𝐀𝐚𝐝𝐫𝐢𝐤𝐚𝐚 𝐋𝐞𝐠𝐚𝐥 𝐒𝐞𝐫𝐯𝐢𝐜𝐞𝐬 (𝐀𝐋𝐒)

Tag: #CESTATDelhi

CESTAT Delhi Sets Aside Allegations of Undervaluation and Customs Duty Evasion
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 24.12.2025

CESTAT Delhi Sets Aside Allegations of Undervaluation and Customs Duty Evasion

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), Principal Bench, New Delhi, has delivered a judgment in favor of M/s ABC Overseas, effectively setting aside allegations of customs duty evasion and undervaluation of imported goods. The case, which revolved around the import of LED TVs and Drywall Screws, has been a significant legal battle for the appellant.

Background of the Case

M/s ABC Overseas, a New Delhi-based importer and trader of goods, primarily deals in LED TVs and Drywall Screws. The company faced allegations from the Department of Customs regarding evasion of customs duty through undervaluation of imported goods. The dispute arose from the import of unbranded 17” and 19” LED TVs under Bill of Entry No. 4973274 dated 27.01.2018, and six past Bills of Entry from 2016 to 2018 for Drywall Screws.

The Department alleged that the imported goods were branded and undervalued, leading to evasion of customs duties. The case was built on comparisons between the declared transaction values and proforma invoices from unrelated third parties, as well as documents retrieved during investigations.

Key Arguments by the Appellant

The appellant, represented by legal counsels, argued that the goods imported under the live Bill of Entry were physically examined and found to match the commercial invoice and packing list. They contended that the TVs were unbranded, as only the LED panels had brand stickers, which were revealed after unscrewing the back panel. The appellant also highlighted that the certificate of origin, which contained incorrect details, was issued by the Government of Thailand and the error was later clarified by the foreign exporter.

Regarding the past Bills of Entry, the appellant argued that the Department’s reliance on proforma invoices from unrelated third parties was unjustified. They emphasized that the declared transaction values were accurate and supported by commercial invoices, packing lists, and payments made through official banking channels. The appellant also pointed out that the Department failed to provide contemporaneous export data or evidence of undervaluation.

Tribunal’s Observations and Final Decision

After hearing both parties and reviewing the evidence, the Tribunal made the following key observations:
1. Live Bill of Entry: The Tribunal noted that the goods were found to be in conformity with the commercial invoice and packing list during a 100% examination. It held that the Department’s allegations of undervaluation and misdeclaration were baseless, as the TVs were correctly declared as unbranded.
2. Past Bills of Entry: The Tribunal found that the Department’s reliance on proforma invoices from unrelated third parties was unreasonable. It emphasized that transaction value, as defined under Section 14 of the Customs Act, 1962, should be the basis for determining customs duty unless there is substantial evidence to reject it. The Tribunal also highlighted the lack of compliance with Section 138C of the Customs Act regarding the admissibility of electronic evidence.
The Tribunal concluded that the Department’s allegations were based on assumptions and lacked substantial evidence. It set aside the order rejecting the declared values and re-determining the transaction values, thereby allowing the appeal.

Key Takeaways

This judgment underscores the importance of adhering to legal procedures and evidentiary requirements when investigating allegations of customs duty evasion. It also highlights the significance of transaction value as the primary basis for determining customs duty, as per Section 14 of the Customs Act, 1962. The decision is a major victory for M/s ABC Overseas, reaffirming the principle that allegations must be backed by concrete evidence and not mere assumptions. It serves as a reminder to importers and authorities alike about the importance of transparency, compliance, and adherence to legal norms in customs-related matters.

Source: CESTAT Delhi

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December 24, 2025
CESTAT Delhi Sets Aside Reclassification of Handheld Barcode Scanners
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 20.12.2025

CESTAT Delhi Sets Aside Reclassification of Handheld Barcode Scanners

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 recent ruling by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), New Delhi, a significant decision was made regarding the classification of imported goods. The case involved M/s Proffer IT Consultancy Private Limited, which had imported handheld barcode scanners and faced a dispute over their classification under the Customs Tariff Act, 1975. This blog delves into the details of the case and the implications of the judgment.

The Case Overview

M/s Proffer IT Consultancy Private Limited, a company specializing in IT solutions, imported handheld barcode scanners under Customs Tariff Heading (CTH) 8471 6050, which covers “Scanners” and is exempt from Basic Customs Duty (BCD). However, the customs authorities reassessed the goods under CTH 8517 1300, classifying them as “Smartphones,” which attract a 20% BCD. This reclassification resulted in a differential customs duty demand of INR 8,47,416.

The company argued that the primary function of the imported devices was barcode scanning and data processing, which are essential for supply chain management, inventory tracking, and logistics operations. While the scanners had additional features like WiFi, SIM slots, Bluetooth, and cameras, these were deemed ancillary to their primary function.

