𝐀𝐚𝐝𝐫𝐢𝐤𝐚𝐚 𝐋𝐞𝐠𝐚𝐥 𝐒𝐞𝐫𝐯𝐢𝐜𝐞𝐬 (𝐀𝐋𝐒)

Tag: #CESTATDelhi

CESTAT Delhi Sets Aside Undervaluation Finding in Furniture Imports
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 27.01.2026

CESTAT Delhi Sets Aside Undervaluation Finding in Furniture Imports

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

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) recently delivered a significant judgment in the case of Ajanta Overseas vs. Principal Commissioner of Customs (Import), which has far-reaching implications for the interpretation and application of Sections 138B and 138C of the Customs Act, 1962. This blog aims to provide a detailed analysis of the case, the legal provisions involved, and the final decision.

Background of the Case

The case arose from an appeal filed by Ajanta Overseas against the order dated December 3, 2020, passed by the Commissioner of Customs (Appeals). The Commissioner had rejected the declared value of imported goods under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, and re-determined the value under Rule 3. The rejection was based on allegations of undervaluation and misdeclaration of furniture and furniture parts imported by the appellant.

The allegations stemmed from an investigation conducted by the Directorate of Revenue Intelligence (DRI), which claimed that several importers had formed a cartel to evade customs duty. The evidence relied upon by the Commissioner (Appeals) included printouts of emails and statements recorded under Section 108 of the Customs Act.

Key Legal Provisions Examined

Section 108 of the Customs Act 

Section 108 empowers Gazetted Officers of Customs to summon individuals to provide evidence or produce documents during an inquiry. Statements recorded under this section are often used as evidence in adjudication proceedings.

Section 138B of the Customs Act 

Section 138B outlines the conditions under which statements recorded under Section 108 can be considered relevant and admissible as evidence. It mandates that:
1. The person who made the statement must be examined as a witness before the adjudicating authority.
2. The adjudicating authority must form an opinion that the statement should be admitted in evidence in the interest of justice.
3. The person against whom the statement is made must be given an opportunity to cross-examine the witness.
Failure to comply with these mandatory provisions renders the statements inadmissible as evidence.

Section 138C of the Customs Act 

Section 138C deals with the admissibility of microfilms, facsimile copies, and computer printouts as evidence. It specifies conditions under which such documents can be deemed admissible, including the requirement of a certificate identifying the document and describing how it was produced.

Key Issues in the Case

The appeal was heard on two primary issues:
1. Whether the statements recorded under Section 108 of the Customs Act could be considered relevant if the procedure under Section 138B was not followed.
2. Whether the printouts of emails could be relied upon in the absence of compliance with Section 138C of the Customs Act.
Tribunal’s Observations

Section 138B Compliance 

The Tribunal emphasized that the provisions of Section 138B are mandatory. It noted that the Commissioner (Appeals) had relied on statements recorded under Section 108, but these statements were retracted by the appellant. The Tribunal referred to several precedents, including M/s Surya Wires Pvt. Ltd. vs Principal Commissioner, CGST, Raipur and Ambika International vs. Union of India, which highlighted the importance of following the procedure under Section 138B. The Tribunal reiterated that statements recorded during investigations have a high likelihood of being made under coercion or compulsion, and the safeguards provided under Section 138B are designed to ensure fairness and justice.

Section 138C Compliance 

The Tribunal also examined the provisions of Section 138C, which require specific conditions to be met for computer printouts and other electronic evidence to be admissible. In this case, the Commissioner (Appeals) failed to record any findings regarding compliance with Section 138C. The Tribunal noted that there was no certificate under Section 138C to validate the printouts of the emails, nor was there any evidence of a Panchnama being drawn regarding these printouts. As a result, the Tribunal held that the printouts could not be relied upon.

Final Decision

The Tribunal concluded that the Commissioner (Appeals) had erred in relying on the statements recorded under Section 108 and the email printouts without ensuring compliance with Sections 138B and 138C of the Customs Act. Consequently, the Tribunal set aside the impugned order dated December 3, 2020, and allowed the appeal filed by Ajanta Overseas.

Key Takeaways
1. Mandatory Compliance with Section 138B: The judgment underscores the importance of adhering to the procedure outlined in Section 138B for admitting statements recorded under Section 108 as evidence. Failure to comply with these provisions renders such statements inadmissible.
2. Admissibility of Electronic Evidence: Section 138C provides specific conditions for the admissibility of electronic evidence, such as computer printouts. Without proper certification and compliance with the section, such evidence cannot be relied upon.
3. Safeguards Against Coercion: The Tribunal highlighted the rationale behind the mandatory provisions of Sections 138B and 138C, emphasizing the need to prevent the use of statements or evidence obtained under coercion or compulsion.
4. Precedents Matter: The Tribunal relied heavily on previous judgments, including Ambika International vs. Union of India and M/s Surya Wires Pvt. Ltd., to reinforce its decision. This demonstrates the importance of judicial precedents in interpreting statutory provisions.
Conclusion

The decision in Ajanta Overseas vs. Principal Commissioner of Customs (Import) serves as a reminder of the importance of adhering to procedural safeguards in customs and excise adjudication proceedings. It highlights the need for strict compliance with Sections 138B and 138C of the Customs Act to ensure that evidence is admissible and that justice is served. This case will undoubtedly serve as a benchmark for future cases involving similar issues.

Source: CESTAT Delhi

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January 27, 2026
CESTAT Delhi Overturns Foreign Currency Confiscation Under Customs Act
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 24.01.2026

CESTAT Delhi Overturns Foreign Currency Confiscation Under Customs Act

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, and Service Tax Appellate Tribunal (CESTAT) in New Delhi recently delivered a landmark judgment in the case of Salt Experiences & Management Pvt Ltd & Others vs. Commissioner of Customs (NS-V). This case revolved around the confiscation of foreign currency and travel cards under the Customs Act, 1962, and raised critical questions about the jurisdiction of customs authorities in handling alleged violations of the Foreign Exchange Management Act (FEMA), 1999. The judgment, delivered on January 21, 2026, provides significant insights into the interplay between the Customs Act and FEMA, and the limits of customs authorities’ powers in foreign currency-related cases.

Background of the Case

The case originated from an incident on August 20, 2018, at the international departure terminal of IGI Airport, New Delhi. Security operatives intercepted foreign currency worth ₹81,01,421 (comprising 50,409 USD, 30,745 EUR, and 25,030 GBP) carried by an employee of M/s Salt Experiences & Management Pvt Ltd. The investigation revealed that the foreign currency was intended for business expenses related to organizing travel and events for M/s Hero MotoCorp Ltd, a client of M/s Salt Experiences & Management Pvt Ltd. The company had a longstanding arrangement with Hero MotoCorp to manage international travel and promotional events.

