𝐀𝐚𝐝𝐫𝐢𝐤𝐚𝐚 𝐋𝐞𝐠𝐚𝐥 𝐒𝐞𝐫𝐯𝐢𝐜𝐞𝐬 (𝐀𝐋𝐒)

Tag: #CESTATAhmedabad

CESTAT Ahmedabad Allows Refund of CVD & SAD in GST Era – Big Relief for Advance Authorization Importers
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 13.02.2026

CESTAT Ahmedabad Allows Refund of CVD & SAD in GST Era – Big Relief for Advance Authorization Importers

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.comor 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 Kiri Industries Limited vs. Commissioner of Customs, Ahmedabad (Customs Appeal No. 10353 of 2020-SM). This case revolved around the refund claim of Rs. 24,12,483/- filed by Kiri Industries Limited under Section 27 of the Customs Act, 1962, for Countervailing Duty (CVD) and Special Additional Duty (SAD) paid on MEIS Scrips. The judgment, pronounced by Hon’ble Member Judicial, on February 12, 2026, has set a precedent for similar cases in the GST regime.

Background of the Case

Kiri Industries Limited filed a refund claim under Section 27 of the Customs Act, 1962, for CVD/SAD paid on excess import quantity of raw materials under Advance Authorization Licenses. The company argued that prior to July 1, 2017, CENVAT credit for such duties was available under the pre-GST regime. However, with the implementation of GST, no credit of such duties was available, prompting the company to seek a refund of Rs. 24,12,483/-.

The refund claim was initially rejected by the Adjudicating Authority (Joint Commissioner) on the grounds that the non-availability of input tax credit under the GST regime does not qualify as a valid reason for claiming a refund under Section 27 of the Customs Act, 1962. The authority also cited the principle of unjust enrichment as another reason for rejection. Subsequently, the Commissioner (Appeals) upheld the decision, leading Kiri Industries Limited to file an appeal before the CESTAT.

Key Arguments Presented

Appellant’s Arguments
1. Provisions of Section 142 of CGST Act, 2017: The appellant argued that Section 142(3) and 142(6)(a) of the CGST Act, 2017, explicitly provide for the refund of CVD/SAD paid under the pre-GST regime in cash if the credit is no longer available under the GST regime. The appellant contended that the department failed to consider these provisions while rejecting the refund claim.
2. Unjust Enrichment: The appellant submitted that the concept of unjust enrichment was not applicable in this case. They provided a certificate from a Chartered Accountant confirming that the incidence of CVD paid on excess imported raw materials was not passed on to any other party. Additionally, the refund amount was disclosed as receivable in the balance sheet and not claimed as an expenditure in the Profit and Loss Account.
3. Supporting Judgments: The appellant cited several judgments, including JSW Steel Limited vs. Commissioner of Central Tax & Central Excise and Granules India Limited vs. Commissioner of Central Tax, Hyderabad, which supported their claim for a refund under Section 142(3) of the CGST Act, 2017.
Department’s Arguments
1. Non-Admissibility of Refund: The department argued that the refund claim was not admissible under Section 27 of the Customs Act, 1962, as the duties were paid correctly in accordance with the relevant provisions of the Foreign Trade Policy and Customs Notifications.
2. Unjust Enrichment: The department raised concerns about unjust enrichment, suggesting that the appellant might have passed on the incidence of CVD/SAD to other parties.
3. Pending Supreme Court Appeal: The department highlighted that an appeal against a similar judgment in the Granules India Limited case was pending before the Hon’ble Supreme Court.
CESTAT’s Observations and Judgment 

After hearing both sides, the Tribunal made the following observations:
1. Applicability of Section 142 of CGST Act, 2017: The Tribunal emphasized that Section 142(3) and 142(6)(a) of the CGST Act, 2017, provide for the refund of CVD/SAD paid under the pre-GST regime in cash if the credit is no longer available under the GST regime. The Tribunal referred to previous judgments, including JSW Steel Limited vs. Commissioner of Central Tax & Central Excise and Granules India Limited vs. Commissioner of Central Tax, Hyderabad, which upheld similar refund claims.
2. Unjust Enrichment: The Tribunal found that the appellant had sufficiently demonstrated that the concept of unjust enrichment was not applicable in this case. The Chartered Accountant’s certificate and financial disclosures provided by the appellant were deemed adequate to establish that the incidence of CVD/SAD was not passed on to other parties.
3. Legal Precedents: The Tribunal noted that the department’s reliance on the Sarvo Packaging Limited case was misplaced, as subsequent judgments, including Sri Chakra Polyplast India Private Limited, had departed from this decision. The Tribunal also highlighted the principle that later judgments hold greater precedent value.
Final Decision

The Tribunal concluded that the learned Commissioner (Appeals) had failed to correctly interpret the provisions of Section 142(3) and 142(6)(a) of the CGST Act, 2017. It held that the refund application filed by Kiri Industries Limited was in accordance with the law and should have been allowed. The appeal was thus allowed, and the appellant was granted consequential relief.

