𝐀𝐚𝐝𝐫𝐢𝐤𝐚𝐚 𝐋𝐞𝐠𝐚𝐥 𝐒𝐞𝐫𝐯𝐢𝐜𝐞𝐬 (𝐀𝐋𝐒)

Tag: #CESTATKolkata

CESTAT Kolkata Ruled on EODC Finality, Export Obligation, and Natural Justice in Customs Duty Disputes
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 23.05.2026

CESTAT Kolkata Ruled on EODC Finality, Export Obligation, and Natural Justice in Customs Duty Disputes

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

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Kolkata, recently delivered a significant judgment in the case involving M/s Kalpena Plastiks Ltd. and the Customs Department. This article provides a comprehensive overview of the dispute, the legal arguments, and the Tribunal’s findings, offering valuable insights for businesses engaged in import-export under government incentive schemes.

Background of the Case

M/s Kalpena Plastiks Ltd., formerly Sarla Gems Limited, is engaged in the import and trade of polymer and plastic raw materials under the Advance Authorisation (AA) and Duty-Free Import Authorisation (DFIA) schemes. Between 2009 and 2012, the company obtained 29 authorisations from the Directorate General of Foreign Trade (DGFT), Kolkata, and imported raw materials worth over Rs. 67.5 crores, availing duty exemptions totaling nearly Rs. 15 crores.

The company fulfilled its export obligations through deemed exports to a 100% Export Oriented Unit (EOU), Tara Holdings Pvt. Ltd. (THPL), and received Export Obligation Discharge Certificates (EODCs) from DGFT after due verification. Customs bonds were vacated, and no proceedings were initiated by DGFT to revoke the EODCs.

The Dispute: Allegations and Proceedings

The Directorate of Revenue Intelligence (DRI) alleged that Kalpena Plastiks misused the AA/DFIA schemes by diverting duty-free imported raw materials into the domestic market, claiming that the deemed exports to THPL were fictitious. A show cause notice was issued, proposing confiscation, duty demand, interest, and penalties.

The Customs Commissioner confirmed the demand and penalties, invoking Section 135 of the Customs Act, 1962, which deals with penalties for fraudulent evasion of duty. Kalpena Plastiks and its directors challenged the order, while the Revenue appealed for the imposition of a redemption fine.

Key Legal Issues Examined

The Tribunal framed several critical issues:
1. Can Customs demand duty for non-fulfilment of export obligation when EODCs have been issued and not revoked?
2. Is the demand sustainable when Central Excise records show that THPL received the goods, contradicting DRI’s claim of diversion?
3. Is it valid to deny cross-examination of witnesses whose statements form the basis of the order?
4. Can duty be demanded on all consignments based on inconclusive vehicle enquiry for a subset?
5. Is the extended limitation period under Section 28(4) applicable without evidence of fraud or suppression?
6. Can penal proceedings under Section 135 survive if the adjudication’s foundation is unsustainable?
7. Are confiscation and redemption fine justified in these circumstances?
Tribunal’s Findings and Rationale

1. EODC as Conclusive Proof

The Tribunal held that once EODCs are issued by DGFT and bonds are vacated, Customs cannot demand duty for alleged non-fulfilment of export obligations. This is supported by previous Tribunal and Supreme Court decisions, which treat EODC as conclusive unless revoked for fraud or misrepresentation.

2. Contradictory Departmental Records

Central Excise show cause notices to THPL acknowledged receipt of goods from Kalpena Plastiks, directly contradicting DRI’s diversion theory. The Tribunal found that the Department cannot take mutually exclusive positions in parallel proceedings.

3. Violation of Natural Justice

The denial of cross-examination of key witnesses was deemed a gross violation of natural justice. The Tribunal emphasized that statements used as evidence must be subject to cross-examination, as per established legal principles.

4. Unsustainable Extrapolation

The Tribunal rejected the practice of extrapolating findings from a small, inconclusive sample to the entire set of consignments, especially when the majority of vehicle enquiries were incomplete or inconclusive.

5. Limitation and Mens Rea

The extended limitation period under Section 28(4) requires proof of fraud, collusion, or wilful misstatement. The Tribunal found no such evidence, as all relevant facts were disclosed to authorities, and EODCs were obtained through due process.

6. Penal and Confiscatory Provisions

With the substantive demand being unsustainable, the Tribunal held that neither penalties nor confiscation/redemption fines could be imposed. The recommendation for prosecution under Section 135 was also set aside.

Final Outcome

The Tribunal allowed the appeals of Kalpena Plastiks and its directors, setting aside the demand, penalties, and confiscation. The Revenue’s appeal for redemption fine was dismissed.

