𝐀𝐚𝐝𝐫𝐢𝐤𝐚𝐚 𝐋𝐞𝐠𝐚𝐥 𝐒𝐞𝐫𝐯𝐢𝐜𝐞𝐬 (𝐀𝐋𝐒)

Tag: #CESTATKolkata

CESTAT Kolkata ruled that the rejection of transaction value and enhancement based on NIDB data was erroneous
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 29.11.2025

CESTAT Kolkata ruled that the rejection of transaction value and enhancement based on NIDB data was erroneous

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 the realm of international trade, customs valuation plays a pivotal role in determining the assessable value of imported goods for the purpose of levying duties. A recent case involving M/s Eagle International and the Commissioner of Customs (Port), Kolkata, sheds light on the complexities surrounding customs valuation and the importance of adhering to established legal principles.

Background of the Case

M/s Eagle International, an importer based in New Delhi, filed a Customs Appeal (No. 75332 of 2023) before the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Kolkata. The appeal arose from an Order-in-Original passed by the Commissioner of Customs (Port), Kolkata, which rejected the declared transaction value of imported water purifier spare parts and re-assessed the value based on National Import Database (NIDB) data. The order also imposed differential duty, interest, redemption fine, and penalties on the appellant.

The case revolved around allegations of mis-declaration of the description and value of the imported goods. The adjudicating authority claimed that the declared value was significantly lower than the value determined using NIDB data, leading to the rejection of the transaction value.

Key Issues in the Case 
1. Non-Existence of the Importer: The Revenue alleged that the appellant was a non-existent entity. However, the Tribunal found no evidence to support this claim, as the appellant was operating under a valid Importer-Exporter Code (IEC) and had been recognized by the High Court in previous proceedings.
2. Rejection of Transaction Value: The primary issue was the rejection of the transaction value declared by the appellant. The Revenue argued that the declared value was under-invoiced and relied on NIDB data to enhance the value. However, the appellant contended that the transaction value was genuine and supported by commercial invoices, and that the rejection was arbitrary and lacked proper evidence.
3. Use of NIDB Data: The Revenue used NIDB data to enhance the value of the imported goods. The appellant argued that this approach was legally unsound, as the Customs Valuation Rules, 2007, require the rejection of transaction value to be based on clear and cogent evidence, which was absent in this case.
Tribunal’s Observations and Final Order 

After hearing both sides and reviewing the evidence, the Tribunal made the following key observations:
- The transaction value declared by the importer should be accepted as the assessable value unless there is clear evidence to reject it under Rule 3 of the Customs Valuation Rules, 2007.
- The Revenue failed to provide any evidence to prove that the declared transaction value was not the actual price paid for the goods or that the buyer and seller were related.
- The use of NIDB data to enhance the value was deemed erroneous, as the transaction value was not first discarded with plausible reasoning.
- The Tribunal cited several precedents, including the Supreme Court’s affirmation in the case of Agarwal Foundries P Ltd vs Commissioner of Customs, which held that NIDB data cannot be directly applied to enhance the value without proper evidence.
Based on these findings, the Tribunal set aside the impugned order and allowed the appeal, granting consequential relief to the appellant.

Key Takeaways

This case highlights several important aspects of customs valuation:
1. Importance of Transaction Value: The transaction value, which is the price actually paid or payable for imported goods, is the primary basis for customs valuation. It cannot be rejected without clear evidence of its inaccuracy.
2. Limitations of NIDB Data: While NIDB data can serve as a guideline, it cannot be the sole basis for enhancing the value of imported goods. Proper evidence and adherence to the Customs Valuation Rules are essential.
3. Adherence to Legal Procedures: The customs authorities must follow the prescribed legal procedures and provide valid reasons for rejecting the declared transaction value. Failure to do so can render their actions legally unsustainable.
Conclusion

The case of M/s Eagle International serves as a reminder of the importance of transparency, evidence-based decision-making, and adherence to legal principles in customs valuation. Importers and customs authorities alike must ensure compliance with the Customs Valuation Rules to maintain fairness and integrity in international trade. This case also underscores the role of judicial bodies like CESTAT in upholding the rule of law and protecting the rights of importers.

Source: CESTAT Kolkata

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November 29, 2025
CESTAT Kolkata Quashes Customs Duty Demands Over Disputed Certificates of Origin

ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 27.11.2025

CESTAT Kolkata Quashes Customs Duty Demands Over Disputed Certificates of Origin

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, and Service Tax Appellate Tribunal (CESTAT), Eastern Zonal Bench, Kolkata, has delivered a significant judgment in favor of M/s. United Sales Agency, setting aside two appeals related to customs duty demands. The case revolved around the authenticity of Certificates of Origin (COO) submitted by the appellant for availing preferential customs duty benefits under Notification No. 46/2011-Cus. dated 01.06.2011.

