𝐀𝐚𝐝𝐫𝐢𝐤𝐚𝐚 𝐋𝐞𝐠𝐚𝐥 𝐒𝐞𝐫𝐯𝐢𝐜𝐞𝐬 (𝐀𝐋𝐒)

Tag: #CESTATKolkata

CESTAT Kolkata Sets Aside IGST Demand
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 03.03.2026

CESTAT Kolkata Sets Aside IGST Demand

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 & Service Tax Appellate Tribunal (CESTAT), Kolkata, has set aside a demand raised by the Commissioner of Customs (Port), Kolkata, against M/s Chirag Corporation. This case, revolving around the classification and IGST rate applicable to imported goods, highlights critical aspects of customs law, including the finality of assessments, the invocation of the extended period under Section 28(4) of the Customs Act, 1962, and the concept of revenue neutrality.

Case Background

M/s Chirag Corporation imported 40 sets of Divya Shakti brand power tillers in August 2017 and filed a Bill of Entry, classifying the goods under CTH 84328090. The company paid IGST at the rate of 12% as per Notification No. 1/2017-CT (Rate) dated 28.06.2017. The Bill of Entry was assessed and cleared without any provisional assessment, bond, or bank guarantee.

However, nearly five years later, on 6th April 2022, the Department issued a Show Cause Notice (SCN) invoking the extended period under Section 28(4) of the Customs Act, alleging that the applicable IGST rate was 18%, not 12%. The lower authorities confirmed the demand, prompting M/s Chirag Corporation to file an appeal before the CESTAT.

Key Arguments by the Appellant 

The appellant, represented by Advocate, raised the following points:
1. Finality of Assessment: The Bill of Entry was finalized and never challenged by the Department. Referring to the Supreme Court’s judgment in ITC Ltd. v. Commissioner of Central Excise, Kolkata-IV, the appellant argued that a finalized assessment cannot be reopened indirectly through a demand notice without first challenging the assessment itself.
2. Limitation Period: The SCN was issued nearly five years after the import, exceeding the normal limitation period. The appellant contended that there was no suppression, misstatement, collusion, or fraud, which are prerequisites for invoking the extended period under Section 28(4).
3. Revenue Neutrality: The appellant emphasized that the IGST paid at the time of import was fully available as Input Tax Credit (ITC) under the CGST Act, 2017. Since the goods were sold on payment of GST, the situation was revenue-neutral, and there was no intention to evade tax.
Key Arguments by the Respondent 

The respondent argued that the appellant had wrongly claimed the benefit of the notification, and the extended period was rightly invoked.

CESTAT’s Observations and Ruling

The Tribunal, comprising Hon’ble Judicial Member and Hon’ble Technical Member, made the following observations:
1. Finalized Assessment: The Tribunal acknowledged that the Bill of Entry was finalized and not challenged by the Department. However, since the imports occurred before the Supreme Court’s judgment in ITC Ltd., the Tribunal did not accept the appellant’s argument on this count.
2. Limitation Period: The SCN was issued well beyond the normal limitation period. The Tribunal noted that the classification, notification number, and IGST rate were clearly declared in the Bill of Entry, and the dispute was merely a matter of interpretation. This did not constitute suppression or willful misstatement, which are necessary to invoke the extended period under Section 28(4).
3. Revenue Neutrality: The Tribunal emphasized that the appellant was eligible to avail ITC for the IGST paid at the time of import, and the goods were sold on payment of GST. This made the situation revenue-neutral, further negating any intention to evade tax.
4. Precedents: The Tribunal referred to similar cases, including Chiripal Poly Films Ltd. v. Commissioner of Customs, Ahmedabad and Himadri Speciality Chemical Ltd. v. Principal Commissioner of Customs, Visakhapatnam. In both cases, the extended period was held to be inapplicable due to the absence of suppression and the revenue-neutral nature of the transactions.
Final Decision

The Tribunal concluded that the demand raised by the Department was barred by limitation and could not be sustained. The impugned order was set aside, and the appeal was allowed with consequential relief as per law.

Key Takeaways
1. Finality of Assessment: Once a customs assessment is finalized, it cannot be reopened indirectly through a demand notice unless the assessment itself is challenged.
2. Extended Limitation Period: The extended period under Section 28(4) of the Customs Act can only be invoked if there is evidence of suppression, willful misstatement, collusion, or fraud.
3. Revenue Neutrality: In cases where the tax paid is available as ITC and the situation is revenue-neutral, the intention to evade tax cannot be established.
4. Judicial Precedents: The Tribunal’s reliance on previous rulings underscores the importance of consistency in judicial decisions and the application of established legal principles.
Conclusion

The decision in M/s Chirag Corporation v. Commissioner of Customs (Port), Kolkata serves as a reminder of the importance of adhering to procedural requirements in customs assessments and the limitations on invoking the extended period for demand notices. It also highlights the significance of revenue neutrality in determining the intent to evade tax. This ruling is likely to have far-reaching implications for similar cases in the future, providing clarity and guidance to both taxpayers and the Department.

Source: CESTAT Kolkata

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March 3, 2026
CESTAT Kolkata Sets Aside Customs Broker License Revocation Over Procedural Lapse
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 16.02.2026

CESTAT Kolkata Sets Aside Customs Broker License Revocation Over Procedural Lapse

Adv Ravi Shekhar Jha

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

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Kolkata, recently delivered a significant judgment in the case of M/s Chatterji & Co. vs. Commissioner of Customs (Port), Kolkata. This case revolved around the revocation of a Customs Broker License under the Customs Brokers Licensing Regulations, 2018 (CBLR 2018). The Tribunal’s decision to set aside the revocation order highlights the importance of adhering to procedural timelines and principles of natural justice in adjudication processes.