Key Takeaways for Businesses
- EODC is Final: Once issued and not revoked, EODC is conclusive proof of export obligation fulfilment.
- Consistency in Departmental Actions: Contradictory positions by different wings of the Department weaken the case for duty demand.
- Natural Justice: Right to cross-examination is fundamental in quasi-judicial proceedings.
- No Duty on Inference Alone: Duty demands must be based on concrete evidence, not assumptions or extrapolations.
- Limitation and Mens Rea: Extended limitation and penalties require clear evidence of intent to evade duty.
This judgment reinforces the importance of procedural fairness and evidentiary standards in customs and excise disputes, providing clarity for exporters and importers operating under government incentive schemes.

Source: CESTAT Kolkata

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May 23, 2026
CESTAT Kolkata Upholds Classification of Imported Roasted Arecanut
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 22.05.2026

CESTAT Kolkata Upholds Classification of Imported Roasted Arecanut

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

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) Kolkata recently delivered a significant judgment in the case of M/s. Shree Durga Trader, addressing the classification and importation of roasted arecanut from Indonesia. This case highlights the complexities of customs classification, the role of laboratory testing, and the importance of judicial discipline in trade regulation.

Background of the Case

M/s. Shree Durga Trader imported 135 metric tons of roasted arecanut from Indonesia, declaring the goods under Customs Tariff Heading (CTH) 20081920. The consignment was subjected to multiple rounds of laboratory testing and legal scrutiny:
1. Initial Testing: Customs officers sent samples to an FSSAI-accredited lab (EFRAC), which confirmed the goods met FSSAI standards.
2. DRI Intervention: The Directorate of Revenue Intelligence (DRI) conducted a 100% examination and sent new samples to NFL, Kolkata. This lab reported the goods did not meet FSSAI standards and noted the lack of clear parameters to distinguish raw from roasted arecanut in FSSAI regulations.
3. Legal Proceedings: The goods were seized, and the importer sought provisional release through the Calcutta High Court, which directed the customs authorities to release the goods and complete adjudication promptly. However, the customs authorities delayed release and ordered confiscation and destruction of the cargo, prompting further legal action.
4. Fresh Testing: Following a second High Court directive, new samples were sent to NFL, Ghaziabad, which confirmed the goods were roasted arecanut conforming to FSSAI standards, with a moisture content of 2.09% (well below the 10% threshold).
Key Legal Issues

1. Classification Dispute
- The core issue was whether the imported goods should be classified as roasted arecanut (CTH 20081920) or raw arecanut (CTH 08028020).
- The distinction is crucial because raw arecanut imports are subject to a minimum price restriction, while roasted arecanut is not.
2. Binding Nature of Advance Rulings
- The importer had obtained an Advance Ruling confirming classification under CTH 20081920. The department challenged this but failed to secure a stay from the High Court.
- CESTAT held that such rulings are binding unless stayed or overturned.
3. Role of Laboratory Testing
- Multiple test reports were considered, but the tribunal gave precedence to the latest report from NFL, Ghaziabad, as it was conducted under High Court supervision and confirmed the goods as roasted arecanut.
- The moisture content test (below 10%) was pivotal, aligning with judicial precedents.
Judicial Precedents and Final Decision
- The tribunal relied on the Madras High Court’s decision in Neena Enterprises, which established that arecanut with moisture content below 10% should be classified as roasted.
- The Supreme Court upheld this principle, reinforcing its legal standing.
- CESTAT Kolkata set aside the confiscation and penalties, upheld the classification under CTH 20081920, and ordered the immediate release of the goods.
Implications for Importers and Customs Authorities
1. Clarity in Classification: The decision provides clear guidance on classifying roasted arecanut, emphasizing the importance of moisture content and laboratory verification.
2. Judicial Discipline: Customs authorities are reminded to respect advance rulings and judicial orders, ensuring consistency and predictability in trade regulation.
3. Procedural Fairness: The case underscores the need for timely action and adherence to court directives in customs adjudication.
Conclusion

The Durga Trader case is a landmark in the interpretation of customs law regarding arecanut imports. It reinforces the binding nature of advance rulings, the evidentiary value of scientific testing, and the necessity for administrative authorities to follow judicial discipline. Importers and customs officials alike should take note of the standards and procedures affirmed in this judgment to avoid future disputes and ensure smooth trade operations.

Source: CESTAT Kolkata

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May 22, 2026
CESTAT Kolkata Upholds Validity of Certificates of Origin
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 14.05.2026

CESTAT Kolkata Upholds Validity of Certificates of Origin

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

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) Eastern Zonal Bench, Kolkata, recently delivered a significant order in a series of appeals involving Anil Industries and other respondents. The core issue revolved around customs duty assessments and the validity of Certificates of Origin for imported goods.

Background of the Case

The appeals arose from an Order-in-Original issued by the Commissioner of Customs (Preventive), Kolkata. The Revenue (appellant) challenged the dropping of proceedings by the Adjudicating Authority, arguing that the Certificates of Origin submitted by the respondents were not proper and should not be relied upon.

