Tag: #CESTATAhmedabad

CESTAT Ahmedabad Ruled on Retrospective Exemption: Setting Aside Customs Duty and Penalties in Advance Authorization Imports
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 18.05.2026

CESTAT Ahmedabad Ruled on Retrospective Exemption: Setting Aside Customs Duty and Penalties in Advance Authorization Imports

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

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) Ahmedabad recently delivered a significant order concerning customs duty disputes involving Ratnaveer Stainless Products Pvt Ltd and related parties. The case centered on the eligibility for exemption from Countervailing Duty (CVD) under advance authorization during a specific period in 2017, following changes in government notifications.

Background of the Case
1. Parties Involved:
  - Ratnaveer Stainless Products Pvt Ltd (Importer)
  - Shri Vijay R Sanghvi (Director)
  - Shri Aranamkotte Madhavan Rajan (Director of CHA firm M/s. Suraj Forwarders Pvt Ltd)
  - Commissioner of Customs, Ahmedabad (Respondent)
2. Nature of Imports:
  - Hot/Cold Rolled Stainless Steel flat products imported from China under Chapter 72 of the Customs Tariff Act, 1975.
3. Period in Question:
  - 07.09.2017 to 12.10.2017, when CVD was imposed via Notification 01/2017-Cus. (CVD).
Dispute and Investigation
- The Directorate of Revenue Intelligence (DRI) alleged that importers wrongly claimed exemption from CVD under advance authorization, which was not available during the specified period.
- Show cause notices were issued demanding CVD, interest, and penalties, and proposing confiscation of goods.
- The Commissioner adjudicated, confirming the demand and imposing penalties, but did not levy redemption fine as goods were not physically available.
Key Legal Arguments by Appellants
1. Advance Authorization Validity:
  - Appellants argued that their advance authorizations were valid and that clearances were permitted by customs authorities against executed bonds.
2. Notification Changes:
  - Notification No. 79/2017-Cus dated 13.10.2017 amended the earlier notification to include CVD in the list of exempt duties, using the term “substitution,” which appellants argued should apply retrospectively.
3. Government Policy:
  - Central Government policy aims not to tax exports, either by refunding duties or exempting them at import.
4. Legal Precedents:
  - Appellants cited Supreme Court and High Court decisions supporting retrospective application of exemption notifications and the principle that duties should not be levied on exports.
5. No Prohibition or Intent to Evade:
  - Appellants contended there was no prohibition or intent to evade duty, and penalties were unjustified.
Tribunal’s Findings and Decision
- The Tribunal referenced the CESTAT Allahabad decision in Vishal Metal Industries, which held that exemption notifications should be applied retrospectively and that importers are entitled to refunds of CVD paid during the disputed period.
- Multiple High Court judgments were cited, confirming the retrospective applicability of Notification No. 79/2017-Cus and supporting refund claims for CVD.
- The Tribunal found the issue to be settled (no longer res-integra) and allowed all appeals, setting aside the impugned order, including demands and penalties.
Implications
1. Retrospective Exemption:
  - Importers who paid CVD during 07.09.2017 to 12.10.2017 under advance authorization are entitled to refunds, as the exemption notification is deemed retrospective.
2. No Penalties:
  - Penalties imposed on directors and CHA were set aside, recognizing the bona fide nature of the dispute and lack of intent to evade duty.
3. Policy Clarity:
  - The order reinforces the principle that export-oriented imports under advance authorization should not be burdened with duties, aligning with government policy.
Conclusion

The CESTAT Ahmedabad’s order provides clarity and relief to importers affected by the brief period of CVD imposition on advance authorization imports. It underscores the importance of retrospective application of exemption notifications and affirms the government’s commitment to facilitating exports by exempting duties on inputs used for export production.

Source: CESTAT Ahmedabad

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May 18, 2026
CESTAT Ahmedabad Ruled on Customs Duty Exemptions for Aircraft Importers
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 13.05.2026

CESTAT Ahmedabad Ruled on Customs Duty Exemptions for Aircraft Importers

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

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) West Zonal Bench at Ahmedabad recently delivered a significant order addressing the eligibility of customs duty exemptions for aircraft importers under Notification No. 21/2002-Cus., as amended by Notification No. 61/2007-Cus. This article provides a comprehensive overview of the tribunal’s findings, the legal context, and the broader implications for aviation operators and customs authorities.

Background: The Dispute Over Aircraft Import Exemptions

Multiple appeals were filed by various aviation companies and individuals against orders confirming differential customs duty and imposing penalties. The central issue was whether the appellants had improperly availed themselves of customs duty exemptions for importing aircraft, specifically under the conditions set out in Notification No. 21/2002-Cus. The customs authorities argued that the aircraft were not used in accordance with the notification’s requirements, particularly regarding the distinction between non-scheduled (passenger) and non-scheduled (charter) services.