Key Takeaways
1. Importance of Section 142 of CGST Act, 2017: This case underscores the significance of Section 142 in addressing refund claims for duties paid under the pre-GST regime. It clarifies that refunds of CVD/SAD paid before July 1, 2017, but not utilized due to the transition to GST, are eligible for cash refunds.
2. Unjust Enrichment: The judgment highlights the importance of providing adequate evidence, such as financial disclosures and certificates from Chartered Accountants, to counter claims of unjust enrichment.
3. Legal Precedents: The Tribunal’s reliance on recent judgments demonstrates the evolving nature of legal interpretations and the importance of staying updated on case law.
Conclusion

The decision in Kiri Industries Limited vs. Commissioner of Customs, Ahmedabad is a landmark ruling that provides clarity on refund claims under the CGST Act, 2017. It reinforces the principle that taxpayers are entitled to refunds of duties paid under the pre-GST regime if they are unable to avail credit under the GST framework. This judgment is expected to have a significant impact on similar cases and serves as a guiding precedent for taxpayers and legal practitioners navigating the complexities of tax refunds in the post-GST era.

Source: CESTAT Ahmedabad

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February 13, 2026
CESTAT Ahmedabad Ruled on Import Restrictions and Compliance with Customs Act
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 04.02.2026

CESTAT Ahmedabad Ruled on Import Restrictions and Compliance with Customs Act

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.comor on his Mobile +91-9999005379.

In a significant ruling, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), West Zonal Bench at Ahmedabad, delivered a judgment on February 4, 2026, in the case of Commissioner of Customs, Mundra Customs vs. Shree Khatu Shyam Steel & Tubes LLP. This case revolved around the import of Cold Rolled Stainless Steel (CRSS) Coils Grade J2 and raised critical questions about import restrictions, procedural compliance under the Customs Act, 1962, and the legal validity of circulars issued by the Ministry of Steel.

Background of the Case

The dispute originated when Shree Khatu Shyam Steel & Tubes LLP imported CRSS Coils Grade J2 from China under House Bill of Lading No. FS241205001 dated December 3, 2024, and filed Bill of Entry No. 8109186 on January 31, 2025, at Mundra Port. The Ministry of Steel had issued a one-time NOC (No Objection Certificate) for shipments where the Bill of Lading was generated on or before December 3, 2024. However, the Customs Department alleged that the Master Bill of Lading for the shipment was issued on January 4, 2025, after the cutoff date, making the goods prohibited for import under the Ministry of Steel’s circular dated October 20, 2023.

The goods were seized on February 27, 2025, under Section 110(1) of the Customs Act, 1962, and the importer requested a waiver of the Show Cause Notice (SCN) and personal hearing to expedite the adjudication process. Despite the waiver, the adjudication order was not passed within the mandatory six-month period stipulated under Section 110(2) of the Customs Act, leading to the seizure becoming illegal.

Key Legal Issues

The case raised several important legal questions:
1. Validity of the Ministry of Steel’s Circulars: The department relied on circulars issued by the Ministry of Steel, which mandated importers to obtain NOCs for steel grades not covered under the Steel and Steel Products (Quality Control) Order, 2024. The respondent argued that these circulars imposed restrictions without statutory authority, as the imported goods were not covered under the Quality Control Order.
2. Procedural Compliance Under Section 110(2): The respondent contended that the department failed to issue an SCN or adjudicate the seizure within the mandatory six-month period, rendering the seizure illegal and necessitating the unconditional release of the goods.
3. Distinction Between House Bill of Lading and Master Bill of Lading: The department argued that the one-time NOC applied exclusively to shipments where the Master Bill of Lading was issued on or before December 3, 2024, and not to House Bills of Lading with earlier dates.
Key Findings of the Tribunal

1. Procedural Compliance Under Section 110(2): 

The Tribunal emphasized the mandatory nature of Section 110(2) of the Customs Act, which requires the issuance of an SCN within six months of the seizure. The Tribunal relied on the landmark judgment of the Delhi High Court in Shiv Shakti Trading Company vs. Commissioner of Customs (Preventive), which held that the waiver of an SCN does not absolve the department of its obligation to adjudicate within the statutory timeframe. The Tribunal ruled that the department’s failure to issue an SCN or adjudicate within six months rendered the seizure illegal, and the goods were liable for immediate release.

2. Validity of Ministry of Steel’s Circulars: 

The Tribunal noted that the circulars issued by the Ministry of Steel could not impose additional restrictions on imports without statutory authority. It relied on precedents such as Atul Commodities Pvt. Ltd. vs. Commissioner of Customs, Cochin and UOI vs. Inter continental India Pvt. Ltd., which established that substantive restrictions on trade must be imposed through legislation or statutory notifications, not through executive circulars.

