Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration
Date: 18.10.2026
Delhi High Court Upholds DMRCβs Refusal to Reimburse Rs.4.46 Crore in DVAT to L&T
This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .
The Delhi High Court has dismissed Larsen & Toubro Limitedβs challenge to an arbitral award that denied reimbursement of Rs.4.46 crore in Delhi Value Added Tax (DVAT) from Delhi Metro Rail Corporation Ltd. (DMRC), holding that the relevant supplies were connected to inter-State trade and import transactions and therefore fell outside DVAT.
The dispute: tax reimbursement under a metro contract
The case arose from a 2008 DMRC contract awarded to a consortium comprising Larsen & Toubro (L&T) and Furrer + Frey AG. The contract concerned the design, supply, installation, testing and commissioning of a 25 kV rigid overhead contact system and related cabling for sections of Delhi Metroβs Phase-II network.
The contract value was approximately Rs.43.37 crore, along with USD 2.02 million and Swiss Franc 5.49 million. It required the contractor to deliver and install equipment including contact wires, traction cables, sectioning posts, sub-sectioning posts, return conductors and associated systems.
A key contractual clause provided that DMRC would reimburse DVAT or Uttar Pradesh trade tax, where applicable, on indigenous equipment upon proof of actual payment. L&T argued that it had paid DVAT of Rs.4,45,73,743 on the equipment and systems supplied to DMRC in Delhi and was entitled to reimbursement.
Why L&T claimed DVAT reimbursement
L&T procured high-voltage and low-voltage panels, cables and other components from suppliers outside Delhi. Some high-voltage panels were imported from Germany by an Indian supplier, while certain other materials were obtained through inter-State transactions.
According to L&T, these components were not supplied to DMRC as standalone items. Instead, they were transported to project sites, assembled, integrated, installed and commissioned into sectioning and sub-sectioning posts and other bill-of-quantities items. L&T maintained that the completed systems were commercially distinct products supplied to DMRC in Delhi, making the transactions local sales subject to DVAT.
L&T also relied on two aspects of DMRCβs conduct:
DMRC initially reimbursed one DVAT invoice, though it later recovered the amount from L&Tβs running bills.
DMRC deducted works-contract tax at source from invoices, which L&T argued showed that DMRC had treated the supplies as local transactions.
DMRCβs position: the supplies were exempt from DVAT
DMRC argued that reimbursement was only available where DVAT was legally applicable. It contended that the goods were procured specifically for the metro project through imports and inter-State purchases, meaning that the transactions were exempt from DVAT under Section 7 of the DVAT Act.
DMRC relied on facts showing a close contractual connection between the goods and the project:
DMRC prescribed technical specifications for the equipment.
It approved the suppliers, including the foreign supplier of the high-voltage panels.
It required pre-inspection of goods.
The goods were custom-made for the metro project.
DMRC issued customs and excise-duty exemption certificates.
The invoices and packaging identified DMRC as the consignee or stated that the goods were for the DMRC project.
DMRC maintained that these facts established that the movement of goods into Delhi, whether from another State or from abroad, was occasioned by and integral to the underlying works contract.
Arbitration award: no reimbursement due
The arbitral tribunal rejected L&Tβs claim in its entirety and issued a nil award. It concluded that the imported high-voltage panels and the materials procured from outside Delhi were directly connected with the DMRC contract.
The tribunal found that the relevant domestic procurements were inter-State sales subject to Central Sales Tax, while the imported equipment was part of a transaction in the course of import. As these categories are excluded from DVAT under Section 7 of the DVAT Act, DMRC was not required to reimburse the tax paid by L&T.
The tribunal also held that DMRCβs initial reimbursement of one invoice and later recovery of that amount was a rectifiable mistake, not an admission that DVAT was properly payable. Since the principal claim failed, the tribunal rejected L&Tβs claims for interest and arbitration costs as well.
High Courtβs analysis: contractual tax disputes can be arbitrated
Before addressing the tax issue, the Court considered L&Tβs argument that an arbitral tribunal could not decide whether DVAT applied because taxability is a matter for statutory authorities.
The Court rejected that objection. It drew a distinction between disputes that require a binding statutory tax determination and disputes between contracting parties over tax reimbursement or allocation of tax liability. The latter category is contractual and can be resolved through arbitration.
Here, the dispute centred on whether DMRC was contractually obliged to reimburse DVAT under the relevant clause. The Court held that this was an arbitrable issue between the parties.
ABB precedent was decisive
The Court held that the case was squarely governed by the earlier decision in ABB Ltd., which had been affirmed by the Supreme Court. That precedent involved a DMRC works contract for electrical and traction systems and examined whether goods procured from outside Delhi or through import were subject to DVAT.
The governing test is whether the movement of goods is integrally connected with the contract for their supply. An express contractual clause requiring inter-State movement is not necessary. It is enough if the movement is pursuant to, or incidental to, the contract.
Applying this principle, the Court found a direct and continuing link between the procurement of the panels and other equipment and L&Tβs obligations to DMRC. The fact that L&T integrated the input materials into sectioning and sub-sectioning posts did not break that connection.
Limited judicial review under Section 34
The Court emphasised that a Section 34 petition is not an appeal against an arbitral award. A court cannot reassess the evidence merely because another interpretation may be possible. Intervention is warranted only on narrow grounds, such as patent illegality going to the root of the matter.
The tribunal had considered the relevant invoices, supplier approvals, customs exemptions, project specifications, consignment details and the partiesβ submissions. Its conclusion that the supplies were linked to inter-State trade and import was therefore a plausible view supported by the record.
Outcome and practical significance
The Delhi High Court dismissed L&Tβs petition, upheld the nil arbitral award and made no order on costs.
The ruling reinforces two important principles for infrastructure and works-contract disputes:
Tax reimbursement clauses depend on legal applicability. A contractual promise to reimburse VAT does not require reimbursement where the transaction is legally exempt from that State tax.
The contractual nexus of goods movement is critical. In projects involving customized equipment, approved suppliers, import-duty exemptions and project-specific consignments, the movement of goods may remain an import or inter-State transaction even after installation or integration into a larger system.
The decision also confirms that arbitrators may decide contractual disputes over which party must bear or reimburse tax, provided they are not purporting to replace the statutory tax authorities on matters that require a binding public-law tax determination.
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Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.
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Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration
Date: 17.10.2026
Rules of Origin vs. Rules of Customs: Constitutional Authority, Treaty Enforcement and the New CBIC Clarification
This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .
From Article 253 of the Constitution to Section 28DA of the Customs Act: Understanding how international trade commitments become enforceable rights under Indian law.
Introduction: When International Trade Commitments Meet Domestic Customs Administration
India’s expanding network of Free Trade Agreements (FTAs) and Comprehensive Economic Partnership Agreements (CEPAs) has transformed the legal framework governing international trade. These agreements offer preferential market access, reduced Customs duties and enhanced commercial opportunities. However, their effective implementation depends upon a fundamental constitutional question: Can domestic Customs authorities impose conditions that dilute or defeat the benefits negotiated under a bilateral Trade Agreement?
This question has acquired renewed importance following CBIC Circular No. 43/2026-Customs, dated 24 September 2026. The Circular clarifies the relationship between Section 28DA of the Customs Act, 1962, the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 (CAROTAR), and the Rules of Origin contained in India’s Trade Agreements.
Its significance extends beyond routine Customs administration. It raises questions concerning constitutional treaty-making powers, legislative competence, delegated legislation, administrative discretion and the enforceability of international obligations within India’s domestic legal system.
The Circular specifically addresses two recurring disputes: the insistence upon Form-I for preferential tariff claims under the IndiaβUK Comprehensive Economic and Trade Agreement (CETA), and the automatic denial of preferential treatment to subsequent consignments following an earlier adverse origin determination.
By reiterating that agreement-specific Rules of Origin prevail over conflicting CAROTAR provisions, CBIC has reinforced an essential legal distinction between the authority to verify preferential claims and the power to impose additional substantive conditions.
To appreciate the Circular’s wider significance, it is necessary to examine the constitutional foundation of India’s bilateral trade agreements, the mechanism through which international obligations acquire domestic legal effect, and the judicial principles governing Customs exemptions and administrative interpretation.
I. Constitutional Foundation of Bilateral Trade Agreements in India
The Constitution of India does not contain a single provision exclusively governing Free Trade Agreements. Instead, India’s treaty-making and treaty-implementation powers arise from several interconnected constitutional provisions.
Article 51(c): Respect for International Law and Treaty Obligations
Article 51(c), contained in Part IV of the Constitution, directs the State to foster respect for international law and treaty obligations in dealings between organised peoples. This provision reflects India’s constitutional commitment to international cooperation and the observance of treaty obligations.
However, Article 51(c) forms part of the Directive Principles of State Policy. By virtue of Article 37, these principles are not directly enforceable by courts, although they remain fundamental to governance. Consequently, Article 51(c) does not independently transform an international trade agreement into an enforceable domestic statute.
Its principal significance lies in guiding constitutional interpretation and encouraging consistency between domestic law and India’s international commitments.
Article 73: Executive Authority to Negotiate and Conclude Trade Agreements
Article 73 defines the extent of the Union’s executive power. Read with Articles 53 and 246 and the relevant Union List entries, it provides the constitutional foundation for the Union executive’s authority in international relations.
Accordingly, the Central Government may negotiate and conclude bilateral and multilateral trade agreements within its constitutional competence. Such agreements may cover tariff concessions, market access, Rules of Origin, investment protection, services, intellectual property, technical barriers to trade and dispute-settlement arrangements.
However, an important distinction must be maintained between concluding an international agreement and giving its provisions enforceable domestic legal effect. An international agreement may bind India at the international level without automatically creating enforceable rights or obligations against private parties under Indian municipal law.
Where implementation requires alteration of existing legislation, restriction of legal rights or imposition of domestic obligations, appropriate legislative authority becomes necessary.
Article 253: Parliament’s Power to Implement International Agreements
Article 253 is the central constitutional provision concerning domestic implementation of international treaties. It empowers Parliament to legislate for implementing treaties, agreements and conventions with foreign countries, notwithstanding the ordinary distribution of legislative powers between the Union and States.
Its importance is twofold. First, it enables Parliament to implement international obligations through domestic legislation. Second, it permits Parliament to legislate even upon matters ordinarily falling within State legislative competence when implementing an international agreement.
Therefore, Article 253 acts as a constitutional bridge between international commitments and domestic legislative authority. However, Article 253 is an enabling provision. It does not automatically make every provision of a bilateral trade agreement directly enforceable in Indian courts.
The Supreme Court’s decision in Maganbhai Ishwarbhai Patel v. Union of India, AIR 1969 SC 783, remains particularly important in understanding this distinction.
Article 246 and the Seventh Schedule: Legislative Competence Over Foreign Trade
Article 246 distributes legislative competence between Parliament and State Legislatures.