The Tribunal’s Observations

The tribunal examined the classification dispute in detail, considering the General Rules of Interpretation (GRI) of the Customs Tariff Act, Chapter Notes, and trade parlance test. Here are the key observations:
1. Primary Function of the Product: The tribunal emphasized that the principal function of the imported devices was barcode scanning and data processing, not communication. The additional features like SIM slots and calling capabilities were deemed supplementary and not the primary purpose of the devices.
2. Customs Tariff Classification: The tribunal analyzed the definitions under CTH 8471 and CTH 8517. It concluded that the imported goods met the criteria of “automatic data processing machines” under CTH 8471, as their primary function was scanning and data processing.
3. Trade Parlance Test: The tribunal highlighted that the goods were recognized in the market as barcode scanners, primarily used by warehouses and logistics companies for inventory management. The trade perception of the product supported its classification under CTH 8471.
4. Physical Characteristics: The tribunal noted that the scanners were larger than typical smartphones and had a handle for handheld use, which is not a feature of mobile phones. This further supported the argument that the devices were scanners rather than smartphones.
The Final Verdict

After considering all the evidence, the tribunal set aside the customs authorities’ decision to classify the goods as smartphones under CTH 8517. It ruled that the imported handheld barcode scanners should be classified under CTH 8471 6050, making them eligible for exemption from Basic Customs Duty. Consequently, the appeals filed by M/s Proffer IT Consultancy Private Limited were allowed, and the differential duty demand was quashed.

Key Takeaways

This case highlights the importance of accurate classification under the Customs Tariff Act, as it directly impacts the duty payable on imported goods. It also underscores the significance of the principal function of a product in determining its classification. Businesses importing goods should ensure that their products are correctly classified to avoid disputes and additional costs.

Moreover, the ruling reinforces the relevance of the trade parlance test, which considers how a product is perceived and used in the market. This test can be a crucial factor in resolving classification disputes.

Conclusion

The CESTAT’s decision in favor of M/s Proffer IT Consultancy Private Limited sets a precedent for similar cases involving the classification of multifunctional devices. It serves as a reminder for businesses to thoroughly understand the Customs Tariff Act and ensure proper documentation to support their claims. This case also highlights the importance of legal expertise in navigating complex customs regulations and protecting business interests.

Source: CESTAT Delhi

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December 20, 2025
CESTAT Delhi Orders Refund of E-Auction Deposit with Interest
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 19.12.2025

CESTAT Delhi Orders Refund of E-Auction Deposit with Interest

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 landmark decision, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), New Delhi, has ruled in favor of M/s Muchipara Consumers Co-operative Operative Stores Ltd, directing the Customs Department to refund the amount deposited by the appellant during an e-auction held in February 2017. The Tribunal also ordered the department to pay interest at the rate of 6% per annum from the date of deposit until the refund is made.

Background of the Case

The case revolves around an e-auction conducted by the Customs Department on February 7, 2017, for the sale of seized/confiscated cigarettes. M/s Muchipara Consumers Co-operative Operative Stores Ltd participated in the auction and was declared the highest bidder. As per the auction terms, the appellant deposited an initial security amount of ₹25,000 and subsequently paid ₹29,19,444 after being declared the highest bidder. However, the appellant raised concerns regarding the compliance of the cigarette packets with the Cigarettes and Other Tobacco Products (Packaging and Labelling) Rules, 2008, and requested the department to provide the manufacturing date and testing report of the cigarettes.

The situation took a turn when the Central Board of Excise and Customs (CBEC) issued a Circular on March 29, 2017, stating that cigarette packets not complying with specific legal provisions should not be released for home consumption and must be destroyed. The appellant, citing this Circular, requested a refund of the deposited amount, as the cigarettes did not meet the required legal standards. However, the department refused the refund, claiming that the appellant had failed to deposit the balance amount within the stipulated time, leading to the forfeiture of the deposit.

Legal Battle and Tribunal Decision

The appellant challenged the department’s decision, leading to a series of legal proceedings. The Delhi High Court intervened, directing the appellant to approach CESTAT to comprehensively adjudicate the matter. The Tribunal, after hearing arguments from both sides, concluded that the cigarette packets did not meet the mandatory legal requirements and should have been destroyed as per the CBEC Circular. It was also noted that the department had failed to provide the necessary information regarding the manufacturing date, which was a critical requirement under the 2008 Rules.

The Tribunal emphasized that the forfeiture of the deposit was unjustified, as the appellant was unable to take delivery of the goods due to their non-compliance with legal standards. Furthermore, the Tribunal referred to a similar case involving M/s Ahad Traders, where the department had refunded the bid amount under comparable circumstances.

Final Order

In its final order, the Tribunal set aside the previous orders of the Assistant Commissioner and the Commissioner (Appeals) and directed the Customs Department to refund the deposited amount of ₹25,000 and ₹29,19,444 to the appellant. Additionally, the Tribunal granted interest at the rate of 6% per annum from the date of deposit until the refund is made.