3. Nature of the Imported Goods: 

The Tribunal found that the imported CRSS Coils Grade J2 were not covered under the Steel and Steel Products (Quality Control) Order, 2024, and were therefore not subject to BIS standards or restrictions. The goods were identified and verified through Positive Metal Identification (PMI) tests, confirming their compliance with the declared specifications.

Impact of the Judgment 

1. Procedural Safeguards for Importers:

The judgment reinforces the importance of procedural compliance under Section 110(2) of the Customs Act, ensuring that importers are not subjected to indefinite delays in adjudication. It underscores the statutory obligation of the department to act within the prescribed timeframe, balancing the State’s power of investigation with the rights of importers.

2. Limits on Executive Authority:

The ruling highlights the limitations of executive circulars in imposing trade restrictions. It reiterates that any change in the categorization of goods from “free” to “restricted” must be made through legislative amendments or statutory notifications, not through circulars.

3. Clarity on Import Restrictions: 

The judgment provides clarity on the legal status of goods not covered under BIS standards or Quality Control Orders. It establishes that such goods cannot be treated as restricted or prohibited unless explicitly stated in the law.

Conclusion

The CESTAT’s decision in this case is a landmark ruling that upholds the principles of procedural fairness and the rule of law in the realm of customs and trade regulations. It serves as a reminder to regulatory authorities to act within the bounds of their statutory powers and provides much-needed clarity to importers navigating complex regulatory frameworks.

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Source: CESTAT Ahmedabad

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February 4, 2026
CESTAT Ahmedabad Quashes Undervaluation & Penalties in Timber Imports
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 24.01.2026

CESTAT Ahmedabad Quashes Undervaluation & Penalties in Timber Imports

This Article has been written by Shri Ravi Shekhar Jha, Advocate based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.comor 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 Appellants vs. Commissioner of Customs – Mundra. This case revolved around allegations of undervaluation of imported timber and evasion of customs duty. The final verdict, pronounced on January 23, 2026, set aside the impugned order and allowed the appeals with consequential benefits. Let’s delve into the details of this case and the implications of the judgment.

Background of the Case

The appellants imported various types of timber at Kandla and Mundra ports during 2009 and 2010. Following an investigation by the Directorate of Revenue Intelligence (DRI), it was alleged that the appellants, along with other timber importers, had undervalued their goods and evaded customs duty. Evidence of undervaluation was reportedly found in emails submitted by a supplier, who admitted to undervaluing timber imports in his statements.

The investigation led to a show cause notice issued on June 9, 2014, proposing the rejection of the declared value of the imported timber, re-determination of value, and demanding differential duty of Rs. 47,421/- and Rs. 91,780/- for imports at Kandla and Mundra ports, respectively. Additionally, penalties and redemption fines were imposed under various sections of the Customs Act, 1962.

Appeals and Arguments 

The appellants challenged the findings of the adjudicating authority and the Commissioner (Appeals), who had upheld the lower authority’s order with minor modifications. The appellants raised several key arguments:
1. Lack of Evidence: The investigation relied heavily on statements and emails from third parties, without corroborative evidence directly linking the appellants to the alleged undervaluation.
2. Third-Party Evidence: The appellants argued that third-party evidence, such as emails and statements from individuals not directly involved in their transactions, cannot be used as the sole basis for demanding duty and imposing penalties.
3. Burden of Proof: The appellants emphasized that the burden of proving undervaluation lies with the Revenue, which failed to provide tangible evidence to substantiate its claims.
4. Contemporaneous Imports: The appellants highlighted that the declared value of their imports was consistent with the prices of similar goods imported during the same period, as evidenced by the National Import Database (NIDB).
5. Extended Period of Limitation: The appellants contended that the extended period for demanding duty was not applicable, as there was no suppression or misstatement on their part.
6. Confiscation and Redemption Fine: The appellants argued that confiscation of goods under Section 111(m) of the Customs Act was not legally valid, as the goods were not physically available for confiscation.
Key Precedents Cited 

The appellants relied on several landmark judgments to support their case, including:
- Beena Sales Corporation (2019): This case dealt with similar allegations of undervaluation based on third-party statements and documents. The Tribunal had set aside the demand and penalties, stating that the evidence was not tangible or cogent enough to substantiate the allegations.
- South India Television (P) Ltd. (2007): The Supreme Court held that the burden of proving undervaluation lies with the Revenue, which must provide credible evidence of contemporaneous imports at higher prices.
- Truwoods Private Limited (2006): The Tribunal ruled that transaction value must be accepted unless credible evidence proves otherwise. It emphasized that third-party documents and statements without corroboration cannot form the basis for rejecting declared values.
The Tribunal’s Observations 