Key Legal Issues
1. Cross-Examination of Witnesses
  - The Adjudicating Authority noted that key witnesses, Shri Narendra Lodaya and Shri Dhaval Lapasiya, did not attend personal hearings or offer themselves for cross-examination, despite efforts by the investigating agency.
  - The absence of cross-examination led to the presumption that the evidence provided by these witnesses could not be relied upon, as per legal principles and the directions of the Hon’ble High Court.
2. Validity of Certificates of Origin
  - The Revenue’s case was based on the allegation that the Certificates of Origin were improper.
  - However, it was admitted that these certificates, issued by the overseas country, remained valid and had not been cancelled by the issuing authorities.
  - The Tribunal emphasized that unless the certificates are proven to be fake or fabricated, or cancelled by the issuing country, they must be accepted as valid documents.
Tribunal’s Findings and Precedents
- The Tribunal referred to previous cases, including CC (Prev), Kolkata Vs Shri Krishan Goswami and Commissioner of Customs (Preventive), West Bengal, Kolkata vrs. RTC Overseas Pvt. Ltd., where similar issues were adjudicated.
- In these cases, the Tribunal upheld the validity of Certificates of Origin when they were not disputed or cancelled by the issuing authorities.
- The Tribunal also highlighted the importance of allowing cross-examination of witnesses, as mandated by the High Court. If witnesses are not produced for cross-examination, their statements cannot be relied upon.
Final Order and Implications
- The Tribunal dismissed the appeals filed by the Revenue, affirming the Adjudicating Authority’s decision to drop the proceedings.
- The order reinforces the principle that valid Certificates of Origin must be accepted unless proven otherwise, and that procedural fairness, including the right to cross-examination, is essential in customs adjudication.
Conclusion

This case sets a clear precedent for customs proceedings involving Certificates of Origin and witness statements. It underscores the necessity for authorities to follow due process and respect the rights of parties to cross-examine witnesses. The Tribunal’s decision provides clarity and guidance for similar cases in the future, ensuring that valid documents and procedural fairness remain central to customs adjudication.

Source: CESTAT Kolkata

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May 14, 2026
CESTAT Kolkata Ruled on Classification of Multimedia Speakers with FM/USB/SD/MMC under CTH 8518
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 12.05.2026

CESTAT Kolkata Ruled on Classification of Multimedia Speakers with FM/USB/SD/MMC under CTH 8518

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

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) Kolkata recently delivered a significant judgment in the case of M/s. Santosh Radio Products, clarifying the customs classification of multimedia speakers imported with features such as FM, USB, SD, and MMC. This article provides a detailed overview of the case, the legal arguments, and the implications for importers and the electronics industry.

Background of the Case

M/s. Santosh Radio Products imported various multimedia speakers and electronic spare parts from China. Upon arrival at Kolkata Port, the company filed the necessary Bills of Entry and classified the goods under Customs Tariff Heading (CTH) 85182200, which covers certain types of loudspeakers. However, customs authorities raised a query, proposing to reclassify the goods under CTH 85279100, which pertains to radio-broadcast receivers capable of operating only with an external power source.

Despite providing product catalogues and referencing previous favorable tribunal decisions, the customs department assessed the goods under the new heading, resulting in higher duties. The company paid the duty under protest and appealed the decision.

Legal Arguments and Tribunal Proceedings

Appellant’s Position
- The appellant argued that the classification of multimedia speakers under CTH 8518 had already been settled by various tribunals and affirmed by high courts.
- They cited the CESTAT Kolkata decision in the case of M/s. Jupiter Green Energy Pvt. Ltd., which upheld the classification of similar multimedia speakers under CTH 8518.
- The appellant requested the tribunal to set aside the reclassification and grant consequential relief.
Revenue’s Position
- The customs department maintained that the speakers, with built-in FM radio and other features, should be classified under CTH 85279100 as radio-broadcast receivers.
Tribunal’s Analysis and Decision

The tribunal reviewed:
1. Previous decisions, including those involving similar products and the same appellant.
2. The technical features of the imported goods, which were primarily multimedia speakers with ancillary features like FM radio and USB/SD/MMC playback.
3. The established legal precedents, including:
  - Logic India Trading Co. v. Commissioner of Customs (Cochin)
  - ONKYO Sight & Sound India Pvt. Ltd. v. Commissioner of Customs (Chennai)
  - Multiple prior orders involving M/s. Santosh Radio Products and M/s. Jupiter International Limited
The tribunal concluded that the issue was no longer in dispute (no longer res integra), as multiple decisions had consistently classified such multimedia speakers under CTH 8518. The tribunal set aside the customs department’s order, allowing the appeal and confirming that the correct classification is under CTH 8518, where MRP-based pricing does not apply.