Key Takeaways

This decision highlights the importance of adhering to legal and regulatory requirements in government auctions. It also underscores the need for transparency and accountability in such processes. The Tribunal’s ruling sets a precedent for similar cases, ensuring that participants in government auctions are treated fairly and that their deposits are not arbitrarily forfeited.

The case serves as a reminder to both government authorities and auction participants about the significance of compliance with legal provisions and the need for clear communication and transparency in transactions. It also reinforces the role of judicial bodies like CESTAT in upholding justice and ensuring fair treatment for all parties involved. This ruling is a victory for M/s Muchipara Consumers Co-operative Operative Stores Ltd and a testament to the importance of legal recourse in resolving disputes. It also serves as a beacon of hope for others who may find themselves in similar situations, emphasizing that justice can prevail when the law is upheld.

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Source: CESTAT Delhi

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December 19, 2025
CESTAT Delhi Sets Aside Penalties and Confiscation on Shared Container Imports
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 16.12.2025

CESTAT Delhi Sets Aside Penalties and Confiscation on Shared Container Imports

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

In a landmark decision, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), New Delhi, has set aside the penalties and confiscation imposed on M/s Kool International, its proprietor. The judgment, delivered on December 12, 2025, brings clarity to the application of customs laws in cases involving shared containers and non-existent firms.

Background of the Case

The case arose from the Order-in-Original No. 05/2012 dated January 31, 2012, issued by the Commissioner of Customs, New Delhi. The order involved the confiscation of goods and imposition of penalties under Section 112(b) of the Customs Act, 1962. The goods in question were imported under the names of M/s Kool International, DSA Imports & Exports, and Prakriti Collection. However, investigations revealed that DSA Imports & Exports and Prakriti Collection were non-existent firms, leading to the absolute confiscation of their goods.

M/s Kool International and its proprietor, were penalized Rs. 10,00,000/- each for alleged acts of omission and commission that rendered the goods liable to confiscation. Similarly, Appellant was also penalized Rs. 10,00,000/- for using the Importer Exporter Code (IEC) of Kool International to import goods.

Key Arguments

The appellants contested the penalties, arguing that:
- They had no personal involvement in the alleged offense.
- They did not file any Bill of Entry for the goods.
- They should not be held responsible for discrepancies in consignments belonging to other importers in the same shared container (LCL cargo).
- The penalties were imposed without proper application of mind, and the principles of natural justice were violated.
On the other hand, the Revenue argued that the goods were deliberately concealed and mis-declared, and the appellants were involved in collusion and deception. It was also highlighted that the goods were imported in the names of non-existent firms, violating customs laws and Intellectual Property Rights (IPR) regulations.

Tribunal’s Findings

After carefully reviewing the submissions and evidence, the Tribunal made the following observations:
1. Shared Container (LCL Cargo): The Tribunal ruled that the appellants could not be held responsible for discrepancies in consignments belonging to other importers in the same shared container. It likened the situation to a shared taxi, where one passenger cannot be held accountable for contraband carried by another passenger.
2. Inapplicability of Sections 111(l), (m), and 119: The Tribunal found that no Bill of Entry was filed for the goods imported in the name of Kool International, making Sections 111(l) and (m) inapplicable. Additionally, the goods imported in the name of Kool International were not used to conceal other goods, rendering Section 119 irrelevant.
3. Non-Existent Firms: The Tribunal noted that the consignments imported in the names of DSA Imports & Exports and Prakriti Collection were found to be fraudulent, as these firms did not exist. However, the appellants could not be penalized for discrepancies in these consignments.
4. Penalties and Confiscation: The Tribunal concluded that the penalties imposed on M/s Kool International, and Appellants were not sustainable under the Customs Act, 1962.
Final Decision

The Tribunal allowed all three appeals and set aside the penalties and confiscation imposed by the Commissioner of Customs. The judgment emphasized the importance of proper application of customs laws and the need for clear evidence to establish liability.

Key Takeaways

This decision highlights several important aspects of customs law:
- Importers cannot be held liable for discrepancies in consignments belonging to other importers in shared containers (LCL cargo).
- The provisions of the Customs Act must be applied correctly, and penalties cannot be imposed without proper evidence.
- The use of non-existent firms for imports is a serious offense, but liability must be established with clear evidence and cannot be arbitrarily imposed on unrelated parties.
The CESTAT’s ruling in this case serves as a reminder of the importance of due process and the need for thorough investigations in customs-related matters. It also underscores the significance of adhering to legal provisions, such as the prohibition on lending or transferring Importer Exporter Codes (IEC), as outlined in the Foreign Trade (Development & Regulation) Act, 1992. This judgment is a significant precedent for importers and exporters, ensuring that penalties and confiscations are imposed only when there is clear evidence of wrongdoing. It also reinforces the principle that shared containers do not automatically implicate all importers for violations committed by others.