Background of the Case

M/s. United Sales Agency, a Kolkata-based importer, had imported bicycles from M/s. Seawa Industries (M) SDN, BHD, Malaysia, availing preferential customs duty benefits based on Certificates of Origin. However, discrepancies in the COO led to a Show Cause Notice issued by the Customs Department, alleging that the COO was inauthentic. The adjudicating authority subsequently denied the exemption benefit and demanded differential customs duty of Rs. 33,17,607/- for one consignment and Rs. 1,02,94,248/- for six earlier consignments imported between 2021 and 2022. The appellant challenged these orders before the CESTAT.

Key Arguments by the Appellant 

The appellant contended that the rejection of the COO was based solely on a letter from the FTA Cell, Directorate of International Customs, C.B.I.C., which referred to a verification report from the Malaysian authorities. However, the appellant argued that this verification report was never provided to them, violating the principles of natural justice. Without access to the report, the appellant was unable to defend their case effectively.

Additionally, the appellant argued that the six earlier consignments were assessed and cleared on a self-assessment basis, and the Customs Department had not challenged these assessments. They cited the Supreme Court judgment in ITC Ltd. v. Commissioner of Central Excise, Kolkata-IV [2019 (368) E.L.T. 216 (S.C.)], which held that demands for differential duty cannot be sustained without challenging the original assessment.

CESTAT’s Observations and Final Order 

The Tribunal noted that the Department relied on the FTA Cell’s letter dated 27.01.2023, which itself was based on a verification report from the Malaysian authorities. However, the verification report was not provided to the appellant, making the Department’s reliance on the letter akin to hearsay evidence. The Tribunal emphasized that the principles of natural justice were not adhered to, as the appellant was not given access to the verification report.

In the case of the six earlier consignments, the Tribunal observed that the Department failed to verify the authenticity of the respective COOs and did not challenge the self-assessed Bills of Entry. Citing the Supreme Court’s judgment in ITC Ltd., the Tribunal held that the confirmed demand of Rs. 1,02,94,248/- was legally unsustainable.

Furthermore, the Tribunal set aside the confiscation and redemption fine of Rs. 25,00,000/- imposed by the adjudicating authority, as the imported goods were no longer available with the Revenue.

Conclusion

The CESTAT’s decision to set aside both appeals is a significant victory for M/s. United Sales Agency and a reminder of the importance of adhering to the principles of natural justice in adjudication proceedings. The judgment underscores the necessity for the Customs Department to provide all relevant documents to the appellants and to follow due process when contesting self-assessed Bills of Entry.

This case serves as a precedent for importers facing similar issues and highlights the importance of transparency and fairness in customs assessments. M/s. United Sales Agency has been granted consequential relief as per law, marking a positive outcome for the appellant.

Source: CESTAT Kolkata

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November 27, 2025
CESTAT Kolkata Quashes Confiscation and Penalties in Betel Nut Smuggling

ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 22.11.2025

CESTAT Kolkata Quashes Confiscation and Penalties in Betel Nut Smuggling

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

In a landmark decision, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Eastern Zonal Bench, Kolkata, has delivered a significant judgment in favor of two appellants, proprietresses of M/s Kumar Traders & Company and M/s Kumar Enterprise, respectively. The case revolved around the alleged smuggling of betel nuts and the subsequent confiscation of goods and imposition of penalties under the Customs Act, 1962.

Background of the Case

The case originated from an investigation by the Directorate of Revenue Intelligence (DRI) into the supply of betel nuts stored in 54 containers. The DRI suspected that the goods were of foreign origin and smuggled into India without proper customs duty payment. Samples from 51 containers were sent to the Arecanut Research & Development Foundation (ARDF) for testing, which concluded that the betel nuts in 46 containers were of foreign origin. Based on this report, the DRI seized the goods and issued Show Cause Notices to the appellants, proposing confiscation and penalties under Section 112(b) of the Customs Act, 1962.

The adjudicating authority ordered the absolute confiscation of the goods but allowed redemption upon payment of fines. Penalties of Rs. 40 lakhs each were imposed on the appellants. The appellants challenged the order, asserting that the goods were purchased from domestic sources and that the ARDF was not a competent authority to determine the foreign origin of the betel nuts.

Tribunal’s Observations

After hearing arguments from both sides, the Tribunal found that the confiscation of the betel nuts was based solely on the ARDF report, which lacked evidentiary value. The Tribunal noted that the ARDF did not have the infrastructure to conclusively determine the foreign origin of the goods. Furthermore, the betel nuts were not notified under Section 123 of the Customs Act, meaning the burden of proof to establish their smuggled nature lay with the Revenue. The Tribunal held that the Revenue failed to provide tangible evidence to substantiate its claims, relying instead on mere suspicion and the inconclusive ARDF report.