After carefully examining the submissions and evidence, the Tribunal found that the investigation against the appellants was based on common evidence and statements used in other similar cases. The Tribunal noted the following:
1. Lack of Incriminating Evidence: Searches conducted at the appellants’ premises did not yield any incriminating documents.
2. Third-Party Evidence: The investigation relied on statements and emails from Person and other third parties, which were not corroborated by independent evidence directly involving the appellants.
3. Consistency with Contemporaneous Imports: The declared value of the appellants’ imports was consistent with the prices of similar goods imported during the same period.
4. Precedents: The Tribunal referred to the Beena Sales Corporation case, which dealt with identical allegations and evidence. Since the Supreme Court had upheld the Tribunal’s decision in that case, the same principles were applied here.
Final Verdict

The Tribunal concluded that the allegations of undervaluation and duty evasion against the appellants were not substantiated by credible evidence. It held that the declared transaction value must be accepted, as the Revenue failed to prove undervaluation. The Tribunal set aside the impugned order, including the demand for differential duty, penalties, and redemption fines, and allowed the appeals with consequential benefits.

Implications of the Judgment

This judgment reinforces the principle that the burden of proving undervaluation lies with the Revenue. It highlights the importance of tangible and corroborative evidence in cases involving allegations of duty evasion. The decision also underscores the significance of adhering to the Customs Valuation Rules and respecting the principles of natural justice during investigations and adjudication.

For importers, this case serves as a reminder to maintain proper documentation and ensure compliance with customs regulations. It also provides reassurance that baseless allegations without credible evidence can be successfully challenged in legal forums.

Conclusion

The case of Appellant vs. Commissioner of Customs – Mundra is a landmark judgment that upholds the principles of fairness and justice in customs valuation disputes. By setting aside the impugned order, the Tribunal has reaffirmed the importance of evidence-based investigations and the need to respect transaction values unless proven otherwise. This decision will undoubtedly serve as a precedent for similar cases in the future, ensuring that importers are not unfairly penalized based on unsubstantiated claims.

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Source: CESTAT Ahmedabad

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January 24, 2026
CESTAT Ahmedabad Clarifies Auction Purchasers Liability for Pre-Liquidation Tax Dues
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 13.12.2025

CESTAT Ahmedabad Clarifies Auction Purchasers Liability for Pre-Liquidation Tax Dues

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

In a significant ruling, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), West Zonal Bench at Ahmedabad, has provided clarity on the liability of auction purchasers concerning pre-liquidation dues of a company. The decision, delivered on December 8, 2025, in the case of Customs Appeal No. 12564 of 2014-DB, has set a precedent for similar cases involving the sale of assets during the liquidation of companies.

Background of the Case

The appeals were filed by FMN Enterprise and Roshanlal & Sons Pvt. Ltd., who had purchased assets of M/s. Varun Seacon Ltd., a 100% Export Oriented Unit (EOU) that ceased operations in 1998 and was declared a sick industrial unit by the Board of Industrial and Financial Reconstruction (BIFR) in 2000. The Gujarat High Court ordered the winding up of the company in 2002 and appointed an official liquidator to oversee the sale of its assets.

The appellants acquired the assets of the company through an auction conducted by the official liquidator. However, the Customs Department sought to recover excise and customs duties from the auction purchasers, claiming that the bonded goods in the EOU could not be removed without payment of duty.

Key Arguments

The appellants contended that:
1. Taxes and duties for the pre-liquidation period cannot be recovered from auction purchasers, as per Section 457 of the Companies Act, 1956.
2. The sale of assets does not transfer the liability for pre-liquidation dues to the purchaser unless the unit is sold as a running concern.
3. Auction purchasers cannot be considered importers and are not liable for duties incurred by the previous owner.
The appellants supported their arguments with various case laws, including Collector of Customs Vs. Dytron (India) Ltd., M/s. Dollar Industries Vs. Assistant Commissioner, and others, which established that auction purchasers are not liable for the arrears of the previous owner unless explicitly stated in the statute.

On the other hand, the respondent argued that bonded goods in an EOU cannot be removed without payment of duty, citing case laws such as Sundaram Finance Ltd Vs. CC, Chennai and Kiran Spinning Mills Vs. CC.

Tribunal’s Observations and Decision

The Tribunal carefully examined the submissions and referred to the Gujarat High Court’s orders during the liquidation process. It noted that the High Court had explicitly stated that statutory dues for the pre-liquidation period would be settled under the provisions of the Companies Act, 1956, and only sales tax on the sold assets would be payable by the purchaser.