Background of the Case

The appellant, M/s Chatterji & Co., was issued a Show Cause Notice (SCN) on July 16, 2019, for alleged violations of the provisions of CBLR 2018. This SCN was based on an Offence Report received from the Directorate of Revenue Intelligence (DRI) on April 30, 2019. Subsequently, the appellant’s Customs Broker License was suspended on May 1, 2019.

The appellant challenged the suspension order, and the CESTAT Kolkata, in its Final Order No. 75731/2024 dated April 19, 2024, set aside the suspension order, citing delayed action by the Revenue authorities. However, the Principal Commissioner of Customs later revoked the appellant’s license through an Order-in-Original (OIO) dated August 16, 2022, which led the appellant to file an appeal before the Tribunal.

Key Arguments Presented 
1. Violation of Procedural Timelines: The appellant argued that the OIO was passed beyond the stipulated time frame under Regulation 17(7) of CBLR 2018. According to this regulation, the Principal Commissioner or Commissioner of Customs must pass an order of suspension or revocation within 90 days from the date of submission of the Inquiry Report by the Deputy Commissioner or Assistant Commissioner of Customs. In this case, the Inquiry Report was submitted on March 28, 2022, but the OIO was passed on August 16, 2022—well beyond the 90-day limit.
2. Previous Tribunal Orders: The appellant highlighted two previous orders by the Tribunal that set aside similar actions taken by the Revenue authorities. These orders demonstrated that the alleged contraventions were not substantiated and that the suspension of the appellant’s license was unjustified.
3. Compliance with CBLR 2018: The appellant contended that they had fulfilled the requirements under Regulation 10(a), (d), and (e) of CBLR 2018, further challenging the grounds for revocation of their license.
Tribunal’s Observations

The Tribunal carefully examined the timeline of events and the provisions of Regulation 17(7) of CBLR 2018. It noted that the Inquiry Report was submitted on March 28, 2022, and the OIO was passed on August 16, 2022—more than 130 days later. This was a clear violation of the 90-day time limit prescribed under Regulation 17(7). The Tribunal emphasized that the regulation does not provide any saving clause for exceeding this time limit, making the delay a procedural lapse.

The Tribunal also acknowledged its previous orders, which had set aside the suspension of the appellant’s license due to delayed action by the Revenue authorities. These orders further supported the appellant’s case.

Final Decision

In its judgment, the Tribunal set aside the impugned order, allowing the appeal filed by M/s Chatterji & Co. The Tribunal held that the revocation of the Customs Broker License was invalid due to the procedural lapse in adhering to the time limit under Regulation 17(7) of CBLR 2018. The appellant was deemed eligible for consequential relief as per the law.

Key Takeaways
1. Adherence to Procedural Timelines: The case underscores the importance of strict compliance with procedural timelines in adjudication processes. The Tribunal’s decision serves as a reminder to authorities to ensure timely action to uphold the principles of natural justice.
2. Significance of Previous Judicial Precedents: The Tribunal’s acknowledgment of its earlier orders highlights the importance of consistency in judicial decisions and the role of precedents in shaping outcomes.
3. Protection of Rights Under CBLR 2018: The judgment reinforces the safeguards provided under CBLR 2018 to Customs Brokers, ensuring that their licenses cannot be arbitrarily revoked without following due process.
Conclusion

The CESTAT Kolkata’s decision in this case is a landmark ruling that emphasizes the need for procedural fairness and timely action by adjudicating authorities. It serves as a precedent for similar cases and provides reassurance to Customs Brokers that their rights under CBLR 2018 will be protected. This judgment is a testament to the judiciary’s role in upholding justice and ensuring accountability in administrative processes.

Source: CESTAT Kolkata

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February 16, 2026
CESTAT Kolkata Upholds Exporter Rights: Landmark Ruling on Customs Valuation Dispute
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 10.02.2026

CESTAT Kolkata Upholds Exporter Rights: Landmark Ruling on Customs Valuation 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.comor on his Mobile +91-9999005379.

In a significant judgment, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Kolkata, has delivered a landmark decision in the case of Commr. of Customs (Port), Kolkata vs. Appellant & M/s Ankraj Developer Pvt. Ltd.. The case revolved around the valuation of exported goods, specifically leather wallets, and the alleged overvaluation by the appellants. The Tribunal’s decision not only dismissed the Revenue’s appeals but also reinforced the importance of adhering to statutory valuation principles under the Customs Act, 1962.

Background of the Case

The dispute originated when the appellants and M/s Ankraj Developer Pvt. Ltd., sought to export leather wallets under nine shipping bills during February 2023. The declared Free on Board (FOB) value of the goods was ₹6,61,02,740. However, the Customs Department alleged that the declared value was inflated, leading to potential undue drawback benefits. Following a market survey, the Department re-determined the value to ₹4,72,30,000, which was later revised to ₹5,22,87,600 by the adjudicating authority. The goods were confiscated, and penalties and redemption fines were imposed.

The appellants challenged the adjudication order before the Commissioner (Appeals), who set aside the order, citing fundamental errors in the valuation process. Dissatisfied with this decision, the Revenue filed appeals before the Tribunal.

Key Arguments

Revenue’s Arguments

The Revenue contended that the declared value was excessively high and based on overvaluation. They argued that a market survey was conducted to determine the correct value, which included the appellant’s representative. The adjudicating authority had considered the appellant’s submissions and revised the valuation, ensuring compliance with principles of natural justice. The Revenue claimed that the appellants were attempting to claim undue drawback benefits and justified the penalties and redemption fines imposed.

Respondents’ Arguments

The respondents argued that the Department failed to follow the procedure outlined in Section 14 of the Customs Act, 1962, and the Customs Valuation (Determination of Value of Export Goods) Rules, 2007 (CVR, 2007). They emphasized that the declared value was consistent with past export transactions to the same overseas importer. The respondents also pointed out flaws in the market survey, which compared non-comparable goods and ignored the higher procurement costs from traders. They argued that the adjudicating authority had arbitrarily added a notional profit margin of 10%, which is not supported by any legal provision.