The Tribunal also referred to several precedents, including judgments from the Hon’ble High Courts of Allahabad, Meghalaya, and Calcutta, which emphasized that the burden of proof lies with the Revenue to establish the smuggled nature of goods. The absence of foreign markings on the seized goods and the appellants’ submission of valid purchase receipts further weakened the Revenue’s case.

Final Order

In its final order, the Tribunal set aside the confiscation of the betel nuts and the penalties imposed on the appellants. It ruled that the goods were not liable for confiscation under the Customs Act, 1962, and that no penalties could be imposed as there was no violation of the Act.

Key Takeaways

This judgment underscores the importance of due process and the need for the Revenue to provide concrete evidence when alleging smuggling. It also highlights the limitations of relying solely on inconclusive reports from non-accredited institutions like the ARDF. The decision serves as a reminder that the burden of proof lies with the authorities, especially when dealing with non-notified goods under Section 123 of the Customs Act.

Conclusion

The CESTAT Kolkata’s decision is a significant win for the appellants and sets a precedent for similar cases in the future. It reinforces the principle that allegations of smuggling must be backed by substantial evidence and not mere assumptions. This judgment is a testament to the importance of upholding justice and ensuring that legal processes are followed meticulously.

Source: CESTAT Kolkata

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November 22, 2025
CESTAT Kolkata Overturns Customs Valuation Enhancement

ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 20.11.2025

CESTAT Kolkata Overturns Customs Valuation Enhancement

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, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Eastern Zonal Bench, Kolkata, has ruled in favor of M/s. Dayan Enterprises in Customs Appeal No. 75086 of 2023. The case revolved around the alleged undervaluation of imported decorative lights from China, with the Department of Revenue claiming that the declared transaction values were not accurate and arbitrarily enhancing the assessable value based on NIDB data.

Background of the Case

M/s. Dayan Enterprises had imported decorative lights, including LED and non-LED Christmas lights, from China and filed 18 Bills of Entry between 2016 and 2017. The declared transaction values ranged from Rs. 0.112 to Rs. 0.165 per LED bulb and Rs. 0.092 to Rs. 0.106 per non-LED bulb. However, following an investigation by the Directorate of Revenue Intelligence (DRI), the Department alleged that the imports were undervalued and recommended enhanced values of Rs. 0.55 per LED bulb and Rs. 0.30 per non-LED bulb.

The Department provisionally assessed the consignments, requiring M/s. Dayan Enterprises to pay an admitted duty of Rs. 71,90,207 and a security deposit of Rs. 32,10,571. Subsequently, a bond enforcement notice was issued, proposing a re-determined value of Rs. 8,46,61,904 and a differential duty of Rs. 1,55,45,793.

The matter was initially adjudicated by the Deputy Commissioner of Customs, who confirmed the enhanced valuation and differential duty liability. M/s. Dayan Enterprises challenged this decision before the Commissioner of Customs (Appeals), who remanded the case back to the original adjudicating authority without deciding the issue on merits. Dissatisfied with this outcome, the appellant approached the CESTAT.

Key Arguments and Observations

During the hearing, the appellant’s consultant argued that the transaction value was rejected without valid reasons or adherence to the procedures outlined in Section 14 of the Customs Act and the Valuation Rules. The consultant emphasized that there was no evidence to suggest that the declared transaction value was not the actual price paid for the goods or that the buyer and seller were related parties.

The appellant also highlighted that similar cases involving the import of decorative lights had been decided in favor of importers by various judicial forums, including CESTAT Kolkata. The consultant cited multiple precedents, such as Commissioner of Customs (Port), Kolkata v. Bajaj Writing Aid and Commissioner of Customs (Port), Kolkata v. Paras Enterprises, where the Tribunal had struck down the enhancement of values due to the Department’s failure to follow proper valuation procedures and reliance on selective NIDB data.

CESTAT’s Final Decision 

After hearing both sides and reviewing the case records, the Tribunal found that the Assessing Officer had rejected the transaction value without valid reasons and failed to follow the prescribed procedures under Section 14 and the Valuation Rules. The Tribunal noted that the Department had not provided sufficient evidence to justify the enhancement of the declared values and had adopted a “pick and choose” approach by selectively using NIDB data.

The Tribunal also observed that the issue was no longer res integra, as similar cases had already been decided in favor of importers by the Tribunal. Respecting the established legal precedents, the Tribunal set aside the impugned order and the original adjudicating authority’s decision, ruling that the enhancement of the value of the imported goods was unsustainable.