Key Legal Provisions and Definitions
- Notification No. 21/2002-Cus. (as amended): Grants customs duty exemption to aircraft imported for non-scheduled (passenger) or non-scheduled (charter) services, subject to specific conditions.
- Condition No. 104: Requires the importer to be an approved operator and to furnish an undertaking that the aircraft will be used only for the specified non-scheduled services.
- Relevant Definitions:
  - Non-scheduled (passenger) services: Air transport services other than scheduled (passenger) air transport services.
  - Non-scheduled (charter) services: Services provided by a non-scheduled (charter) air transport operator for charter or hire, with published tariff and DGCA approval.
Tribunal’s Analysis and Findings

1. Eligibility for Exemption
- The tribunal clarified that the exemption is available to both non-scheduled (passenger) and non-scheduled (charter) service operators.
- There is no prohibition in the notification or the Civil Aviation Requirements (CAR) against a non-scheduled (passenger) service permit holder conducting charter operations.
- The DGCA’s clarifications and CAR 1999 explicitly allow non-scheduled operators to conduct charter operations.
2. Use of Aircraft and Remuneration
- The tribunal emphasized that as long as the aircraft is used for air transport services for remuneration, it qualifies as public transport and not private use.
- Even if some flights are conducted without remuneration, if the operator’s business includes carriage by air for hire or reward, such flights are still considered public transport.
3. Publication of Tariff and Issuance of Tickets
- There is no requirement under the notification or the Aircraft Rules for non-scheduled (passenger) service operators to publish tariffs or issue passenger tickets.
- The absence of a published tariff does not convert the use of the aircraft into private use.
4. Role of DGCA and Customs Authorities
- The tribunal held that compliance with operational conditions is primarily monitored by the DGCA and the Civil Aviation Ministry.
- Customs authorities can act only if the DGCA finds a violation of the permit conditions.
- Renewal of permits by the DGCA without objection supports the operator’s compliance.
5. Distinction from Other Judicial Decisions
- The tribunal distinguished the present cases from the Delhi High Court’s decision in East India Hotels Ltd., where the aircraft was always used without remuneration and thus did not qualify as public transport.
- In the present cases, evidence showed that the aircraft were used for hire or reward, supporting the claim for exemption.
Implications for Aviation Operators
1. Clarity on Permitted Operations:
  - Operators holding non-scheduled (passenger) permits can legally conduct charter operations without risking exemption denial, provided they comply with DGCA guidelines and use the aircraft for remuneration.
2. Documentation and Compliance:
  - Maintaining records of flights, invoices, and evidence of remuneration is crucial to demonstrate compliance with exemption conditions.
3. Customs and DGCA Coordination:
  - Operators should ensure ongoing compliance with DGCA requirements, as customs authorities rely on DGCA findings to assess exemption eligibility.
4. No Need for Published Tariff:
  - Non-scheduled (passenger) operators are not required to publish tariffs or issue tickets, simplifying operational requirements.
Conclusion

The tribunal’s order provides much-needed clarity for aircraft importers and operators regarding the scope of customs duty exemptions. By affirming that non-scheduled (passenger) operators can conduct charter operations and that compliance is primarily a matter for the DGCA, the decision reduces regulatory uncertainty and supports the growth of non-scheduled aviation services in India. Operators should, however, maintain robust documentation and ensure all operations are for hire or reward to safeguard their exemption status.

Connected Matter

Delhi High Court Addresses Aircraft Usage and Customs Duty Exemption Dispute

Source: CESTAT Ahmedabad

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May 13, 2026
CESTAT Ahmedabad Upholds Export Valuation and DEPB Benefits
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 30.04.2026

CESTAT Ahmedabad Upholds Export Valuation and DEPB Benefits

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

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

Background of the Case

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

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

Revenue’s Position

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

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

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

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

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

Conclusion

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

Connected Matter

CESTAT Ahmedabad Sets Aside Duty Demand in FPS Scrip

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Source: CESTAT Ahmedabad

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April 30, 2026

CESTAT Ahmedabad Sets Aside Customs Duty and Penalties in Steel Import Valuation and Classification Dispute

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

Date: 24.04.2026

CESTAT Ahmedabad Sets Aside Customs Duty and Penalties in Steel Import Valuation and Classification Dispute

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

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) Ahmedabad recently delivered a significant order in the appeals involving Vasko Steel Private Limited and Vasko Metalloys Private Limited. The case centers on the import of cold rolled stainless steel coils from China, with allegations of undervaluation, misclassification, and improper availing of customs duty exemptions. This article provides a comprehensive overview of the dispute, the arguments from both sides, and the Tribunal’s findings.