The Tribunal emphasized that no non-obstante clause in the Customs or Excise laws was presented to override the provisions of the Companies Act, 1956. It also highlighted that the assets were sold, not the entire unit as a running concern, which further negated the liability of the auction purchasers for pre-liquidation dues.

Relying on various judgments, including M/s. Dollar Industries Vs. Assistant Commissioner and Rana Girders Limited v. Union of India, the Tribunal concluded that auction purchasers cannot be held liable for the arrears incurred by the previous owner unless explicitly stated in the statute.

Final Verdict

The Tribunal ruled that the notices issued to the appellants demanding arrears of tax or duty foregone by the previous owner were without jurisdiction. It held that the recovery provisions of the Customs and Excise Acts for pre-liquidation dues were subsumed under the Companies Act, 1956, and could not be enforced against the auction purchasers. Consequently, the appeals were allowed with consequential relief.

Key Takeaways

This landmark decision reinforces the principle that auction purchasers of assets during the liquidation of a company cannot be held liable for pre-liquidation dues unless explicitly stated in the statute. It also highlights the importance of adhering to the provisions of the Companies Act, 1956, in such cases.

The ruling provides much-needed clarity for businesses and individuals involved in purchasing assets from liquidated companies, ensuring that they are not burdened with liabilities that are not legally theirs. It also underscores the need for clear statutory provisions to avoid ambiguity in such matters.

Source: CESTAT Ahmedabad

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December 13, 2025
Penalties Under Sections 114(3) and 114AA of Customs Act Quashed by CESTAT Ahmedabad

ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 09.12.2025

Penalties Under Sections 114(3) and 114AA of Customs Act Quashed by CESTAT Ahmedabad

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

In a significant legal development, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), West Zonal Bench at Ahmedabad, has delivered a landmark judgment in the case of Appellant vs. C.C. – Ahmedabad. The case revolved around the imposition of penalties under Sections 114(3) and 114AA of the Customs Act, 1962, amounting to Rs. 7 Lakh and Rs. 3 Lakh, respectively, on the appellant.

Background of the Case

The case originated from allegations that the appellant was involved in issuing erroneous valuation certificates for export cargo, leading to penalties imposed by the adjudicating authority. Despite the original authority noting that the appellant had no knowledge of the alleged misdeclaration of export cargo, the Commissioner (Appeals) upheld the penalties, citing intentional misconduct.

Key Arguments Presented

The appellant’s legal team highlighted critical discrepancies in the findings of the Commissioner (Appeals). They pointed out that the original adjudicating authority had explicitly stated that the appellant was not aware of the misdeclaration and was not part of any conspiracy. This factual observation was contradicted in the impugned order by the Commissioner (Appeals), who claimed that the appellant knowingly signed false valuation certificates.

To support their case, the appellant’s advocates relied on precedents such as Anchor Logistics vs C.C.  (2013) and Bhatia Shipping Pvt. Limited (2024), which emphasized the necessity of proving knowledge before imposing penalties under Sections 114 and 114AA of the Customs Act. They argued that the absence of knowledge invalidates the penalties imposed.

Tribunal’s Decision

The Hon’ble Member Judicial, presided over the case and delivered the final order on November 21, 2025. After carefully examining the facts and legal precedents, the Tribunal concluded that the penalties imposed on the appellant were unjustified. The court emphasized that knowledge of the alleged misdeclaration is a prerequisite for imposing penalties under Sections 114 and 114AA of the Customs Act. The Tribunal found that the Commissioner (Appeals) had made factually incorrect findings, which contradicted the original adjudicating authority’s observations.

In light of these findings, the Tribunal allowed the appeal and granted consequential relief to the appellant, setting aside the penalties imposed.

Implications of the Judgment

This judgment reinforces the principle that penalties under the Customs Act cannot be imposed without establishing clear evidence of knowledge and intent. It serves as a reminder to authorities to ensure that their findings are consistent and based on factual evidence. The decision also highlights the importance of judicial scrutiny in upholding justice and protecting individuals from unwarranted penalties.

Conclusion

The case of Appellant vs. C.C. – Ahmedabad is a testament to the importance of due process and the role of appellate tribunals in correcting errors in administrative decisions. It underscores the need for fairness and accuracy in adjudication, ensuring that penalties are imposed only when supported by concrete evidence. This victory is not just for the appellant but for the principles of justice and transparency in the legal system.

Source: CESTAT Ahmedabad

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December 9, 2025
CESTAT Ahmedabad Grants 12% Interest on Revenue Deposit
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 21.11.2025

CESTAT Ahmedabad Grants 12% Interest on Revenue Deposit

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

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) West Zonal Bench at Ahmedabad recently delivered a significant judgment in the case of KLJ Plasticizers Ltd. vs. Commissioner of Customs, Kandla. This case revolved around the appellant’s claim for interest on a refund of Rs. 5 crore, which was deposited during an investigation into alleged duty evasion. The judgment, delivered by Hon’ble, Member (Judicial), has set a precedent for granting interest on revenue deposits, even in the absence of explicit statutory provisions.