Conclusion

This judgment is a significant win for M/s. Dayan Enterprises and other importers facing similar allegations of undervaluation. It reinforces the importance of adhering to proper valuation procedures and highlights the need for the Department to provide concrete evidence when challenging declared transaction values. The decision also underscores the role of judicial precedents in ensuring consistency and fairness in adjudication. The appeal was allowed with consequential relief, marking a positive outcome for M/s. Dayan Enterprises and setting a precedent for similar cases in the future.

Source: CESTAT Kolkata

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November 20, 2025
CESTAT Kolkata Upholds Late Fine Waiver for Importer Amid COVID-19 and System Errors
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 17.11.2025

CESTAT Kolkata Upholds Late Fine Waiver for Importer Amid COVID-19 and System Errors

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 decision, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Eastern Zonal Bench, Kolkata, has upheld the order of the Commissioner of Customs (Appeals) to waive late fines imposed on M/s. Shalimar Wires Industries Limited. This ruling comes as a relief to the respondent, who faced challenges due to systemic errors and the unprecedented disruptions caused by the COVID-19 pandemic.

Background of the Case

M/s. Shalimar Wires Industries Limited, engaged in the importation of Polyester Monofilament Yarn and Polyamide (Nylon) Monofilament Yarn, filed four advance Bills of Entry on December 1, 2021, for consignments imported from the United Kingdom. However, due to the global pandemic and financial constraints, the company was unable to pay the duty on time. When they attempted to regularize the Bills of Entry in January 2022, they discovered that the entries were no longer available in the ICEGATE system due to a systemic error.

The Customs House Agent (CHA) was advised by ICEGATE to re-assess the Bills of Entry and file fresh ones. Consequently, new Bills of Entry were filed on January 19, 2022, but the system automatically imposed a late fine of ₹4,65,000/- for each case. The respondent requested a waiver of the late fine, citing the Supreme Court’s order in RE: COGNIZANCE FOR EXTENSION OF LIMITATION, which extended the limitation period due to the pandemic. Despite this, the Deputy Commissioner of Customs rejected the request for a full waiver, reducing the fine to the duty amount instead.

Decision by the Commissioner of Customs (Appeals) 

On appeal, the Commissioner of Customs (Appeals) ruled in favor of the respondent, setting aside the late fine. The Commissioner noted that the delay was caused by a systemic error in the ICEGATE system and the challenges posed by the COVID-19 pandemic. The Commissioner also highlighted the Supreme Court’s decision to extend the limitation period during the pandemic, which supported the respondent’s case.

Revenue’s Appeal to CESTAT 

The Revenue challenged the Commissioner’s decision, arguing that the late fine was automatically calculated by the EDI system and that the delay was due to the respondent’s inaction in regularizing the Bills of Entry within the stipulated 30-day period. They contended that the late fine was justified and should not have been waived entirely.

CESTAT’s Final Ruling

After hearing both sides, the Tribunal upheld the Commissioner of Customs (Appeals)’ decision to waive the late fine. The Tribunal observed that the disappearance of the advance Bills of Entry from the ICEGATE system was due to a systemic error, and the respondent could not be held accountable for this issue. Furthermore, the Tribunal acknowledged the challenges posed by the COVID-19 pandemic, referencing the Supreme Court’s ruling that extended the limitation period from March 15, 2020, to February 28, 2022.

The Tribunal concluded that the delay in filing the Bills of Entry was not due to any fault of the respondent and that the Commissioner (Appeals) had rightly set aside the late fine. Consequently, the appeals filed by the Revenue were rejected.

Key Takeaways
1. Systemic Errors and Accountability: The Tribunal emphasized that importers cannot be penalized for delays caused by errors in the customs system, such as the unavailability of advance Bills of Entry in the ICEGATE system.
2. Impact of COVID-19: The decision highlights the importance of considering the challenges posed by the pandemic, including financial constraints and operational disruptions, when assessing compliance with regulatory timelines.
3. Judicial Precedent: The Tribunal relied on the Supreme Court’s ruling on the extension of limitation periods during the pandemic, reinforcing the principle of fairness in extraordinary circumstances.
4. Role of Proper Officers: The Tribunal clarified that proper officers have the authority to waive late fines in cases where delays are not willful and are caused by genuine reasons.
Conclusion

This ruling by the CESTAT serves as a reminder of the importance of considering systemic errors and external factors, such as the COVID-19 pandemic, when enforcing regulatory compliance. It underscores the need for fairness and flexibility in addressing cases where delays are beyond the control of importers. The decision is a significant step in ensuring that businesses are not unduly penalized for circumstances outside their control, fostering a more equitable and supportive environment for trade and commerce.