Background of the Case

Vasko Steel and Vasko Metalloys are engaged in wholesale trading of iron and steel articles. They imported cold rolled stainless steel coils, classifying them under CTH 7220 90 22 of the Customs Tariff Act, 1975. The customs department raised two primary allegations:

Undervaluation of Imported Goods: The department claimed the importers declared lower values than the actual transaction values to evade customs duty.
Misclassification and Denial of Exemption: The department alleged the goods were misclassified to avail benefits under Notification No. 50/2018-Cus, which provides tariff concessions for certain goods.

Key Allegations and Evidence

1. Undervaluation

Department’s Evidence:
- A note retrieved from the mobile phone of Mr. Madhur Jain (Marketing Manager) allegedly contained actual CIF values, which were higher than those declared in the Bills of Entry (BoEs).
- Comparison with import prices of M/s Shah Foils Ltd. and other Delhi-based importers showed higher prices for similar goods.
Appellants’ Defense:
- The note’s data did not match the specifications and quantities of the actual imports.
- Goods imported by Shah Foils and Delhi-based importers differed in thickness, width, and grade, making them non-comparable.
- No evidence of extra remittance or payment beyond the declared values.

2. Misclassification and Exemption Denial

Department’s Position:
- Mill Test Certificates showed the imported coils had lower nickel and chromium content than required for “Nickel Chromium Austenitic Type” classification.
- The invoices were issued by a third-party operator, rendering the Certificate of Origin ineligible for preferential treatment.
Appellants’ Defense:
- Indian Standards (IS 15997:2012) allow for austenitic stainless steel with nickel content as low as 0.2%.
- The goods were correctly classified under CTH 7220 90 22.
- The exemption should not be denied merely due to third-party invoicing, as the goods originated from China and all documents were submitted at the time of import.

Tribunal’s Findings

1. Valuation

The Tribunal found that the department had not provided sufficient evidence to reject the transaction value declared by the appellants.
The note from the mobile phone was not properly authenticated, and the goods compared were not similar or identical.
The declared values were accepted, and the charge of undervaluation was set aside.

2. Classification and Exemption

The Tribunal referred to previous decisions (e.g., Shah Foils Ltd.) and Indian Standards, noting that austenitic stainless steel can have nickel content as low as 0.2%.
The issue of classification was left open for further determination, but the benefit of Notification No. 50/2018-Cus was not denied solely on procedural grounds.

3. Limitation and Penalties

The Tribunal held that the extended period for raising duty demand was not invokable, as all relevant documents were submitted at the time of import and there was no suppression or collusion.
Penalties imposed under Sections 114A and 114AA of the Customs Act were set aside.

Penalties and Duty Demands (Summary Table)

Entity	Duty Demand	Penalty
Vasko Steel Pvt Ltd	Rs. 2,94,01,991	Rs. 2,94,01,991 (Section 114A)
Vasko Metalloys Pvt Ltd	Rs. 68,70,721	Rs. 68,70,721 (Section 114A)
Vinaye Jain (Director)	–	Rs. 29,00,000 (Section 112), Rs. 50,00,000 (Section 114AA)
Madhur Jain (Manager)	–	Rs. 29,00,000 (Section 112), Rs. 80,00,000 (Section 114AA)

Legal Precedents Cited

United Traders (India) vs. Commissioner of Customs, Chennai
M/s Ruchi Enterprise vs. Commissioner of Customs – Kandla
Commissioner of Customs, Ahmedabad v. M/s Hamilton Housewares Pvt. Ltd.
Gulshan Exim Pvt Ltd & Ors. Vs. CCE, Mundra Gujarat

Conclusion

The CESTAT Ahmedabad order in the Vasko Steel case underscores the importance of proper evidence and comparability in customs valuation and classification disputes. The Tribunal’s decision to set aside undervaluation charges and penalties, while leaving classification open for further determination, provides clarity on the standards for importers and customs authorities alike. The case also highlights the role of Indian Standards and legal precedents in resolving complex issues related to steel imports.

Source: CESTAT Ahmedabad

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April 24, 2026

CESTAT Ahmedabad Sets Aside Penalties: Smuggling Syndicate Case Highlights Evidentiary and Procedural Lapses in Customs Adjudication
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 23.04.2026

CESTAT Ahmedabad Sets Aside Penalties: Smuggling Syndicate Case Highlights Evidentiary and Procedural Lapses in Customs Adjudication

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

A recent order from the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Ahmedabad, has brought to light a complex smuggling syndicate operating through Sardar Vallabhbhai Patel International Airport, Ahmedabad. The case involved the seizure of gold, saffron, and gutkha from air passengers, and alleged facilitation by customs officers. This article details the investigation, the modus operandi, the legal proceedings, and the final outcome, based on the tribunal’s exhaustive findings.

