    Date: 13.04.2026

    CESTAT Mumbai Sets Aside Rejection of β‚Ή27.5 Lakh ADD Refund

    This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email idΒ intelconsul@gmail.com . Β 

    ​​ ​​   ​​ ​ ​​​  ​ ​

    This article delves into the legal case of M/s AKASAKA Electronic Ltd (now M/s MIRC Electronics Limited) versus the Commissioner of Customs (Import), Mumbai, as adjudicated by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai. The case revolves around a refund dispute concerning Anti-Dumping Duty (ADD) payments and the principle of unjust enrichment.

    Case Background

    The dispute originated from the provisional imposition of Anti-Dumping Duty (ADD) on Copper Clad Laminates imported by AKASAKA Electronic Ltd through nine Bills of Entry between September 19, 2003, and January 22, 2004.Β The ADD was later rescinded on January 22, 2004, as per Rule 21(3) of the Anti-Dumping Duty Rules, 1995, which mandates the refund of provisional ADD if the duty is withdrawn without confirmation.

    Despite the withdrawal of the ADD, the appellant did not receive the refund of Rs.Β 27,51,395/- paid as ADD.Β After waiting for a year, the appellant filed a refund application under Section 11B of the Central Excise Act, which was rejected on the grounds of unjust enrichment.Β The rejection was based on the observation that the duty amount was recorded as an expenditure in the appellant’s Profit & Loss Account rather than as a receivable.

    Legal Proceedings

    First Round of Litigation

    In the first round of litigation, the Tribunal remanded the matter back for re-adjudication, emphasizing that the appellant should be given an opportunity to substantiate their case with relevant documents.Β The Tribunal disagreed with the lower authorities’ contention that recording the duty amount as an expenditure in the Profit & Loss Account conclusively proved unjust enrichment.

    Second Round of Litigation

    Despite the Tribunal’s direction, the Refund Sanctioning Authority rejected the refund claim again, citing the appellant’s failure to provide conclusive evidence that the duty incidence was not passed on to customers.Β The Commissioner (Appeals) upheld this decision, relying on the Supreme Court’s judgment in the case of Allied Photographic India Ltd, which stated that uniformity in price does not necessarily prove that the duty incidence was not passed on.

    Final Tribunal Decision

    In the second round of litigation, the Tribunal ruled in favor of the appellant, stating that:

    • Rule 21(3) of the Anti-Dumping Duty Rules, 1995, explicitly mandates the refund of provisional ADD if the duty is withdrawn, without requiring the importer to file a refund claim.
    • The rejection of the refund claim based on the principle of unjust enrichment was not supported by standard accounting principles.
    • The Tribunal cited multiple precedents, including M/s. EMA Lubes Pvt. Ltd. and M/s. Ring Plus Aqua Ltd., to argue that the mere recording of the duty amount as an expenditure does not establish unjust enrichment.
    • The Tribunal also criticized the reliance on the Allied Photographic India Ltd case, stating that it was not applicable to the present case.

    The Tribunal concluded that the Commissioner (Appeals) had erred in scrutinizing the refund claim under the principle of unjust enrichment, as Rule 21(3) of the Anti-Dumping Duty Rules, 1995, clearly stipulates that the ADD should be refunded without such scrutiny.

    Final Order

    The Tribunal allowed the appeal and directed the Commissioner of Customs (Import), Mumbai, to refund the Anti-Dumping Duty of Rs.Β 27,51,395/- along with applicable interest to the appellant within two months of the order date.

    Key Takeaways

    1. Rule 21(3) of the Anti-Dumping Duty Rules, 1995: This rule mandates the refund of provisional ADD if the duty is withdrawn without confirmation, eliminating the need for a refund application.
    2. Unjust Enrichment: The principle of unjust enrichment cannot be conclusively established based solely on the recording of duty as an expenditure in financial statements.Β Standard accounting principles do not support this assumption.
    3. Legal Precedents: The Tribunal’s decision was supported by multiple precedents, which clarified the interpretation of unjust enrichment and the role of accounting practices in legal disputes.
    4. Importance of Proper Documentation: The case highlights the critical role of documentation, such as Chartered Accountant certificates and financial statements, in legal disputes involving tax refunds.

    Conclusion

    The case of AKASAKA Electronic Ltd vs. Commissioner of Customs (Import), Mumbai, underscores the importance of adhering to statutory provisions and established accounting principles in legal disputes. It also serves as a reminder of the need for clear and consistent documentation to substantiate claims in tax-related matters. The Tribunal’s decision not only provides relief to the appellant but also sets a precedent for similar cases in the future.