Several entries in List I of the Seventh Schedule are directly relevant to bilateral trade agreements.
Constitutional provision
Subject matter
Relevance to international trade
Union List, Entry 10
Foreign affairs and matters concerning the Union’s relations with foreign countries
International economic relations and trade negotiations
Union List, Entry 14
Entering into treaties and agreements with foreign countries and implementing them
Constitutional legislative foundation for treaty implementation
Union List, Entry 41
Trade and commerce with foreign countries; import and export across Customs frontiers
Import-export regulation and foreign trade administration
Union List, Entry 83
Duties of Customs, including export duties
Customs tariff legislation and duty concessions
Article 253
Legislation implementing international agreements
Parliamentary authority extending beyond ordinary federal legislative limitations
These provisions collectively explain why international trade negotiations, Customs tariff legislation and foreign trade regulation principally fall within Union competence.
Articles 265 and 14: Constitutional Controls Over Customs Administration
Article 265 provides that no tax shall be levied or collected except by authority of law.
This principle is central to Customs taxation. An international agreement does not, merely through its execution, independently amend the Customs tariff or authorise Customs authorities to collect duties contrary to domestic law.
Preferential tariff treatment must be implemented through a legally valid domestic mechanism. Conversely, once a preferential concession has been lawfully implemented, its administration must remain within the governing statute and notification.
Article 14 introduces another constitutional limitation. Administrative decisions must not be arbitrary, discriminatory or unsupported by legally relevant considerations. Accordingly, Customs officers exercising powers under Section 28DA and CAROTAR remain subject to constitutional standards of legality, reasonableness and non-arbitrariness.
II. How Are Bilateral Trade Agreements Enforced Domestically in India?
India broadly follows a dualist approach to international treaties. Under this approach, international obligations and domestic legal rights operate in related but distinct legal spheres.
The execution of an international agreement does not necessarily make all its provisions directly enforceable against individuals or authorities. Domestic implementation may occur through legislation, statutory notifications, delegated legislation or executive action supported by existing law.
The Domestic Implementation Mechanism
1. Negotiation and conclusion of a Trade Agreement
Union executive authority under the Constitution
2. Identification of domestic legal requirements
Articles 246 and 253; relevant Union List entries
3. Implementation through Indian law
Customs Act, Customs Tariff Act, notifications and Rules of Origin
4. Administration of preferential tariff claims
Section 28DA, CAROTAR and the applicable Trade Agreement
5. Judicial review and statutory remedies
Customs appeals and constitutional remedies, where maintainable:-
In the Customs context, Section 5 of the Customs Tariff Act, 1975 enables the Central Government to make rules for determining the origin of goods under Trade Agreements. Preferential tariff concessions are generally implemented through notifications issued under the relevant statutory powers, including Section 25 of the Customs Act.
Section 28DA and CAROTAR then regulate the administration and verification of preferential claims. Thus, an FTA’s tariff commitments do not ordinarily operate as an independent substitute for India’s Customs legislation. Their domestic enforceability must be examined through the applicable implementing law.
III. Landmark Constitutional Precedent: Maganbhai Ishwarbhai Patel v. Union of India
Case: Maganbhai Ishwarbhai Patel v. Union of India Citation: AIR 1969 SC 783; (1969) 3 SCC 400 Court: Supreme Court of India Date: 9 January 1969
The dispute arose from the implementation of an international boundary determination involving India and Pakistan. The Supreme Court considered the constitutional powers of the Union executive to enter into international agreements and the circumstances requiring parliamentary legislation. The Court recognised that the executive could conclude international agreements within its constitutional authority.
However, it distinguished international obligations from their domestic legal consequences. Where implementation affects enforceable private rights or modifies existing domestic law, legislative support is required. The Court also explained the significance of Article 253 and Parliament’s authority to implement international agreements.
Commentary
Although the judgment concerned an international boundary dispute rather than an FTA, its constitutional reasoning remains directly relevant to trade agreements. It establishes that the Union executive’s treaty-making authority and Parliament’s treaty-implementation authority are legally distinct.
Consequently, a bilateral trade agreement cannot automatically override an inconsistent Indian statute merely because India has accepted the agreement internationally. The legally enforceable rights of importers must be identified through the applicable domestic implementing provisions, interpreted in light of the Trade Agreement where the law permits or requires such interpretation.
IV. Section 28DA of the Customs Act: The Statutory Framework for Preferential Origin
Section 28DA, introduced through the Finance Act, 2020, establishes the responsibilities of importers claiming preferential Customs duty under Trade Agreements.
The provision was intended to strengthen verification of originating status and prevent the misuse of preferential tariff concessions. Under Section 28DA(1), importers must declare that imported goods qualify as originating goods, possess sufficient supporting information, furnish prescribed particulars and exercise reasonable care regarding the accuracy of origin claims.
Section 28DA(2) makes it clear that the mere submission of a Certificate of Origin does not discharge the importer’s responsibility to exercise reasonable care. However, this provision cannot be interpreted in isolation.
Section 28DA(3) contemplates requests for further information consistent with the relevant Trade Agreement. This qualification is important because different agreements prescribe different documentary and verification procedures.
Section 28DA also establishes mechanisms for origin verification, suspension of preferential treatment, provisional clearance and denial of preferential benefits in specified circumstances. Subsection (11) addresses subsequent imports of identical goods following an earlier adverse origin determination. Importantly, the statutory framework does not confer unrestricted authority upon Customs to disregard agreement-specific origin procedures.
V. CAROTAR, 2020: Procedural Compliance and the Limits of Delegated Legislation
CAROTAR, 2020 was notified through Notification No. 81/2020-Customs (N.T.), dated 21 August 2020, and came into effect on 21 September 2020.
The Rules provide a domestic administrative mechanism for implementing Section 28DA. Rule 3 governs preferential tariff claims at the Bill of Entry stage. Rule 4 addresses the information importers must possess, including origin-related information identified in Form-I.
Rule 5 governs requests for further information. Rule 6 provides for verification through the prescribed authorities, while Rule 7 addresses identical goods and earlier adverse origin determinations.
Rule 8 deals with additional administrative matters, including consequences of non-compliance.
Rule 8(3): The Most Important Provision
Rule 8(3) expressly provides that where CAROTAR conflicts with the Rules of Origin under the relevant Trade Agreement, the latter shall prevail. This creates a specific rule of precedence within the domestic regulatory framework.
Its legal effect should be carefully understood. Rule 8(3) does not establish that every international treaty automatically overrides Indian legislation. Rather, it is a domestic legal provision expressly recognising the precedence of agreement-specific Rules of Origin over conflicting CAROTAR requirements.
The distinction is constitutionally significant. The authority of the Trade Agreement’s Rules of Origin in this context flows through the statutory framework enacted and notified under Indian law. Accordingly, Customs officers cannot disregard Rule 8(3) while administering preferential tariff claims.
VI. CBIC Circular No. 43/2026: Five Major Legal Clarifications
1. Valid Origin Declaration Under IndiaβUK CETA
Paragraph 2.1.1 recognises an Origin Declaration completed by the UK exporter or producer in the prescribed manner as proof of origin.
Therefore, a claim supported by a valid Origin Declaration must be processed without requiring Form-I. This clarification protects importers from an additional routine documentary requirement. However, the declaration must satisfy the applicable agreement’s conditions, and the goods must qualify under the relevant Rules of Origin.
2. Form-I Cannot Be a Routine Precondition
Paragraph 2.1.2 clarifies that Form-I is not required to be submitted with the Bill of Entry. Customs cannot treat its submission as a mandatory precondition for preferential tariff treatment. Nevertheless, the Circular does not abolish Form-I or eliminate lawful requests for origin-related information.
3. Requests for Form-I Information Are Restricted
Paragraph 2.1.3 identifies two cumulative conditions for seeking relevant Form-I information under the clarification concerning IndiaβUK CETA.
The Bill of Entry must have been interdicted by the National Risk Management System for origin-related checks, and the proper officer must have reason to believe that the applicable origin criteria have not been satisfied. The words used in the Circular limit routine administrative discretion. However, other verification powers lawfully available under the governing framework remain subject to their respective statutory conditions.
4. Confidential Commercial Information Is Protected
Paragraph 2.1.4 clarifies that IndiaβUK CETA importers need not obtain confidential information from exporters or producers.
Failure to furnish such information cannot, by itself, justify denial of preferential treatment. The importer must nevertheless provide information made available by the exporter or producer. Where the information remains insufficient, verification may be undertaken through the exporting Party’s Verification Authority in accordance with the Trade Agreement.
Paragraphs 2.2.1 to 2.2.3 address Section 28DA(11).
The Circular rejects the assumption that goods are identical merely because they share an HSN classification, description, exporter, producer or technical characteristics.
Before applying an earlier adverse determination, Customs must provide the importer an opportunity to furnish additional information. Where material origin-related facts differ, the current claim must be independently examined. This safeguard is particularly relevant to industrial imports involving changing suppliers, production arrangements, originating inputs and manufacturing processes.
VII. Supreme Court Judgments from 2025: Their Relevance to Customs Exemptions and Administrative Powers
The following decisions were delivered within the preceding two years. Their holdings are relevant to the broader legal principles involved, although neither directly adjudicates Circular No. 43/2026.
A. M/s L.G. Electronics India Private Limited v. Commissioner of Customs
Court: Supreme Court of India Decision: 10 September 2025 Proceedings: Civil Appeal Nos. 10349β10350 of 2024
The Supreme Court allowed LG Electronics India Pvt. Ltd.βs customs appeals concerning the import classification of G Watch smartwatches.
While it did not decide the classification dispute, the Court held that LG was eligible for the Korea-origin duty exemption based on the Certificate of Origin, set aside the CESTAT and original orders, and directed refund of the duty paid with applicable interest within two months.
Legal commentary: The Supreme Court rightly distinguished tariff classification from entitlement to a preferential-origin exemption, holding that an incorrect claimed classification cannot defeat a substantive benefit otherwise established by a valid Certificate of Origin. While leaving the smartwatch classification issue open, the ruling reinforces that customs adjudication must prioritize proven statutory conditions over technical errors made in good faith.
B. Noble Resources and Trading India Private Limited v. Union of India & Others
Citation: 2025 INSC 684 Court: Supreme Court of India Decision: 14 May 2025 Proceedings: Civil Appeal No. 2572 of 2025
The dispute concerned an exemption claimed on imported crude degummed soyabean oil under the applicable Duty Free Credit Entitlement framework.
The Department relied upon a Customs circular to extend an exclusion concerning agricultural and dairy products to certain manufactured products derived from agricultural commodities. The Supreme Court rejected the enlarged interpretation and held that the departmental circular could not expand the exclusion beyond the governing notification.
The Court allowed the importer’s appeal.
Legal commentary: This decision reinforces the principle that executive circulars cannot alter the substantive scope of statutory exemptions. Although the case did not concern Section 28DA or FTA origin verification, its reasoning is relevant where departmental instructions purport to impose restrictions beyond the governing legal instrument. The decision also demonstrates the importance of distinguishing a statutory condition from an administrative interpretation.