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Source: CESTAT Delhi

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December 16, 2025
CESTAT Delhi Sets Aside Demand for Cost Recovery Charges
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 05.12.2025

CESTAT Delhi Sets Aside Demand for Cost Recovery Charges

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 Thar Dry Port vs. Principal Commissioner of Customs (Preventive), Jodhpur. This decision, pronounced on December 4, 2025, has far-reaching implications for customs custodians and the legality of cost recovery charges under the Handling of Cargo in Customs Areas Regulations, 2009 (HCCAR, 2009).

Background of the Case

The dispute arose when the Principal Commissioner of Customs (Preventive), Jodhpur, issued an order dated April 11, 2025, demanding cost recovery charges amounting to over ₹15 crore from M/s Thar Dry Port (TDP). The order also imposed a penalty of ₹50,000 under Regulation 12(8) of HCCAR, 2009, and threatened suspension of custodianship approval if the dues were not paid within three months.

TDP challenged the order, arguing that the 2009 Regulations were ultra vires the Customs Act, 1962, and that the demand for cost recovery charges was unlawful. The appellant also contended that it had met the performance benchmarks for exemption from these charges, as outlined in the Ministry of Finance’s Notification dated September 12, 2005, and Circular No. 2/2021.

Key Issues Addressed

The Tribunal examined several critical issues, including:
1. Legality of Cost Recovery Charges: TDP argued that the 2009 Regulations were ultra vires the Customs Act, as the Act does not explicitly authorize the levy of cost recovery charges. This argument was supported by the Telangana High Court’s decision in GMR Hyderabad International Airport Limited vs. Central Board of Excise and Customs, which declared the 2009 Regulations ultra vires.
2. Exemption from Charges: TDP claimed it was entitled to exemption from cost recovery charges, having met the performance benchmarks outlined in the 2005 Notification and Circular No. 2/2021.
3. Calculation of Charges: TDP raised concerns about the methodology used to calculate the charges, arguing that allowances and transport costs should not have been included.
Tribunal’s Observations and Decision 

The Tribunal relied heavily on precedents, including the Telangana High Court’s judgment in GMR Hyderabad International Airport Limited and its own decisions in CMA CGM Logistics Park Dadri Private Limited vs. Commissioner of Customs, Noida and Container Corporation of India Limited vs. Commissioner of Customs, Jodhpur. These rulings had established that the 2009 Regulations were ultra vires the Customs Act and that cost recovery charges could not be legally imposed under these regulations.

The Tribunal concluded that:
- The Principal Commissioner had no legal authority to demand cost recovery charges under the 2009 Regulations.
- The imposition of a penalty under Regulation 12(8) was also unsustainable, as there was no contravention of the 2009 Regulations.
- The order dated April 11, 2025, was set aside, and the appeal was allowed.
Implications of the Judgment

This landmark decision has significant implications for customs custodians across India:
1. Legal Clarity: The judgment reinforces the principle that regulations must align with the parent statute. In this case, the Tribunal upheld that the Customs Act does not authorize the levy of cost recovery charges, making the 2009 Regulations invalid.
2. Precedent for Future Cases: The decision sets a strong precedent for other custodians facing similar demands for cost recovery charges. It underscores the importance of challenging unlawful demands and regulations.
3. Impact on Policy: The judgment may prompt the government to revisit the legal framework governing cost recovery charges and custodianship to ensure compliance with the Customs Act.
Conclusion

The CESTAT’s decision in the M/s Thar Dry Port case is a victory for custodians and a reminder of the importance of adhering to statutory provisions. It highlights the need for clarity and fairness in regulatory frameworks and serves as a beacon for businesses navigating complex customs regulations. This case is a testament to the power of judicial review in upholding the rule of law and protecting the rights of stakeholders in the customs ecosystem. As the dust settles, it will be interesting to see how this decision shapes the future of customs regulations in India.

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Source: CESTAT Delhi

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December 5, 2025
CESTAT Delhi Sets Aside DRI Duty Demand on Imported Aircraft
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 26.11.2025

CESTAT Delhi Sets Aside DRI Duty Demand on Imported Aircraft

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 judgment, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, has ruled in favor of M/s. Decore Exxoils Pvt. Ltd., setting aside the order passed by the Additional Director General (Adjudication), Directorate of Revenue Intelligence (DRI), New Delhi. The case revolved around the alleged misuse of an exemption notification related to the import of an aircraft and its spare parts, which led to a demand for differential customs duty amounting to Rs. 8.84 crore, along with penalties and interest.

Background of the Case

M/s. Decore Exxoils Pvt. Ltd., formerly known as Bhaskar Essoils Pvt. Ltd., is a company engaged in non-scheduled air taxi services and charter operations. The company imported a Learjet 60XR aircraft in December 2010, claiming exemption under Notification No. 21/2002-Cus and Notification No. 6/2006-CE. The exemption was granted based on the condition that the aircraft would be used exclusively for non-scheduled air transport services.