Tribunal’s Observations

After hearing both sides and reviewing the evidence, the Tribunal made the following key observations:
1. Violation of Statutory Valuation Principles: The Tribunal noted that the Customs Act, 1962, and CVR, 2007 mandate a sequential approach to valuation. The transaction value declared in the shipping bills should be accepted unless the Revenue provides concrete evidence to prove otherwise. In this case, the Department failed to justify the rejection of the declared value.
2. Errors in Market Survey: The Tribunal found that the market survey conducted by the Department was flawed. It compared dissimilar goods and failed to account for factors such as procurement costs, compliance testing, and warranty obligations that impact export pricing.
3. Past Export Data Ignored: The Tribunal highlighted that the adjudicating authority disregarded the appellant’s consistent export history, which demonstrated similar values for identical goods exported to the same buyers in the past.
4. Improper Application of Customs Valuation Rules: The Tribunal criticized the Department for bypassing the mandatory sequential application of valuation rules. The adjudicating authority failed to exhaust primary methods under Rules 3 and 4 before invoking Rule 6, which contravenes established legal principles.
5. No Evidence of Misdeclaration: The Tribunal found no evidence of misdeclaration, forged documents, or fabricated claims by the appellants. The goods were cleared through proper banking channels, and all material particulars matched the declared values.
Final Decision

The Tribunal upheld the Commissioner (Appeals)’ decision, dismissing the Revenue’s appeals. It concluded that the rejection of the declared FOB value was legally unsustainable and that the confiscation of goods, along with the imposition of fines and penalties, was unwarranted. The Tribunal directed the Customs Department to release the goods immediately, considering the significant delay of three years since their seizure.

Key Takeaways

This judgment underscores the importance of adhering to statutory valuation principles under the Customs Act, 1962, and CVR, 2007. It reiterates that the declared transaction value should be accepted unless the Revenue provides substantial evidence to prove otherwise. The case also highlights the need for proper application of the sequential valuation mechanism and the importance of considering past export data and business relationships.

The Tribunal’s decision serves as a reminder to authorities to ensure fairness and transparency in valuation disputes, protecting the rights of exporters while safeguarding revenue interests. It also emphasizes the need for thorough investigations and evidence-based conclusions in cases of alleged overvaluation or misdeclaration.

Conclusion

The dismissal of the Revenue’s appeals in this case is a victory for exporters and a reaffirmation of the principles of natural justice. It sets a precedent for future valuation disputes, ensuring that the Customs Department adheres to established legal procedures and safeguards. This judgment is a testament to the importance of upholding the rule of law and protecting the rights of businesses engaged in international trade.

Source: CESTAT Kolkata

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February 10, 2026
CESTAT Kolkata Overturns Customs Duty Demand Over Disputed Chartered Engineer Certificate
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 03.02.2026

CESTAT Kolkata Overturns Customs Duty Demand Over Disputed Chartered Engineer Certificate

Adv Ravi Shekhar Jha

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

In a significant judgment, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Eastern Zonal Bench, Kolkata, has ruled in favor of M/s. Sana Impex Private Limited, setting aside the demands for differential customs duty and interest. The case, which revolved around the import of old and used machinery, highlights critical issues regarding the validity of certificates issued by Chartered Engineers and the procedural lapses in customs assessments.

Background of the Case

M/s. Sana Impex Private Limited, a Kolkata-based importer, had imported four old and used color printing machines with standard accessories and a paper cutting machine with standard accessories under Customs Tariff Headings 84431200 and 84411010, respectively. The company filed two Bills of Entry (Nos. 5165104 and 5165044) on May 5, 2016, for the clearance of these goods. Along with the Bills of Entry, the importer submitted all requisite documents, including the Bill of Lading, Country of Origin certificate, Commercial Invoice, Packing List, and a Load Port Chartered Engineer Certificate.

The goods were examined by the shed officer, who ordered their release based on the Load Port Chartered Engineer Certificate. However, the Assessing Officer provisionally assessed the Bills of Entry based on the invoice value and marked them for further investigation by the Special Intelligence and Investigation Branch (SIIB). The consignments were allowed ‘out of charge’ after the importer submitted a PD Bond.

Six years later, in December 2022, the SIIB directed the assessing group to finalize the Bills of Entry based on a certificate issued by a local Chartered Engineer. The final assessment led to the confirmation of differential customs duty amounting to Rs. 6,14,034/- (Rs. 3,16,074/- + Rs. 2,97,960/-), along with interest. Aggrieved by this decision, the importer filed an appeal before the Commissioner of Customs (Appeals), who upheld the final assessment orders. Subsequently, the importer approached the CESTAT Kolkata to challenge the impugned order.

Key Arguments Presented by the Appellant 

During the hearing, the appellant, represented by Advocate and Consultant, raised several critical points:
1. Validity of the Chartered Engineer Certificate: The appellant argued that the certificate issued by Mr. Sajal Majumdar on May 7, 2016, was invalid as it was prepared five days before the goods were physically examined on May 11 and 12, 2016. The appellant contended that the certificate could not have accurately assessed the condition and value of the goods without a proper examination.
2. Reliance on Load Port Certificate: The appellant emphasized that the goods were released based on the Load Port Chartered Engineer Certificate, which was submitted at the time of filing the Bills of Entry. This certificate confirmed the goods were “old and used” and did not dispute their declared value.
3. Procedural Lapses: The appellant questioned the appointment of the local Chartered Engineer, asserting that they were not informed about who appointed him. They also highlighted that the shed officer had already conducted a thorough examination of the goods and referred to the Overseas Chartered Engineer Certificate during the investigation.
Observations and Judgment by CESTAT Kolkata

The Hon’ble Tribunal, comprising Member (Judicial) and Member (Technical), carefully examined the facts and arguments presented by both sides. The Tribunal observed the following:
1. The certificate issued by the Chartered Engineer, dated May 7, 2016, was prepared without physically examining the goods, as the container was opened and examined only on May 11 and 12, 2016. Therefore, the certificate lacked validity and could not be relied upon for enhancing the value of the imported goods.
2. The Load Port Chartered Engineer Certificate submitted by the appellant at the time of filing the Bills of Entry was valid and formed the basis for the initial release of the goods. The Tribunal noted that the lower authorities had ignored this certificate without providing sufficient justification.
3. The enhancement of the value of the goods based on an invalid certificate was deemed legally unsustainable.
Based on these observations, the Tribunal set aside the impugned order and allowed the appeal filed by M/s. Sana Impex Private Limited. The demands for differential customs duty and interest were quashed, and the appellant was granted consequential relief as per the law.