The Smuggling Operation: Intelligence and Interception

Intelligence Gathering

The Directorate of Revenue Intelligence (DRI), Ahmedabad, developed intelligence indicating that a group based in Vapi, Gujarat, was smuggling gold from Dubai and Abu Dhabi into India. The syndicate used air passengers as carriers, and also attempted to smuggle saffron and RMD Gutka in commercial quantities.

The Interception

On 27 June 2019, DRI officers intercepted two passengers, arriving from Abu Dhabi. Upon search, gold chains and gold paste concealed in clothing were recovered, along with saffron and gutkha in their baggage. The gold was ingeniously concealed in paste form mixed with chemicals to evade metal detectors.

Seizure Details
- Gold Chains:
  - Sahidul: 693.14 grams (purity 999), valued at Rs. 22,05,640 (tariff value)
  - Sarfraj: 706.95 grams (purity 999), valued at Rs. 22,49,585 (tariff value)
- Gold Bars (from paste):
  - Sahidul: 673.61 grams (purity 999), 28.98 grams (purity 831.2)
  - Sarfraj: 424.60 grams (purity 999)
- Saffron: 5,000 grams each
- Gutkha: 2,000 pouches each
The Syndicate: Roles and Modus Operandi

The investigation revealed a well-planned conspiracy involving:
- Shamim (Dubai/Mumbai): Mastermind and financier
- Sajahan Chowdhury (Vapi): Refinery owner, receiver of smuggled gold
- Sahidul Chowdhury: Carrier, brother of Sajahan
- Mohmad Sarfraj Mansuri: Carrier
- Mohammad Azam (Mumbai): Organizer
- Customs Officers: Alleged facilitators
Gold was smuggled in various forms, melted at the refinery, and sold in the local market. Payments were routed through Angadia (informal courier) channels, with cash handed over to customs officers allegedly for facilitating smooth passage.

Investigation and Evidence

Statements and Digital Evidence
- Multiple statements were recorded under Section 108 of the Customs Act.
- Angadia slips and call data records (CDRs) were used to trace money flows.
- WhatsApp messages and audio recordings were analyzed.
Legal Arguments
- The department relied heavily on third-party statements and digital evidence.
- The accused customs officers argued that statements were untested, not recorded in their presence, and lacked corroboration.
- No direct evidence (CCTV, duty rosters, bank trails) linked the officers to the smuggling.
Tribunal Findings: Legal and Procedural Issues

Denial of Cross-Examination

The tribunal noted that cross-examination of witnesses whose statements were relied upon was denied, violating Section 138B of the Customs Act and principles of natural justice. Judicial precedents require that such statements be tested for reliability.

Lack of Direct Evidence
- No identification of the officers by passengers or co-accused.
- No evidence of officers being present or facilitating clearance on alleged dates.
- No financial trail or corroborative material linking officers to smuggling.
Contradictions and Procedural Lapses
- Inconsistencies in duty rosters, CDRs, and alleged dates of smuggling.
- No evidence of receipt of alleged quid pro quo (e.g., LED TV).
- Statements of co-accused found unreliable or untrue upon examination of CCTV footage.
Outcome: Appeals Allowed

The tribunal set aside penalties imposed on the customs officers, finding that the department failed to prove its case even on the standard of preponderance of probability. The reliance on untested statements and uncorroborated digital evidence was deemed legally unsustainable.

Key Takeaways
- Smuggling syndicates use sophisticated concealment methods and informal financial channels.
- Legal proceedings must adhere to principles of natural justice, including the right to cross-examination.
- Reliance on untested statements and circumstantial digital evidence is insufficient for penal action.
- The tribunal’s order underscores the importance of robust, direct evidence in customs enforcement cases.
Conclusion

This case highlights the challenges faced by enforcement agencies in tackling organized smuggling, and the critical role of procedural fairness in adjudication. The tribunal’s detailed analysis serves as a benchmark for future investigations, emphasizing the need for concrete evidence and adherence to legal safeguards.

Source: CESTAT Ahmedabad

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April 23, 2026
CESTAT Ahmedabad Sets Aside Penalty on Technical Grade Urea Imports
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 08.04.2026

CESTAT Ahmedabad Sets Aside Penalty on Technical Grade Urea Imports

Adv Ravi Shekhar Jha

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

In the realm of international trade, compliance with import regulations is crucial for businesses to avoid penalties and ensure smooth operations. This article delves into the case of Deep Traders, a Gujarat-based company, and its legal battle with the Commissioner of Customs regarding the import of Technical Grade Urea (TGU) without proper licensing. The case highlights the complexities of import policies, the role of State Trading Enterprises (STEs), and the interpretation of legal provisions under the Customs Act, 1962.