However, in June 2015, the DRI issued a show-cause notice alleging that the company had violated the conditions of the exemption notification. The notice claimed that the aircraft was primarily used for private purposes by the promoters and their families, rather than for non-scheduled air transport services. The DRI also alleged that the company failed to issue individual passenger tickets and publish tariffs, which are requirements under the Civil Aviation Requirements (CAR) 2010.

Tribunal’s Observations 

The case was heard by Hon’ble Justice (President) and Hon’ble (Member – Technical). After a detailed examination of the submissions made by both parties, the Tribunal ruled in favor of M/s. Decore Exxoils Pvt. Ltd., citing the following key points:
1. Compliance with Exemption Notification: The Tribunal referred to previous judgments, including Commissioner of Customs (Preventive), New Delhi vs. Global Vectra Helicorp Ltd., which clarified that non-scheduled operators are allowed to operate revenue charter flights for related entities. The Tribunal concluded that the appellant had not violated Condition 104 of the Exemption Notification, as the aircraft was used for non-scheduled air transport services, including charter services.
2. Non-Issuance of Tickets: The Tribunal held that the non-issuance of individual tickets does not violate CAR 2010. It was noted that the appellant issued invoices for chartered flights, which is permissible under the CAR guidelines.
3. Extended Period of Limitation: The Tribunal found that the invocation of the extended period of limitation under Section 28(4) of the Customs Act was unjustified. It emphasized that suppression of facts must be deliberate and intended to evade payment of duty. In this case, there was no evidence to suggest that the appellant had deliberately suppressed information or acted with fraudulent intent.
Final Verdict

The Tribunal set aside the impugned order dated 26.09.2017, ruling that the demand for differential customs duty, penalties, and interest could not be sustained. The appeal filed by M/s. Decore Exxoils Pvt. Ltd. was allowed, marking a significant victory for the company.

Key Takeaways

This judgment highlights the importance of adhering to the conditions of exemption notifications while also emphasizing the need for authorities to establish deliberate intent when invoking the extended period of limitation under Section 28(4) of the Customs Act. It also clarifies the scope of non-scheduled air transport services under CAR 2010, providing clarity for operators in the aviation industry.

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Source: CESTAT Delhi

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November 26, 2025
CESTAT Delhi Sets Aside Penalties and Confiscation in Mercedes Benz Import
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 22.11.2025

CESTAT Delhi Sets Aside Penalties and Confiscation in Mercedes Benz Import

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

In a significant judgment delivered on November 20, 2025, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, provided relief to Watermark Systems (India) Private Limited and Appellant in a long-standing customs appeal case. The case revolved around the import of a Mercedes Benz CLS 320 CDI car, which was alleged to have been mis-declared as “new” to claim benefits under a customs notification, leading to undervaluation and evasion of duty.

Background of the Case 

The case dates back to 2008 when the car was imported by Seller, the importer-on-record, through New Customs House, New Delhi. The declared value of the car was ₹20,47,300, which was later reassessed to ₹28,83,435 by the Commissioner of Customs (Imports). The car was confiscated under Section 111(d) of the Customs Act, 1962, with an option to redeem it on payment of a fine of ₹6,00,000, along with a penalty of ₹4,00,000 under Section 112(a).

The car was subsequently registered in India in the name of Seller and later purchased by Appellant through Watermark Systems (India) Pvt. Ltd. for ₹54,00,000. Investigations by the Directorate of Revenue Intelligence (DRI) in 2011 revealed alleged mis-declaration and undervaluation of imported luxury cars, including the Mercedes Benz in question. A show-cause notice was issued in 2013, and the car was seized by DRI. The matter was adjudicated afresh in 2016, leading to penalties of ₹10,00,000 under Section 112(a) and ₹5,00,000 under Section 114AA of the Customs Act against Watermark Systems and Appellant.

Key Arguments Presented

The appellants challenged the penalties imposed, arguing that the DRI lacked jurisdiction to issue the show-cause notice under Section 28 of the Customs Act. They contended that the Additional Director of DRI was not a “proper officer” authorized to demand duty. However, this issue was settled by the Supreme Court in its review judgment dated November 7, 2024, which confirmed that DRI officers are indeed proper officers under Section 28.

The appellants also argued that they were bona fide purchasers of the car and had no role in the alleged mis-declaration or undervaluation during its import. They emphasized the absence of evidence proving their involvement in any wrongdoing. The appellants relied on various judicial precedents, including the Supreme Court’s decision in Hindustan Steel Ltd. vs. State of Orissa, which held that penalties should not be imposed for technical or venial breaches of legal provisions.

Tribunal’s Observations and Final Decision

The Tribunal carefully examined the facts and legal arguments presented by both parties. It noted that the car had already been confiscated and released on payment of redemption fine and penalty, and as per established legal principles, it could not be reconfiscated. The Tribunal referred to the Supreme Court’s decision in Mohan Meakin Ltd., which held that subsequent purchasers of redeemed goods cannot be penalized for undervaluation or mis-declaration during import.