Source: CESTAT Kolkata

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November 17, 2025
CESTAT Kolkata Overturns Rs. 56.7 Lakh Customs Duty Demand and Upholds Correct Classification
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 15.11.2025

CESTAT Kolkata Overturns Rs. 56.7 Lakh Customs Duty Demand and Upholds Correct Classification

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, and Service Tax Appellate Tribunal (CESTAT), Eastern Zonal Bench, Kolkata, has delivered a favorable judgment for M/s. B.M. Jain & Sons Pvt. Ltd., a company engaged in the import of Dioctyl Phthalate (DOP). The case revolved around the classification of imported goods and the applicability of concessional duty rates under Notification No. 152/2009-CUS dated 31.12.2009.

Background of the Case

The dispute arose when the Directorate of Revenue Intelligence (DRI) alleged that the company had misdeclared Dioctyl Orthophthalate (Ortho DOP) as Dioctyl Phthalate (DOP) and classified it under Customs Tariff Heading (CTH) 29173920 to avail concessional duty benefits. The DRI issued a Show Cause Notice (SCN) demanding differential duty of Rs. 56,71,510/- along with interest and penalties, claiming that the goods should have been classified under CTH 29173200.

The Commissioner of Customs (Port) upheld the DRI’s findings, confirming the demand and imposing penalties. Aggrieved by this decision, M/s. B.M. Jain & Sons Pvt. Ltd. filed an appeal before the CESTAT.

Key Arguments by the Appellant 
1. Historical Classification: The appellant argued that they had been importing the same goods for years under CTH 29173920 without any objections from the Customs Department. They continued this classification even after the 2018 Budget, which deleted the specific tariff entry for Dioctyl Phthalate under CTH 29173920.
2. Scientific Classification: The appellant contended that the classification of goods should be based on their scientific and technical name, not commercial or market parlance. They emphasized that no samples or tests were conducted by the department to substantiate the claim that the goods were Dioctyl Orthophthalate.
3. Tariff Changes Post-Budget 2018: The appellant highlighted that after the 2018 Budget, the goods should still be classified under the new entry for Dioctyl isophthalate and Dioctyl terephthalate under CTH 29173920, as they continued to import the same product from the same supplier.
4. Finality of Bills of Entry: The appellant argued that all Bills of Entry were self-assessed and cleared under customs supervision. Since the department did not appeal against the final assessment of these Bills of Entry, the proceedings initiated through the SCN were invalid.
CESTAT’s Observations and Ruling

After hearing both sides, the Tribunal made the following observations:
1. Classification of Goods: The Tribunal held that the goods imported by the appellant were rightly classifiable under CTH 29173920, as there was no evidence to prove that the goods were Dioctyl Orthophthalate. The deletion of the tariff entry for Dioctyl Phthalate in the 2018 Budget did not imply that the goods should be reclassified under CTH 29173200.
2. Concessional Duty Benefits: The Tribunal confirmed that the appellant was eligible for the concessional duty benefits under Notification No. 152/2009-CUS dated 31.12.2009.
3. Lack of Evidence: The department failed to conduct tests or provide evidence to support its claim that the goods were misdeclared. The Tribunal emphasized that classification should be based on scientific and technical names, not market parlance.
4. Invalid Proceedings: The Tribunal referred to the Supreme Court judgment in ITC Limited v. CCE, Kolkata-IV [2019(368) E.L.T. 216(SC)] and held that without filing an appeal against the final assessment of the Bills of Entry, the proceedings initiated through the SCN were non-est.
Final Verdict

The Tribunal set aside the impugned order, ruling that the demand for differential duty, interest, and penalties was unsustainable. The appeal filed by M/s. B.M. Jain & Sons Pvt. Ltd. was allowed with consequential relief as per law.

Key Takeaways

This judgment underscores the importance of adhering to scientific and technical classifications in customs matters. It also highlights the significance of finality in the assessment of Bills of Entry and the need for substantial evidence to support allegations of misdeclaration. The ruling is a major relief for M/s. B.M. Jain & Sons Pvt. Ltd. and sets a precedent for similar cases in the future. It serves as a reminder to businesses and authorities alike to ensure proper procedures and evidence-based actions in customs disputes.

Source: CESTAT Kolkata

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November 15, 2025
CESTAT Kolkata- Differential Customs Duty Demand and Confiscation Order Declared Unsustainable
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 03.11.2025

CESTAT Kolkata- Differential Customs Duty Demand and Confiscation Order Declared Unsustainable

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), Kolkata, has set aside the demand for differential Customs Duty (CVD) imposed on M/s Reach Infocom Tech Pvt. Ltd. and its Director. The case revolved around allegations of undervaluation of imported goods, specifically mobile phones and laptops, due to discrepancies in the declared Retail Sale Price (RSP) at the time of import and the RSP found during a subsequent investigation.