The customs authorities initiated proceedings under Section 113(d) of the Customs Act, 1962, alleging contravention of FEMA regulations. The seized currency was confiscated absolutely, and penalties were imposed on the appellants under Section 114 of the Customs Act, 1962. The appellants challenged the confiscation and penalties, arguing that the proceedings were extra-jurisdictional and that the customs authorities lacked the competence to adjudicate alleged violations of FEMA.

Key Legal Issues

The case raised several critical legal questions:
1. Jurisdiction of Customs Authorities: The appellants argued that the customs authorities were not competent to adjudicate violations of FEMA, as the Foreign Exchange Regulation Act (FERA), 1973, which previously allowed customs authorities to act on foreign exchange violations, had been repealed and replaced by FEMA, 1999. Unlike FERA, FEMA does not contain provisions that deem violations of its regulations as prohibitions under the Customs Act, 1962.
2. Definition of “Goods” Under the Customs Act: The case also examined whether “currency” falls under the definition of “goods” in Section 2(22) of the Customs Act, 1962. The appellants contended that while “currency” is included in the definition of “goods,” it is not subject to the same prohibitions as other goods under the Customs Act.
3. Applicability of FEMA Regulations: The appellants argued that the foreign currency was procured legally and within the limits prescribed by the Reserve Bank of India (RBI) for business purposes. They contended that the carriage of foreign currency exceeding USD 3,000 was a technical oversight and did not warrant absolute confiscation or harsh penalties.
The Tribunal’s Findings 

The Tribunal’s judgment, delivered by Hon’ble Members Technical and Judicial, provided a detailed analysis of the legal framework governing foreign currency transactions and the jurisdiction of customs authorities. Key findings include:
1. Lack of Competence Under Customs Act: The Tribunal held that the Customs Act, 1962 does not provide the necessary jurisdiction for customs authorities to adjudicate violations of FEMA. The inclusion of “currency” in the definition of “goods” under Section 2(22) of the Customs Act does not automatically confer the authority to confiscate foreign currency or impose penalties for violations of FEMA regulations.
2. Absence of Deeming Provisions: The Tribunal emphasized that under FERA, customs authorities were empowered to act on foreign exchange violations through a deeming provision that treated certain prohibitions under FERA as prohibitions under the Customs Act. However, FEMA does not contain such deeming provisions, effectively rescinding the dual machinery of enforcement that existed under FERA.
3. Improper Invocation of Customs Act: The Tribunal found that the lower authorities had improperly invoked Section 113(d) of the Customs Act, 1962, which allows for the confiscation of goods exported or attempted to be exported contrary to prohibitions imposed by the Customs Act or any other law. Since FEMA does not deem its prohibitions as prohibitions under the Customs Act, the customs authorities lacked the legal basis to confiscate the foreign currency or impose penalties.
4. Technical Errors and Harsh Penalties: The Tribunal acknowledged that the foreign currency was legally procured for business purposes and that the excess cash carried by Shri Amit Bali was a technical oversight. It held that absolute confiscation and harsh penalties were unwarranted in this context.
Conclusion

The Tribunal’s judgment in this case underscores the importance of adhering to the legislative intent and the limits of statutory authority. It highlights the need for customs authorities to operate within the framework of the law and avoid overreach. The deliberate omission of deeming provisions in FEMA, 1999, signals a shift in legislative intent to centralize the regulation of foreign exchange under the exclusive jurisdiction of the Enforcement Directorate.

Source: CESTAT Delhi

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January 24, 2026
CESTAT Delhi Rejects Re-Classification Under CTH 8708; Aluminium Tubes & Profiles Held Under Chapter 76
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 22.01.2026

CESTAT Delhi Rejects Re-Classification Under CTH 8708; Aluminium Tubes & Profiles Held Under Chapter 76

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) recently delivered a significant judgment in the case of Hanon Climate Systems India Pvt. Ltd. vs. Commissioner of Customs (Customs Appeal No. 51748 of 2021). This case revolved around the classification of imported goods and the applicability of exemption notifications under the Customs Tariff Act, 1975. The decision, pronounced on January 21, 2026, has set a precedent for determining the classification of goods based on their description at the time of import rather than their end-use.

Background of the Case

Hanon Climate Systems India Pvt. Ltd., a manufacturer of engine cooling modules, radiators, and condensers, imported three types of goods—aluminium tubes, aluminium pipes, and aluminium profiles—between April 2015 and March 2016. The appellant classified these goods under Chapter 76 of the Customs Tariff Act, specifically under Customs Tariff Items (CTI) 7604, 7608, and 7616, and claimed exemption from Basic Customs Duty (BCD) under Notification No. 152/2009-Cus dated December 31, 2009, and Notification No. 046/2011-Cus dated June 1, 2011.

However, following an audit in November 2019, the customs department raised objections regarding the classification of the goods. The department argued that the goods should be reclassified under CTI 8708, which pertains to “Parts and Accessories of Motor Vehicles.” A show-cause notice was issued in July 2020, proposing the reclassification and demanding customs duty under Section 28(4) of the Customs Act, 1962, along with interest and penalties under Sections 114A and 114AA.

Key Issues in the Case

The primary issue in this case was the classification of the imported goods. The appellant argued that the goods were raw aluminium inputs that required further processing before being used in the manufacture of radiators, condensers, and charge air coolers. Therefore, they should be classified under Chapter 76, which covers “Aluminium and Articles Thereof.” The department, on the other hand, contended that the goods were specifically designed and cut to size for use in motor vehicle assemblies, making them classifiable under Chapter 87 as “Parts and Accessories of Motor Vehicles.”