Background of the Case

Deep Traders imported Technical Grade Urea (TGU) under Customs Tariff Heading (CTH) 31021000 on a high sea sales basis from State Trading Enterprises (MMTC) during the period April 2012 to April 2015. However, the company did not possess the requisite license from the Directorate General of Foreign Trade (DGFT) for importing urea, which led to investigations by the Directorate of Revenue Intelligence (DRI).

Key Allegations
1. Violation of Foreign Trade Policy: The import policy for urea under ITC(HS) 31021000 was amended in 2015, allowing imports by STEs and industrial users under specific conditions. Deep Traders was accused of contravening these provisions.
2. Confiscation and Penalty: Two show-cause notices were issued in 2018 and 2019, proposing confiscation of the imported goods valued at over ₹53 lakh and imposing penalties under Sections 111(d) and 112(a)(i) of the Customs Act, 1962.
Legal Proceedings

The case went through multiple levels of adjudication:

Adjudication by Additional Commissioner of Customs

The Additional Commissioner of Customs ordered the confiscation of the goods under Section 111(d) of the Customs Act, 1962, but did not impose redemption fines as the goods were not available for confiscation. Penalties of ₹2,25,000 and ₹1,31,912 were imposed on Deep Traders.

Appeal to Commissioner (Appeals)

Deep Traders challenged the adjudication orders, arguing that:
- They had obtained permission from the Ministry of Chemicals and Fertilizers to import 1500 MT of TGU for industrial use.
- The agreement with MMTC did not prohibit high sea sales.
- As traders, they were not required to provide input-output ratios for TGU consumption.
- The goods were cleared by Customs after payment of appropriate duties, implying no revenue loss.
The Commissioner (Appeals) rejected their arguments and upheld the confiscation and penalties.

Appeal to the Customs, Excise & Service Tax Appellate Tribunal (CESTAT)

Deep Traders further appealed to the CESTAT, presenting the following arguments:
- The term “through” in the ITC(HS) policy allows imports via STEs, not necessarily by STEs.
- High sea sales are a recognized practice in international trade and are not prohibited under the policy.
- The confiscation and penalties were unjustified as the imports were made in compliance with the policy.
Tribunal’s Decision

The Tribunal analyzed similar cases, including:
- Shiv Krupa Ispat Pvt. Ltd. vs. CCE, Nasik
- Asoj Soft Caps Pvt. Ltd. vs. Commissioner of Customs, Ahmedabad
- Sunita Commercials Pvt. Ltd. vs. Commissioner of Customs, Mundra
Key Findings
1. Interpretation of “Through” vs. “By”: The Tribunal clarified that the term “through” in the ITC(HS) policy means that imports can be facilitated by STEs, not necessarily conducted directly by them.
2. High Sea Sales: The Tribunal noted that high sea sales are a standard practice and are permissible under the policy.
3. No Revenue Loss: Since the goods were cleared by Customs after payment of duties, there was no revenue loss to the government.
4. No Grounds for Confiscation or Penalty: The Tribunal found no evidence of policy violation or grounds for imposing penalties under Sections 111(d) and 112(a)(i) of the Customs Act, 1962.
Final Order

The Tribunal set aside the impugned orders, revoked the penalties, and allowed the appeals filed by Deep Traders.

Implications of the Case

This case serves as a precedent for similar disputes involving import policies and high sea sales. It underscores the importance of:
- Clear Policy Interpretation: Ambiguities in policy language, such as the distinction between “through” and “by,” can lead to legal disputes.
- Documentation and Compliance: Importers must ensure they have the necessary permissions and comply with all conditions to avoid penalties.
- Legal Recourse: Businesses should not hesitate to challenge decisions that they believe are unjust, especially when supported by precedents.
Conclusion

The Deep Traders case highlights the intricate nature of import regulations and the importance of understanding and adhering to them. It also demonstrates the role of legal systems in resolving disputes and ensuring fair treatment for businesses. As international trade continues to grow, cases like these emphasize the need for clarity in policy and the significance of legal advocacy in protecting business interests.