C. The Constitutional Connection
The decisions in Maganbhai, L.G. Electronics and Noble Resources operate at different levels. Maganbhai addresses the constitutional relationship between international agreements and domestic legislation.
L.G. Electronics concerns the examination of preferential Customs exemption entitlement. Noble Resources addresses the limits of departmental circulars in interpreting statutory exemptions.
Taken together, these authorities support the proposition that Customs administration must operate within the authority conferred by Indian law. They do not establish an unrestricted supremacy of FTAs over Parliament’s legislation. Instead, they reinforce lawful implementation, proper statutory interpretation and limitations on executive action.
VIII. Constitutional and Administrative Limitations on Customs Discretion
The Circular raises several questions concerning the lawful exercise of Customs powers. Under Article 265, Customs duty must have legal authority. Consequently, tariff concessions and their withdrawal must be examined within the applicable statutory framework.
Article 14 requires administrative action to satisfy constitutional standards against arbitrariness. Article 19(1)(g), subject to Article 19(6), protects the right of citizens to practise professions and carry on occupations, trade or business. This does not eliminate lawful import restrictions, but it may be relevant where administrative action unjustifiably interferes with protected commercial activity.
Article 226 empowers High Courts to exercise judicial review over unlawful administrative action, subject to principles governing the availability of alternative statutory remedies.
Therefore, Customs action concerning preferential tariff claims may raise constitutional issues where it exceeds statutory authority, disregards mandatory procedures or violates principles of natural justice. However, not every disagreement concerning an origin determination constitutes a constitutional violation.
Ordinary disputes involving documentary sufficiency, factual origin criteria or assessment may appropriately fall within the Customs Act’s statutory appellate framework. The constitutional remedy becomes particularly relevant where the challenge concerns jurisdictional error, procedural illegality, violation of natural justice or the validity of subordinate legislation.
IX. Inclusions, Exclusions, Limitations and Discretions: A Consolidated Legal Position
Category
Legal position
Constitutional inclusion
Articles 73 and 253 provide distinct foundations for treaty-making and legislative implementation.
Legislative inclusion
Customs Act and Customs Tariff Act provisions provide mechanisms for domestic administration of trade commitments.
Preferential origin inclusion
Valid agreement-prescribed origin documents support preferential claims.
Procedural exclusion
Form-I cannot be imposed routinely as a prerequisite under the IndiaβUK CETA clarification.
Confidentiality exclusion
IndiaβUK CETA importers need not obtain confidential exporter or producer information.
Statutory limitation
Importers must exercise reasonable care and satisfy substantive origin requirements.
Treaty limitation
International agreements do not automatically override inconsistent Indian primary legislation.
Administrative limitation
CAROTAR cannot override conflicting Rules of Origin under the applicable Trade Agreement, as recognised by Rule 8(3).
Customs discretion
Origin-related information and verification may be sought within the prescribed conditions.
Identical-goods safeguard
Earlier adverse determinations cannot be applied mechanically without considering relevant origin facts and additional information.
Judicial safeguard
Unlawful administrative action may be challenged through statutory remedies or constitutional judicial review, as appropriate.
X. A Constitutional Question for Future Litigation
One of the most significant questions emerging from this framework is whether a delegated rule, administrative instruction or Customs assessment can impose requirements inconsistent with the Rules of Origin incorporated into India’s domestic legal framework.
The answer requires identifying the precise legal source of each obligation. Where an agreement-specific rule has been implemented under the Customs Tariff Act, the officer must consider that rule alongside Section 28DA and CAROTAR. Where CAROTAR itself expressly gives precedence to the Trade Agreement’s Rules of Origin, administrative authorities must respect that prescribed hierarchy.
Where a conflict arises between an international commitment and primary parliamentary legislation, the analysis is different. The international agreement does not automatically invalidate or override the statute. The constitutional distinction is fundamental.
The enforceability of preferential trade benefits in India rests not merely upon diplomatic commitments but upon their lawful incorporation and administration under the Indian legal system.
Consequently, future litigation may increasingly examine whether origin-verification demands are supported by statutory authority, whether they comply with the applicable Trade Agreement, and whether administrative discretion has been exercised for a legitimate legal purpose.
XI. The Role of Aadrikaa Legal Services in Corporate Legal Support and Case Research
Aadrikaa Legal Services (ALS) assists large corporates, in-house legal departments, law firms and professional advisory organisations with specialised paralegal support and legal research relating to Customs, GST, Foreign Trade Policy, international trade compliance and regulatory disputes. Its support may include case-law research, statutory interpretation, preparation of legal research notes, compilation of judicial precedents, document examination, litigation chronologies, drafting assistance, regulatory compliance reviews and preparation of case briefs for counsel.
By combining legal research with domain-specific knowledge of Customs and trade regulations, ALS aims to support corporate legal teams and law firms in managing complex regulatory matters, developing litigation strategies and preparing well-researched submissions before statutory and judicial forums.
XII. Conclusion: The Constitution Sets the Boundary, Parliament Creates the Framework, and Customs Must Follow the Law
CBIC Circular No. 43/2026-Customs is more than a procedural clarification concerning Form-I and Rules of Origin. It highlights the constitutional relationship between India’s international trade commitments and their domestic implementation.
Articles 73 and 253 establish the foundations of treaty-making and legislative implementation. Articles 246 and 265 define the relevant legislative and taxation framework, while Article 14 imposes constitutional limitations upon administrative action.
Section 28DA and CAROTAR provide the domestic machinery for administering preferential tariff claims. However, Rule 8(3) expressly recognises that conflicting CAROTAR provisions must yield to the applicable Trade Agreement’s Rules of Origin.
The Supreme Court’s decisions in Maganbhai, L.G. Electronics and Noble Resources illuminate the constitutional and statutory principles that govern this relationship. The essential legal conclusion is that Customs authorities retain the power to verify originating status, prevent misuse of preferential concessions and protect public revenue.
What they cannot do is transform procedural authority into an independent power to impose substantive conditions unsupported by the governing law.
For importers, the Circular provides meaningful procedural protection. For Customs authorities, it reinforces the requirement of agreement-consistent administration. For legal practitioners, it offers a framework for examining origin disputes through statutory interpretation, delegated legislation and constitutional principles.
Ultimately, India’s international trade commitments can deliver their intended commercial benefits only when their domestic implementation remains legally coherent, transparent and consistent with the constitutional rule of law.
About the Author
Advocate Ravi Shekhar Jha is a New Delhi-based legal professional practising in matters involving Customs, indirect taxation, constitutional law, international trade and regulatory compliance, including matters before the Delhi High Court and statutory tribunals.
With approximately two decades of experience in international trade, regulatory advisory and supply-chain compliance, his professional work encompasses Customs classification and valuation, Free Trade Agreements, Rules of Origin, DGFT and Foreign Trade Policy matters, BIS and Quality Control Orders, trade remedies, and Customs litigation.
He holds an LL.M. in Constitutional Law and is associated with Aadrikaa Legal Services (ALS), which provides legal advisory, litigation, research and regulatory support to corporate clients and professional organisations.
Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.
Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration
Date: 17.10.2026
Supreme Court: Conscious Possession Must Be Established for Conviction Under Section 15 of NDPS Act
This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .
The Supreme Court of India dismissed the State of Punjabβs appeal against the acquittal of Hari Singh and other accused, holding that a failure to question them on the central allegation of conscious possession under Section 313 of the Code of Criminal Procedure (CrPC) materially weakened the prosecutionβs case.
Case at a glance
In State of Punjab v. Hari Singh & Ors., the respondents had initially been convicted under Section 15 of the Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS Act). The trial court sentenced each accused to 10 yearsβ rigorous imprisonment and imposed a fine of Rs. 1,00,000.
The prosecution alleged that police officers found the accused sitting on 16 gunny bags of poppy husk, each weighing 30 kilograms, near sugarcane fields on 9 July 1999. The accused were arrested after the bags were searched in the presence of a Deputy Superintendent of Police, following their request for the presence of a Gazetted Officer.
The Punjab and Haryana High Court later acquitted the accused. The State challenged that acquittal before the Supreme Court.
The central legal issue: conscious possession
Section 15 of the NDPS Act penalizes unlawful possession of poppy straw. The Court emphasized that possession in this context is not limited to physical custody. For criminal liability, the prosecution must establish conscious possession: possession coupled with awareness and the required mental element.
The judgment explains that βpossessionβ can take different forms depending on the circumstances. It may be:
Physical possession, where a person directly holds or carries an article; or
Constructive possession, where a person has the power and control to deal with the article even if it is not physically on them.
The Court noted that the evidence in this case, including the allegation that the accused were sitting on the bags, was relevant to conscious possession. Under Sections 35 and 54 of the NDPS Act, statutory presumptions may arise once possession is established. A person claiming that possession was not conscious may need to explain circumstances particularly within their knowledge.
However, proving or relying on possession was not enough by itself. The accused had to be given a fair opportunity to respond to that allegation.
Why the Section 313 CrPC examination was decisive
The Supreme Court found that the accused were not asked any question during their examination under Section 313 CrPC about possession or conscious possession of the contraband.
Section 313 requires the court, after the prosecution evidence closes, to question the accused so they can personally explain circumstances appearing against them. This is a core safeguard in a criminal trial, not a procedural formality.
The Court reaffirmed several principles:
Every material incriminating circumstance should be put to the accused. This allows a meaningful explanation or defence.
A circumstance not put to the accused ordinarily cannot be used against them.
The purpose is fairness. The provision gives effect to the natural-justice principle that a person must have an opportunity to answer the case against them.
Prejudice matters. An omission does not automatically invalidate every trial, but a conviction cannot safely rest on a vital fact that the accused were never asked to explain.
Here, conscious possession was the essence of the accusation under the NDPS Act. Because that crucial issue was omitted from the Section 313 examination, the omission was held to have a vital effect on the prosecution case.
The Courtβs guidance on personal appearance under Section 313
The judgment also discussed when an accused must personally appear to answer Section 313 questions. The general rule is that the accused should be personally examined, particularly in cases more serious than summons cases.
Still, the Court endorsed a limited practical exception for genuine hardship. If an accused already exempted from personal appearance cannot attend because of substantial expense, physical incapacity, or another justified difficulty, the court may permit written answers through a questionnaire.
This alternative requires safeguards, including:
A written application supported by the accusedβs own affidavit explaining the difficulty.
An assurance that the accused will not suffer prejudice from the arrangement.
An undertaking not to challenge the exemption later.
Personally authenticated answers, signed by the accused on every page and returned within the deadline fixed by the court.
The Court stressed that this is an exceptional arrangement. It cannot become a way for counsel to substitute their own answers for the accusedβs statement.