Background of the Case

M/s Reach Infocom Tech Pvt. Ltd. (RITPL) is engaged in the import and sale of mobile phones and laptops under the brand name “REACH.” The company had imported goods from China between 2015 and 2017, paying the appropriate Customs Duty, including Countervailing Duty (CVD), based on the declared RSP. However, during a search conducted by the Directorate of Revenue Intelligence (DRI) in 2019, discrepancies were allegedly found between the declared RSP and the RSP displayed on goods seized during the investigation. This led to the issuance of two Show Cause Notices (SCNs) and a subsequent demand for differential CVD amounting to Rs. 2,92,54,340, along with interest, penalties, and redemption fines.

Key Arguments by the Appellant 

The appellants, represented by their legal counsel, raised several critical points challenging the demand:
1. Jurisdictional Overreach: The appellants argued that Customs authorities lacked jurisdiction to demand differential CVD for goods that had already been assessed and cleared for home consumption. They contended that any subsequent activity, such as affixing new MRP stickers, constituted “manufacture” under Section 2(f)(iii) of the Central Excise Act, 1944, and any duty liability arising from such activities should fall under the purview of Central Excise authorities, not Customs.
2. Lack of Evidence: The appellants highlighted that the demand was based on assumptions and generalizations rather than concrete evidence. The Department failed to provide proof of any single transaction where goods were sold at a price higher than the declared MRP.
3. Non-compliance with Legal Procedures: The appellants pointed out that the statements relied upon by the Department were recorded under Section 108 of the Customs Act but were not subjected to the mandatory procedure under Section 138B, which requires examination and cross-examination of witnesses before admitting their statements as evidence.
4. Time-Barred Demand: The appellants argued that the extended period of limitation could not be invoked for the second SCN issued in 2020, as the facts of the case were already known to the Department when the first SCN was issued in 2019.
5. Finality of Self-Assessed Bills of Entry: The appellants contended that the self-assessed Bills of Entry for the imported goods were not challenged by the Department, and as per the Supreme Court’s ruling in the ITC Ltd. case, the Department cannot reassess the original assessments indirectly.
Tribunal’s Observations and Ruling 

After hearing both sides, the Tribunal made the following key observations:
1. No Provision for Re-Determination of CVD: The Tribunal held that Section 3(2) of the Customs Tariff Act, read with Section 4A of the Central Excise Act, does not provide any mechanism for re-determining the CVD when it is paid based on the declared RSP at the time of import.
2. Activity Constitutes “Manufacture”: The Tribunal agreed with the appellants that affixing new MRP stickers on goods listed under the Third Schedule of the Central Excise Act amounts to “manufacture.” As such, any duty liability arising from this activity should be under the Central Excise Act, not Customs Law.
3. Non-Admissibility of Statements: The Tribunal emphasized that the Department failed to follow the mandatory procedure under Section 138B of the Customs Act, rendering the recorded statements inadmissible as evidence.
4. Erroneous Quantification of Duty: The Tribunal found that the Department’s method of calculating differential duty was flawed, as it relied on RSPs from unrelated e-commerce websites without corroborating evidence.
5. Time-Barred Demand: The Tribunal ruled that the extended period of limitation could not be invoked for the second SCN, as the facts were already within the Department’s knowledge when the first SCN was issued.
6. Confiscation and Redemption Fine Unsustainable: The Tribunal held that confiscation and redemption fines were not legally sustainable, as the goods were not available for confiscation and had been cleared without any bond.
Final Verdict

The Tribunal set aside the impugned order in its entirety, both on merits and on account of time-bar. The appeals filed by M/s Reach Infocom Tech Pvt. Ltd. and its Director were allowed, and they were granted consequential relief as per law.

Connected Matter

Bombay High Court Clarifies Scope of Redemption Fines Under Section 125 of the Customs Act

Source: CESTAT Kolkata

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November 3, 2025
CESTAT Kolkata Dismissed DRI’s Allegations of Fe Content Manipulation
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 27.10.2025

CESTAT Kolkata Dismissed DRI’s Allegations of Fe Content Manipulation

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, and Service Tax Appellate Tribunal (CESTAT), Eastern Zonal Bench, Kolkata, has rejected the appeal filed by the Revenue against M/s Kashvi Power and Steel Pvt. Limited (KPSPL) in Customs Appeal No. 75043 of 2022. The case revolved around allegations of export duty evasion by mis-declaring the iron content (‘Fe’) in iron ore fines exported by KPSPL through Paradip Port, Odisha.