Source: CESTAT Ahmedabad

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April 8, 2026
CESTAT Ahmedabad Set Aside Confiscation and Penalties in Aluminum Scrap Import
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 20.03.2026

CESTAT Ahmedabad Set Aside Confiscation and Penalties in Aluminum Scrap Import

Adv Ravi Shekhar Jha

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

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), West Zonal Bench, Ahmedabad, recently delivered a significant judgment in the case of M/s. Palco Recycle Exchange Limited & Others vs. Commissioner of Customs, Mundra. This case revolved around the import of aluminum scrap and the submission of allegedly invalid Pre-Shipment Inspection Certificates (PSICs). The tribunal’s decision, pronounced on March 18, 2026, has set a precedent for similar cases involving the import of metallic scrap and the interpretation of customs regulations.

Background of the Case

The case originated from the import of 25.175 MT of aluminum scrap “Terse” by M/s. Palco Recycle Exchange Limited from M/s. RKG International FZE, UAE. The consignment was accompanied by two PSICs issued by M/s. Worldwide Logistics Survey and Inspection Group and Affiliates (WLSI), New Delhi and M/s. Geo Chem Middle East, Dubai. These certificates are mandatory under the Foreign Trade Policy to ensure that imported metallic scrap does not contain hazardous materials or radiation levels exceeding natural background levels.

However, based on intelligence reports, the Directorate of Revenue Intelligence (DRI) investigated the matter and found that both PSICs were allegedly issued without proper inspection of the cargo at the port of loading. This led to the issuance of a Show Cause Notice proposing the confiscation of the aluminum scrap and the imposition of penalties under Sections 112(a) and 114AA of the Customs Act, 1962.

Lower Authorities’ Findings 

The Additional Commissioner of Customs adjudicated the matter and passed an order on April 26, 2014, confiscating the seized goods under Section 111(d) of the Customs Act, 1962. The importer was given the option to redeem the goods upon payment of a redemption fine of Rs. 4 lakh. Penalties were also imposed on the appellants, including M/s. Palco Recycle Exchange Limited, its Director and Vice President of M/s. Vistas Trading. The Commissioner (Appeals) upheld the confiscation and penalties, leading the appellants to file appeals before the CESTAT.

Grounds of Appeal 

The appellants argued that the goods were cleared after 100% examination by Customs, ensuring compliance with all regulations. They contended that the PSICs submitted were valid at the time of import and that any discrepancies in the inspection process were the responsibility of the inspection agencies, not the importer or indenter. They cited several judicial precedents to support their case, including:
1. Alang Metal Exim Pvt. Ltd vs. CC (2015): This case established that importers who submit PSICs from authorized agencies and follow prescribed procedures are not liable for confiscation or penalties if the inspection agency fails to perform its duties.
2. Commissioner of Customs vs. Senor Metals Pvt. Limited (2009): The Gujarat High Court ruled that non-compliance with import policy conditions may lead to 100% inspection but does not constitute improper import under Section 111 of the Customs Act.
3. CMA CGM Agencies (I) Pvt. Ltd vs. Commissioner of Customs (Port-Import), Chennai (2016): The tribunal held that non-compliance with PSIC requirements does not automatically render goods liable for confiscation if no prohibited items are found during inspection.
CESTAT’s Final Decision 

After hearing the arguments from both sides, the tribunal concluded that there was insufficient evidence to prove that the appellants had abetted the production of invalid PSICs or contravened the Foreign Trade Policy. The tribunal emphasized that the responsibility for ensuring the validity of PSICs lies with both the importer and the supplier, as per the Hand Book of Procedure 2015-20.

The tribunal relied on the aforementioned judicial precedents and ruled that the confiscation of goods, imposition of redemption fines, and penalties on the appellants were not sustainable. Consequently, the appeals filed by M/s. Palco Recycle Exchange Limited, its Director were allowed, and the impugned order was set aside.

Key Takeaways
1. Importance of PSIC Compliance: The case highlights the critical role of Pre-Shipment Inspection Certificates in ensuring the safe import of metallic scrap. Both importers and suppliers must ensure the validity of these certificates to avoid legal complications.
2. Judicial Precedents Matter: The tribunal’s reliance on previous judgments underscores the importance of established legal principles in resolving disputes.
3. Shared Responsibility: The ruling clarifies that both importers and suppliers are jointly responsible for compliance with PSIC requirements, as per the Foreign Trade Policy.
4. 100% Inspection as a Safeguard: The tribunal reiterated that non-compliance with PSIC requirements does not necessarily lead to confiscation if the goods pass a thorough inspection and are found to be free of prohibited materials.
Conclusion

The CESTAT’s decision in this case serves as a reminder of the importance of adhering to import regulations while also recognizing the limitations of importers in verifying the actions of third-party inspection agencies. This landmark ruling not only provides relief to the appellants but also sets a precedent for similar cases in the future, ensuring a balanced approach to the enforcement of customs laws.