Outcome of the appeal
The Supreme Court upheld the High Courtβs acquittal and dismissed the State of Punjabβs appeal. It concluded that, despite evidence bearing on conscious possession, the failure to put that essential allegation to the accused under Section 313 CrPC justified refusing to interfere with the acquittal.
The Court did remove one part of the High Courtβs order: directions to initiate action against certain officials were expunged because such directions should not have been issued while deciding the criminal appeal.
Key takeaway
This decision shows that even in serious NDPS prosecutions, procedural fairness remains indispensable: a conviction cannot rely on a decisive incriminating circumstance, such as conscious possession, unless the accused has been given a proper opportunity to explain it under Section 313 CrPC.
Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.
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Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration
Date: 17.10.2026
Delhi HC: ROC Approval Does Not Validate a Corporate Name That Violates Companies Act
This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .
The Delhi High Court directed Mondelez India Private Limited to adopt a different corporate name after finding that its use of βMondelezβ was deceptively similar to the pre-existing name of Mondelez Foods Private Limited.
Background of the dispute
Mondelez Foods Private Limited, incorporated on 28 May 2012, challenged the Registrar of Companiesβ approval of a name change by Nonstop Logistics India Private Limited to βMondelez India Private Limited.β The new certificate of incorporation was issued on 11 September 2012.
The petitioner argued that βMondelezβ was a distinctive and coined term associated with the Mondelez group and its trademark rights. It stated that it was authorized to use the name and that the later adoption by the other company was intended to exploit the established reputation connected with the word.
Documents submitted for the name-change request recorded that the company sought the new name because its directors considered it βlucky for business transactions.β The petitioner also noted that the company applied to register a βMondelezβ logo for similar goods.
Earlier action and rejection by the Regional Director
Before approaching the High Court, Mondelez Foods Private Limited sent legal notices and filed a rectification representation under Section 22 of the Companies Act, 1956. The Regional Director rejected the representation on two principal grounds:
The petitioner was not itself the registered proprietor of the βMondelezβ trademark.
More than 12 months had passed since the registration of the changed corporate name.
Separately, Intercontinental Great Brands, LLC, formerly known as Kraft Foods Global Brands, LLC, and Mondelez Foods Private Limited obtained a decree in a civil suit on 24 July 2014. That decree restrained the company and related defendants from using βMondelezβ as a trademark, trade name, corporate name, or part of a corporate name.
Courtβs findings
Justice Vibhu Bakhru observed that the respondent company did not appear to contest the petition. As a result, the petitionerβs allegations about the respondentβs conduct and intent remained uncontroverted.
The Court held that the adoption of βMondelezβ was dishonest and mala fide. It emphasized that βMondelezβ is a coined and distinctive word, as well as a prominent part of both companiesβ names. The Court therefore found the names deceptively similar.
Under Section 20 of the Companies Act, 1956, a company cannot be registered under an undesirable name. A name may be considered undesirable if it is identical with or too nearly resembles the name of an existing company or a registered trademark. The Court found that the respondentβs name fell within this prohibition and should not have been registered by the Registrar of Companies.
Effect of the Companies Act, 2013
The Court noted uncertainty in the wording of Section 22 of the 1956 Act, particularly concerning the 12-month period for a direction to change a company name. However, it considered the newer Companies Act, 2013, which empowers the Central Government to direct a company to change a name that is identical with or too nearly resembles a previously registered company name.
Because βMondelez India Private Limitedβ too closely resembled βMondelez Foods Private Limited,β the Court concluded that the Regional Director had the authority to require a correction.
Final order
On 7 July 2017, the Delhi High Court directed the Regional Director to issue the necessary instructions requiring Mondelez India Private Limited to change its name. The replacement name must not be identical with or resemble the petitionerβs name or that of any other existing company.
The company and its directors were also expressly directed to ensure compliance with the name-change requirement.
Why the ruling matters
The decision reinforces that company-name registration is not a mere administrative formality. A distinctive pre-existing corporate identity can be protected where a later name is confusingly similar, particularly when the record indicates dishonest adoption. It also illustrates the interaction between company-name law and trademark protection in preventing misleading corporate identities.
Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.
Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration
Date: 26.09.2026
Rajasthan HC Grants Bail Where Samples Were Drawn from Just One of Five Bags
This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .
The Rajasthan High Court has granted bail to an accused in an NDPS case involving an alleged recovery of 79.400 kg of Doda Chura (poppy straw), after finding that samples for forensic examination were taken from only one out of five bags allegedly recovered from him.
Justice Ganesh Ram Meena held that since no samples were drawn from the remaining four bags, only the material contained in the sampled bag could, at this stage, be treated as the alleged contraband. That bag weighed 19.80 kg, which was below the commercial quantity threshold. Consequently, the stringent restrictions governing bail under Section 37 of the Narcotic Drugs and Psychotropic Substances Act, 1985 were not attracted in the circumstances considered by the Court.
Case Arose From Alleged Recovery of 79.400 Kg Doda Chura
Sitaram alias Udham Meena filed his second bail application under Section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS).
The proceedings arose from FIR No. 94/2025, registered at Police Station Harnavda Shahji, District Baran, Rajasthan, for offences under Sections 8, 15 and 25 of the NDPS Act.
The petitioner’s first bail application had earlier been dismissed as withdrawn by the High Court on 8 May 2026.
According to the FIR, the alleged contrabandβDoda Churaβwas recovered from the petitioner’s possession in five separate bags, having a combined weight of 79.400 kg.
Samples Drawn From Only Bag βCβ
The petitioner’s principal argument concerned the manner in which the samples were drawn.
According to the inventory report prepared before the Judicial Officer, two samples were taken only from the packet/bag marked βCβ. No samples were taken from the remaining four bags for examination by the Forensic Science Laboratory (FSL).
The defence therefore argued that there was no forensic material to establish that the substances contained in bags A, B, D and E were also contraband.
It was submitted that only the contents of bag C could be treated as alleged contraband for the purpose of considering bail.
Crucially, bag C weighed only 19.80 kg. The petitioner argued that this was below commercial quantity and hence the restrictions contained in Section 37 of the NDPS Act would not apply.
State: All Five Bags Contained Similar Material
The Public Prosecutor opposed the second bail application.
The State argued that samples were taken from only one bag because the material found in the other bags appeared to be the same or similar.
It further contended that the total alleged recovery was above commercial quantity and therefore the restrictions under Section 37 of the NDPS Act continued to apply.
The High Court, however, did not accept that contention for the purpose of deciding the bail application.
Court Examines Inventory and Judicial Officer’s Certificate
The High Court examined the record and found that the alleged recovery made on 31 May 2025 had been packed in five separate bags marked A, B, C, D and E.
The inventory report and certificate issued by the Additional Chief Judicial Magistrate No. 2, Chhabra, Baran on 6 June 2025 showed that only two samples, marked F and G, were drawn from bag C.
No sample was drawn from bags A, B, D or E.
This factual circumstance became decisive for the bail determination.
Unsampled Bags Could Not Be Treated as Contraband at Bail Stage
The High Court held that in the absence of samples from the other four bags, the material contained in bag C alone could be treated as the alleged contraband for the purpose under consideration.
The Court recorded:
βthe material which has been found to be in bag marked as-C can only be treated to be alleged contrabandβ
Since bag C weighed 19.80 kg, the quantity attributable to the sampled material was below commercial quantity.
The ruling is significant because the total physical recovery alleged by the prosecution was 79.400 kg. However, for the bail assessment, the Court did not aggregate the contents of the four bags from which no sample had been taken with the sampled bag merely because the substances appeared similar.
Rajasthan HC Relies on Hariram v. State of Rajasthan
The petitioner relied upon the Rajasthan High Court’s recent order in Hariram v. State of Rajasthan, S.B. Criminal Miscellaneous Bail Application No. 741/2026, decided on 20 April 2026.
In Hariram, six bags were allegedly recovered containing Doda Chura. However, samples had been drawn from only two bagsβmarked A and E.
The combined weight of those two sampled bags was 45.400 kg, below the commercial quantity of 50 kg applicable to poppy straw.
The Court in Hariram observed that because no samples had been taken or sent to the FSL from the remaining bags, those bags could not be treated as containing contraband merely on assumption, particularly when there was nothing on record showing that the entire recovered material had first been mixed and thereafter sampled.
The same reasoning was applied in Sitaram’s case.
Supreme Court’s Puranmal Jat Decision Considered
The Hariram order, reproduced in the present judgment, also relied upon the Supreme Court’s decision in:
Puranmal Jat v. State of Rajasthan, Criminal Appeal No. 3394/2023 arising out of SLP (Crl.) No. 10670/2023, decided on 2 November 2023.
In that case, the alleged recovery was approximately 35 kg and 150 grams of Doda Posh/poppy straw, while the commercial quantity was 50 kg.
The Supreme Court observed that because the recovered quantity was below commercial quantity, the restriction on grant of bail under Section 37 of the NDPS Act did not apply. The accused had also remained in custody for more than seven months and the charge sheet had already been filed.
Section 37 NDPS Act Not Attracted to 19.80 Kg Sampled Bag
Applying the above reasoning, the Rajasthan High Court treated 19.80 kg in bag C as the relevant alleged contraband quantity for the bail consideration.
Because this was below commercial quantity, the defence contention was that the special restrictions under Section 37 were not attracted, and the Court’s reasoning proceeded on that basis.
This distinction was particularly important because Section 37 imposes stringent conditions for release on bail in cases involving commercial quantity.
The order, however, is a bail-stage determination and does not finally adjudicate the nature or quantity of the entire seized material.
More Than One Year in Custody
The Court also took into consideration the period of incarceration.
Sitaram had remained in custody since 31 May 2025, meaning that by the date of the order on 25 September 2026, he had spent more than one year in custody.
Considering the sampling issue, the quantity of the sampled bag and the period of custody, the High Court found it just and proper to enlarge him on bail.
Importantly, the Court expressly stated that it was doing so without expressing any opinion on the merits or demerits of the case.
Second Bail Application Allowed
The Rajasthan High Court accordingly allowed the second bail application.
The Court directed Sitaram alias Udham Meena to be released upon furnishing:
a personal bond of βΉ1,00,000; and
two sureties of βΉ50,000 each,
to the satisfaction of the Trial Court.
He was also directed to remain present before the Trial Court, or any court to which the proceedings may be transferred, on subsequent hearing dates and whenever required.
Bail Can Be Cancelled for Similar Future Offence
The High Court imposed an additional safeguard.
It directed that if the petitioner is found involved in any other criminal case of a similar nature in the future, the prosecution would be at liberty to move an application seeking cancellation of his bail. Sitaram Alias Udham Meena RHC
Thus, the order grants liberty to the accused pending trial but leaves the prosecution free to seek cancellation if the stipulated condition is breached.