Background of the Case

M/s KPSPL, engaged in trading iron ore in domestic and international markets, was accused of evading export duty by misrepresenting the iron content in their shipments. According to the Directorate of Revenue Intelligence (DRI), KPSPL allegedly manipulated test reports to declare lower iron content (‘Fe’) in their shipments, thereby claiming a nil export duty rate for iron ore fines with less than 58% Fe content. The investigation revealed that KPSPL had exported iron ore fines through multiple shipping bills between 2016 and 2018, allegedly splitting consignments to avoid paying the higher export duty of 30% applicable to iron ore fines with Fe content above 58%.

A Show Cause Notice (SCN) was issued to KPSPL, demanding differential export duty of ₹17.59 crore, along with interest and penalties. However, the Principal Commissioner of Customs (Preventive), Bhubaneswar, dropped the proceedings, citing unsustainable evidence. Aggrieved by this decision, the Revenue filed an appeal with the CESTAT.

Key Issues in the Appeal

The Revenue raised several points in its appeal, including:
1. The Adjudicating Authority (AA) relied solely on test reports from the Central Revenue Control Laboratories (CRCL), Kolkata, and disregarded test reports from private testing agencies.
2. The AA allegedly ignored the analysis of Fe content conducted at the discharge port in China by the China Entry-Exit Inspection and Quarantine Bureau (CIQ).
3. The AA failed to consider the alleged manipulation of test reports and splitting of consignments by KPSPL.
Tribunal’s Observations and Ruling 

After hearing both sides and reviewing the evidence, the Tribunal upheld the findings of the Adjudicating Authority and rejected the Revenue’s appeal. The key observations and conclusions were:
1. Reliability of Test Reports: The Tribunal emphasized that the CRCL test reports, based on samples drawn by Customs authorities in the presence of KPSPL representatives, were more credible than private lab reports. It cited the Supreme Court’s decision in Steer Overseas Pvt. Ltd. v. Commissioner [2022 (381) E.L.T. A34 (S.C.)], which held that private lab reports based on samples drawn without Customs oversight cannot override CRCL reports.
2. Valuation of Goods: The Tribunal found no evidence of suppression or misdeclaration of Fe content by KPSPL. The declared values in the shipping bills matched the final invoices and bank realization certificates (BRCs), indicating no undervaluation.
3. Discharge Port Analysis: The Tribunal ruled that the CIQ test reports from the discharge port in China were irrelevant for customs duty assessment, as the contracts between KPSPL and its overseas buyers were based on load port test results.
4. Alleged Manipulation of Consignments: The Tribunal found no substantial evidence to support the Revenue’s claim that KPSPL had manipulated test reports or artificially split consignments to evade export duty.
Refund of Deposited Amount 

During the investigation, KPSPL had deposited ₹2.5 crore towards potential duty liability. With the Tribunal ruling in favor of KPSPL, it ordered the refund of the deposited amount along with applicable interest.

Conclusion

This ruling highlights the importance of adhering to established procedures for sample collection and testing in customs cases. The Tribunal’s decision underscores the credibility of CRCL test reports over private lab analyses and reinforces the principle that adjudication must be based on substantial evidence rather than mere allegations. The case serves as a reminder to exporters about the importance of accurate self-assessment under the Customs Act, 1962, while also emphasizing the need for the Revenue to follow due process and present credible evidence in cases of alleged duty evasion.

Source: CESTAT Kolkata

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October 27, 2025
CESTAT Kolkata Sets Aside Confiscation and Penalty in Pre-Shipment Inspection
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 21.10.2025

CESTAT Kolkata Sets Aside Confiscation and Penalty in Pre-Shipment Inspection

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, and Service Tax Appellate Tribunal (CESTAT), Eastern Zonal Bench, Kolkata, has ruled in favor of M/s. Jai Salasar Balaji Industries Private Limited, setting aside the confiscation of imported goods and the imposition of penalties by the Principal Commissioner of Customs (Port), Kolkata. This judgment, delivered on October 16, 2025, has significant implications for importers dealing with metallic waste and scrap.

Background of the Case

The case revolved around the import of “Low Nickel Turning Scrap (1.30 Nickel)” from Belgium by M/s. Jai Salasar Balaji Industries Private Limited. The consignment, weighing 261.850 MT, was inspected at Duisburg, Germany, by M/s. Melt Enterprise Ltd., a DGFT-approved Pre-Shipment Inspection Agency (PSIA). The inspection confirmed that the consignment was free from hazardous materials, explosives, and radiation levels exceeding natural background.