Regarding the penalties imposed on the appellants, the Tribunal found that there was no evidence of any act or omission by the appellants that rendered the goods liable to confiscation under Section 111 of the Customs Act. It also noted that the appellants had purchased the car in a bona fide manner and were not involved in the import process or any fraudulent activities.

In light of these findings, the Tribunal set aside the impugned order and allowed the appeals, providing relief to Watermark Systems (India) Pvt. Ltd. and Appellant.

Implications of the Judgment

This landmark decision reinforces the principle that bona fide purchasers of goods cannot be penalized for alleged irregularities during the import process, especially when they have no role in the import or any fraudulent activities. It also clarifies the scope of penalties under Sections 112(a) and 114AA of the Customs Act, emphasizing the need for concrete evidence and the presence of mens rea for imposing penalties.

The judgment serves as a reminder to authorities to ensure due diligence during the adjudication process and highlights the importance of adhering to principles of natural justice. It also provides clarity on the jurisdiction of DRI officers under Section 28 of the Customs Act, following the Supreme Court’s review judgment.

Connected Matter

Bombay High Court Holds Subsequent Buyer Not Liable for Customs Duty

Source: CESTAT Delhi

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November 22, 2025
CESTAT Delhi Upholds Fulfillment of Export Obligations Under EPCG Scheme
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 21.11.2025

CESTAT Delhi Upholds Fulfillment of Export Obligations Under EPCG Scheme

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

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, recently delivered a significant judgment in the case of Interglobe Enterprises Limited vs. Commissioner of Customs, New Delhi. This case revolved around the import of three cars under the Export Promotion Capital Goods (EPCG) scheme and the fulfillment of export obligations. The decision, pronounced on November 20, 2025, has far-reaching implications for businesses operating under the EPCG scheme and highlights the interplay between customs authorities and the Directorate General of Foreign Trade (DGFT).

Background of the Case

Interglobe Enterprises Limited, engaged in the tours and travel services business, imported three cars under the EPCG scheme, availing concessional customs duty benefits. The company claimed that the cars were used for tourism-related services to earn foreign exchange, thereby fulfilling the export obligations under the scheme. While the DGFT issued Export Obligation Discharge Certificates (EODCs) for two licenses, the third license’s EODC was delayed due to investigations initiated by the Directorate of Revenue Intelligence (DRI).

The DRI alleged misuse of the imported cars and non-compliance with EPCG scheme conditions, leading to a demand for customs duty, interest, and penalties. The Commissioner of Customs upheld these allegations, prompting Interglobe Enterprises to file an appeal before the CESTAT.

Key Arguments and Findings
1. DGFT’s Role in Export Obligation Certification: The appellant argued that the DGFT, as the competent authority, had already issued EODCs for two licenses and clarified that export obligations could be fulfilled through foreign exchange earnings from tourism-related services, not exclusively from the use of imported cars. The Tribunal agreed, emphasizing that the issuance of EODCs by DGFT is determinative of export obligation fulfillment.
2. Registration of Imported Cars: The DRI contended that the cars were registered as private vehicles, not commercial/tourist vehicles, violating EPCG scheme conditions. However, the Tribunal noted that the requirement for commercial registration was introduced only in 2006, whereas the cars were imported between 2001 and 2003. Thus, the registration as private vehicles did not invalidate the appellant’s compliance with the scheme.
3. Use of Imported Cars for Tourism Services: The Tribunal examined whether the foreign exchange earnings were directly attributable to the use of the imported cars. It concluded that the appellant had provided tourism-related services, including transportation, hotel accommodation, and food, as part of an overall package. The DGFT had clarified that such earnings could be considered for export obligation fulfillment, further supporting the appellant’s case.
4. Applicability of the Surya Samundra Case: The department relied on the Supreme Court’s decision in the Surya Samundra Holiday Resorts Pvt. Ltd. case, which emphasized direct use of imported capital goods for fulfilling export obligations. However, the Tribunal distinguished the facts of the present case, noting that the cars were used for tourism services and not transferred or misused, unlike in the Surya Samundra case.
5. Time-Barred Demand: The appellant argued that the demand was time-barred, as the cars were imported between 2001 and 2003, and the show cause notice was issued in 2006. The Tribunal agreed, finding no evidence of willful misrepresentation or suppression of facts by the appellant.
Final Decision

The Tribunal set aside the impugned order, allowing the appeal and granting consequential relief to the appellant. It reaffirmed the principle that once EODCs are issued by DGFT, they are deemed to signify the completion of export obligations.

Implications of the Judgment

This landmark decision underscores the importance of DGFT’s role in certifying export obligation fulfillment under the EPCG scheme. It clarifies that customs authorities cannot override DGFT’s certification without valid reasons. Additionally, the judgment highlights the need for clear and consistent policy guidelines to avoid disputes over compliance with EPCG scheme conditions.