Cases Referred
Two decisions were central to the reasoning recorded in the order:
Hariram v. State of Rajasthan, S.B. Criminal Miscellaneous Bail Application No. 741/2026, decided on 20 April 2026 β relied upon for the principle that where multiple bags are separately seized but only some are sampled, unsampled bags cannot automatically be treated as contraband in the absence of FSL examination or evidence that the entire material was mixed before sampling.
Puranmal Jat v. State of Rajasthan, Criminal Appeal No. 3394/2023 arising from SLP (Crl.) No. 10670/2023, decided on 2 November 2023 β Supreme Court decision noting that where recovered poppy straw was below the stipulated commercial quantity, the Section 37 restriction did not apply.
Key Takeaway
The ruling underscores the importance of representative sampling and forensic examination in multi-bag NDPS recoveries, particularly when the prosecution seeks to rely upon the combined weight to invoke the stringent commercial-quantity bail restrictions under Section 37.
Where five separate bags were allegedly recovered but the inventory showed that samples were taken from only one bag, the Rajasthan High Court treated only the 19.80 kg contained in that sampled bag as the alleged contraband for the purpose of deciding bail. Since that quantity was below commercial quantity and the accused had spent more than a year in custody, the Court granted bail.
The ruling should nevertheless be read in its procedural context: the High Court did not acquit the accused or finally hold that the remaining four bags contained no contraband.
Its determination was confined to the second bail application, and the Court expressly refrained from expressing any opinion on the merits of the prosecution case.
Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.
Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration
Date: 26.09.2026
CESTAT Mumbai Allows Customs Duty Exemption on Dowtherm Heat Transfer Fluid Under SHIS Scheme
This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .
The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai has held that Dowtherm RP Heat Transfer Fluid/Dowtherm A Heat Transfer Fluid, used for the initial charging and continuous operation of a Continuous Polycondensation (CP) Plant for manufacturing polyester products, falls within the definition of βcapital goodsβ and is consequently eligible for Customs duty exemption under Notification No. 104/2009-Customs dated 14 September 2009.
Setting aside the Commissioner’s order, the Tribunal held that the thermic fluids fulfilled the statutory requirements of the Status Holders Incentive Scrip (SHIS) Scheme under the Foreign Trade Policy and that Customs was not justified in denying the exemption merely because the goods were chemicals falling under Chapter 29 or were described as inputs under SION.
Background of the Dispute
Wellknown Polyesters Limited was engaged in manufacturing Polyester Filament Yarn (PFY), Polyester Oriented Yarn (POY), Fully Drawn Yarn (FDY), Draw Textured Yarn (DTY) and polyester chips at its Daman manufacturing facility.
For its manufacturing operations, the company had imported a Continuous Polycondensation Plant from Oerlikon Barmag under an EPCG authorisation during AprilβJuly 2012. The plant was imported without thermic fluid.
Subsequently, the company imported 3,01,296 kg of Dowtherm RP Heat Transfer Fluid/Dowtherm A Heat Transfer Fluid, valued at approximately βΉ9.86 crore, through Bills of Entry filed in October 2012. Customs duty involved was approximately βΉ2.55 crore.
Instead of paying the duty in cash, Wellknown Polyesters utilised eight SHIS scrips issued by the DGFT under the Status Holders Incentive Scrip Scheme and claimed exemption under Notification No. 104/2009-Customs. The goods were initially cleared by Customs extending the exemption.
DRI Objects to SHIS Benefit
The Directorate of Revenue Intelligence (DRI), Ahmedabad Zonal Unit subsequently initiated an investigation on the ground that Notification No. 104/2009-Customs permitted duty-free import of capital goods, whereas Dowtherm heat-transfer fluid was, according to the Department, not capital goods.
DRI also relied upon the Standard Input Output Norms (SION), under which Dowtherm/Therminol and heat-transfer oil were identified as permitted inputs for manufacture of Polyester Partially Oriented Yarn and Polyester Filament Yarn. The Department therefore treated the material as an input rather than capital goods.
A Show Cause Notice dated 14 May 2013 consequently demanded approximately βΉ2.55 crore Customs duty with interest under Section 28(1) of the Customs Act, 1962, besides proposing confiscation under Section 111(o) and penalty under Section 112(a).
The Commissioner confirmed the duty demand and interest but refrained from confiscating the goods because they were no longer physically available and did not impose the proposed penalty. Wellknown Polyesters challenged that order before CESTAT.
Appellant: Thermic Fluid Was Integral to Continuous Polycondensation Plant
The appellant argued that although the CP Plant and thermic fluid had been imported separately, both were required to operate together.
The thermic fluid was charged into the heaters, piping and vessels and thereafter continuously circulated in a closed loop between the heaters and reactors. The polyester polycondensation process required temperatures of approximately 270Β°Cβ300Β°C under high vacuum, making the thermic fluid critical for providing precise high-temperature heat while maintaining low system pressure.
The appellant relied upon the definition of βcapital goodsβ under the Foreign Trade Policy and Notification No. 104/2009-Customs, arguing that it was broad enough to cover goods required directly or indirectly for manufacture, including items necessary for the initial setting up and functioning of plant and machinery.
It also relied upon CBEC’s earlier clarification concerning transformer oil, under which oil required for filling/topping up a transformer was considered part of the equipment because the transformer could not function without it.
Revenue: Chemical Falling Under Chapter 29 Cannot Be Capital Goods
The Department maintained that the imported thermic fluid was a chemical classifiable under Chapter 29 and therefore could not be regarded as plant, machinery, equipment or an accessory.
The Commissioner’s reasoning was that even though the chemical was indirectly used in manufacturing, its nature did not change into that of plant, machinery, equipment or accessories. The Department also relied upon the fact that SION treated Dowtherm as an input/raw material for polyester production.
CESTAT was therefore required to decide whether denial of the exemption under Notification No. 104/2009-Customs for the October 2012 imports was legally sustainable.
CESTAT Examines SHIS Scheme and Definition of βCapital Goodsβ
The Tribunal examined the Foreign Trade Policy 2009β2014 and observed that the objective of the SHIS Scheme was to promote investment in technology upgradation.
Paragraph 3.17.5 of the FTP permitted Duty Credit Scrips to be used for import of inputs or goods, including capital goods, subject to the stipulated conditions. More importantly, the FTP defined βcapital goodsβ broadly as plant, machinery, equipment or accessories required directly or indirectly for manufacture or production, including specified items such as refractories for initial lining and catalysts for initial charge.
Notification No. 104/2009-Customs, issued under Section 25(1) of the Customs Act, 1962, similarly exempted capital goods and specified components/spares/parts imported against SHIS Duty Credit Scrips from Customs duties, subject to its conditions.
CESTAT found the definition of βcapital goodsβ under the Customs notification and the FTP to be substantially identical.
Thermic Fluid Critical to Functioning of CP Plant
The Tribunal accepted the technical evidence concerning the role played by Dowtherm in the Continuous Polycondensation Plant.
It observed that the thermic fluid enabled the plant to provide precise high-temperature heat while maintaining low pressure, thereby permitting efficient continuous polycondensation and energy-efficient manufacture of high molecular weight polyester.
On that basis, CESTAT concluded that the imported goods fulfilled the statutory requirements of the SHIS Scheme.
A particularly important factual finding arose from the Chartered Engineer’s Certificate. Out of the total 3,01,296 kg of imported thermic fluid, 2,92,920 kgβapproximately 97.2%βwas used as a one-time/initial charge in the CP Plant’s Electric Thermal Oil Heater Boiler.
The fluid thereafter enabled continuous high-temperature operation at very low pressure for the polycondensation process.
The technical diagrams reproduced on pages 13β15 of the order further illustrate the closed-loop recirculation of Dowtherm between the thermic-fluid heater and CP Plant, the stages of polyester manufacture where heat transfer is required, and the Electric Thermal Oil Heater Boiler arrangement.
Capitalisation in Books Also Supported Appellant
CESTAT additionally noted that the imported thermic fluid had been capitalised in Wellknown Polyesters’ books of account, as certified by its Chartered Accountants on 29 May 2026.
The Tribunal regarded this financial treatment as further evidence supporting the appellant’s case that the imported goods were treated as capital goods.
Accordingly, the Bench held:
βthe impugned goods are covered under the definition of βcapital goodsββ
and were therefore eligible for exemption under Notification No. 104/2009-Customs.
CESTAT Relies on Reliance Communications Infrastructure
The Tribunal found support in Reliance Communications Infrastructure v. Commissioner of Customs, 2009 (240) E.L.T. 461 (Tri.-Bang.).
In that case, a Gas Suppression System included HFC 227 EA gas. The Tribunal had held that Customs could not dissect an integrated system and treat the gas required for its functioning as a mere consumable when the EPCG licence covered the complete system.
CESTAT applied the same reasoning to the thermic fluid, observing that where a material is essential to the functioning of the plant, its character cannot be determined merely by isolating it from the system in which it operates.
Transformer Oil Analogy Applied to Dowtherm
CESTAT also referred to CBEC Circular No. 344/60/97-CX dated 22 October 1997, concerning transformer oil.
The circular recognised that a transformer cannot function without transformer oil and that the equipment cannot be regarded as complete without the oil filled into it.
Applying the same analogy, CESTAT held that if the Continuous Polycondensation Plant cannot function without thermic fluid, the fluid has to be treated as part of the plant, notwithstanding the absence of a specific Customs clarification concerning thermic fluid.
Cases Cited by Wellknown Polyesters
The appellant relied upon several judicial authorities in support of its interpretation of capital goods:
S. No.
Case
Citation
1
Reliance Communications Infrastructure v. Commissioner of Customs
2009 (240) E.L.T. 461 (Tri.-Bang.)
2
Commissioner of Central Excise, Coimbatore v. Jawahar Mills
2001 (132) E.L.T. 3 (S.C.)
3
Bharti Airtel Limited v. Commissioner of Central Excise, Pune
2025 (391) E.L.T. 3 (S.C.)
4
Chief Commissioner of Central Goods and Service Tax & Ors. v. Safari Retreats Private Limited & Ors.
2024 SCC OnLine SC 2691
5
Scientific Engineering House (P) Ltd. v. Commissioner of Income Tax, Andhra Pradesh
(1986) 1 SCC 11
These authorities are expressly recorded in the appellant’s submissions.
Of these, the final reasoning expressly discusses and applies Reliance Communications Infrastructure.
Final Decision: Wellknown Polyesters Wins Appeal
CESTAT concluded that the Commissioner’s order denying the benefit of Notification No. 104/2009-Customs dated 14 September 2009 by refusing to treat Dowtherm RP/Dowtherm A Heat Transfer Fluid as capital goods βdoes not stand the scrutiny of law.β
The Tribunal consequently set aside the Order-in-Original dated 7 October 2016 and allowed Wellknown Polyesters’ appeal in its favour.
The ruling is significant for the interpretation of capital goods under export-promotion schemes, particularly where a material may chemically resemble an input or consumable but is technically required as an initial charge and thereafter continuously circulates as an integral part of plant operation.