Background of the Case

The appellant, KLJ Plasticizers Ltd., had deposited Rs. 5 crore on September 18, 2014, during an investigation into duty evasion. The investigation was based on the premise that the actual consumption of certain inputs was less than the Standard Input Output Norms (SION). After a series of legal proceedings, the CESTAT ruled in favor of the appellant on March 25, 2019, stating that the revenue could not demand duty based on actual consumption being less than SION norms if the export obligations were fulfilled.

Following this favorable ruling, KLJ Plasticizers Ltd. filed a refund claim for the deposited amount, which was sanctioned by the adjudicating authority on November 8, 2019. However, the appellant later filed an application on January 21, 2020, seeking interest on the refunded amount for the period between the deposit date and the refund date. This claim was rejected by the adjudicating authority and subsequently by the Commissioner (Appeals), leading the appellant to approach the CESTAT.

Key Issues in the Case

The case raised two critical legal questions:
1. Jurisdiction of the Single Member Bench: Could a Single Member Bench decide the matter, given the potential for the refund amount to exceed Rs. 50 lakh?
2. Entitlement to Interest on Revenue Deposits: Was the appellant entitled to interest on the refunded deposit, even though the Customs Act, 1962, does not explicitly provide for such interest?
CESTAT’s Observations and Ruling 

Jurisdiction of Single Member Bench 

The Tribunal clarified that disputes regarding interest do not fall under the excluded categories mentioned in Section 129C(4) of the Customs Act, 1962. Since interest is neither duty, fine, nor penalty, the Single Member Bench has jurisdiction to decide the matter. The Tribunal cited precedents, including Dhampur Sugar Mills Ltd. vs. Commissioner of Central Excise, Meerut, to support this interpretation.

Entitlement to Interest 

The Tribunal acknowledged that the Customs Act, 1962, does not explicitly prescribe interest on revenue deposits. However, it emphasized the principle of compensation for the deprivation of the use of money wrongfully retained by the Revenue. The Tribunal relied on landmark judgments, including Sandvik Asia Ltd. vs. Commissioner of Income Tax and Parle Agro Pvt. Ltd. vs. Commissioner, CGST, which established the doctrine of compensation for unjust retention of funds.

The Tribunal also noted that various High Courts and CESTAT benches have consistently granted interest at 12% per annum on revenue deposits in similar cases. It held that the appellant was entitled to interest at 12% per annum on the refunded amount from the date of deposit (September 18, 2014) to the date of refund (November 8, 2019).

Implications of the Judgment

This decision is a landmark in the realm of indirect tax law, as it reinforces the principle that taxpayers are entitled to compensation for the wrongful retention of their funds by the Revenue. It also clarifies the jurisdiction of Single Member Benches in cases involving interest disputes, ensuring that such matters can be resolved efficiently.

The judgment sets a precedent for future cases involving claims for interest on revenue deposits, providing clarity and consistency in the application of the law. It also underscores the importance of judicial discipline, as the Tribunal followed established precedents from the Supreme Court and High Courts.

Conclusion

The CESTAT’s decision in the KLJ Plasticizers Ltd. case is a significant step toward ensuring fairness and justice in tax-related disputes. By granting interest on revenue deposits at 12% per annum, the Tribunal has upheld the principle of compensating taxpayers for the deprivation of their funds. This judgment serves as a reminder of the importance of adhering to judicial precedents and the doctrine of equity in cases where statutory provisions may be silent.

This case is a testament to the evolving jurisprudence in indirect tax laws and highlights the role of judicial bodies in safeguarding taxpayer rights. It is a must-read for legal professionals, businesses, and anyone interested in understanding the nuances of tax law in India.

Connected Matter

Kerala High Court Orders 12% Interest on Delayed Refund of Pre-Deposit

Source: CESTAT Ahmedabad

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November 21, 2025
CESTAT Ahmedabad Allows Refund to Ship Recyclers
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 07.11.2025

CESTAT Ahmedabad Allows Refund to Ship Recyclers

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

In a landmark decision, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), West Zonal Bench at Ahmedabad, has ruled in favor of M/s Dynamic Ship Recyclers Pvt. Ltd. and other appellants in a series of refund appeals. The judgment, delivered on November 4, 2025, marks a significant win for the appellants in their long-standing battle against the rejection of refund claims by the department.