Tribunal’s Observations and Decision 

The Tribunal examined the relevant provisions of Chapter 76 and Chapter 87, as well as the Explanatory Notes to Section XVII of the Customs Tariff Act. It concluded that the goods in question—aluminium tubes, pipes, and profiles—did not meet the criteria for classification under CTI 8708. The key observations were:
1. Goods in Imported Condition: The Tribunal emphasized that the classification of goods should be determined based on their condition at the time of import, not their end-use. The imported goods were simple aluminium articles that required significant processing before they could be used in motor vehicle assemblies. Therefore, they could not be considered as identifiable parts of motor vehicles at the time of import.
2. Specific vs. Generic Classification: The Tribunal noted that the goods were more specifically covered under Chapter 76, which includes aluminium profiles, tubes, and pipes, rather than the generic classification under Chapter 87 for motor vehicle parts.
3. Explanatory Notes to Section XVII: The Tribunal highlighted that for goods to be classified under CTI 8708, they must meet three conditions: (a) not being excluded by Note 2 to Section XVII, (b) being suitable for use solely or principally with motor vehicles, and (c) not being more specifically included elsewhere in the Nomenclature. The imported goods did not meet these conditions.
4. Exemption Notifications: The Tribunal ruled that the appellant was entitled to claim the benefits of the exemption notifications, as the goods were correctly classified under Chapter 76 and originated from eligible countries.
5. Extended Period of Limitation: The Tribunal held that the extended period of limitation under Section 28(4) of the Customs Act could not be invoked, as there was no evidence of suppression of facts or intent to evade duty. The appellant had made complete declarations in the Bills of Entry and had informed the department about the classification issue during the audit stage.
6. Penalties and Interest: Since the extended period of limitation was not applicable, the Tribunal also set aside the penalties under Sections 114A and 114AA and the demand for interest under Section 28AA.
Implications of the Judgment

This judgment has far-reaching implications for importers and the customs department. It reinforces the principle that the classification of goods should be based on their description at the time of import rather than their intended use. The decision also highlights the importance of adhering to the specific descriptions provided in the Customs Tariff Act and the Explanatory Notes.

Moreover, the Tribunal’s ruling on the extended period of limitation and penalties provides clarity on the distinction between misclassification and misrepresentation. Importers can take solace in the fact that genuine classification disputes, arising from differing interpretations, do not automatically imply intent to evade duty.

Conclusion

The CESTAT’s decision in the Hanon Climate Systems India Pvt. Ltd. case is a landmark ruling that underscores the importance of accurate classification and the limitations of the customs department in reclassifying goods based on their end-use. It serves as a reminder to importers to ensure proper documentation and compliance with customs regulations while also providing a precedent for challenging unjustified reclassifications and penalties. This case is a testament to the importance of understanding the nuances of customs law and the need for a fair and transparent adjudication process.

Source: CESTAT Delhi

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January 22, 2026
CESTAT Delhi Sets Aside Customs Undervaluation Order for Non-Compliance with Sections 138B & 138C
ALO Law Office- IDT Tax I Arbitration I Litigation

Date:21.01.2026

CESTAT Delhi Sets Aside Customs Undervaluation Order for Non-Compliance with Sections 138B & 138C

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), Principal Bench, New Delhi, recently delivered a significant judgment on January 20, 2026, in the case of Aashna Mercantile Pvt. Ltd. & Others vs. Principal Commissioner of Customs (Import). This case revolved around allegations of misdeclaration and undervaluation of imported goods, leading to the imposition of differential duty and penalties under the Customs Act, 1962. The judgment, which set aside the impugned order dated April 23, 2020, has brought to light critical aspects of the Customs Act, particularly sections 108, 138B, and 138C.

Background of the Case

The appeals were filed by Aashna Mercantile Pvt. Ltd. and four co-noticees—Appellants—challenging the order passed by the Principal Commissioner of Customs, ICD-TKD, New Delhi. The order was based on two show-cause notices issued in 2017 and 2018, alleging misdeclaration and undervaluation of imported furniture and furniture parts. The Principal Commissioner had relied on statements recorded under section 108 of the Customs Act and invoices retrieved from the email of the supplier to confirm the demand for differential duty and impose penalties under sections 112, 114A, and 114AA of the Customs Act.

Key Legal Issues Addressed

The Tribunal focused on two critical legal provisions of the Customs Act:

1. Section 138B: Relevancy of Statements 

Section 138B outlines the conditions under which statements recorded under section 108 of the Customs Act can be considered relevant evidence. The Tribunal emphasized that such statements are admissible only if:
- The person who made the statement is examined as a witness before the adjudicating authority.
- The adjudicating authority forms an opinion that the statement should be admitted in evidence in the interest of justice.
- The person against whom the statement is made is given an opportunity to cross-examine the witness.
The Tribunal highlighted that these provisions are mandatory and must be strictly followed. Failure to comply with this procedure renders the statements inadmissible as evidence. In this case, the appellants had retracted their statements made under section 108, and the adjudicating authority did not follow the mandatory procedure under section 138B. As a result, the Tribunal ruled that the statements could not be relied upon to reject the transaction value or impose penalties.

2. Section 138C: Admissibility of Computer Printouts 

Section 138C deals with the admissibility of microfilms, facsimile copies, and computer printouts as evidence. The provision requires specific conditions to be met, including the issuance of a certificate identifying the document and verifying its authenticity. The Tribunal noted that the Principal Commissioner had relied on emails and invoices retrieved from the supplier’s email without ensuring compliance with section 138C. There was no evidence of a Panchnama being drawn for the printouts, nor was there a certificate as required under section 138C. Consequently, the Tribunal held that the emails and invoices could not be relied upon as evidence.

Precedents Cited

The Tribunal referred to several landmark judgments to support its decision, including:
- M/s Surya Wires Pvt. Ltd. vs Principal Commissioner, CGST, Raipur (2025): This case emphasized the mandatory nature of section 138B and the need for cross-examination of witnesses before admitting statements as evidence.
- Ambika International vs. Union of India (2016): The Punjab and Haryana High Court highlighted the importance of following the procedure under section 9D of the Central Excise Act, which is similar to section 138B of the Customs Act.
- Hi Tech Abrasives Ltd. vs. Commissioner of C. Ex. & Cus., Raipur (2018): The Chhattisgarh High Court reiterated the mandatory nature of section 9D and the need for strict compliance.
- Additional Director General (Adjudication) vs. Its My Name Pvt. Ltd. (2020): The Delhi High Court held that statements recorded under section 108 of the Customs Act must undergo the process outlined in section 138B before being considered relevant.
- Additional Director General, Adjudication, Directorate of Revenue Intelligence vs. Suresh Kumar and Co. Impex Pvt. Ltd. & Ors. (2025): The Supreme Court discussed the compliance requirements under section 138C and the evidentiary value of statements recorded under section 108.
Tribunal’s Final Decision 

After a detailed examination of the legal provisions and precedents, the Tribunal concluded that the Principal Commissioner had failed to comply with the mandatory requirements of sections 138B and 138C of the Customs Act. The statements recorded under section 108 and the emails retrieved from the supplier’s account were deemed inadmissible as evidence. Consequently, the Tribunal set aside the impugned order dated April 23, 2020, and allowed all five appeals.

Implications of the Judgment

This judgment underscores the importance of adhering to procedural requirements under the Customs Act when relying on statements and electronic evidence in adjudication proceedings. It serves as a reminder to authorities that failure to comply with mandatory provisions can lead to the rejection of evidence and the setting aside of orders. For importers and businesses, this case highlights the significance of understanding their rights under the law, particularly the right to cross-examine witnesses and challenge the admissibility of evidence.