It also demonstrates that classification of an item as a chemical under Chapter 29, or its description as an βinputβ under SION for a different regulatory purpose, is not by itself determinative of whether it can qualify as capital goods under the specific language and objective of an exemption notification.
Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.
Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration
Date: 25.09.2026
Delhi High Court: Trademark Refusal Must Be Based on Reasoned Analysis, Not Mere Similarity of Marks
This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .
The Delhi High Court has set aside the refusal of Lucy Group Ltd.βs application for registration of the trademark βGEMINIβ in Class 09, holding that the Registrar of Trademarks failed to consider crucial factual and legal submissions placed before it.
Justice Jyoti Singh held that the Registrar’s order was βunreasoned, non-speaking and reflects non-application of mindβ, observing that a quasi-judicial authority is legally required to consider all relevant contentions and issues raised by the parties before arriving at its decision.
The High Court, however, did not decide whether GEMINI was ultimately entitled to registration. Instead, it remanded the trademark application to the Registrar for fresh consideration and directed a decision within 10 weeks after hearing Lucy Group.
Lucy Group Ltd. filed the appeal under Section 91 of the Trade Marks Act, 1999, challenging the Registrar’s order dated 17 April 2025, which had refused registration of its trademark under Application No. 5247072 dated 14 December 2021 in Class 09.
According to the company, it first used the GEMINI mark in India at the Elecrama trade event in Bengaluru on 13 February 2016, where it promoted and displayed products to potential customers and business associates.
Lucy Group subsequently filed a convention trademark application in Great Britain on 16 June 2021 and, on 14 December 2021, applied to register GEMINI in India as a convention application.
Trademark Registry Cites Four Earlier βGEMINIβ Marks
On 4 January 2022, the Registry issued an Examination Report raising an objection under Section 11(1) of the Trade Marks Act.
Four earlier marks were cited on the ground that Lucy Group’s proposed GEMINI mark was identical or similar to marks already appearing on the Register in respect of identical or similar goods.
Following hearings and written submissions, the Registrar refused registration on 17 April 2025. Lucy Group thereafter filed Form TM-M on 15 May 2025 seeking detailed grounds for refusal, but according to the appeal, those grounds were never supplied.
Lucy Group: Registrar Failed to Compare the Actual Goods
Lucy Group’s principal grievance was that the Registrar had merely noted the existence of four earlier registrations and concluded that there was a likelihood of confusion because of the allegedly similar goods.
The company argued that the Registrar had failed to undertake a meaningful comparative analysis of the nature and function of the goods, their trade channels and the relevant consumers.
It also challenged the Registrar’s finding that adoption of GEMINI was not bona fide, arguing that this was not a ground of refusal under Section 11(1).
Lucy Group’s GEMINI Products Are Industrial SCADA and RTU Systems
A central aspect of Lucy Group’s case was the highly specialised nature of the products for which registration was sought.
The application covered industrial-grade products including SCADA (Supervisory Control and Data Acquisition) systems and GEMINI RTUs (Remote Terminal Units).
The RTUs were described as multipurpose units intended for advanced feeder automation and for controlling and monitoring pole- and ground-mounted medium-voltage switchgear.
Lucy Group relied on product catalogues, technical specifications and its corporate profile to show that it operated in the specialised field of power automation, grid monitoring and infrastructure control systems.
The company also claimed continuous and extensive use of GEMINI in India since February 2016 and argued that the specialised nature, application and trade channels of its goods distinguished them from the products covered by the cited registrations.
Cited Mark 1: βWires and Cablesβ
The first cited GEMINI registration, No. 728627 in Class 09, covered βwires and cables.β
Lucy Group argued that wires and cables were basic electrical transmission components, whereas its SCADA systems, RTUs and industrial switchgear were advanced control systems integrated with software and supplied as part of specialised engineering projects.
It further claimed that the two marks had co-existed in the Indian market since 2016 without reported confusion and that GEMINI had acquired secondary distinctiveness among its customers.
Cited Mark 2: Television Broadcasting and Entertainment Products
The second cited registration, No. 953168, was also for GEMINI in Class 09 and belonged to Sun TV Network Limited.
Lucy Group argued that the goods associated with this registration related to the television broadcasting and entertainment sector, whereas its own products concerned industrial power-distribution and control solutions.
According to Lucy Group, the nature, purpose and consumer base of the respective goods were entirely different. It also informed the Court that it had filed a rectification petition on the ground of non-use against the second cited mark on 30 July 2022, which remained pending.
Third Mark Abandoned; Fourth Filed on βProposed to Be Usedβ Basis
Lucy Group also raised specific objections regarding the remaining two cited marks.
It submitted that Registration No. 3164101 for GEMINI in Class 09 had been abandoned before the date of the impugned order.
As regards the fourth mark, Application No. 3939124, Lucy Group pointed out that it had been filed on a βproposed to be usedβ basis and that its filing was later than Lucy Group’s claimed first use of GEMINI.
The detailed comparison reproduced on pages 5β9 of the High Court order further contrasted Lucy Group’s specialised industrial products with the goods associated with each cited mark, including wires and cables, broadcasting/electronic goods, consumer electronics and portable spectroscopic instruments.
Same Trademark Class Does Not Automatically Mean Goods Are Similar: Lucy Group’s Argument
Lucy Group argued that goods cannot be treated as similar merely because they fall within the same Nice Classification class.
According to the company, the correct enquiry was whether the respective goods were commercially and functionally similar, rather than whether there was a theoretical or broad overlap in their classification.
It also emphasised that Section 11 requires consideration of likelihood of confusion βon the part of the publicβ, yet the Registrar had not identified the relevant public or adequately examined the consumers involved.
Registrar Defends Refusal Under Section 11
The Registrar defended the order, arguing that the GEMINI application was barred by earlier identical marks appearing on the Trade Marks Register.
It contended that Lucy Group’s mark was phonetically, visually and structurally identical to the cited marks and that the relevant goods were similar or identical, creating a likelihood of confusion under Section 11(1).
In particular, the Registrar argued that electrical goods such as wires, cables and switchgear may travel through the same trade channels and reach common classes of consumers such as electricians, contractors and engineers.
According to the Registrar, treating specialised industrial products as wholly different from cables created an artificial distinction because cables and switchgear could be closely connected in the modern electrical industry.
Delhi High Court Finds Crucial Submissions Were Ignored
After examining the Examination Report, Lucy Group’s reply and its detailed written submissions, the High Court found a fundamental defect in the Registrar’s decision-making process.
Justice Jyoti Singh observed that none of the crucial submissions had been considered.
The registration had essentially been refused because the applied-for mark was considered phonetically and visually similar to the cited marks and the goods were treated as similar.
However, the Registrar had not examined the distinctions Lucy Group sought to establish regarding the nature and function of the competing goods.
Registrar Failed to Consider Abandoned and Later-Filed Marks
The Court specifically noted that the Registrar had also failed to consider Lucy Group’s submissions that:
the third cited mark had been abandoned; and
the fourth cited mark was filed on a βproposed to be usedβ basis much after Lucy Group’s claimed first use.
The High Court observed that these crucial facts and legal issues were not even referred to in the impugned order.
Significantly, the Court stated that had these matters been considered and adjudicated, the decision might have been different.
Quasi-Judicial Authorities Must Deal With Relevant Contentions
The Court then reiterated an important principle governing administrative and quasi-judicial decision-making.
It held that even a quasi-judicial authority is under a legal obligation to consider all contentions and issues raised by the parties, insofar as they are relevant, before taking a decision.
Viewed against that requirement, the Registrar’s order was held to be:
βclearly unreasoned, non-speaking and reflects non-application of mind.β
This became the decisive basis for judicial interference.
High Court Does Not Decide Trademark Registration on Merits
Importantly, the Delhi High Court expressly stated that it was not entering into the merits of Lucy Group’s claim for registration.
The Court therefore did not finally rule that the cited GEMINI marks were dissimilar, that there was no likelihood of confusion, or that Lucy Group was necessarily entitled to registration.
Instead, it remanded the matter to the Registrar for a fresh decision.
This distinction is significant because Lucy Group secured a procedural appellate victory, while the substantive question of whether GEMINI should ultimately be registered remains for reconsideration by the Trademark Registry.
Fresh Decision Within 10 Weeks
The High Court directed the Registrar to freshly consider Application No. 5247072 after hearing Lucy Group and taking into account all the points raised in response to the Examination Report.
The Registrar was specifically directed to consider documents already on record, including the:
priority documents;
user affidavit;
written submissions dated 6 August 2024;
written submissions dated 17 February 2025; and
written submissions dated 15 March 2025.
The fresh decision must be taken within 10 weeks from 27 March 2026. The Court also directed that no new documents would be permitted before the Registrar during the reconsideration.
The appeal was accordingly allowed and disposed of.
Why the Judgment Matters for Trademark Examination
The ruling highlights an important procedural safeguard in trademark registration proceedings. The existence of an identical or similar earlier mark may trigger scrutiny under Section 11, but a refusal order must still demonstrate that the Registrar has considered the material factual and legal submissions placed by the applicant.
Where an applicant specifically distinguishes the competing goods by their function, market, consumer base and trade channelsβor raises issues concerning abandonment, priority and claimed prior useβthose contentions cannot simply be ignored.
At the same time, the judgment should not be understood as establishing a general rule that goods within the same class are necessarily dissimilar merely because their applications differ. The High Court deliberately left the merits open for the Registrar’s fresh determination.
Key Takeaway
The Delhi High Court’s decision reinforces that trademark refusal orders must be reasoned, speaking orders reflecting consideration of relevant evidence and contentions.
A mechanical conclusion based on similarity of marks and broadly stated similarity of goods, without addressing material objections raised by the applicant, may not withstand appellate scrutiny.
For Lucy Group, the judgment reopens the path to registration of GEMINI in Class 09, but does not itself grant the trademark registration. The Registrar must now reconsider the application on its merits within the timeline fixed by the Court.
Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.
Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration
Date: 25.09.2026
Calcutta High Court Grants Bail in NDPS Case Over Prolonged Detention; Says Section 37 Rigours Do Not Bar Bail for Trial Delay
This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .
The Calcutta High Court granted bail to an accused facing prosecution under the Narcotic Drugs and Psychotropic Substances Act, 1985, holding that prolonged incarceration coupled with little possibility of commencement of trial justified release on bail.
Significantly, the Division Bench observed that a bail plea founded on delay in trial is not fettered by the restrictions contained in Section 37 of the NDPS Act, relying upon the Supreme Court’s decision in Rabi Prakash v. State of Odisha, (2023) SCC OnLine SC 1109.
Background of the Case
The bail application was filed under Section 439 of the Code of Criminal Procedure in connection with Kaliachak Police Station Case No. 875 of 2022 dated 12 August 2022.
The petitioner, Alok Kumar Mandal @ Alok Mandal, was facing proceedings for alleged offences under Sections 21(c), 27A and 29 of the NDPS Act.