Conclusion

This judgment underscores the importance of adhering to proper procedures and relying on valid documentation during customs assessments. The decision by CESTAT Kolkata serves as a reminder that procedural lapses and reliance on invalid certificates cannot form the basis for imposing additional duties and interest on importers. The ruling is a significant victory for M/s. Sana Impex Private Limited and sets a precedent for similar cases in the future.

Source: CESTAT Kolkata

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February 3, 2026
CESTAT Kolkata Dismisses Revenue Appeal and Orders Release of Confiscated Gold Bar
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 29.01.2026

CESTAT Kolkata Dismisses Revenue Appeal and Orders Release of Confiscated Gold Bar

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

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Eastern Zonal Bench, Kolkata, recently delivered a significant judgment in Customs Appeal No. 75045 of 2024. The case revolved around the confiscation of two gold bars weighing 999.900 grams each, valued at Rs. 61,79,382, and the imposition of penalties under the Customs Act, 1962. The final order, pronounced on January 27, 2026, upheld the decision of the Commissioner of Customs (Appeals) to release one of the gold bars unconditionally to the respondent, and drop the penalties imposed on him.

Background of the Case

The case originated from the seizure of two gold bars on September 18, 2018, from an employee of respondent, outside his shop, M/s. Gems & Jarwa House. The seized gold bars were identified as:
- AS-1 (Serial No. 156469) weighing 999.900 grams
- AS-2 (Serial No. 151551) weighing 999.900 grams
During the investigation, the respondent admitted ownership of the gold bars. He stated that one bar was purchased from M/s. Dutta Bullion Mart, Kolkata, while the other was handed over to him by his late cousin, as repayment for a loan. The shop premises were searched, and statements from various parties involved in the gold’s transaction chain were recorded.

The investigation revealed that both gold bars were originally purchased from M/s. Kundan Care Products Ltd., Kolkata, under valid tax invoices. However, the Revenue alleged that the respondent failed to provide valid documentation for the gold bar bearing serial number 151551, claiming it was smuggled. A Show Cause Notice was issued on September 6, 2019, proposing the confiscation of the gold and the imposition of penalties under Sections 111(b), 111(d), 112(a), 112(b), and 14AA of the Customs Act, 1962.

Adjudication and Appeal 

The adjudicating authority, in its Order-in-Original dated March 5, 2020, ordered the release of the gold bar bearing serial number 156469 but confiscated the gold bar bearing serial number 151551. A penalty of Rs. 6,00,000 was also imposed on the respondent under Sections 112(a) and 112(b) of the Customs Act.

The respondent challenged the adjudication order before the Commissioner of Customs (Appeals), who set aside the confiscation order and directed the unconditional release of the gold bar bearing serial number 151551. The Commissioner (Appeals) relied on the judgment in Commissioner of Central Excise, Meerut-I Vs. Parmarth Iron Pvt Ltd [2010 (260) E.L.T. 514 (All.)], which held that the Revenue cannot rely on statements from prosecution witnesses if cross-examination is not allowed. The Commissioner (Appeals) also observed that the Department failed to provide sufficient evidence to establish the smuggled nature of the gold bar.

CESTAT’s Final Order

The Revenue filed an appeal against the Commissioner (Appeals)’ decision, arguing that the respondent had not discharged the burden of proof under Section 123 of the Customs Act, 1962, which requires the person from whom goods are seized to prove that they are not smuggled. The Revenue contended that the respondent failed to provide valid documentation for the gold bar bearing serial number 151551 and relied heavily on the statement of proprietor of M/s. Dutta Bullion Mart, who claimed that the gold bar in question was sold in cut pieces to different customers.

After hearing both sides and reviewing the case records, the CESTAT upheld the decision of the Commissioner (Appeals). The Tribunal noted the following key points:
1. Burden of Proof Under Section 123: The Tribunal clarified that the burden of proof under Section 123 of the Customs Act shifts to the respondent only when there is a reasonable belief that the goods are smuggled. In this case, the Revenue failed to establish the smuggled nature of the gold bar, as it was originally purchased from M/s. Kundan Care Products Ltd. under valid tax invoices.
2. Lack of Evidence: The Revenue relied solely on the statement of Shri Aniruddha Dutta, which claimed that the gold bar was sold in cut pieces to different customers. However, the Department did not provide any documentary evidence or conduct further investigations to substantiate this claim. The Tribunal emphasized that the absence of evidence to prove the smuggled nature of the gold bar invalidated the Revenue’s allegations.
3. Cross-Examination: The Tribunal highlighted that the Department did not allow the respondent to cross-examine Shri Aniruddha Dutta, which violated the principles of natural justice. Citing the Parmarth Iron Pvt Ltd case, the Tribunal held that the Revenue cannot rely on statements from witnesses who were not cross-examined.
4. Legal Chain of Transactions: The Tribunal observed that the gold bar in question had a clear legal chain of transactions, starting from M/s. Kundan Care Products Ltd. to M/s. J.J. House Pvt. Ltd., and then to M/s. Dutta Bullion Mart. This established that the gold was legally imported and was circulating in the domestic market.
5. No Evidence of Smuggling: The Tribunal concluded that the Department failed to provide any evidence, documentary or otherwise, to prove that the gold bar was smuggled. It noted that gold is freely imported and widely available in the Indian market, and mere suspicion cannot justify penal action.
Conclusion

In its final order, the CESTAT upheld the decision of the Commissioner (Appeals) and rejected the Revenue’s appeal. The Tribunal emphasized the importance of adhering to the principles of natural justice and the need for concrete evidence to substantiate allegations of smuggling. This judgment serves as a reminder that the burden of proof lies with the Department to establish the smuggled nature of goods, and mere suspicion or unsubstantiated statements cannot form the basis for confiscation or penalties.