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    Source: CESTAT Mumbai

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  • Bombay High Court Clarifies Scope of Redemption Fines Under Section 125 of the Customs Act

    Bombay High Court Clarifies Scope of Redemption Fines Under Section 125 of the Customs Act

    Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

    Date: 13.04.2026

    Bombay High Court Clarifies Scope of Redemption Fines Under Section 125 of the Customs Act

    This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email idΒ intelconsul@gmail.com . Β 

    ​​ ​​   ​​ ​ ​​​  ​ ​

    The Bombay High Court recently delivered a significant judgment in the case ofΒ The Commissioner of Customs (Import) vs. M/s. Finesse Creation Inc.. This case revolved around the legality of imposing redemption fines and confiscating imported goods that were no longer available for seizure or confiscation under the Customs Act, 1962.Β The judgment provides clarity on the interpretation of Section 125 of the Customs Act and its application in cases where the goods in question are not physically available for confiscation.

    Background of the Case

    The case originated from a search conducted at the premises of M/s. Finesse Creation Inc. on September 28, 2006, where incriminating documents were recovered.Β Upon scrutiny, it was discovered that the value declared by the respondent for imported artificial flowers was significantly lower than the value indicated in the seized documents.Β This discrepancy led to the issuance of a show-cause notice on August 31, 2007, and subsequent adjudication by the Commissioner of Customs.

    The Commissioner of Customs rejected the declared value of the goods for 13 consignments imported between August 4, 2003, and September 20, 2006.Β The goods were reassessed at a higher value of β‚Ή44,82,452, resulting in a differential duty of β‚Ή8,20,543 under Section 28(2) of the Customs Act.Β Additionally, interest under Section 28AB was ordered, and penalties were imposed.Β The imported goods were confiscated, and a redemption fine of β‚Ή13,45,000 under Section 125 of the Customs Act was imposed in lieu of confiscation.

    Appeal to CESTAT

    The respondent challenged the Commissioner order before the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT).Β While the tribunal upheld the differential duty, penalties, and interest, it set aside the redemption fine imposed under Section 125 of the Customs Act.Β The tribunal relied on the judgment of the Punjab & Haryana High Court inΒ Commissioner of Customs, Amritsar vs. Raja Impex (P) Ltd., which held that redemption fines cannot be imposed if the goods are not available for confiscation.

    Key Legal Questions

    The Bombay High Court admitted the appeal on two key questions:

    1. Whether goods deemed improperly imported are liable for confiscation under Section 111 of the Customs Act, even if they are cleared and not available for seizure.
    2. Whether the CESTAT was correct in holding that imported goods not available for confiscation are not liable for redemption fines under Section 125 of the Customs Act.

    Courts Analysis and Judgment

    The Bombay High Court examined the provisions of Section 125 of the Customs Act, which grants the Customs Authorities the power to confiscate goods that violate the Act, rules, or notifications. The court emphasized that the concept of redemption fine arises only when the goods are available for redemption.Β If the goods are not available, the question of confiscation or redemption does not arise.

    The court distinguished the present case from the Supreme Court\u0019s judgment inΒ Weston Components Ltd. vs. Commissioner of Customs, New Delhi.Β InΒ Weston, the goods were released on the execution of a bond, and the Supreme Court held that redemption fines could still be imposed.Β However, in the case ofΒ Finesse Creation, the goods were cleared earlier and were not available for confiscation or redemption.

    The court concluded that the tribunal was correct in holding that no redemption fine could be imposed in the absence of the goods.Β The appeal was dismissed, affirming the CESTAT decision.

    Implications of the Judgment

    This judgment has significant implications for the interpretation and application of Section 125 of the Customs Act:

    1. Clarification on Redemption Fines: The judgment establishes that redemption fines under Section 125 can only be imposed if the goods are physically available for confiscation and redemption.
    2. Distinction from Previous Judgments: The court clarified that theΒ Weston Components Ltd.Β case is not applicable in situations where the goods are not available for confiscation.
    3. Impact on Importers and Exporters: Importers and exporters must ensure accurate declarations to avoid penalties and confiscation. However, this judgment provides relief in cases where goods are no longer available for seizure.

    Conclusion

    The Bombay High Court’s decision inΒ The Commissioner of Customs (Import) vs. M/s. Finesse Creation Inc.Β underscores the importance of adhering to the provisions of the Customs Act while also providing clarity on the limitations of imposing redemption fines. This case serves as a precedent for similar disputes and highlights the need for transparency and compliance in international trade practices.