Conclusion

The CESTAT’s decision in Aashna Mercantile Pvt. Ltd. & Others vs. Principal Commissioner of Customs is a landmark ruling that reinforces the importance of procedural compliance in customs adjudication. By setting aside the impugned order, the Tribunal has upheld the principles of natural justice and due process, ensuring that appellants are not penalized based on inadmissible evidence. This case will undoubtedly serve as a precedent for future disputes involving the admissibility of statements and electronic evidence under the Customs Act.

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Source: CESTAT Delhi

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January 21, 2026
CESTAT Delhi Allows Exemption for Oxygen Concentrators
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 20.01.2026

CESTAT Delhi Allows Exemption for Oxygen Concentrators

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

In a significant ruling, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, delivered a judgment on January 19, 2026, in the case of M/s Aspen Diagnostics Pvt Ltd vs. Commissioner of Customs, New Delhi (ICD TKD). This case revolved around the interpretation of a customs notification and the eligibility of oxygen concentrators for exemption under Notification No. 20/2020-Cus dated April 9, 2020.

Background of the Case 

The dispute arose when M/s Aspen Diagnostics Pvt Ltd imported oxygen concentrators during the COVID-19 pandemic under Bill of Entry No. 7630674/11.05.2020. The company claimed exemption from customs duty under Notification No. 20/2020-Cus, which provided a ‘nil’ rate of duty for certain medical equipment, including “artificial respiration or other therapeutic respiration apparatus (ventilators).” However, the customs authorities denied the exemption, arguing that oxygen concentrators did not fall under the category of “ventilators” as specified in the notification.

The appellant challenged this decision, arguing that the notification was intended to provide broad relief during the pandemic and should not be narrowly interpreted to exclude oxygen concentrators. The case was first heard by the Commissioner of Customs (Appeals), who upheld the original decision, leading the appellant to approach the CESTAT.

Key Arguments Presented
1. Appellant’s Contention:
  - The appellant argued that the term “artificial respiration or other therapeutic respiration apparatus (ventilators)” should not be narrowly interpreted to mean only conventional ventilators. Instead, it should encompass all apparatus performing therapeutic respiration functions, including oxygen concentrators.
  - The appellant highlighted the urgency of the pandemic situation, which necessitated broad interpretation of the notification to provide relief to the public.
  - They criticized the reliance on subsequent notifications and press releases to interpret the intent of the original notification, stating that these were not credible instruments for determining the scope of the earlier notification.
  - The appellant also pointed out that the first appellate authority failed to comply with Section 17(5) of the Customs Act, 1962, which mandates a “speaking order” to justify the denial of exemption.
2. Respondent’s Argument:
  - The respondent argued that the exemption was specifically intended for ventilators, as indicated by the parenthetical description in the notification.
  - They relied on a press release issued by the Ministry of Finance and subsequent notifications that explicitly distinguished between ventilators and oxygen concentrators.
  - The respondent also emphasized the technical differences between ventilators and oxygen concentrators, asserting that the latter does not assist respiration through an external source, which is the essence of a ventilator.
The Tribunal’s Observations

The Tribunal made several critical observations while delivering its judgment:
1. Broad Interpretation of Notification:
  - The Tribunal emphasized that the notification under Section 25 of the Customs Act, 1962, should be read holistically. The description of goods eligible for exemption should not be narrowly confined to the parenthetical term “ventilators.”
  - It noted that the term “ventilator” is not explicitly enumerated in the First Schedule to the Customs Tariff Act, 1975, and the description in the notification was designed to cover a broader range of apparatus for artificial or therapeutic respiration.
2. Context of the Pandemic:
  - The Tribunal acknowledged the extraordinary circumstances of the COVID-19 pandemic, which required governments to provide relief in the broadest terms to address the acute respiratory distress faced by the population.
  - It criticized the lower authorities for their narrow interpretation of the notification, which failed to consider the broader intent of the government to provide relief during a public health crisis.
3. Technical and Legal Analysis:
  - The Tribunal analyzed the technical aspects of oxygen concentrators and ventilators, concluding that the source of oxygen supply does not determine whether an apparatus qualifies as one for artificial or therapeutic respiration.
  - It also referred to judicial precedents, including decisions by the High Courts of Bombay and Chhattisgarh, which emphasized the importance of interpreting tax-related notifications in a broader context.
Final Judgment

The Tribunal ruled in favor of M/s Aspen Diagnostics Pvt Ltd, setting aside the impugned order and allowing the appeal. It held that the lower authorities had erred in restricting the benefit of the notification to conventional ventilators and that oxygen concentrators, being apparatus for therapeutic respiration, were eligible for the exemption.

Key Takeaways
1. Holistic Interpretation of Notifications:
  - The judgment underscores the importance of interpreting customs notifications in their entirety, rather than focusing on specific terms or parenthetical descriptions.
2. Context Matters:
  - The Tribunal highlighted the need to consider the broader context, especially during extraordinary circumstances like the COVID-19 pandemic, when government policies are aimed at providing maximum relief.
3. Compliance with Legal Obligations:
  - The judgment criticized the lower authorities for failing to comply with Section 17(5) of the Customs Act, 1962, which requires a detailed explanation for denying exemptions.
4. Precedents in Tax Law Interpretation:
  - The Tribunal relied on previous judicial decisions to support its stance on the interpretation of tax-related notifications, emphasizing the importance of consistency in legal reasoning.
Conclusion

This landmark judgment by the CESTAT serves as a reminder of the need for a fair and holistic approach in interpreting tax notifications, especially during times of crisis. It highlights the importance of considering the broader intent of government policies and adhering to legal obligations to ensure justice for taxpayers. The decision to allow the exemption for oxygen concentrators is a significant step in recognizing the evolving nature of medical technology and the necessity of adapting tax policies to address public health emergencies.

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Source: CESTAT Delhi

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January 20, 2026
CESTAT Delhi Sets Aside Order on Unjust Enrichment in Customs Duty Refund
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 19.01.2026

CESTAT Delhi Sets Aside Order on Unjust Enrichment in Customs Duty Refund

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), Principal Bench, New Delhi, recently delivered a significant judgment in the case of M/s. Lord Image vs. Commissioner of Customs – Jaipur I (Customs Appeal No. 50283 of 2022). The appeal was filed by M/s. Lord Image challenging the Order-in-Appeal No. 69(SM)/CUS/JPR/2021 dated 26.05.2021, which denied their refund claim on the grounds of unjust enrichment. The judgment, pronounced by Hon’ble Member Judicial, on 06.01.2026, marks a crucial victory for the appellant.