Source: CESTAT Kolkata

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January 29, 2026
CESTAT Kolkata Ruling: Clarity on OPGW Cable Classification Dispute
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 23.01.2026

CESTAT Kolkata Ruling: Clarity on OPGW Cable Classification Dispute

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

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Kolkata, recently delivered a landmark judgment in the case of M/s. KEC International Limited vs. Commissioner of Customs (Port), Kolkata. This case revolved around the classification of Optical Ground Wire (OPGW) Fiber Optic Cable under the Customs Tariff Heading (CTH). The decision, pronounced on January 20, 2026, has brought clarity to a long-standing dispute regarding the classification of OPGW cables and the associated customs duty.

Background of the Case

M/s. KEC International Limited imported OPGW Fiber Optic Cables between June 16, 2016, and June 11, 2021, classifying them under CTH 8544 70 90. This classification was based on a Test Report issued by the Electronics Regional Test Laboratory (EAST) in 2014, which was accepted by the Customs Department in 2015. However, the Department of Revenue later alleged that the correct classification should be under CTH 9001 00 00, which would attract a higher customs duty.

On June 11, 2021, the Department issued a Show Cause Notice (SCN) demanding a differential duty of Rs. 2,38,07,593/- along with interest and penalties. The SCN also sought penalties against the DGM Taxation and Senior Manager Taxation of KEC International. The appellant contested the SCN, arguing that their classification was consistent with the earlier accepted Test Report and that the goods were identical to those previously imported.

Adjudicating Authority’s Decision 

The Adjudicating Authority reviewed the case and made the following decisions:
1. Dropped Demand for Extended Period: The demand of Rs. 2,23,22,087/- for imports made between June 16, 2016, and June 10, 2019, was dropped due to the absence of suppression and the expiration of the limitation period.
2. Confirmed Demand for Normal Period: The demand of Rs. 14,85,505/- for imports made between June 11, 2019, and June 11, 2021, was confirmed under the normal period.
3. No Penalties on Individuals: The proposed penalties against the DGM Taxation and Senior Manager Taxation were dropped.
Appeals Filed by Both Parties 

Both parties filed appeals before the Tribunal:
- KEC International: Challenged the confirmed demand of Rs. 14,85,505/-.
- Revenue: Appealed against the dropped demand of Rs. 2,23,22,087/- and sought penalties against the DGM Taxation and Senior Manager Taxation. However, the Tribunal clarified that the Revenue’s appeal against the individuals could not be considered as no specific appeal was filed against them.
Tribunal’s Observations and Final Decision 

The Tribunal carefully analyzed the arguments and evidence presented by both parties. Below are the key observations and findings:

1. Classification Dispute

The classification of OPGW Fiber Optic Cable under CTH 8544 70 90 or CTH 9001 00 00 has been a contentious issue for years. The Larger Bench of the Tribunal had previously ruled in 2017 that the cables should be classified under CTH 9001 00 00. However, this decision was stayed by the Supreme Court in 2020, and the matter remains unresolved.

2. Lack of Evidence from Revenue 

The Tribunal noted that the Revenue failed to provide concrete evidence, such as test reports, to support their claim that the goods imported between June 2019 and June 2021 should be classified under CTH 9001 00 00. The Revenue relied on assumptions and partial readings of letters from the Department of Telecommunication, which were insufficient to substantiate their case.

3. Importance of Sample Testing 

The Tribunal emphasized the necessity of sample testing for determining the classification of goods. It cited several case laws, including Stonex India Pvt Ltd vs Mundra Customs and Shalimar Paints Ltd. v. Commissioner, which established that test reports from one consignment cannot be applied to another and that each consignment must be assessed separately.

4. No Suppression Found 

The Tribunal agreed with the Adjudicating Authority that the issue was one of interpretation rather than suppression. The appellant had disclosed all relevant facts and had acted in accordance with the Test Report accepted by the Customs Department in 2015.

5. Final Decision

The Tribunal dismissed the Revenue’s appeal against the dropped demand of Rs. 2,23,22,087/- and upheld the Adjudicating Authority’s decision. Additionally, the Tribunal set aside the confirmed demand of Rs. 14,85,505/- against M/s. KEC International, allowing their appeal with consequential relief.

Key Takeaways

This judgment is a significant milestone in the ongoing debate over the classification of OPGW Fiber Optic Cables. It highlights several important principles:
- Evidence-Based Classification: The importance of sample testing and concrete evidence in determining the classification of goods.
- Consistency in Decision-Making: The binding nature of previously accepted test reports and finalized assessments.
- Interpretation vs. Suppression: The suppression clause cannot be applied in cases involving disputes over interpretation.
- Adherence to CBEC Instructions: The necessity of following CBEC guidelines for verification and classification.
Conclusion

The CESTAT Kolkata’s decision in this case is a testament to the importance of evidence-based decision-making in customs classification disputes. By dismissing the Revenue’s appeal and allowing the importer’s appeal, the Tribunal has reinforced the need for consistency, transparency, and adherence to established procedures. As the matter of classification remains sub judice before the Supreme Court, this judgment serves as a reminder of the complexities involved in customs classification and the critical role of due process in resolving such disputes.