Background of the Case

The case revolves around the import of a vessel, MT Falcon Spirit, by M/s Dynamic Ship Recyclers Pvt. Ltd. for breaking and recycling purposes. The company filed a refund claim of Rs. 8,23,782 on April 16, 2024, under Section 27 of the Customs Act, 1962. The dispute arose over the classification of fuel and oil contained in the vessel’s bunker tanks. Initially, the department assessed the duty on these items under Chapter 27, separate from the vessel itself. However, following a previous CESTAT order, the Assistant Commissioner of Customs, Bhavnagar, issued a Final Assessment Order on March 20, 2024, stating that the bunker tanks containing oil should be treated as part of the vessel’s machinery and classified under CTH 8908, along with the vessel.

Despite this favorable assessment, the department rejected the refund claims, citing the bar of unjust enrichment under Section 11B of the Customs Act. The appellants, led by Dynamic Ship Recyclers Pvt. Ltd., challenged this decision, arguing that they had not passed on the incidence of customs duty to any other party.

Key Arguments by the Appellants 

The appellants presented compelling evidence to support their claims, including:
1. Sales Data: A comparison of the Bill of Entry with the sales invoices demonstrated that the bunkers were sold at a price below the import price/value on which the duty was assessed. This indicated that the appellants had not recovered the cost of the bunkers, let alone the duty paid on them.
2. Chartered Accountant Certificate: The appellants submitted a certificate from M/s B.R. Popat & Co., Chartered Accountants, which confirmed that the incidence of customs duty paid on the bunkers had not been passed on to any other party. The certificate also stated that the duty was shown as “Customs Duty Receivable” in the company’s accounts.
3. Legal Precedents: The appellants cited several judicial rulings, including Business Overseas Corporation v. CCE (Import and General) New Delhi and Commissioner Central Excise v. Flow Tech Power, which established that selling goods below cost and providing a Chartered Accountant certificate are sufficient to rebut the presumption of unjust enrichment.
The Tribunal’s Observations and Decision

After considering the submissions and evidence, the Tribunal concluded that the appellants had successfully demonstrated that the bar of unjust enrichment was not applicable in their case. The Tribunal noted that the appellants had sold the bunkers at a price significantly lower than the import price, making it impossible for them to recover the customs duty paid. Furthermore, the Chartered Accountant certificate provided by the appellants shifted the burden of proof to the department, which failed to produce any evidence to counter the claims.

The Tribunal also emphasized that the department’s reliance on the premise that the duty was debited to expenses in the Profit and Loss Account was legally untenable. Citing various judicial precedents, the Tribunal reiterated that such a debit does not imply that the incidence of duty was passed on to buyers, especially when the goods were sold below cost.

In light of the overwhelming evidence and legal precedents, the Tribunal allowed the appeals and granted consequential relief to the appellants.

Implications of the Judgment

This decision is a significant victory for Dynamic Ship Recyclers Pvt. Ltd. and other appellants, as it sets a precedent for similar cases involving refund claims and the application of the unjust enrichment bar. The judgment underscores the importance of presenting robust evidence, such as sales data and Chartered Accountant certificates, to establish that the incidence of duty has not been passed on to buyers.

Moreover, the ruling highlights the responsibility of the department to provide concrete evidence when challenging refund claims. The Tribunal’s decision serves as a reminder that mere assumptions or procedural technicalities cannot override substantive evidence.

Conclusion

CESTAT Ahmedabad’s judgment in favor of Dynamic Ship Recyclers Pvt. Ltd. and other appellants is a testament to the importance of adhering to legal principles and ensuring justice in tax-related disputes. This case will undoubtedly serve as a guiding light for future cases involving similar issues, reinforcing the need for fairness and transparency in the adjudication process.

Source: CESTAT Ahmedabad

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November 7, 2025
CESTAT Ahmedabad Overturns Penalties and Redemption Fine in Tug ‘Alliance’ Smuggling
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 31.10.2025

CESTAT Ahmedabad Overturns Penalties and Redemption Fine in Tug ‘Alliance’ Smuggling

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

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Ahmedabad, recently delivered a significant judgment in the case of Customs Appeal No. 11938 of 2015 and related appeals, concerning the alleged illegal supply of goods to a foreign vessel, MT CANTA, by the tug ‘Alliance’. The case, which involved multiple appellants, including individuals and companies, revolved around allegations of smuggling and violations of the Customs Act, 1962.

Background of the Case

The case originated from intelligence reports suggesting that the tug ‘Alliance’, owned by M/s. K.B. Shipping & Company, had illegally supplied 20 KL of diesel oil, welding rods, grinders, and discs to the foreign vessel MT CANTA in high seas without filing export documents or obtaining proper customs clearance. The Directorate of Revenue Intelligence (DRI) investigated the matter, leading to the issuance of a Show Cause Notice on March 11, 2014.

The Adjudicating Authority found the goods liable for confiscation under Sections 113(f) and (g) of the Customs Act, 1962, and imposed penalties on several individuals and entities under Sections 114(iii) and 114AA of the Act. Additionally, the tug ‘Alliance’ was confiscated, with an option for redemption upon payment of a fine of Rs. 30,00,000.