Section 21(c) concerns contraventions involving a commercial quantity of manufactured drugs or preparations, while Section 27A deals with financing illicit traffic and harbouring offenders. Section 29 relates to abetment and criminal conspiracy.
Accused in Custody for One Year and Eight Months
Counsel for the petitioner submitted that Mandal had already remained in custody for approximately one year and eight months.
More importantly, despite this period of incarceration, charges had still not been framed. The petitioner therefore sought bail primarily on the ground of delay in the criminal proceedings.
Investigation Was Still Continuing
The State placed a report before the High Court.
The report showed that further investigation was still underway and forensic analysis of the mobile phone belonging to co-accused Devendra Ahuja was awaited.
The status of the investigation became particularly relevant because it indicated that commencement of the trial was not imminent.
High Court Finds Little Possibility of Trial Commencing Soon
After considering the material on record, the Division Bench noted that there was βlittle possibility of commencement of trial.β
The Court also took into account the petitioner’s prolonged detention and concluded that he had made out a case for bail on the ground of delay in trial.
The case therefore turned substantially on the effect of prolonged pre-trial incarceration in an NDPS prosecution where the trial itself had yet to effectively commence.
Section 37 NDPS Act Does Not Fetter Bail Based on Trial Delay: High Court
The most significant observation in the order concerns the stringent bail restrictions contained in Section 37 of the NDPS Act.
Ordinarily, Section 37 imposes additional conditions for granting bail in cases involving specified serious NDPS offences and commercial quantity.
However, the High Court held:
βBail prayer on the ground of delay in trial is not fettered by restrictions under Section 37 of the NDPS Actβ¦β
The Court relied upon the Supreme Court judgment in Rabi Prakash v. State of Odisha, (2023) SCC OnLine SC 1109 for this proposition.
The ruling therefore distinguishes a bail claim based upon the merits of the prosecution from one arising because continued pre-trial incarceration has become prolonged while the trial remains unlikely to commence within a reasonable period.
Reliance on Supreme Court’s Rabi Prakash Decision
The only judicial precedent expressly cited in the short order is:
Rabi Prakash v. State of Odisha, (2023) SCC OnLine SC 1109.
By relying on Rabi Prakash, the High Court treated prolonged detention and delay in trial as grounds capable of being considered notwithstanding the statutory restrictions governing ordinary bail under Section 37.
Bail Granted on βΉ10,000 Bond
Having found sufficient grounds for release, the High Court directed that Alok Kumar Mandal be released on bail upon furnishing a bond of βΉ10,000 with two sureties of the like amount, one of whom must be a local surety.
The bond was required to be furnished to the satisfaction of the Judge, Special Court under the NDPS Act-cum-Additional District Judge, 4th Court, Malda.
Conditions Imposed by the High Court
The grant of bail was subject to conditions intended to protect the trial process.
The petitioner was directed to appear before the Trial Court on every date of hearing until further orders. He was also prohibited from intimidating witnesses or tampering with evidence in any manner.
The High Court further clarified that if the petitioner failed to appear before the Trial Court without justifiable cause, the Trial Court would be at liberty to cancel the bail in accordance with law without further reference to the High Court.
The bail application was accordingly allowed.
Why the Decision Is Significant
The order is important for NDPS bail jurisprudence because it reiterates that the stringent conditions prescribed by Section 37 cannot be considered in isolation from prolonged pre-trial detention and delay in commencement of trial.
The decision does not hold that Section 37 ceases to apply generally in NDPS prosecutions. Rather, the Court specifically dealt with a situation where the accused had remained incarcerated for one year and eight months, charges had not been framed, further investigation remained pending, and there was little prospect of the trial commencing soon.
The distinction is important: the relief was based on delay in trial and prolonged detention, not on a final determination concerning the merits of the NDPS allegations.
Key Takeaway
The Calcutta High Court has reaffirmed that prolonged incarceration and substantial delay in commencement of an NDPS trial can constitute an independent basis for bail, and a bail plea founded on such delay is not fettered by the rigours of Section 37 of the NDPS Act.
Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.
Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration
Date: 25.09.2026
CESTAT Chennai: Vitamin Feed Premixes Classifiable as Animal Feed Preparations Under CTH 2309
This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .
In a significant ruling concerning the customs classification of feed-grade vitamins and animal nutrition preparations, the CESTAT Chennai has set aside a Customs order seeking to classify imported Vitamin E 50% Feed Grade, Vitamin B2 80% Feed Grade and Vitamin C 35% Feed Grade under CTH 2936 instead of CTH 2309.
The Tribunal held that, in the absence of a chemical examiner’s report establishing that the imported products were pure chemicals or separate chemically defined organic compounds falling under Chapter 29, the Department had failed to discharge the burden necessary to sustain its proposed classification. Consequently, the benefit of classification was required to go to the importer, Provimi Animal Nutrition India Pvt. Ltd.
The Classification Dispute: CTH 2309 vs CTH 2936
Provimi imported goods described as:
Vitamin E 50% Feed Grade
Vitamin B2 80% Feed Grade
Vitamin C 35% Feed Grade
The importer classified these products under CTH 2309, covering βpreparations of a kind used in animal feeding.β
Customs disagreed. The Department considered CTH 2309 to be general in nature and took the view that CTH 2936, covering provitamins, vitamins and their derivatives, was the more specific heading under Rule 3(a) of the General Rules for Interpretation (GRI).
According to Revenue, CTH 2309 applies to products presented in a form suitable for use as animal food supplements, whereas the imported vitamins were essentially inputs or raw materials requiring further processing before being incorporated into aquatic, poultry or cattle feed.
The Department therefore proposed classification under CTH 2936, attracting 7.5% Basic Customs Duty under Sl. No. 185 of Notification No. 50/2017-Customs and 18% IGST under Sl. No. 40 of Schedule III of Notification No. 1/2017-IGST.
A Show Cause Notice dated 8 March 2024 proposed rejection of Provimi’s classification, reclassification under CTH 2936, denial of the relevant notification benefits and recovery of βΉ58,83,019 as short-levied duty, along with confiscation and penalties.
The Commissioner of Customs (Audit), Chennai subsequently confirmed the proposals through Order-in-Original No. 108625/2024 dated 16 August 2024, leading Provimi to approach CESTAT.
Provimi: Products Are Specifically Formulated for Animal Feed
Provimi argued that the imported goods were essentially animal-feed preparations and appropriately fell under Chapter Heading 2309.
The company relied upon the WCO’s HSN Explanatory Notes to Heading 23.09, particularly the category covering preparations used in making complete feeds or supplementary feeds.
It also argued that the goods were designed exclusively for animal use, contained specifically tailored additives, were labelled accordingly and were supplied only to businesses engaged in animal feed and animal husbandry.
The importer further contended that Chapter 29 primarily covers separate chemically defined compounds, whereas its imported products were not pure vitamins and contained additives intended to make them suitable specifically for animal nutrition.
Department: High-Concentration Vitamins Are Raw Materials, Not Animal Feed
Revenue countered that the imported products contained vitamins in concentrations ranging from 35% to 80% and could not themselves be directly consumed by animals.
The Department argued that they were merely inputs/raw materials for manufacturing animal feed, rather than animal feed or feed supplements themselves.
It relied particularly on Commissioner of Customs CGO v. Sonam International Shop No. 9, 2020 (10) TMI 120 β Allahabad High Court, where the High Court considered high-concentration vitamins in the context of classification under Heading 2309.
Revenue also referred to the Constitution Bench decision in Commissioner of Customs (Import) v. Dilip Kumar and Company & Ors., AIR 2018 SC 3606 in support of its position concerning the interpretation of exemption/classification jurisprudence and earlier reliance on Sun Export Corporation.
A major feature of the Tribunal’s analysis was the Supreme Court’s recent judgment in Commissioner of Customs (Import) v. Welkin Foods, 2026 INSC 19.
CESTAT noted that Welkin Foods comprehensively examined customs classification principles, including the role of:
GRI 1, tariff headings and statutory notes, HSN Explanatory Notes, the common/trade parlance test, and the relevance of end use.
The Supreme Court had emphasised that GRI 1 is the fundamental starting point for customs classification. Classification must first be determined according to the terms of the headings and the relevant Section and Chapter Notes.
Only where goods cannot be classified through GRI 1 and the applicable legal notes should the subsequent rules be considered sequentially.
Common Parlance Test Cannot Override Technical Tariff Provisions
Provimi had argued that, in common and trade parlance, the products were understood as animal-feed supplements.
CESTAT, applying Welkin Foods, held that the common or trade parlance test has to be applied restrictively in the modern HSN-based classification system.
The Tribunal observed that the terminology employed in Chapters 23 and 29 is scientific and technical. Consequently, the tariff provisions must primarily be interpreted technically rather than simply according to the manner in which the goods are marketed or commercially described.
It further observed that an importer relying on a trade-parlance meaning must produce satisfactory evidence supporting that meaning.
End Use, However, Was Relevant
While limiting the common-parlance argument, CESTAT found that end use could legitimately be considered in the present classification dispute.
Heading 2309 itself refers to preparations βof a kind used in animal feeding,β while Heading 2936 deals with vitamins and their derivatives used primarily as vitamins.
The language of the competing headings therefore permitted consideration of use or adaptation as part of the classification exercise.
Chapter 23 Does Not Exclude Products Merely Because They Are of Chemical Origin
Revenue also argued that Heading 2309 covered products obtained from the processing of vegetable or animal materials, whereas Provimi’s products were chemicals.
CESTAT rejected a blanket exclusion on that basis.
The Tribunal held that the relevant Chapter Note is inclusive and does not exclude products of chemical origin if they otherwise satisfy the description compatible with Chapter 23.
This finding is important because it prevents the mere chemical origin of a product from automatically determining classification under Chapter 29.
Crucial Evidentiary Gap: No Chemical Examiner’s Report
The decisive weakness in Revenue’s case was the absence of technical evidence.
CESTAT observed that it did not have the benefit of an expert chemical test report prepared at the time of import to establish whether the products were:
separate chemically defined organic compounds, capable of classification under Chapter 29; or
preparations of a kind used in animal feeding, falling under Chapter 23.
The Certificates of Analysis submitted by Provimi also did not contain the considered opinion of a technical expert capable of conclusively resolving this question.
Provimi maintained that the imported vitamins were not pure vitamins but were formulated with various additives specifically for animal-feed applications, altering their suitability and making them intended for animal nutrition.
HSN Notes Recognise Premixes Under Heading 2309
CESTAT then examined the HSN Explanatory Notes because it found the HSN and Customs Tariff entries under Chapter 23 to be sufficiently aligned.
The HSN Notes divide the relevant Heading 23.09 preparations into three broad categories:
Preparations used in making complete or supplementary feeds
The Tribunal observed that the disputed goods were not complete feed or feed supplements falling within categories A or B. However, category C specifically concerns βpreparationsβ used in making such feeds, commonly known in trade as premixes.