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Source: CESTAT Ahmedabad

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March 20, 2026
CESTAT Ahmedabad- No Violation of Plastic Waste (Management and Handling) Rules, 2011 in Export of RMD Gutkha by 100% EOU
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 09.03.2026

CESTAT Ahmedabad- No Violation of Plastic Waste (Management and Handling) Rules, 2011 in Export of RMD Gutkha by 100% EOU

Adv Ravi Shekhar Jha

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

In a landmark decision, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), West Zonal Bench at Ahmedabad, has ruled in favor of Appellant in a case concerning alleged violations of the Plastic Waste (Management and Handling) Rules, 2011. The case revolved around the export of RMD Gutkha in packaging materials that were suspected to be non-compliant with environmental regulations. The tribunal’s decision, delivered on October 8, 2018, has set a precedent for similar cases involving 100% Export Oriented Units (EOUs).

Background of the Case

The case originated from the customs authority’s seizure of goods intended for export by Appellant, a 100% EOU. The goods, RMD Gutkha, were packaged in materials that the customs authority believed violated Rule 5(d) and 5(g) of the Plastic Waste (Management and Handling) Rules, 2011. These rules prohibit the use of certain types of non-biodegradable plastic packaging materials.

Two shipping bills were at the center of the dispute:
1. Shipping Bill No. 6478523 dated 01.12.2011: 10,000 kg of RMD Gutkha valued at Rs. 2,29,64,063/- was exported, but samples were drawn for testing.
2. Shipping Bill No. 7419312 dated 03.02.2012: 10,000 kg of RMD Gutkha valued at Rs. 2,19,21,250/- was seized and not allowed to be exported.
The customs authority sent samples of the packaging material to the Customs Chemicals Laboratory in Vadodara for testing. The initial report indicated that the packaging material was composed of plastic, paper, and aluminum but did not clarify whether the plastic was biodegradable. This led to the issuance of a Show Cause Notice on July 31, 2012, proposing the confiscation of goods and imposing penalties on the appellant and other individuals involved.

Legal Proceedings

The adjudicating authority confirmed the charges in the Show Cause Notice, imposing hefty penalties and redemption fines on the appellant and other individuals. Dissatisfied with the decision, M/s R.M. Dhariwal (HUF) filed an appeal before the Commissioner (Appeals), who remanded the matter for a de novo decision. Despite the Commissioner’s clear instructions to re-test the packaging material to determine its biodegradability, the adjudicating authority reiterated its original findings, leading to further appeals.

Key Arguments by the Appellant 

The counsel for the appellant, argued that multiple test reports from reputable laboratories, including the Central Institute of Plastics Engineering & Technology (CIPET) and Customs Laboratory, Kandla, confirmed that the packaging material was made of biodegradable plastic based on Poly Lactic Acid (PLA). He emphasized that the adjudicating authority had ignored these findings and the directions of the Commissioner (Appeals) to conduct proper re-testing.

Additionally, the appellant cited a Supreme Court judgment in the case of R.M. Dhariwal 100% EOU vs. Union of India (2016), which established that the Plastic Waste (Management and Handling) Rules, 2011, do not apply to 100% EOUs exporting goods, even if the packaging material contains non-biodegradable plastic. The appellant argued that this precedent should apply to their case as well.

Tribunal’s Observations and Final Decision 

The tribunal carefully reviewed the submissions, test reports, and previous judgments, including the Supreme Court’s ruling in R.M. Dhariwal 100% EOU vs. Union of India and Baba Global Ltd. vs. Union of India. It noted the following:
1. Test Reports Confirm Biodegradability: Multiple test reports from CIPET and Customs Laboratories confirmed that the packaging material used by the appellant was made of biodegradable plastic based on Poly Lactic Acid, which is compliant with the Plastic Waste (Management and Handling) Rules, 2011.
2. Defiance of Commissioner’s Directions: The adjudicating authority failed to follow the Commissioner (Appeals)’ explicit instructions to re-test the packaging material and instead reiterated its original findings, which were not supported by conclusive evidence.
3. Supreme Court Precedent: The tribunal highlighted the Supreme Court’s judgment, which exempted 100% EOUs exporting goods from the application of the Plastic Waste (Management and Handling) Rules, 2011. The tribunal emphasized that the rules are aimed at preventing the use of hazardous, non-biodegradable plastic in the domestic market, not for goods meant exclusively for export.
Based on these observations, the tribunal concluded that the appellant had not violated the Plastic Waste (Management and Handling) Rules, 2011. It set aside the impugned order and allowed the appeals, ruling that the export goods were not liable for confiscation.