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Source: CESTAT Kolkata

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January 23, 2026
Revenue’s Appeal Fails in Valuation & Classification Dispute on Electric Tricycle Controllers
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 19.01.2026

Revenue’s Appeal Fails in Valuation & Classification Dispute on Electric Tricycle Controllers

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

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Kolkata, recently delivered a significant judgment in the case of Commissioner of Customs (Port), Kolkata v. M/s Aahana Commerce Pvt. Ltd. (Customs Appeal No. 76000 of 2023). This case revolved around the classification and valuation of imported Motor Controllers and Electric Tricycle Spare Parts, and the decision has set a precedent for similar cases in the future. Here’s a detailed breakdown of the case and its implications.

Background of the Case

M/s Aahana Commerce Pvt. Ltd. imported Motor Controllers and various Electric Tricycle Spare Parts. Upon filing the Bills of Entry, the Assessing Officer reassessed the importation by enhancing the CIF value, rejecting the declared value of the goods, and changing the classification of the Motor Controller from Customs Tariff Heading (CTH) 8503 0090 to CTH 8708 9900.

To avoid delays and demurrage charges, the Respondent cleared the goods on payment of the enhanced customs duty under protest and requested the lower authority to issue assessment orders under Section 17(5) of the Customs Act, 1962. However, no such orders were issued.

Aggrieved by the assessment, the Respondent approached the Commissioner (Appeals), who set aside the assessment orders, accepted the declared value, and classified the Motor Controller under CTH 8503 0090. The Revenue, dissatisfied with this decision, filed an appeal before the CESTAT.

Key Issues in the Case

The case revolved around two primary issues:
1. Valuation of Imported Goods: The Revenue argued that the declared transaction value could not be accepted under Rule 3(1) of the Customs Valuation Rules, 2007, as the Respondent failed to provide substantive documents to support the declared value. The Revenue contended that the transaction value should be determined sequentially under Rules 4 to 9 of the Customs Valuation Rules, 2007, based on contemporaneous import data.
2. Classification of Motor Controller: The Revenue claimed that the Motor Controller should be classified under CTH 8708 9900, which covers parts and accessories of motor vehicles, as the controller is used in electric tricycles (e-rickshaws). The Respondent argued that the Motor Controller is a part of an electric motor and should be classified under CTH 8503 0090.
CESTAT’s Observations and Decision

After hearing both parties and reviewing the appeal papers, the Tribunal made the following observations:

Valuation of Imported Goods
- The assessing officer rejected the transaction values without valid reasons or evidence, failing to follow the procedures outlined in Section 14 of the Customs Act and the Customs Valuation Rules, 2007.
- There was no evidence to suggest that the declared transaction values were not the actual prices paid for the goods or that the buyer and seller were related.
- The Department did not provide any proof that the Respondent paid an amount over and above the invoice value to the foreign supplier.
- The Tribunal upheld the Commissioner (Appeals)’ decision to accept the transaction value declared by the Respondent.
Classification of Motor Controller 
- The Tribunal observed that the Motor Controller is principally used with electric motors to perform functions such as starting, stopping, regulating speed, and selecting forward or reverse rotation. These functions are directly connected to the motor, making the controller a part of the motor.
- The Tribunal rejected the Revenue’s argument that the controller is a separate device used for controlling various activities in an e-rickshaw. It emphasized that the controller cannot perform its functions without being attached to the motor.
- The Tribunal referred to the Customs Tariff Heading 8503, which covers “parts suitable for use solely or principally with the machines of heading 8501 or 8502.” Since the Motor Controller is principally used with electric motors, it was rightly classified under CTH 8503 0090.
- The Tribunal also noted that Note No. 2(f) to Section XVII specifically excludes electrical machinery or equipment falling under Chapter 85 from being classified under Chapter 87.
Precedents

The Tribunal relied on its previous decisions in similar cases, including Final Order No. 76829-76831/2024 and Final Order No. 77726-77729/2025, which upheld the classification of Motor Controllers under CTH 8503 0090. It also referred to the Supreme Court’s judgment in CCE, Aurangabad v. Videocon Industries Ltd. [2023 (384) E.L.T. 628 (S.C.)], which emphasized the importance of narrowly construing exclusions and classifications under the Customs Tariff Act.

Final Verdict

The CESTAT dismissed the Revenue’s appeal, upholding the Commissioner (Appeals)’ decision to classify the Motor Controller under CTH 8503 0090 and accept the declared transaction value. The Tribunal found no merit in the Revenue’s arguments and emphasized the importance of adhering to established procedures and providing substantive evidence when challenging declared values and classifications.

Implications of the Judgment

This landmark decision has significant implications for importers and the customs authorities:
1. Clarity on Classification: The judgment provides clarity on the classification of Motor Controllers, confirming that they fall under CTH 8503 0090 as parts of electric motors, rather than CTH 8708 9900 as parts of motor vehicles.
2. Adherence to Valuation Rules: The Tribunal reinforced the importance of following the Customs Valuation Rules, 2007, and providing valid reasons and evidence when rejecting declared transaction values.
3. Precedent for Future Cases: The decision sets a precedent for similar cases involving the classification and valuation of imported goods, ensuring consistency in the application of customs laws.
Conclusion

The CESTAT Kolkata’s decision in this case highlights the importance of adhering to established legal procedures and accurately interpreting customs tariff headings. It serves as a reminder to both importers and customs authorities to ensure compliance with the Customs Act and Valuation Rules while handling import transactions. This judgment is a significant step toward ensuring transparency and fairness in customs assessments, and it will undoubtedly guide future cases involving similar disputes.