Implications of the Ruling
1. Clarity for Importers: The decision provides legal certainty for importers of multimedia speakers with additional features, ensuring consistent customs treatment.
2. Duty Assessment: Classification under CTH 8518 generally results in lower duties compared to CTH 8527, benefiting importers.
3. Precedent Value: The ruling reinforces the importance of judicial precedents in customs classification disputes, reducing litigation and administrative delays.
Conclusion

The CESTAT Kolkata’s decision in favor of M/s. Santosh Radio Products marks a pivotal moment for the electronics import sector. By upholding the established classification of multimedia speakers under CTH 8518, the tribunal has provided much-needed clarity and relief to importers facing similar disputes. This judgment is expected to guide future assessments and foster a more predictable regulatory environment for the industry.

Connected Matter

CESTAT Kolkata Sets Aside Reclassification of Multimedia Speakers

Source: CESTAT Kolkata

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May 12, 2026
CESTAT Kolkata Sets Aside Customs Duty Demands: Rapeseed Oil Imports from Bangladesh Upheld Under SAFTA Exemption
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 28.04.2026

CESTAT Kolkata Sets Aside Customs Duty Demands: Rapeseed Oil Imports from Bangladesh Upheld Under SAFTA Exemption

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

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata delivered a landmark judgment on April 27, 2026, concerning the import of crude rapeseed/mustard oils from Bangladesh under the South Asian Free Trade Area (SAFTA) Agreement.

Multiple appeals were filed by importers and their directors challenging the denial of customs duty exemption based on the authenticity of Certificates of Origin and the classification of the imported oils.

Background
- Importers Involved: Aone Agro Products Pvt. Ltd., Sowallow Enterprises, Bengani Commodities Pvt. Ltd., V.K. Oils Ltd., and their directors.
- Period of Dispute: Imports occurred between December 2019 and February 2020.
- SAFTA Benefit: Importers claimed customs duty exemption under SAFTA supported by Certificates of Origin issued by Bangladeshi authorities.
- Revenue’s Allegation: The Directorate of Revenue Intelligence (DRI) argued that the imported oils had less than 2% Erucic Acid, classifying them as Low Erucic Acid Rapeseed (LEAR) or Canola Oil, and contended that Bangladesh lacked the capability to produce such rapeseed.
Key Legal and Procedural Issues

1. Authenticity of Certificates of Origin
- Indian authorities sought verification from Bangladesh, which confirmed the certificates and local origin of the rapeseed.
- CESTAT held that unless a certificate is cancelled or proven fraudulent, Indian Customs cannot unilaterally reject it.
2. Sample Testing and Classification
- At import, samples were tested by CRCL, with results showing both above and below 2% Erucic Acid.
- DRI selectively retested a few samples and attempted to apply those findings to all consignments.
- The Tribunal held such extrapolation legally unsustainable.
3. Procedural and Legal Compliance
- All documents, including lab reports and certificates, were submitted at the time of import.
- No suppression or fraudulent conduct by importers was established.
- Extended limitation for Show Cause Notices was held time-barred.
4. Impact of Legal Amendments
- Section 28DA of the Customs Act came into force after the imports in question and had no retrospective application.
Tribunal’s Findings

The Tribunal set aside all demands, interest, and penalties imposed by Customs and granted consequential relief to the importers.

It reaffirmed that:
1. Verified Certificates of Origin are conclusive unless cancelled.
2. Selective sample testing cannot determine liability for all consignments.
3. No suppression or fraud was proved.
4. Proceedings were time-barred.
Broader Implications
- Reinforces the sanctity of Certificates of Origin under trade agreements.
- Clarifies limits of Customs reassessment powers.
- Protects importers’ rights through procedural fairness.
Conclusion

The CESTAT Kolkata decision is a landmark ruling for importers seeking preferential duty benefits under SAFTA and similar agreements. It highlights the importance of documentary evidence, procedural integrity, and respect for international certification processes.

Source: CESTAT Kolkata

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April 28, 2026
CESTAT Kolkata- No Evidence of Involvement in Alleged Fraudulent Export and Overvaluation
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 24.04.2026

CESTAT Kolkata- No Evidence of Involvement in Alleged Fraudulent Export and Overvaluation

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

In a significant legal development, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata, delivered its final order on two appeals filed by Sri Kousik Nundy, proprietor of M/s. SSS Sai Forwarders. The case revolved around allegations of fraudulent export and overvaluation, with the authorities imposing penalties under sections 114(iii) and 114AA of the Customs Act, 1962. This article provides a comprehensive overview of the proceedings, the arguments presented, and the Tribunal’s reasoning for exonerating the appellant.

Background of the Case

The appeals stemmed from two show cause notices issued to the appellant, charging him with alleged fraudulent export activities carried out by M/s. Asian Enterprises and M/s. Sai Trading. The authorities claimed that these firms, in connivance with M/s. SSS Sai Forwarders, cleared highly overvalued export consignments to fraudulently avail IGST refunds. The appellant was accused of providing contacts and documents related to these exports to M/s. Advent Shipping Agency, the authorized Customs Broker.