Background of the Case

M/s. Lord Image, a Jaipur-based importer, had imported gold jewelry from Thailand under two Bills of Entry dated 20.10.2011 and 17.11.2012, with a total value of Rs. 40,20,932/-. The goods were classified under sub-heading 711319 of the Customs Tariff Act, 1975, and the appellant claimed duty exemption under Notification No. 82/2004-Cus. and Notification No. 101/2004-Cus., both dated 31.08.2004. However, the department denied the exemption under the Free Trade Agreement (FTA) scheme and issued a show cause notice on 07.09.2013, demanding recovery of short-paid customs duty amounting to Rs. 4,18,297/-. The appellant deposited the amount under protest on 29.12.2012.

The adjudicating authority later dropped the demand for short-paid customs duty through Order-in-Original No. 40/2018-19 dated 29.11.2018, which was accepted by the department. Subsequently, M/s. Lord Image filed a refund claim for Rs. 4,18,297/- on 27.11.2019, supported by a Chartered Accountant Certificate dated 04.01.2020. The refund was sanctioned via Order-in-Original No. 26/2019-20 dated 30.01.2020, as it was filed within the limitation period. However, the department reviewed the order under Review Order No. 01/2020 dated 20.03.2020, claiming that the refund was hit by the principle of unjust enrichment. The department filed an appeal against the refund order, which was decided in their favor by the Commissioner (Appeals), leading to the present appeal before CESTAT.

Arguments Presented

Appellant’s Submissions: The appellant argued that the Order-in-Original dated 30.01.2020 had correctly considered both the limitation period and the principle of unjust enrichment. The Chartered Accountant Certificate clearly certified that the burden of customs duty was borne by the appellant and was not passed on to customers. The invoices for selling gold did not include any customs duty, and the department’s reliance on book entries in the profit and loss account was insufficient to prove unjust enrichment. The appellant emphasized that the findings of the Commissioner (Appeals) ignored documentary evidence and were contrary to the Customs Act, 1962.

Department’s Submissions: The department contended that the customs duty was booked as an expense under “Direct and Manufacturing Expenses” in the profit and loss account, indicating that the burden of duty was passed on to customers. They argued that the refund claim was rightly denied under the principle of unjust enrichment.

CESTAT’s Observations and Decision 

After hearing both parties and reviewing the evidence, CESTAT made the following key observations:
1. Nature of Deposit: The customs duty deposited by the appellant during the investigation was deemed a revenue deposit made under protest. CESTAT relied on precedents, including the Hon’ble Supreme Court’s decision in Sooraj Mull Baijnath Industries (P) Ltd. and EBIZ Com Pvt Ltd., which held that such deposits must be refunded with interest as they are not subject to unjust enrichment.
2. Chartered Accountant Certificate: The certificate submitted by the appellant confirmed that the customs duty burden was not passed on to customers. It certified that the duty was booked under “Import Duty Paid” in the profit and loss account, leading to a reduction in profit, and was not included in the sale value of goods.
3. Invoices as Evidence: The Tribunal emphasized that invoices are the best evidence to determine whether the duty burden was passed on to customers. The appellant’s invoices showed no mention of customs duty, proving that the duty was not included in the sale price.
4. Misinterpretation by Commissioner (Appeals): CESTAT held that the Commissioner (Appeals) erred in relying solely on book entries in the profit and loss account without considering the invoices and other documentary evidence. The findings were deemed inconsistent with established legal principles.
5. Legal Precedents: The Tribunal referred to various judgments, including Vishal Video & Appliances Pvt. Ltd. and Organan (India) Ltd., which established that the principle of unjust enrichment does not apply when the duty burden is not passed on to customers.
Final Order

CESTAT set aside the impugned order and allowed the appeal, holding that the refund claim was not hit by the principle of unjust enrichment. The Tribunal concluded that the appellant had successfully demonstrated that the burden of customs duty was borne by them and not passed on to customers.

Key Takeaways
1. Importance of Documentary Evidence: This case highlights the significance of invoices and Chartered Accountant Certificates in proving that the burden of customs duty has not been passed on to customers.
2. Nature of Deposits: Deposits made under protest during investigations are treated as revenue deposits, and the principle of unjust enrichment does not apply to such cases.
3. Legal Precedents: The judgment reinforces established legal principles regarding unjust enrichment and refund claims under the Customs Act, 1962.
4. Role of Adjudicating Authorities: The case underscores the importance of thorough examination of evidence by adjudicating authorities to ensure justice.
Conclusion

The judgment in favor of M/s. Lord Image is a landmark decision that upholds the principles of justice and fairness in refund claims under the Customs Act. It serves as a reminder to both importers and authorities to rely on concrete evidence and established legal precedents while adjudicating disputes. This case sets a precedent for similar cases and provides clarity on the application of the principle of unjust enrichment in customs duty refunds.

Source: CESTAT Delhi

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January 19, 2026
CESTAT Delhi Overturns Department’s Reclassification of Fuel Injection Valves as Diesel Engine Parts
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 17.01.2026

CESTAT Delhi Overturns Department’s Reclassification of Fuel Injection Valves as Diesel Engine Parts

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), New Delhi, recently delivered a significant judgment in the case of Senior India Pvt. Ltd. vs. Commissioner of Customs. This case revolved around the classification of pressure relief valves imported by Senior India Pvt. Ltd. under the Customs Tariff Act, 1975. The decision, pronounced on January 7, 2026, has provided clarity on the classification of such goods under the Customs Tariff Items (CTI).

Background of the Case

Senior India Pvt. Ltd., a company engaged in manufacturing common rail and other parts for fuel injection equipment for diesel engines, imported pressure relief valves through a Bill of Entry dated March 15, 2019. The company classified the goods under CTI 8481 40 00, which covers “Safety or Relief Valves.” However, the Customs Department contended that the goods should be classified under CTI 8409 99 41, which pertains to “Other parts of diesel engines for motor vehicles.”

The dispute arose when the department directed the reassessment of the Bill of Entry under CTI 8409 99 41, arguing that the pressure relief valves were parts of diesel engines and not standalone valves. Senior India Pvt. Ltd. filed an appeal to challenge this classification.