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Source: CESTAT Kolkata

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January 19, 2026
Revised Guidelines for Arrest and Bail under Customs Act, 1962
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 18.12.2025

Revised Guidelines for Arrest and Bail under Customs Act, 1962

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

The Central Board of Indirect Taxes & Customs (CBIC) has issued Circular No. 13/2022-Customs dated 16th August 2022, revising the guidelines for arrest and bail in relation to offences punishable under the Customs Act, 1962. This circular streamlines the threshold limits for arrest and bail, aligning them with the revised limits for launching prosecution as per Circular No. 12/2022-Customs.

Key Highlights of the Revised Guidelines:

The revised guidelines emphasize that arrests under the Customs Act, 1962 should only be made in exceptional situations. The updated provisions under Para 2.3 of the guidelines are as follows:
1. Unauthorised Importation in Baggage/Transfer of Residence Rules: Arrests can be made if the market value of goods involved is Rs. 50,00,000 or more.
2. Outright Smuggling of High-Value Goods: This includes precious metals, restricted/prohibited items, goods notified under Section 123 of the Customs Act, 1962, or foreign currency, where the value of offending goods is Rs. 50,00,000 or more.
3. Importation of Trade Goods with Wilful Mis-declaration: Arrests can be made in cases involving mis-declaration, concealment, or import of restricted/prohibited items where the market value of goods is Rs. 2,00,00,000 or more.
4. Fraudulent Evasion of Duty: Arrests are permissible if the evasion or attempted evasion of duty involves Rs. 2,00,00,000 or more.
5. Fraudulent Availment of Drawback or Duty Exemption: In cases of fraudulent claims for duty drawback or exemptions related to exports, arrests can be made if the amount exceeds Rs. 2,00,00,000.
6. Exportation of Trade Goods with Mis-declaration or Concealment: Arrests are allowed for mis-declaration in value/description or concealment of restricted goods where the market value exceeds Rs. 2,00,00,000.
7. Fraudulent Utilisation of Instruments: If an instrument obtained through fraud, collusion, or suppression of facts is used, and the duty involved exceeds Rs. 2,00,00,000, arrests can be made.
8. Special Cases: For offences involving items such as Fake Indian Currency Notes (FICN), arms, ammunition, explosives, antiques, art treasures, wildlife items, and endangered species, arrests may be considered irrespective of the value of the goods involved.
Section 104 of the Customs Act, 1962:

Section 104 of the Customs Act, 1962, empowers Customs officers to arrest individuals if they have reasons to believe that the person has committed an offence punishable under the Act. The section outlines the procedure for arrest, including informing the person of the grounds for arrest and producing them before a magistrate within 24 hours.

Relevant Case Citation:
- Appellants vs Commissioner of Customs – CESTAT Kolkata (Customs 76113 of 2025)
The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Kolkata, overturned the confiscation of 259.99 kg of silver granules and a Hyundai i-20 car, ruling that the Revenue failed to provide sufficient evidence to prove the goods were smuggled. The appellants were arrested under Section 104 of the Customs Act, 1962, but the tribunal found that the silver granules were not a notified item under Section 123 of the Customs Act, and the burden of proof rested on the Revenue. The appellants provided valid GST invoices and returns, substantiating their claim of domestic procurement. The tribunal also dismissed all penalties imposed on the appellants and allowed the appeals with full relief.

Key Points:
1. Arrest Under Section 104: The appellants were arrested for alleged smuggling of silver granules under Section 104 of the Customs Act, 1962.
2. Confiscation Overturned: The tribunal ruled that the silver granules and vehicle were not liable for confiscation due to lack of evidence proving smuggling.
3. Burden of Proof: The Revenue failed to establish the foreign origin and smuggled nature of the goods, as silver granules are not a notified item under Section 123 of the Customs Act.
4. Documentary Evidence: Appellants provided valid GST invoices and returns, supporting their claim of domestic procurement.
5. Penalties Dismissed: Penalties imposed under Sections 112(a), 112(b), and 114AA of the Customs Act were set aside.
6. Cross-Examination Denied: Statements relied upon by the Revenue were deemed invalid as cross-examination under Section 138B of the Customs Act was not allowed.
Conclusion:

The revised guidelines under Circular No. 13/2022-Customs aim to ensure that arrests under the Customs Act, 1962 are made judiciously and only in exceptional circumstances. By setting clear threshold limits and emphasizing the importance of proportionality, the CBIC seeks to uphold the principles of justice while addressing serious offences under the Act. Stakeholders are encouraged to familiarize themselves with these guidelines to ensure compliance and avoid legal complications.

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Source: CBIC, CESTAT Kolkata

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December 18, 2025
CESTAT Kolkata Overturns FSEZ Decision and Orders Revaluation of Duty Drawback Claims
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 17.12.2025

CESTAT Kolkata Overturns FSEZ Decision and Orders Revaluation of Duty Drawback Claims

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 development, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Eastern Zonal Bench, Kolkata, has delivered a favorable judgment for M/s Promising Exports Limited in two appeals concerning supplementary duty drawback claims. The appeals, numbered C/75607/2022 and C/75608/2022, were heard and decided on November 19, 2025, by a bench comprising Hon’ble Member Judicial and Hon’ble Member Technical.

Background of the Case

M/s Promising Exports Limited, a Kolkata-based company engaged in the export of garments, had supplied Men’s Cotton Knitted Vests and T-Shirts to a unit at Falta Special Economic Zone (FSEZ) under the Duty Drawback Scheme. The company initially claimed duty drawback amounts of Rs. 7,48,800/- and Rs. 6,02,640/- for the vests and T-shirts, respectively. However, only Rs. 6,52,464/- was sanctioned on March 31, 2004.

Seeking revaluation of the drawback amount, the appellant approached the Development Commissioner, FSEZ, and subsequently filed a supplementary drawback claim on January 3, 2008, under Rule 15 of the Customs, Central Excise Duties & Service Tax Drawback Rules, 1995. The claim was based on a revised valuation of the goods by the Apparel Export Promotion Council (AEPC), which indicated a lower per-piece value for the T-shirts.