    Connected Matter

    CESTAT Kolkata- Differential Customs Duty Demand and Confiscation Order Declared Unsustainable

    Source: Bombay High Court

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  • CESTAT Delhi Sets Aside Duty Demand Under IGCR Rules

    CESTAT Delhi Sets Aside Duty Demand Under IGCR Rules

    Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

    Date: 11.04.2026

    CESTAT Delhi Sets Aside Duty Demand Under IGCR Rules

    This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email idΒ intelconsul@gmail.com .

    ​​ ​​   ​​ ​ ​​​  ​ ​

    In a recent legal case, K.A. Enterprises, a manufacturer of sanitary napkins, faced allegations of violating import procedures and exemption rules under the Customs Act, 1962.Β The case revolved around the import of raw materialsβ€”super absorbent polymers and untreated fluff pulpβ€”used in the production of sanitary napkins.Β The dispute highlighted the complexities of adhering to the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 (IGCR Rules) and the implications of non-compliance.

    Background of the Case

    K.A. Enterprises imported super absorbent polymers and untreated fluff pulp between October 2018 and June 2021, claiming a concessional rate of duty under Notification No. 50/2017-Cus dated June 30, 2017.Β To avail of this exemption, importers are required to follow the procedures outlined in the IGCR Rules.Β The Customs Department alleged that K.A. Enterprises failed to comply with these rules, specifically Rule 5 and Rule 6, which mandate prior declarations and record-keeping of imported goods.

    The department claimed that K.A. Enterprises imported 452 metric tons of untreated fluff pulp but filed declarations for only 150 metric tons under Rule 5 of the IGCR Rules.Β Consequently, a show-cause notice was issued on January 31, 2022, demanding differential duty of β‚Ή31,40,636 along with interest and penalties under Section 114A of the Customs Act.

    Key Legal Provisions

    The case hinged on the interpretation and application of the following legal provisions:

    Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017

    • Rule 5: Requires importers to provide prior information about the estimated quantity and value of goods to the jurisdictional customs officer and submit a continuity bond.
    • Rule 6: Mandates importers to provide information about the receipt of imported goods and maintain detailed records of their usage.
    • Rule 8: Allows recovery of duty if the imported goods are not used for the declared purpose.

    Customs Act, 1962

    • Section 28(4): Allows the recovery of customs duty in cases of short payment or non-payment due to suppression of facts.
    • Section 114A: Imposes penalties for non-compliance with customs regulations.

    Arguments Presented

    K.A. Enterprises

    The appellant argued that:

    1. The demand was based on unfounded allegations of excess imports without following the IGCR Rules.
    2. They had complied with all requirements, including filing the requisite declarations and providing estimated quantities and values.
    3. Procedural lapses, if any, should not result in the denial of the exemption benefit.
    4. The demand was time-barred as the show-cause notice was issued beyond the normal period of limitation.

    Customs Department

    The Customs Department contended that:

    1. K.A. Enterprises violated Rule 5 by failing to provide prior intimation of the estimated quantity and value of imports.
    2. The appellant suppressed the actual quantities imported, justifying the invocation of the extended period of limitation under Section 28(4).

    Tribunal’s Observations and Final Order

    The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) analyzed the case and made the following observations:

    1. There was no dispute regarding the nature of the imported goods or their intended use.
    2. The department failed to provide evidence that the Assistant Commissioners at the jurisdictional level or the port of import allowed clearance of goods in excess of declared quantities.
    3. The responsibility for any irregularities in the clearance process lies with the customs officials, not the appellant.
    4. The demand for differential duty and penalties on K.A. Enterprises was not substantiated.

    Based on these findings, the tribunal set aside the impugned order and allowed the appeal, ruling in favor of K.A.Β Enterprises.

    Key Takeaways

    This case underscores the importance of:

    1. Strict Compliance: Importers must adhere to all procedural requirements under the IGCR Rules to avoid disputes and penalties.
    2. Accountability: Customs officials play a crucial role in ensuring compliance and must be held accountable for any lapses in the clearance process.
    3. Legal Recourse: Businesses should be aware of their rights and seek legal remedies when faced with unjustified demands or penalties.

    Conclusion

    The case of K.A. Enterprises serves as a reminder of the complexities involved in customs procedures and the importance of meticulous compliance. It also highlights the need for transparency and accountability in the enforcement of customs regulations. Businesses must ensure they are well-versed in applicable rules and prepared to defend their rights in case of disputes.

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    Source: CESTAT Delhi

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