Key Arguments Presented

Appellant’s Arguments
1. Correct Classification Under CTI 8481 40 00: The appellant argued that the pressure relief valves are specifically designed to relieve excess pressure in the common rail fuel injection system, which is a metallic pipe-like structure. The valves function by opening an aperture automatically when the pressure exceeds the prescribed limit, aligning with the description of “Safety or Relief Valves” under CTI 8481 40 00.
2. HSN Explanatory Notes: The appellant referred to the Harmonized System of Nomenclature (HSN) Explanatory Notes, which state that valves remain classified under heading 8481 even if specialized for use on a particular machine or apparatus.
3. Incorrect Interpretation by Commissioner (Appeals): The appellant contended that the Commissioner (Appeals) misinterpreted the HSN Explanatory Notes and incorrectly classified the goods under CTI 8409 99 41. The appellant emphasized that the pressure relief valves are complete valves in themselves and do not regulate the flow of fluid but merely relieve excess pressure.
Department’s Arguments
1. Classification Under CTI 8409 99 41: The department argued that the pressure relief valves are part of the common rail fuel injection system, which is a component of diesel engines used in motor vehicles. As such, the goods should be classified under CTI 8409 99 41 as “Other parts of diesel engines for motor vehicles.”
2. Exclusion from CTH 8481: The department referred to the HSN Explanatory Notes, which exclude machinery parts that regulate the flow of fluid inside a machine, even if they incorporate a complete valve, from classification under CTH 8481.
3. Specific Use in Diesel Engines: The department emphasized that the pressure relief valves are specifically designed for use in diesel engines and have no independent application outside of the common rail fuel injection system.
CESTAT’s Observations and Decision

After carefully analyzing the arguments and evidence presented by both parties, the Tribunal made the following observations:
1. Function of Pressure Relief Valves: The Tribunal noted that the pressure relief valves are complete valves in themselves and are not machinery parts incorporating a valve. Their sole function is to relieve excess pressure in the common rail fuel injection system, and they do not regulate or control the flow of fluid.
2. Applicability of HSN Explanatory Notes: The Tribunal emphasized that the HSN Explanatory Notes to CTH 8481 clearly state that valves remain classified under this heading even if specialized for use on a particular machine or apparatus. The pressure relief valves meet the criteria for classification under CTI 8481 40 00.
3. Exclusion from CTI 8409 99 41: The Tribunal rejected the department’s argument that the goods should be classified under CTI 8409 99 41. It clarified that Section Note 2(a) to Section XVI of the Customs Tariff excludes CTH 8409 from its purview when the goods are specifically covered under another heading, such as CTH 8481.
4. Precedents: The Tribunal referred to previous decisions, including Commissioner of Central Excise, Aurangabad vs. Motor Industries Company Ltd. and Kirloskar Pneumatic Co. Ltd. vs. Collector of Customs, Bombay, which supported the classification of specialized valves under CTH 8481.
Final Verdict

The Tribunal concluded that the pressure relief valves imported by Senior India Pvt. Ltd. were correctly classified under CTI 8481 40 00 as “Safety or Relief Valves.” The impugned order passed by the Commissioner (Appeals) was set aside, and the appeal was allowed.

Key Takeaways from the Judgment
1. Importance of HSN Explanatory Notes: The judgment highlights the significance of HSN Explanatory Notes in determining the correct classification of goods under the Customs Tariff Act.
2. Specific vs. General Classification: When goods are specifically covered under a particular heading, they must be classified under that heading, even if they are designed for use as part of a specific machine.
3. Functionality Matters: The function of the goods plays a crucial role in determining their classification. In this case, the pressure relief valves were classified based on their function of relieving pressure, rather than regulating or controlling fluid flow.
4. Precedents in Classification Disputes: The Tribunal relied on previous decisions to reinforce its reasoning, demonstrating the importance of judicial precedents in customs classification matters.
Conclusion

The CESTAT’s decision in this case serves as a landmark judgment in the realm of customs classification. It underscores the need for a detailed understanding of the functionality and design of imported goods, as well as the importance of adhering to the HSN Explanatory Notes and Section Notes of the Customs Tariff Act. This ruling not only provides clarity on the classification of pressure relief valves but also sets a precedent for similar disputes in the future.

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Source: CESTAT Delhi

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January 17, 2026
CESTAT Delhi Ruled in Favor of Global Links: Customs Broker Licence Revocation Set Aside
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 16.01.2026

CESTAT Delhi Ruled in Favor of Global Links: Customs Broker Licence Revocation Set Aside

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 legal development, M/s Global Links, a Customs Broker based in New Delhi, emerged victorious in a case before the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi. The case revolved around the revocation of the Customs Broker licence of M/s Global Links, along with the imposition of a penalty of Rs. 50,000 and the forfeiture of their security deposit by the Principal Commissioner of Customs (Airport & General), New Delhi. The final judgment, delivered on January 14, 2026, brought relief to the appellant, as the tribunal set aside the impugned order and ruled in their favor.

Background of the Case

M/s Global Links, a licensed Customs Broker under the Customs Broker Licensing Regulations (CBLR), 2018, filed three Bills of Entry at Mumbai port in January 2023 on behalf of two importers, M/s Dreams Inc. and M/s Aahanna Associates. Following intelligence reports, the Central Intelligence Unit at Mumbai flagged the consignments for examination. Upon inspection, discrepancies were found, including mis-declared descriptions, quantities, and values of goods, undeclared items, violations of Bureau of Indian Standards (BIS) certification requirements, contraventions of RE-44 Notification, and breaches of Legal Metrology provisions.

Subsequently, the Principal Commissioner of Customs (Airport & General), New Delhi, initiated action against the importers, M/s Global Links, and its employees. The Customs Broker licence of M/s Global Links was suspended on March 13, 2023, and the suspension was confirmed on May 9, 2023. A show-cause notice was issued on June 16, 2023, proposing the revocation of the licence, imposition of penalties, and forfeiture of the security deposit for alleged violations of Regulations 10(d), 10(e), 10(f), 10(m), and 13(12) of the CBLR.