However, the Customs Department raised concerns over a discrepancy between the port of loading (Antwerp, Belgium) and the place of inspection (Duisburg, Germany). The department deemed the Pre-Shipment Inspection Certificate (PSIC) invalid, citing non-compliance with the Handbook of Procedures, 2023, and Foreign Trade Policy, 2023. Consequently, the consignment was confiscated under Section 111(d) of the Customs Act, 1962, with a redemption fine of Rs. 10,00,000/- and a penalty of Rs. 15,00,000/- imposed under Section 112(a)(i) of the Act.

Key Issues in the Appeal 

The appellant challenged the confiscation and penalties, arguing that the PSIC issued by M/s. Melt Enterprise Ltd. was valid and complied with the requirements of Para 2.51 of the Handbook of Procedures, 2023. The appellant contended that there is no legal stipulation mandating that pre-shipment inspection must occur at the port of loading/shipment. The inspection at Duisburg, an inland port and logistics hub, was necessary as the goods were transported to Antwerp for shipment to India.

The Revenue argued that the PSIC was invalid as it was not issued from the country of origin, citing Public Notice No. 46/(2015-2020) dated January 14, 2022, which mandates inspection at the country of origin.

CESTAT’s Observations and Ruling 

After hearing both sides, the Tribunal made the following observations:
1. Validity of PSIC: The Tribunal noted that the PSIC issued by M/s. Melt Enterprise Ltd. was genuine and complied with the requirements of Para 2.51 of the Handbook of Procedures, 2023. The certificate confirmed that the consignment was free from hazardous, radioactive, or explosive materials, fulfilling the primary objective of the PSIC requirement.
2. No Prohibition on Inspection Location: The Tribunal clarified that there is no legal requirement for pre-shipment inspection to be conducted exclusively at the port of loading/shipment. The inspection at Duisburg, Germany, was valid as it ensured compliance with safety standards.
3. Post-Shipment Inspection Findings: The Tribunal emphasized that the post-shipment inspection conducted at the port of discharge confirmed the consignment’s compliance with all prescribed safety parameters, further validating the genuineness of the PSIC.
4. Confiscation and Penalty: The Tribunal held that the procedural deficiency in the PSIC did not amount to a violation of the Customs Act, 1962, or the Foreign Trade Policy, 2023. As such, the confiscation of goods and imposition of redemption fine and penalty were deemed unsustainable.
Final Order

The Tribunal passed the following order:
1. The confiscation of goods under Section 111(d) of the Customs Act, 1962, was set aside.
2. The redemption fine of Rs. 10,00,000/- and penalty of Rs. 15,00,000/- imposed under Section 112(a)(i) of the Customs Act, 1962, were also set aside.
3. The Revenue was directed to release the detained consignment immediately, subject to payment of applicable customs duties.
Implications of the Judgment 

This decision is a significant win for importers, as it clarifies the legal requirements for pre-shipment inspection certificates and emphasizes the importance of ensuring compliance with safety standards over procedural technicalities. The Tribunal’s ruling reinforces the principle that procedural lapses should not lead to the confiscation of goods or imposition of penalties if the primary objectives of the law are met.

The judgment also highlights the need for clarity in regulatory provisions to avoid unnecessary disputes and delays in the clearance of goods. Importers can now breathe a sigh of relief, knowing that genuine efforts to comply with safety standards will be recognized and upheld by the judiciary.

Source: CESTAT Kolkata

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October 21, 2025
CESTAT Kolkata Quashes DRI-Issued Show Cause Notice

ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 07.10.2025

CESTAT Kolkata Quashes DRI-Issued Show Cause Notice

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), Kolkata Regional Bench, has set aside an order demanding differential duty from M/s Beriwala Impex Pvt. Ltd. The case revolved around the authority of Directorate of Revenue Intelligence (DRI) officers to issue Show Cause Notices (SCNs) under Section 28 of the Customs Act, 1962. This decision reaffirms the legal principles established by the Supreme Court in the Canon India case and sheds light on the scope of powers exercised by DRI officers under the Customs Act.

Background of the Case

M/s Beriwala Impex Pvt. Ltd. imported LDPE re-processed granules through various ports, including Kolkata, Chennai, and ICD Tughlakabad. The Directorate of Revenue Intelligence (DRI) alleged undervaluation of the imported goods, leading to a short levy of customs duty. Following an investigation, the DRI issued a Show Cause Notice (SCN) demanding differential duty of Rs. 96,42,062, along with interest, confiscation of goods, and penalties.

The appellant challenged the SCN, arguing that DRI officers were not “proper officers” under Section 28 of the Customs Act, as clarified by the Supreme Court in Canon India Pvt. Ltd. v. Commissioner of Customs.

Source: CESTAT Kolkata

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October 7, 2025