Despite reminders and legal interventions, the supplementary claim was rejected by the Development Commissioner, FSEZ, on December 12, 2017, citing it as time-barred under Rule 15(1) of the Drawback Rules, 1995. This led the appellant to pursue legal remedies, including appeals before the Commissioner of Customs (Appeals) and writ petitions in the Hon’ble High Court of Calcutta.

CESTAT Kolkata’s Decision

The tribunal observed that the cause of action for the supplementary claim arose only on October 5, 2007, when the AEPC’s revised valuation was communicated to the appellant. Since the supplementary claim was filed on January 3, 2008, it was well within the three-month limitation period prescribed under Rule 15 of the Drawback Rules, 1995.

The tribunal held that the rejection of the claim as time-barred was unsustainable and set aside the orders passed by the Development Commissioner, FSEZ. It further directed the proper officer to reconsider the supplementary claims and sanction the eligible amount of drawback based on AEPC’s revaluation.

Key Takeaways
1. Timely Filing of Supplementary Claims: The tribunal clarified that the limitation period for filing supplementary claims begins from the date the cause of action arises, not the date of the original claim.
2. Importance of AEPC Valuation: The revised valuation by AEPC played a crucial role in determining the eligibility for additional duty drawback.
3. Legal Remedies for Exporters: The case highlights the importance of pursuing legal remedies when administrative decisions adversely affect exporters.
Conclusion

The judgment is a significant win for M/s Promising Exports Limited and sets a precedent for similar cases involving supplementary duty drawback claims. It underscores the importance of adhering to procedural timelines and leveraging legal avenues to ensure justice. Exporters can take heart from this decision, knowing that the judiciary remains a robust mechanism for resolving disputes and protecting their rights.

Source: CESTAT Kolkata

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December 17, 2025
CESTAT Kolkata Sets Aside Penalties Imposed on Customs Broker Under Sections 114(i) and 114AA of the Customs Act, 1962
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 11.12.2025

CESTAT Kolkata Sets Aside Penalties Imposed on Customs Broker Under Sections 114(i) and 114AA of the Customs Act, 1962 

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 set aside penalties imposed on M/s. Seaking Agencies, a Customs Broker, under Sections 114(i) and 114AA of the Customs Act, 1962. This decision, delivered on December 9, 2025, highlights the importance of evidence-based adjudication and the role of Customs Brokers in export processes.

Background of the Case

The case revolved around the export of a container (No. TCKU 2571904) under Shipping Bill No. 6092170 dated February 25, 2016, which was intercepted by the Directorate of Revenue Intelligence (DRI) at Kolkata Port. The container, declared to contain sanitary ware accessories, was found to contain Red Sanders—a prohibited item for export. Investigations linked the Customs Broker, M/s. Seaking Agencies, to two earlier consignments under Shipping Bill Nos. 3134799 dated June 5, 2014, and 3690980 dated July 4, 2014, which were alleged to have been part of fraudulent exports.

The Principal Commissioner of Customs (Port) imposed penalties of ₹50 lakhs under Section 114(i) for failure to verify the Know Your Customer (KYC) details and ₹1 crore under Section 114AA for allegedly using forged documents to facilitate fraudulent exports.

Key Arguments by the Appellant

M/s. Seaking Agencies challenged the penalties, arguing that:
1. No Evidence of Misconduct: The containers under the two shipping bills were duly sealed and cleared by customs authorities without any misdeclaration or concealment of Red Sanders. The Appellant had no authority to inspect the contents of the sealed containers.
2. No Proven Violation of KYC Norms: A separate action under the Customs Brokers Licensing Regulations (CBLR), 2013, had already been adjudicated by the Commissioner of Customs (Airport & Admin), who dropped the charges against the Appellant in 2017, confirming that the allegations of improper KYC verification were unsubstantiated.
3. No Proof of Forged Documents: The investigation failed to provide concrete evidence to establish that the Appellant had submitted forged or fabricated documents. The Appellant had relied on documents provided by the exporter and intermediary, and there was no indication of connivance or monetary benefit.
4. Conjecture-Based Allegations: The adjudicating authority’s findings were based on assumptions and lacked concrete evidence to prove the Appellant’s involvement in fraudulent activities.
CESTAT’s Observations and Judgment

After hearing both sides, the Tribunal made the following observations:
1. No Evidence of KYC Violation: The Tribunal noted that the Commissioner of Customs (Airport & Admin) had already dropped charges against the Appellant in 2017, confirming that the allegations of KYC violations were not proven. Therefore, imposing penalties on the same grounds was legally unsustainable.
2. No Proof of Forged Documents: The Tribunal found no evidence to substantiate the claim that the Appellant had submitted forged or fabricated documents. The containers were sealed under Central Excise supervision, and the Appellant had no authority to examine the contents.
3. Lack of Concrete Evidence: The Tribunal highlighted that the allegations against the Appellant were based on conjectures and surmises, with no concrete evidence to establish their involvement in fraudulent exports.
4. Precedent Case: The Tribunal referred to the case of Pallab Mitra v Commissioner of CGST & CX, Kolkata [(2024) 22 Centax 383 (Tri-Cal)], where penalties on a Customs Broker under similar circumstances were set aside.
Final Decision

The Tribunal set aside the penalties imposed under Sections 114(i) and 114AA of the Customs Act, 1962, and allowed the appeal filed by M/s. Seaking Agencies. The judgment emphasized the need for evidence-based adjudication and recognized the limited role of Customs Brokers in verifying the contents of sealed containers.

Key Takeaways

This judgment is a landmark decision for Customs Brokers and the export-import community. It underscores the importance of adhering to legal principles and evidence-based findings in adjudication processes. The case also highlights the limited scope of a Customs Broker’s responsibilities, emphasizing that they cannot be held liable for the contents of sealed containers unless concrete evidence of misconduct is presented.

Source: CESTAT Kolkata

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December 11, 2025