Key Issues in the Case

The tribunal was tasked with addressing two primary questions:
1. Whether M/s Global Links had violated the specified regulations under the CBLR based on the evidence presented.
2. Whether the penalties imposed on the appellant were proportionate to the alleged violations.
The regulations in question included:
- Regulation 10(d): Advising clients to comply with customs laws and notifying authorities in case of non-compliance.
- Regulation 10(e): Exercising due diligence to ensure the correctness of information provided to clients.
- Regulation 10(f): Not withholding information related to cargo clearance from clients.
- Regulation 10(m): Discharging duties with utmost speed and efficiency.
- Regulation 13(12): Supervising employees to ensure proper conduct and taking responsibility for their actions.
Tribunal’s Observations and Judgment

After hearing arguments from both sides and reviewing the evidence, the tribunal made the following observations:
1. No Authority to Examine Goods: The tribunal noted that Customs Brokers do not have the authority to physically examine goods, as this responsibility lies solely with Customs Officers and custodians. Therefore, the misdeclaration of goods by the importers could not be held against M/s Global Links.
2. Violation of Legal Requirements: While the imports violated various legal requirements, including BIS certification, RE-44 Notification, and Legal Metrology provisions, the tribunal emphasized that the Customs Broker’s role is limited to advising clients and exercising due diligence.
3. Statements Not Admitted as Evidence: The Commissioner relied heavily on statements made by the importers under Section 108 of the Customs Act, 1962, to establish violations of the CBLR regulations. However, the tribunal pointed out that these statements were not admitted as evidence under Section 138B of the Act. The Commissioner failed to examine the importers as witnesses and did not record an opinion to admit their statements as evidence. As a result, the findings based on these statements were deemed unsustainable.
4. Proportionality of Penalty: The tribunal also questioned the proportionality of the penalty imposed on M/s Global Links, given the lack of admissible evidence to substantiate the alleged violations.
Final Verdict

In light of the above observations, the tribunal concluded that the findings in the impugned order regarding violations of the CBLR regulations were not supported by admissible evidence. Consequently, the tribunal set aside the order, revoked the penalties, and allowed the appeal with consequential relief to M/s Global Links.

Implications of the Judgment

This judgment underscores the importance of adhering to procedural requirements when relying on statements as evidence in legal proceedings. It also highlights the limited role of Customs Brokers in the examination of goods and emphasizes the need for proportionality in imposing penalties.

For M/s Global Links, this victory not only reinstates their Customs Broker licence but also serves as a vindication of their professional conduct. The case serves as a reminder to both Customs authorities and Customs Brokers about the importance of following due process and clearly defining the scope of responsibilities.

Conclusion

The CESTAT’s decision in favor of M/s Global Links is a landmark ruling that reinforces the principles of justice and due process in customs-related disputes. It provides clarity on the obligations of Customs Brokers under the CBLR and sets a precedent for future cases involving similar issues. As the customs landscape continues to evolve, this judgment will undoubtedly serve as a guiding light for stakeholders in the industry.

Source: CESTAT Delhi

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January 16, 2026
CESTAT Delhi Sets Aside Undervaluation Demand for Electronic Components
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 15.01.2026

CESTAT Delhi Sets Aside Undervaluation Demand for Electronic Components

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), New Delhi, recently delivered a significant judgment in the case of M/s Rama Krishna Sales Pvt. Ltd. vs. Commissioner of Customs (Import & General), New Delhi. This case revolved around allegations of undervaluation of imported electronic components and the rejection of transaction value under the Customs Valuation Rules, 1988. The judgment, pronounced on January 14, 2026, provides valuable insights into the principles of customs valuation and the burden of proof in cases of alleged undervaluation.

Background of the Case

M/s Rama Krishna Sales Pvt. Ltd., an importer and trader of electronic components, filed an appeal against the Order-in-Original No. 13/VKG/2010 dated July 20, 2010, issued by the Commissioner of Customs (Import & General), New Delhi. The order confirmed a customs duty demand of ₹9,63,586, along with interest of ₹49,460 and an equal amount of penalty. The case stemmed from allegations that the appellant had undervalued electronic components imported from Singapore by routing them through intermediaries, M/s Great Himalayan Pte Ltd. and M/s Hopeen Trading Pte Ltd.

The Directorate of Revenue Intelligence (DRI) initiated investigations based on intelligence reports, alleging that the appellant had deliberately undervalued the goods by suppressing their brand name (Phillips) and submitting forged invoices. The investigation included searches, statements from various parties, and overseas inquiries with Hong Kong Customs & Excise Department. The authorities claimed that the goods imported by the appellant were of Phillips brand and that the declared transaction value was incorrect.

Key Issues in the Case

The primary issue before the Tribunal was whether the electronic components imported by M/s Rama Krishna Sales Pvt. Ltd. were of Phillips brand and whether the appellant had deliberately undervalued the goods to evade customs duty. The adjudicating authority had confirmed the demand based on the correlation between invoices issued by M/s Phillips to M/s Hopeen Trading Pte Ltd., Singapore, and the invoices issued by M/s Hopeen Trading to the appellant.

Arguments Presented

Appellant’s Arguments:
1. Examination Report: The appellant argued that the examination report prepared at the time of clearance did not indicate that the goods were of Phillips brand. The department failed to provide this report, claiming it had been destroyed, which left the appellant unable to substantiate its claim.
2. Common Article Numbers: The appellant contended that the article numbers on the goods were common among manufacturers and not exclusive to Phillips. Catalogues from Chinese suppliers were submitted to support this claim.
3. Transaction Value: The appellant argued that the price at which the goods were sold by M/s Phillips to M/s Hopeen Trading Pte Ltd., Singapore, could not be used as the transaction value for customs assessment. The Supreme Court’s judgment in Eicher Tractors Ltd. vs. Commissioner of Customs, Mumbai was cited to emphasize that the transaction value should be the price actually paid for the particular transaction unless proven otherwise.
Department’s Arguments:
1. Suppression of Brand Name: The department alleged that the appellant had intentionally suppressed the brand name to declare a lower value for the goods. It argued that the goods were found to be of Phillips brand upon examination.
2. Overseas Inquiry: Documents obtained from overseas inquiries were presented as evidence to support the claim of undervaluation.
3. Rejection of Transaction Value: The department contended that the declared transaction value was liable to be rejected under Rule 10A of the Customs Valuation Rules, 1988, as the relationship between the supplier and the appellant was not disclosed.
Tribunal’s Observations and Judgment

After hearing both parties and reviewing the evidence, the Tribunal made the following observations:
1. Importance of Examination Report: The Tribunal emphasized that the examination report is a crucial piece of evidence in undervaluation disputes. It provides a factual description of the goods, including their brand, condition, and other features impacting value. In this case, the absence of the examination report weakened the department’s claim that the goods were of Phillips brand.
2. Burden of Proof: The Tribunal reiterated that the burden of proving undervaluation lies with the department. Courts have consistently held that undervaluation must be established through cogent and positive evidence, such as contemporaneous imports at higher prices or other incriminating material. In this case, the department failed to provide sufficient evidence to support its allegations.
3. Transaction Value: The Tribunal referred to Section 14 of the Customs Act, 1962, and the Customs Valuation Rules, 2007, which mandate that the transaction value declared by the importer should be accepted unless there are valid grounds for rejection. The department did not provide evidence of higher-priced contemporaneous imports or other material to justify rejecting the declared value.
4. Benefit of Doubt: Given the lack of conclusive evidence, the Tribunal extended the benefit of doubt to the appellant. It held that the department had not discharged its burden of proving that the goods were of Phillips brand or that the declared transaction value was incorrect.
Final Decision

The Tribunal set aside the impugned order and allowed the appeal filed by M/s Rama Krishna Sales Pvt. Ltd. The judgment underscores the importance of adhering to the principles of customs valuation and the need for the department to provide concrete evidence in cases of alleged undervaluation.