Key Allegations and Charges
- Fraudulent Export and Overvaluation: The authorities alleged that the appellant’s firm facilitated the export of overvalued goods, aiming to claim higher IGST refunds.
- Involvement of Employees: It was claimed that employees of M/s. SSS Sai Forwarders were actively involved in the facilitation process.
- Penalties Imposed: Penalties under sections 114(iii) and 114AA of the Customs Act were imposed and upheld by the Commissioner (Appeals).
Appellant’s Defense

The appellant, represented by counsel, strongly contested the charges:
- No Involvement as Customs Broker: The appellant asserted that he was not the Customs Broker for the impugned exports and had no nexus with the consignment.
- Employee Status Disputed: The appellant refuted claims that the individuals named by the authorities were employees of his firm at the relevant time.
- Lack of Evidence: He argued that there was no evidence connecting him or his firm to the alleged fraudulent activities.
Tribunal’s Analysis and Findings

The Tribunal meticulously examined the facts and arguments:
- No Direct Evidence: The Tribunal found no direct evidence linking the appellant to the fraudulent exports or overvaluation.
- Role of Exporter and Customs Broker: The misdeclaration of value was attributed to the exporter and the Customs Broker (M/s. Advent Shipping Agency), not the appellant.
- Employee Connection Unsubstantiated: The claim that certain individuals were employees of the appellant at the material time was not supported by evidence.
- Legal Distinction: The Tribunal noted the legal distinction between M/s. SSS Sai Forwarders (proprietary concern) and M/s. SSS Sai Forwarders Pvt. Ltd., emphasizing that no link was established between the two entities.
- Requirement of Concrete Proof: The Tribunal stressed that penal liabilities require concrete proof of nexus and malicious intent, which was absent in this case.
Extracts from the Tribunal’s Order

The Tribunal highlighted key findings from the lower authority’s orders:

“Gross mis-declaration in terms of valuation has been done by the exporter, M/s. Asian Enterprises with the connivance of Customs Broker, M/s. Advent Shipping Agency for the purpose of availing IGST refund fraudulently, thus causing loss to exchequer. … rendering the Exporter and Customs Broker liable for penal action under section 114(iii) & 114AA of the Act.”

Regarding the appellant:

“Mere providing of contact/reference and documents related to certain exports to a third person, cannot itself be considered as an offending cause, liable for penal action under law. … Without such knowledge being ascribed to on part of the appellant, it would be utterly improper to subject them to penal consequences under law.”

Final Decision

The Tribunal set aside the penalties imposed on the appellant, stating:

“In view of the discussions above, we set aside the order of the lower authority qua the imposition of penalty under Section 114(iii) and under Section 114AA of the Customs Act, 1962 on the appellant in each of the two cases and allow the two appeals filed.”

Conclusion

This case underscores the importance of concrete evidence and clear legal nexus in imposing penal liabilities under customs law. The CESTAT Kolkata’s decision reaffirms that mere association or provision of documents, without proven malicious intent or direct involvement, cannot be grounds for penal action. The exoneration of M/s. SSS Sai Forwarders sets a precedent for similar cases, emphasizing the need for thorough investigation and substantiation before attributing liability.

Source: CESTAT Kolkata

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April 24, 2026
CESTAT Kolkata Quashes IGST Demand on Tea Pruning Machines
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 20.04.2026

CESTAT Kolkata Quashes IGST Demand on Tea Pruning Machines

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

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

Background of the Case

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

The Dispute: IGST Rate and Classification

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

Legal Arguments

Appellant’s Position
- No Suppression or Misstatement: The appellant argued that all facts were disclosed, and the goods were classified and assessed transparently.
- Correct Classification: The machines were classified under CTH 8432, and the corresponding IGST rate was paid.
- Jurisdictional Challenge: The appellant contended that IGST recovery under Section 28(4) of the Customs Act was beyond jurisdiction, as IGST is not a ‘duty’ specified under the Act.
Department’s Position
- Residual Classification: Customs authorities argued that the goods did not have a specific entry in the IGST schedules and should be classified under the residual entry, attracting 18% IGST.
- Extended Limitation: The department invoked the extended period for issuing the show cause notice, citing suppression.
Tribunal’s Findings and Decision

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

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

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

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

Source: CESTAT Kolkata

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April 20, 2026
CESTAT Kolkata Sets Aside Vehicle Confiscation and Penalty
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 07.04.2026

CESTAT Kolkata Sets Aside Vehicle Confiscation and Penalty

Adv Ravi Shekhar Jha

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

In a significant ruling, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Eastern Zonal Bench, Kolkata, has set aside the confiscation of a vehicle and the imposition of a penalty on its owner, Appellant, in a case involving the alleged transportation of foreign-origin goods. The judgment, delivered by Hon’ble Member Judicial, highlights the importance of evidence in proving the foreign origin of goods under the Customs Act, 1962.