The appellants challenged the Order-in-Original, arguing that the penalties and fines were imposed without proper consideration of their submissions and in violation of the principles of natural justice. They contended that they were not given an opportunity to cross-examine key witnesses and that the penalties were unjustified due to a lack of evidence proving their involvement or knowledge of the alleged illegal activities.

Tribunal’s Observations and Decision 

After a detailed examination of the case, The Tribunal made the following key observations:
1. No Evidence of Prior Knowledge or Connivance: The Tribunal found no evidence to suggest that the appellants, including Appellants, had prior knowledge or were involved in the illegal activities carried out by the tug’s Master, and Supervisor. The Tribunal noted that the appellants had trusted their employees to follow proper procedures, but the employees failed to comply with customs regulations.
2. Violation of Principles of Natural Justice: The Tribunal highlighted that the appellants were denied the opportunity to cross-examine key witnesses, which violated the principles of natural justice. This was a significant procedural lapse in the adjudication process.
3. Wrongful Imposition of Penalties: The Tribunal ruled that penalties under Sections 114(iii) and 114AA of the Customs Act were wrongly imposed on the appellants, as there was no evidence of their direct involvement or intent to violate customs laws.
4. Redemption Fine on Tug ‘Alliance’ Not Sustainable: The Tribunal observed that the tug ‘Alliance’ was under the operational control of M/s. K.B. Shipping & Co. at the time of the alleged incident, and the actual owners, M/s. V.S. Marine Services, were not involved in or aware of the illegal activities. Therefore, the redemption fine of Rs. 30,00,000 imposed on the tug was deemed unsustainable.
Final Verdict

The Tribunal set aside the impugned order passed by the Commissioner of Customs (Appeals) and allowed the appeals filed by the appellants. The penalties imposed on the appellants under Sections 114(iii) and 114AA of the Customs Act were revoked, and the redemption fine on the tug ‘Alliance’ was also annulled.

Source: CESTAT Ahmedabad

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October 31, 2025
CESTAT Ahmedabad Strikes Down Interest, Penalty, and Redemption Fine on IGST for Pre-Import Condition Violations

ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 08.10.2025

CESTAT Ahmedabad Strikes Down Interest, Penalty, and Redemption Fine on IGST for Pre-Import Condition Violations

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

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Ahmedabad, recently delivered a significant judgment in the case of Chiripal Poly Films Ltd. vs. Commissioner of Customs, Ahmedabad. This decision, pronounced on July 23, 2024, has far-reaching implications for importers operating under the Advance Authorization Scheme and sheds light on the legal framework surrounding the levy of interest, penalties, and redemption fines under the Customs Tariff Act, 1975.

Background of the Case

The case revolved around the alleged violation of the “pre-import condition” by Chiripal Poly Films Ltd. during imports made under the Advance Authorization Scheme between October 13, 2017, and January 9, 2019. The company had availed exemptions from Integrated Goods and Services Tax (IGST) under Notification No. 18/2015-Cus, as amended by Notification No. 79/2017-Cus. However, the “pre-import condition” was later challenged in courts, leading to a protracted legal battle.

The Hon’ble Supreme Court, in its judgment dated April 28, 2023, upheld the validity of the “pre-import condition” but allowed importers to pay IGST retrospectively and claim input tax credit (ITC) or refunds. Following this, the Central Board of Indirect Taxes and Customs (CBIC) issued Circular No. 16/2023-Cus, directing importers to comply with the Supreme Court’s decision.

Source: CESTAT Ahmedabad

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October 8, 2025
CESTAT Ahmedabad Upholds SAD Refund Claim of Importer

ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 27.09.2025

CESTAT Ahmedabad Upholds SAD Refund Claim of Importer

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

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), West Zonal Bench, Ahmedabad, recently delivered a significant judgment in the case of Sanjay Furniture Palace vs. Commissioner of Customs, Kandla. This decision, pronounced on September 23, 2025, has clarified the applicability of Notification No. 102/2007-Cus dated September 14, 2007, which grants exemption from Special Additional Duty (SAD) on goods imported for subsequent sale.

Background of the Case

The appellants, Sanjay Furniture Palace and its authorized signatory, had filed refund claims under Notification No. 102/2007-Cus for the 4% SAD paid on imported timber. The refund claims were initially sanctioned but later investigated by the Directorate General of Central Excise Intelligence (DGCEI), which alleged that the appellants had submitted forged invoices and failed to correlate the sales invoices with the Bills of Entry. The Adjudicating Authority and the Commissioner (Appeals) denied the refund claims, citing discrepancies in the documentation and alleged fabrication of invoices.

Source: CESTAT Ahmedabad

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September 27, 2025