Key Takeaways for Businesses
1. EODC as a Determinative Factor: Businesses can rely on EODCs issued by DGFT as conclusive proof of export obligation fulfillment, provided there is no evidence of misuse or fraud.
2. Clarity on Registration Requirements: The judgment provides clarity on the registration of vehicles imported under the EPCG scheme, emphasizing that conditions introduced after the import cannot be applied retrospectively.
3. Holistic View of Export Earnings: The Tribunal recognized that foreign exchange earnings from tourism-related services, including transportation, hotel accommodation, and food, can be considered for export obligation fulfillment.
Conclusion

The CESTAT’s decision in Interglobe Enterprises Limited vs. Commissioner of Customs is a significant milestone in the interpretation of the EPCG scheme. It reinforces the principle that businesses operating under the scheme must be given the benefit of clarifications issued by DGFT and ensures that compliance is assessed fairly and transparently. This judgment will undoubtedly serve as a guiding precedent for similar cases in the future.

Source: CESTAT Delhi

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November 21, 2025
CESTAT Delhi Sets Aside Penalties and Confiscation in E-Rickshaw Import Classification Dispute
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 18.11.2025

CESTAT Delhi Sets Aside Penalties and Confiscation in E-Rickshaw Import Classification Dispute

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 judgment, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, has delivered a significant verdict in favor of M/s. Soni E Vehicle Pvt. Ltd., its Managing Director, Professional Exim (Customs House Agent), and its G-Card holder Appellant. The judgment, pronounced on November 17, 2025, has set aside the penalties imposed by the Principal Commissioner of Customs (Preventive), New Delhi, in a case involving the classification of imported goods.

Background of the Case

The case revolved around the import of various parts of e-rickshaws by M/s. Soni E Vehicle Pvt. Ltd., a manufacturer of e-rickshaws since 2013. The customs department alleged that the company had misclassified imported goods as spare parts of e-rickshaws instead of incomplete e-rickshaws in CKD/SKD condition, which attract higher customs duty. The department claimed that the company had evaded duty by misclassifying the goods under different Customs Tariff Headings (CTH).

The Principal Commissioner of Customs (Preventive) passed an order on August 20, 2020, confirming the reassessment of duty, imposing penalties under sections 112(a)(ii) and 114A of the Customs Act, and confiscating the goods with an option to pay redemption fines.

Key Allegations and Findings

The customs department alleged that the appellant had imported incomplete e-rickshaws in unassembled or disassembled condition, which should have been classified under CTH 8703 (complete e-rickshaws) instead of CTH 8708 (parts of e-rickshaws). The department relied heavily on an office order dated March 12, 2014, issued by the Joint Commissioner of Customs, which outlined the criteria for classifying e-rickshaws in CKD/SKD condition.

The Principal Commissioner concluded that the appellant had imported incomplete e-rickshaws based on the presence of three essential components—transmission, axle, and chassis—in the import consignments. Penalties were imposed on the appellants, including the Customs House Agent and its G-Card holder, for alleged complicity in the misclassification.

Tribunal’s Observations and Judgment 

After hearing the submissions from both sides, the Tribunal found several flaws in the Principal Commissioner’s order:
1. Misinterpretation of Office Order: The Tribunal noted that the office order dated March 12, 2014, clearly stated that if the motor and two other essential components were missing, the goods should be classified as parts under CTH 8708. Since the appellant did not import the motor, the goods could not be classified as incomplete e-rickshaws under CTH 8703.
2. Reliance on Unsubstantiated Evidence: The Tribunal observed that the Principal Commissioner relied on the statement of Anuj Sharma under section 108 of the Customs Act and a Chartered Engineer’s report without following the procedure under section 138B of the Customs Act, which requires examination and cross-examination of witnesses.
3. Presumption-Based Liability: The Tribunal held that liability cannot be based on presumptions, such as the number of parts imported being sufficient to assemble a fixed number of e-rickshaws. The conditions set out in the office order for classifying goods as e-rickshaws in CKD/SKD condition were not satisfied.
4. Extended Period of Limitation: The Tribunal ruled that the extended period of limitation under section 28(4) of the Customs Act could not be invoked for the 13 previous Bills of Entry, as there was no evidence of deliberate suppression of facts with the intent to evade duty.
5. No Misclassification: The Tribunal found that the appellant had correctly described the goods in the Bills of Entry, and the issue was merely one of classification. Therefore, penalties under sections 112(a)(ii) and 114A of the Customs Act were unwarranted.
Final Verdict

The Tribunal set aside the impugned order dated August 20, 2020, and allowed all four appeals filed by the appellants. The penalties imposed on M/s. Soni E Vehicle Pvt. Ltd., Appellant, Professional Exim, and Appellant were revoked, and the demands for duty under the 13 previous Bills of Entry were also quashed.

Key Takeaways

This judgment highlights the importance of adhering to established guidelines and procedures in customs cases. It underscores that liability cannot be based on presumptions or unsubstantiated evidence and that the extended period of limitation requires proof of deliberate suppression of facts with the intent to evade duty.