Background of the Case

The case originated on October 5, 2020, when a vehicle bearing registration number BR01GH-9594 was intercepted near Maithi Toll Plaza on Darbhanga Road, Bihar. The driver, informed authorities that the vehicle was loaded with goods described as “Khesari Packet 100×50” on an invoice issued by M/s. Gupta Gaila Bhandar and General Store. However, upon further inspection, 100 jute bags containing green peas and yellow peas, weighing 4,300 kilograms, were discovered in the vehicle. Two traders present during the inspection opined that the peas appeared to be of foreign origin, with a retail price of Rs. 60-70 per kilogram.

The driver admitted during interrogation that he was transporting the goods without valid documentation and was using his elder brother’s driving license. He also revealed that the vehicle belonged to the appellant, and that the business activities of the vehicle were managed by his brother. The driver further confessed to transporting Nepali peas for extra money.

Following the seizure of the vehicle under Section 110 of the Customs Act, 1962, a Show Cause Notice was issued to the appellant, proposing the confiscation of the vehicle and the imposition of a penalty under Section 112(b) of the Act. The adjudicating authority imposed a redemption fine of Rs. 2,45,073/- and a penalty of Rs. 25,000/- on the appellant. The Commissioner (Appeals) upheld this decision, prompting the appellant to challenge the order before the CESTAT.

Tribunal’s Observations and Final Order 

The case was heard on April 6, 2026, with no representation from the appellant. Despite this, the tribunal proceeded to examine the matter, noting that the issue at hand was limited to the confiscation of the vehicle and the imposition of the penalty.

The tribunal observed that the sole allegation against the appellant was the transportation of goods allegedly of foreign origin. However, upon reviewing the records, the tribunal found no evidence to substantiate the claim that the goods were of foreign origin. It emphasized that under Section 123 of the Customs Act, 1962, the burden of proof lies with the Revenue to establish the foreign origin of goods that are not notified under the Act. In this case, the Revenue failed to provide any such evidence.

In light of the lack of proof, the tribunal held that the confiscation of the vehicle and the imposition of the redemption fine and penalty were unwarranted. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief.

Key Takeaways
1. Burden of Proof Under Section 123: The judgment underscores the principle that the onus of proving the foreign origin of goods lies with the Revenue, especially when the goods are not notified under Section 123 of the Customs Act, 1962.
2. Importance of Evidence: The tribunal highlighted the necessity of concrete evidence to support allegations of foreign origin, emphasizing that mere suspicion or opinion is insufficient.
3. Protection of Rights: The ruling serves as a reminder of the importance of safeguarding the rights of individuals and businesses against unwarranted penalties and confiscations.
Conclusion

The CESTAT’s decision in this case is a significant development in customs law, reinforcing the importance of evidence-based adjudication. It provides clarity on the application of Section 123 of the Customs Act, 1962, and serves as a precedent for similar cases in the future. The judgment not only upholds the principles of justice but also ensures that individuals are not penalized without proper evidence.

Source: CESTAT Kolkata

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April 7, 2026
CESTAT Kolkata Overturns Customs Duty Demand in Valuation and Limitation Dispute
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 03.04.2026

CESTAT Kolkata Overturns Customs Duty Demand in Valuation and Limitation Dispute

Adv Ravi Shekhar Jha

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

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Kolkata, recently delivered a significant judgment in the case of M/s Rimjhim Ispat Ltd. vs. Commissioner of Customs (Preventive), Kolkata. The case revolved around the inclusion of freight and insurance charges in the assessable value of imported goods under Rule 10(2) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. The tribunal’s decision, pronounced on March 25, 2026, has clarified key aspects of customs valuation and the application of extended periods of limitation under the Customs Act, 1962.

Case Background

M/s Rimjhim Ispat Ltd., a manufacturer of iron and steel products based in Uttar Pradesh, imports Ferro Silicon from Bhutan for its production processes. These imports are made through the Land Customs Station (LCS) at Jaigaon, located at the Indo-Bhutan border. The goods are invoiced on a Free on Board (FOB) basis, which the appellant argued was equivalent to the Cost, Insurance, and Freight (CIF) value due to the unique geographical proximity of the Bhutanese export point (Phuentsholing Customs Station) and the Indian import point (Jaigaon Customs Station).

The dispute arose when the Commissioner of Customs (Preventive), Kolkata, issued an Order-in-Original (No. 10/Cus/CC(P)/WB/2023-24 dated October 31, 2023), directing the reassessment of the imported goods. The order mandated the inclusion of 20% of the FOB value as freight charges and 1.125% of the FOB value as insurance charges in the assessable value. This resulted in a demand for Rs. 1,08,49,409/- in differential Integrated Goods and Services Tax (IGST), along with interest and an equal amount of penalty under Section 114A of the Customs Act.

Key Issues in the Case

The case revolved around two primary issues:

1. Inclusion of Freight and Insurance Charges in Assessable Value 

The Revenue argued that the inclusion of freight and insurance charges was mandatory under Rule 10(2) of the Customs Valuation Rules, 2007. The appellant contended that the FOB value was effectively the CIF value due to the absence of a no-man’s land between the Bhutanese and Indian borders. They argued that no additional transportation or insurance costs were incurred during the import process.