Implications of the Judgment

This decision is significant for businesses operating as 100% EOUs, particularly those involved in the export of goods packaged in materials containing plastic. The tribunal’s ruling reinforces the principle that the Plastic Waste (Management and Handling) Rules, 2011, are not applicable to goods manufactured for export, provided they are not sold in the domestic market.

The judgment also underscores the importance of adhering to procedural directions during legal proceedings. The adjudicating authority’s failure to comply with the Commissioner (Appeals)’ instructions for re-testing was deemed a serious procedural lapse, ultimately leading to the reversal of its decision.

Conclusion

The CESTAT’s ruling in favor of Appellant is a testament to the importance of evidence-based decision-making and adherence to legal precedents. It provides clarity on the applicability of environmental regulations to 100% EOUs and sets a benchmark for future cases involving similar disputes.

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Source: CESTAT Ahmedabad

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March 9, 2026
CESTAT Ahmedabad Sets Aside Duty Demand in FPS Scrip
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 19.02.2026

CESTAT Ahmedabad Sets Aside Duty Demand in FPS Scrip

Adv Ravi Shekhar Jha

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

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

Background of the Case

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

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

Key Arguments Presented

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

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

Implications of the Judgment

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

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

Connected Matter

CESTAT Ahmedabad Upholds Export Valuation and DEPB Benefits

Source: CESTAT Ahmedabad

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February 19, 2026
CESTAT Ahmedabad Overturns Penalties in J3 Grade Stainless Steel Import
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 18.02.2026

CESTAT Ahmedabad Overturns Penalties in J3 Grade Stainless Steel Import

Adv Ravi Shekhar Jha

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

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) West Zonal Bench at Ahmedabad recently delivered a significant judgment in the case of D Bhatia and Company vs Commissioner of Customs-Mundra. This case, marked as Customs Appeal No. 10002 of 2026-SM, revolved around the import of J3 grade Cold Rolled Stainless Steel and the imposition of redemption fine and personal penalty by the customs authorities. The judgment, delivered by Hon’ble Judicial Member has set a precedent for similar cases in the future.

Background of the Case

The appellant, D Bhatia and Company, imported J3 grade Cold Rolled Stainless Steel, which the customs department deemed restricted or prohibited. Consequently, the goods were released after examining valuation issues and imposing a redemption fine and personal penalty. Feeling aggrieved by these penalties, the appellant challenged the decision before the CESTAT.

The appellant’s argument relied heavily on a precedent set in the case of Commissioner of Customs Mundra vs Shree Khatu Shyam Sales and Tubes LLP (2026 (2) TMI 302-CESTAT-AHMEDABAD). In that case, the Division Bench ruled that restrictions on importing J2 grade stainless steel could not be enforced if the concerned Ministry had issued a certificate permitting the import of the grade. The appellant argued that the same principle should apply to J3 grade stainless steel, as a certificate from the Ministry of Steel confirmed its permissibility.

Key Points of the Judgment
1. Reliance on Precedent: The appellant cited the Shree Khatu Shyam Sales and Tubes LLP case, where the Division Bench ruled that once the Ministry of Steel permits the import of a specific grade, the restriction cannot be enforced for other parties importing the same grade. The court agreed that this precedent applied to the current case.
2. Certificate from the Ministry of Steel: The appellant presented a certificate issued by the Ministry of Steel, which explicitly stated that J3 grade Cold Rolled Stainless Steel was permissible for import. This certificate played a pivotal role in the court’s decision.
3. Identification of Goods: The customs authorities had identified the imported goods as J3 grade stainless steel, aligning with the certificate provided by the appellant.
4. Judgment: Based on the precedent and the certificate, the court ruled in favor of the appellant. The redemption fine and personal penalty imposed by the customs authorities were set aside, and the appeal was allowed with consequential relief.
Implications of the Judgment

This judgment is a significant development in the realm of customs law, particularly concerning the import of restricted or prohibited goods. It underscores the importance of certificates issued by relevant ministries in determining the permissibility of imports. The ruling also highlights the role of precedents in ensuring consistency and fairness in judicial decisions.

For importers, this case serves as a reminder to maintain proper documentation and seek necessary certifications from relevant authorities to avoid penalties and fines. It also demonstrates the importance of challenging decisions that may not align with established legal principles.

Conclusion

The decision in D Bhatia and Company vs Commissioner of Customs-Mundra is a testament to the importance of judicial review in upholding fairness and justice in customs-related matters. By relying on precedent and the certificate from the Ministry of Steel, the CESTAT has provided clarity on the import of J3 grade Cold Rolled Stainless Steel and set a benchmark for similar cases in the future.

Source: CESTAT Ahmedabad

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February 18, 2026