Key Takeaways
1. Examination Report as Crucial Evidence: The absence of an examination report can significantly weaken the department’s case in undervaluation disputes.
2. Burden of Proof: The department must provide cogent evidence to prove undervaluation and cannot rely solely on conjecture or third-party statements.
3. Transaction Value: The declared transaction value should be accepted unless there are valid grounds for rejection, supported by evidence of higher-priced contemporaneous imports or other material.
4. Legal Precedents: The judgment highlights the importance of adhering to established legal principles, as laid down by the Supreme Court in cases like Eicher Tractors Ltd. and Sounds N. Images.
This case serves as a reminder of the importance of procedural fairness and evidence-based decision-making in customs valuation disputes. It also reinforces the principle that importers are entitled to the benefit of doubt in the absence of conclusive evidence against them.

Source: CESTAT Delhi

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January 15, 2026
CESTAT Delhi Clarifies LDC Duty-Free Exemption Applicability on Restricted Items Under FTDR Act
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 14.01.2026

CESTAT Delhi Clarifies LDC Duty-Free Exemption Applicability on Restricted Items Under FTDR Act

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) in New Delhi recently delivered a significant judgment in the case of M/s. R.K. Jewels vs. Principal Commissioner of Customs ACC (Import). This case revolved around the import of gold dore bars from Tanzania and the applicability of exemption notifications under the Customs Act, 1962. The judgment, pronounced on January 7, 2026, has set a precedent for interpreting import license conditions and the simultaneous applicability of multiple exemption notifications.

Background of the Case

M/s. R.K. Jewels, the appellant, imported gold dore bars from Tanzania under an Import License issued by the Directorate General of Foreign Trade (DGFT) on September 16, 2021. The license permitted the import of gold dore bars with purity up to 95% and specified that the import was subject to Customs Notification No. 12/2012-Cus dated March 17, 2012, which was later superseded by Customs Notification No. 50/2017-Cus dated June 30, 2017.

The appellant filed Bills of Entry on September 12 and September 15, 2023, claiming exemption from customs duty under Notification No. 96/2008-Cus dated August 13, 2008. This notification provided duty-free benefits for goods imported from Least Developed Countries (LDCs), including Tanzania, under the Duty-Free Tariff Preference (DFTP) scheme. The appellant also submitted a country of origin certificate to support its claim.

However, the customs department alleged that the appellant had violated the conditions of the Import License by claiming exemption under the 2008 Exemption Notification instead of the 2012 Notification (or its successor, the 2017 Notification). A show-cause notice was issued, and the Principal Commissioner of Customs confirmed the demand for customs duty, interest under Section 28AA of the Customs Act, and imposed penalties under Section 112(a)(ii) of the Customs Act. Redemption fines were also imposed under Section 125 of the Customs Act.

Key Issues in the Case 

The primary issue in this case was whether the appellant could claim the benefit of the 2008 Exemption Notification for importing gold dore bars when the Import License explicitly stated that the import was subject to the 2012 Notification. The customs department argued that the appellant was obligated to pay customs duty under the 2012 Notification, as gold dore bars are classified as “restricted” items under the Foreign Trade Policy. The department contended that the appellant’s claim for exemption under the 2008 Notification violated the Import License conditions and resulted in a short levy of customs duty.

On the other hand, the appellant argued that the Import License did not explicitly prohibit the simultaneous availment of benefits under multiple exemption notifications. The appellant also contended that the customs department lacked jurisdiction to determine violations of Import License conditions, as this authority lies solely with the DGFT under the Foreign Trade (Development and Regulation) Act, 1992 (FTDR Act).

The Tribunal’s Observations and Judgment 

After hearing arguments from both sides, the Tribunal made the following key observations:
1. Interpretation of Import License Conditions: The Tribunal noted that the Import License issued by the DGFT did not explicitly bar the appellant from availing the benefits of the 2008 Exemption Notification. The Principal Commissioner’s finding that the license conditions could only be fulfilled by paying customs duty under the 2012 Notification was not supported by the license’s terms.
2. Simultaneous Availment of Exemption Notifications: The Tribunal referred to previous judgments, including JSW Energy Ltd. vs. Union of India, which established that in the absence of an explicit bar, an importer can avail benefits under multiple exemption notifications. The Tribunal held that the appellant was entitled to claim exemption under the 2008 Notification.
3. Jurisdiction of Customs Authorities: The Tribunal emphasized that the customs authorities cannot question the validity of an Import License issued by the DGFT unless the DGFT itself has canceled the license. This principle was supported by the Supreme Court’s judgment in Titan Medical Systems Pvt. Ltd. vs. Collector of Customs, New Delhi and the Delhi High Court’s judgment in M/s. Designco and others vs. Union of India.
4. International Obligations: The Tribunal acknowledged that denying the benefit of the 2008 Exemption Notification would violate India’s international obligations under the Duty-Free Tariff Preference (DFTP) scheme for Least Developed Countries, as outlined in the Doha Ministerial Order and the Hong Kong Ministerial Declaration.
Final Decision

The Tribunal concluded that the appellant was entitled to claim the benefit of the 2008 Exemption Notification and that the customs department’s demand for duty, interest, penalty, and redemption fine was unsustainable. The Tribunal set aside the impugned order passed by the Principal Commissioner and allowed the appeal.

Key Takeaways
1. Importance of License Conditions: Importers must carefully adhere to the conditions specified in their Import Licenses. However, the absence of explicit restrictions in the license allows for the simultaneous availment of multiple exemption notifications.
2. Jurisdiction of Customs Authorities: Customs authorities cannot question the validity of an Import License issued under the FTDR Act unless the DGFT has canceled the license.
3. International Trade Obligations: Exemption notifications issued under international trade agreements, such as the DFTP scheme, must be honored to uphold India’s commitments under global treaties.
4. Self-Assessment Responsibility: Importers are responsible for ensuring the correct computation and payment of customs duties under the self-assessment regime.
This judgment serves as a crucial reference for importers and legal practitioners dealing with customs duty exemptions and Import License conditions. It underscores the need for clarity in license terms and the importance of adhering to international trade obligations.

Source: CESTAT Delhi

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January 14, 2026