2. Invocation of Extended Period of Limitation 

The Revenue issued a show-cause notice on June 7, 2022, alleging suppression and willful misstatement by the appellant regarding the assessable value of the imported goods. The appellant argued that the extended period of limitation was not applicable, as they had disclosed all relevant information in the invoice and Bill of Entry. They claimed the case was based on a difference in interpretation rather than deliberate suppression.

Arguments Presented

Appellant’s Arguments
1. FOB vs. CIF Value: The appellant argued that the FOB value was effectively the CIF value due to the geographical proximity of the export and import points. They claimed that no transportation or insurance costs were incurred between the Phuentsholing Customs Station in Bhutan and the Jaigaon LCS in India.
2. No-Man’s Land: The appellant emphasized that there was no no-man’s land between the two borders, and the goods were directly transported from the Bhutanese exporter to the Indian importer without any transit time or additional costs.
3. Extended Limitation Period: The appellant contended that the extended period of limitation was not applicable, as they had disclosed all relevant information in the invoice and Bill of Entry. They argued that the case was based on a difference in interpretation rather than suppression or willful misstatement.
4. Revenue Neutrality: The appellant highlighted that the case was revenue-neutral, as they were eligible to claim credit for any duty paid on transportation and insurance costs.
Revenue’s Arguments
1. Mandatory Inclusion of Freight and Insurance: The Revenue argued that the inclusion of freight and insurance charges was legally mandated under Rule 10(2) of the Customs Valuation Rules, 2007. They contended that the appellant failed to add 20% of the FOB value as freight charges and 1.125% as insurance charges.
2. Suppression and Misstatement: The Revenue alleged that the appellant had deliberately misdeclared the assessable value by not including transportation and insurance costs, thereby evading IGST.
Tribunal’s Observations

The tribunal carefully analyzed the arguments and evidence presented by both parties. The key observations were:
1. FOB vs. CIF Value: The tribunal acknowledged the appellant’s argument that the FOB value was equivalent to the CIF value due to the geographical proximity of the export and import points. However, it noted that the appellant failed to provide sufficient documentary evidence to substantiate this claim. The tribunal emphasized that oral arguments and assumptions were insufficient to meet legal requirements.
2. Extended Limitation Period: The tribunal held that the extended period of limitation under Section 28(4) of the Customs Act could only be invoked in cases of deliberate default. It found that the appellant had disclosed all relevant information in the invoice and Bill of Entry, including the FOB value and the mention of NIL freight charges. The tribunal concluded that the Revenue failed to establish suppression or willful misstatement on the part of the appellant.
3. Revenue Neutrality: The tribunal noted that the case was revenue-neutral, as the appellant was eligible to claim credit for any duty paid on transportation and insurance costs. This further weakened the Revenue’s claim of suppression or willful misstatement.
Final Decision

The tribunal allowed the appeal filed by M/s Rimjhim Ispat Ltd. and set aside the order of the lower authority. It concluded that the extended period of limitation was not applicable and that the inclusion of freight and insurance charges in the assessable value was not justified in the absence of concrete documentary evidence.

Implications of the Ruling

This landmark judgment has significant implications for importers and the customs authorities:
1. Clarity on Customs Valuation Rules: The ruling provides clarity on the application of Rule 10(2) of the Customs Valuation Rules, particularly regarding the inclusion of freight and insurance charges in the assessable value.
2. Strict Interpretation of Suppression: The tribunal’s emphasis on the need for concrete evidence to establish suppression or willful misstatement sets a precedent for future cases.
3. Revenue Neutrality Considerations: The judgment highlights the importance of considering revenue neutrality in cases involving alleged duty evasion.
Conclusion

The CESTAT’s decision in the case of M/s Rimjhim Ispat Ltd. underscores the importance of transparency, proper documentation, and adherence to customs valuation rules. It also serves as a reminder to customs authorities to exercise caution when invoking extended periods of limitation and alleging suppression or willful misstatement.

Source: CESTAT Kolkata

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April 3, 2026
CESTAT Kolkata Clarifies Scope of Valuation Rule 10(2) and Limits of Extended Limitation
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 27.03.2026

CESTAT Kolkata Clarifies Scope of Valuation Rule 10(2) and Limits of Extended Limitation

Adv Ravi Shekhar Jha

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

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Kolkata, recently delivered a significant judgment in the case of Customs Appeal No. 75332 of 2024, involving M/s. Jindal Nickel & Alloys Ltd. and the Commissioner of Customs (Preventive), Kolkata. This case revolved around the inclusion of freight and insurance charges in the assessable value of imported goods and the invocation of the extended limitation period under Section 28(4) of the Customs Act, 1962. The tribunal’s decision has set a precedent for similar cases in the future.