The decision is a significant win for importers, emphasizing the need for fair and transparent adjudication processes. It also serves as a reminder to customs authorities to ensure that their findings are based on concrete evidence and proper interpretation of rules and orders. This case will likely serve as a precedent for similar disputes in the future, reinforcing the principle that classification disputes should be resolved based on clear guidelines and not on assumptions.

Source: CESTAT Delhi

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November 18, 2025
Oppo Mobiles Wins Customs Duty Exemption Case on PCBA Components
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 14.11.2025

Oppo Mobiles Wins Customs Duty Exemption Case on PCBA 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.com or on his Mobile +91-9999005379.

In a significant ruling, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), New Delhi, delivered its final verdict on the case of M/s Oppo Mobiles India Pvt. Ltd. vs. Principal Commissioner of Customs (Import) on November 13, 2025. This case revolved around the denial of customs duty exemption for the import of microphones and receivers used in the manufacture of Printed Circuit Board Assemblies (PCBA) for cellular mobile phones.

Background of the Case

M/s Oppo Mobiles India Pvt. Ltd., a leading manufacturer of cellular mobile phones, filed an appeal against the order dated June 15, 2020, passed by the Principal Commissioner of Customs, ACC (Imports), New Delhi. The order rejected Oppo’s claim for exemption from customs duty on microphones and receivers imported for PCBA manufacturing and imposed a demand for differential duty, interest, and penalties for the period between February 2, 2018, and July 6, 2019.

The appellant argued that microphones and receivers are integral parts of PCBA, which is used in the manufacturing of mobile phones. They claimed exemption under Serial No. 6 of Notification No. 57/2017-Customs, dated June 30, 2017, and its subsequent amendments. However, the department contended that microphones and receivers were excluded from the exemption under the amendment notifications issued on February 2, 2018, and April 2, 2018, and that the amendment notification dated July 6, 2019, was retrospective in nature.

Key Issues in the Case

The primary dispute revolved around whether microphones and receivers imported for PCBA manufacturing were eligible for customs duty exemption under the relevant notifications during the period from February 2, 2018, to July 6, 2019. The department argued that these items were excluded from the exemption, while Oppo maintained that the amendments did not alter the original exemption for microphones and receivers used in PCBA manufacturing.

Tribunal’s Observations and Ruling 

After a detailed examination of the case, the Tribunal made the following key observations:
1. Amendment Notifications Did Not Alter Serial No. 6: The Tribunal noted that the amendment notifications dated February 2, 2018, and April 2, 2018, did not modify Serial No. 6 of the original Notification No. 57/2017-Customs. Microphones and receivers imported for PCBA manufacturing were still eligible for exemption under this entry.
2. Retrospective Application of July 6, 2019 Notification: The Tribunal rejected the department’s claim that the amendment notification dated July 6, 2019, was retrospective. It emphasized that Section 25(4) of the Customs Act clearly states that notifications issued under Section 25(1) are prospective unless explicitly stated otherwise. The Tribunal also referred to the Tax Research Unit’s communication dated July 5, 2019, which confirmed the prospective nature of the notification.
3. Expert Opinion and Evidence: The Tribunal criticized the Principal Commissioner for relying on personal knowledge and information from the internet to conclude that microphones and receivers were not part of PCBA. It highlighted the importance of expert opinions and authentic evidence, such as the Chartered Engineer’s certificate submitted by Oppo, which confirmed that microphones and receivers are integral components of PCBA.
4. Precedents: The Tribunal referred to previous rulings, including Vivo Mobile India Pvt. Ltd. vs. Commissioner, Customs, New Delhi and InterGlobe Aviation Limited vs. Commissioner of Customs, New Delhi, to support its decision. These cases emphasized the prospective nature of notifications and the importance of expert evidence in determining the classification of goods.
Final Verdict

The Tribunal concluded that the amendment notifications dated February 2, 2018, and April 2, 2018, did not affect the exemption for microphones and receivers used in PCBA manufacturing. It also held that the July 6, 2019 notification was prospective and could not be applied to the disputed period. Consequently, the Tribunal set aside the Principal Commissioner’s order, including the demand for differential customs duty, interest, and penalties, and allowed Oppo’s appeal.

Key Takeaways

This landmark judgment underscores several critical aspects of customs law:
1. Importance of Notification Language: The Tribunal emphasized that the language of a notification determines its applicability. Unless explicitly stated, notifications under Section 25(1) of the Customs Act are prospective.
2. Role of Expert Evidence: The ruling highlighted the significance of relying on expert opinions and authentic evidence rather than personal knowledge or unverified information.
3. Impact on the Mobile Manufacturing Industry: The decision is expected to have a positive impact on mobile manufacturers, as it clarifies the scope of customs duty exemptions for components used in PCBA manufacturing.
This case serves as a reminder of the importance of precise interpretation of notifications and the need for robust evidence in customs disputes. It also reinforces the principle that amendments to notifications cannot be applied retrospectively unless explicitly stated.

Source: CESTAT Delhi

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November 14, 2025