Background of the Case

M/s. Jindal Nickel & Alloys Ltd., a trader and importer of goods, imports Ferro Silicon and Magnesium Ferro Silicon from Bhutan through the Land Customs Station (LCS) at Jaigaon, located at the Indo-Bhutan border. The dispute arose when the Commissioner of Customs (Preventive), Kolkata, issued an Order-in-Original (No. 09/Cus/CC(P)/WB/2023-24 dated 31.10.2023), directing the re-assessment of the imported goods. The order mandated the inclusion of freight charges (20% of the Free on Board (FOB) value) and insurance charges (1.125% of the FOB value) in the assessable value, as per Rule 10(2) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.

The department alleged that the appellant had misared the assessable value of the goods by excluding freight and insurance charges, resulting in a short payment of Integrated Goods and Services Tax (IGST) amounting to ₹83,43,639 during the period July 2017 to June 2018. Consequently, the department imposed a penalty of an equal amount under Section 114A of the Customs Act, 1962, and demanded the recovery of the evaded IGST along with interest under Section 28AA.

Key Issues in the Case

The case revolved around two primary issues:
1. Inclusion of Freight and Insurance Charges in Assessable Value: The department argued that the appellant failed to include freight and insurance charges in the assessable value, as mandated by Rule 10(2) of the Customs Valuation Rules. The appellant contended that the FOB value declared in the invoice was equivalent to the Cost, Insurance, and Freight (CIF) value, as there was no transportation cost or insurance required between the Bhutan Customs Station at Phuentsholing and the Indian LCS at Jaigaon.
2. Invocation of Extended Limitation Period: The department invoked the extended limitation period under Section 28(4) of the Customs Act, alleging suppression and willful misstatement by the appellant. The appellant argued that they had disclosed all relevant information in the invoice and Bill of Entry, and the case was one of interpretation rather than suppression.
Tribunal’s Observations and Judgment

Merits of the Case 

The tribunal examined the appellant’s claim that the FOB value was equivalent to the CIF value due to the absence of transportation costs and insurance between the two borders. While the appellant argued that the goods were invoiced on an FOB basis, which included transportation costs within Bhutan, the tribunal noted that the appellant failed to provide documentary evidence to substantiate this claim. The tribunal emphasized that oral arguments alone could not establish the equivalence of FOB and CIF values.

The tribunal also highlighted the terms and conditions printed on the invoice-cum-challan, which indicated that the goods were dispatched at the buyer’s risk and the seller’s responsibility ceased once the goods left the factory premises. This supported the department’s claim that transportation and insurance costs were incurred and should be included in the assessable value as per Rule 10(2) of the Valuation Rules.

Extended Limitation Period 

The tribunal scrutinized the department’s invocation of the extended limitation period under Section 28(4) of the Customs Act. It noted that the appellant had clearly declared the FOB value and indicated NIL freight charges in the Bill of Entry. The tribunal held that the charge of suppression or willful misstatement could not be substantiated, as the appellant had disclosed all relevant information in the invoice and Bill of Entry. The tribunal emphasized that the extended limitation period could only be invoked in cases of deliberate default or willful intent to evade duty, which was not evident in this case.

Revenue Neutrality

The tribunal also considered the revenue neutrality of the case, noting that the appellant was eligible to avail credit for any duty paid on transportation and insurance costs. This further supported the appellant’s argument that there was no intention to evade duty.

Final Decision

After considering the arguments and evidence presented by both parties, the tribunal ruled in favor of the appellant. It set aside the order of the lower authority and allowed the appeal on the grounds of limitation. The tribunal concluded that the extended period of limitation was not applicable, as the department failed to establish suppression or willful misstatement by the appellant.

Key Takeaways
1. Importance of Documentary Evidence: The tribunal emphasized the need for documentary evidence to substantiate claims regarding the equivalence of FOB and CIF values. Oral arguments alone are insufficient to meet legal requirements.
2. Strict Interpretation of Suppression: The tribunal reiterated that suppression or willful misstatement must be proven with clear evidence of deliberate intent to evade duty. Mere non-payment or incorrect statements cannot be equated with suppression.
3. Revenue Neutrality: The tribunal highlighted that cases involving revenue neutrality, where the appellant is eligible to claim credit for the duty paid, are less likely to be considered as deliberate evasion.
4. Extended Limitation Period: The judgment clarified that the extended limitation period under Section 28(4) of the Customs Act can only be invoked in cases of deliberate default or suppression, not for mere errors or misinterpretations.
Conclusion

The decision in Customs Appeal No. 75332 of 2024 serves as a crucial precedent for importers and the customs department alike. It underscores the importance of proper documentation, the need for clear evidence in cases of alleged suppression, and the significance of revenue neutrality in determining the intent behind duty evasion claims. This judgment is a reminder of the importance of adhering to legal provisions while also ensuring that enforcement actions are based on solid evidence and not mere assumptions.

Source: CESTAT Kolkata

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March 27, 2026