This was significant because a product need not necessarily be directly fed to an animal in order to fall within the broader scope of Heading 2309.
Government Circular Identified Products as βVitamin Premixes (Feed Grade)β
Provimi also relied upon a circular dated 21 December 2022 issued by the Department of Animal Husbandry and Dairying, Ministry of Fisheries, Animal Husbandry and Dairying.
The Tribunal recorded that the very products involved in the disputeβVitamin E 50% Feed Grade, Vitamin B2 80% Feed Grade and Vitamin C 35% Monophosphate Feed Gradeβwere expressly mentioned as βVitamin Premixes (Feed Grade)β in that document.
CESTAT Also Examines Meaning of βPremixβ
The Tribunal referred to the Customs Advance Ruling in In Re: BASF India Ltd., (2024) 24 Centax 401 (A.A.R.-Cus.-Mum.).
That ruling discussed premixes as complex mixtures of vitamins, minerals, trace elements and other feed additives incorporated into compound feed, and explained that such premixtures are not themselves intended for direct feeding to animals.
This was relevant to Revenue’s argument that the products could not fall under Heading 2309 merely because they were not capable of being directly consumed by animals.
Burden to Establish Reclassification Lies on Customs
CESTAT ultimately treated the burden of proof as decisive.
Referring to Union of India v. Garware Nylons Ltd., 1996 (87) E.L.T. 12 (S.C.) and HPL Chemicals Ltd. v. Commissioner of Central Excise, Chandigarh, 2006 (197) E.L.T. 324 (S.C.), the Tribunal reiterated that when Revenue seeks a particular classification, it must establish that the goods are taxable under the classification proposed by it.
Because there was no Chemical Examiner’s certificate establishing whether the goods were pure chemicals, mixture concentrates or premixes, Revenue had failed to discharge that burden.
CESTAT therefore held that the benefit of classification must go to the appellant.
B.V. Bio Corp Decision Supports Classification Under CTH 23099090
The Tribunal also relied on its coordinate-bench ruling in B.V. Bio Corp Private Limited v. Commissioner of Customs (NS-I), 2024 (4) TMI 1173 β CESTAT Mumbai.
That case concerned imported products containing vitamins and provitamins in concentrations ranging from 2.7% to 100%.
The Mumbai Bench had concluded that the goods were classifiable under Tariff Item 23099090 and that classification under Heading 2936 was not legally sustainable.
The judgment further records that the B.V. Bio Corp position was affirmed, with the goods being treated as animal-feed preparations appropriately classified under Tariff Item 23099090, having regard to Circular No. 188/22/96-CX dated 26 March 1996.
Duty, Interest, Confiscation and Penalty Fall with Classification Demand
Once Revenue failed to sustain the proposed classification under CTH 2936, CESTAT held that the consequential duty demand, interest, fine and penalty could not survive.
Provimi had separately challenged confiscation and penalty under Sections 111, 125 and 114A of the Customs Act, 1962, arguing inter alia that a bona fide classification claim did not amount to misdeclaration.
Final Decision: Provimi’s Appeal Allowed
CESTAT set aside the impugned Order-in-Original and allowed Provimi’s appeal to the limited extent decided in the classification proceedings, with consequential relief as available under law.
The Tribunal, however, made an important qualification regarding Provimi’s separate refund claim. Issues such as refund that were not part of the original proceedings were not adjudicated in this appeal and would have to be pursued separately in accordance with law.
Thus, while Provimi succeeded in overturning the Department’s reclassification and consequential demand, the order should not be read as having independently sanctioned the refund claimed by the company.
Key Takeaway
The ruling reinforces an important principle in customs classification disputes: Customs cannot sustain reclassification merely by asserting that an alternative tariff heading is more specific. When the proposed classification depends upon the chemical composition and technical character of imported goods, Revenue must produce adequate technical evidence to discharge its burden of proof.
For feed-grade vitamins and premixes, the decision also recognises that Heading 2309 is not confined to products directly consumed by animals.
Preparations used in making complete or supplementary feeds can fall within its scope, subject to their objective characteristics, composition, HSN guidance and supporting technical evidence.
Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.
Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration
Date: 24.09.2026
Supreme Court: Accused Must Be Clearly and Individually Informed of Section 50 Right Before Personal Search
This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .
In an important judgment governing search and seizure under the NDPS Act, the Supreme Court held that the statutory right available to an accused under Section 50(1) must be communicated clearly, unambiguously and individually to each person who is about to be searched.
The Court ruled that a joint notice to multiple accused is insufficient. It further held that an investigating officer cannot offer an accused a βthird optionβ of being searched before a gazetted officer who is himself a member of the raiding party, because Section 50 contemplates a search before the nearest Magistrate or nearest gazetted officer and the safeguard is intended to provide an element of independence.
Upholding the Rajasthan High Court’s acquittal of Parmanand and Surajmal, the Supreme Court dismissed the State’s appeal and held that the breach of Section 50 had vitiated the search and consequently the conviction.
Background of the Case
The prosecution case arose from information received by a Narcotics Department officer on 13 October 1997 that Parmanand and Surajmal would deliver approximately 10 kg of opium the following morning at Nangdi-Tiraha, Iklera, Chhipabaraud Road.
A raiding party headed by Superintendent J.S. Negi was constituted. At approximately 4:25 a.m., the two accused arrived and were intercepted. Parmanand was carrying a white gunny bag.
Before conducting the search, the officers purported to inform the accused about their rights under Section 50. A single written notice was issued to both accused.
Surajmal gave written consent not only for himself but purportedly also on behalf of Parmanand. Parmanand himself did not independently sign the notice or provide independent consent. The officers thereafter searched Parmanand’s bag and recovered 9.6 kg of opium.
Trial Court Convicted the Accused
The Special Judge convicted Parmanand under Section 8 read with Section 18 of the NDPS Act, while Surajmal was convicted under Section 8 read with Section 28.
Each was sentenced to 10 years’ rigorous imprisonment and a fine of βΉ10 lakh, with a further two years’ rigorous imprisonment in default of payment of the fine.
The accused appealed to the Rajasthan High Court, which acquitted them. The State of Rajasthan thereafter approached the Supreme Court challenging that acquittal.
Central Question Before the Supreme Court
The central issue was whether the search complied with the mandatory safeguards contained in Section 50 of the NDPS Act.
The State argued that the accused had been informed of their right to be searched before a Magistrate or gazetted officer and that a written notice had been given. The respondents countered that the notice was a joint notice, whereas each accused was entitled to an individual communication of his statutory right.
Does Section 50 Apply When Drugs Are Recovered From a Bag?
The case raised an important preliminary issue because the opium was recovered from the bag carried by Parmanand, rather than from his body.
The Supreme Court distinguished between two situations.
Where only a bag, briefcase or container carried by a person is searched, without searching the person’s body, Section 50 does not apply. The Court referred to Kalema Tumba v. State of Maharashtra and State of Himachal Pradesh v. Pawan Kumar in support of this principle.
However, where both the bag and the person’s body are searched, Section 50 applies.
The Court relied upon Dilip & Anr. v. State of Madhya Pradesh and Union of India v. Shah Alam, where personal searches conducted in addition to searches of vehicles or bags brought Section 50 into operation.
In the present case, the officers searched Parmanand’s bag and also conducted personal searches of both accused. The Supreme Court therefore held that Section 50 was applicable.
Joint Section 50 Notice Is Not Sufficient
The most significant principle emerging from the judgment concerns joint notices under Section 50.
The Supreme Court found that there had been no individual communication of the statutory right. A common notice was issued, and Surajmal purported to sign both for himself and Parmanand. Parmanand did not sign the notice.
The Court held:
βA joint communication of the right available under Section 50(1) of the NDPS Act to the accused would frustrate the very purport of Section 50.β
The Court explained that communication of the Section 50 right is not an empty formality. Given the stringent punishments prescribed by the NDPS Act, statutory search safeguards must be meticulously observed.
Right Must Be βClear, Unambiguous and Individualβ
The Supreme Court laid down an important standard for communicating Section 50 rights:
βThe communication of this right has to be clear, unambiguous and individual.β
Each accused must therefore be independently informed that he or she has a right under Section 50(1) to be searched before the nearest gazetted officer or nearest Magistrate.
The Court reasoned that a joint communication could create confusion and dilute the statutory safeguard. It expressly approved the similar approach adopted by the Punjab & Haryana High Court in Paramjit Singh and by the Bombay High Court in Dharamveer Lekhram Sharma.
One Accused Cannot Exercise Section 50 Right for Another
The Court also rejected the prosecution’s reliance on Surajmal’s purported consent on behalf of Parmanand.
Parmanand had neither signed the written communication nor independently consented to the proposed search. Accepting the prosecution case would require an assumption that he had authorised Surajmal to consent on his behalf.
The Supreme Court refused to proceed on such a presumption and concluded that the Section 50 right had not been properly communicated to the respondents.
This aspect of the judgment reinforces that Section 50 confers a personal procedural safeguard which must be communicated to the individual who is to be searched.
Supreme Court Rejects βThird Optionβ During Section 50 Search
The Court found another serious defect in the search procedure.
The investigating officer told the accused that they could choose to be searched:
before the nearest Magistrate;
before the nearest gazetted officer; or
before Superintendent J.S. Negi, who was himself part of the raiding party.
The Supreme Court held that offering this third option amounted to another breach of Section 50(1).
The statutory purpose of taking an accused before a Magistrate or gazetted officer, the Court explained, is to provide an opportunity for the search to take place in the presence of an independent officer.
Superintendent Negi, being a member of the raiding party, could not be treated as an independent officer for this purpose.
The Court accordingly held that the searching officer could not introduce a third option which Section 50 itself does not provide. Such an option would frustrate the statutory safeguard.
Section 50 Safeguards Must Be Meticulously Followed
The judgment draws heavily upon the Constitution Bench decision in State of Punjab v. Baldev Singh, (1999) 6 SCC 172.
The Constitution Bench had held that an empowered officer acting on prior information must inform the person to be searched of the existence of his right to be taken before the nearest gazetted officer or Magistrate. Failure to properly communicate that right can render the recovery suspect and vitiate a conviction founded upon such recovery.
In Parmanand, the Supreme Court applied that principle to emphasize that the protection must be meaningful rather than merely formal.
Cases Referred by the Supreme Court
The judgment discusses several important authorities on Section 50, including State of Punjab v. Balbir Singh, (1994) 3 SCC 299; State of Himachal Pradesh v. Pirthi Chand, (1996) 2 SCC 37; State of Punjab v. Baldev Singh, (1999) 6 SCC 172; Kalema Tumba v. State of Maharashtra, (1999) 8 SCC 257; State of Himachal Pradesh v. Pawan Kumar, (2005) 4 SCC 350; Dilip & Anr. v. State of Madhya Pradesh, (2007) 1 SCC 450; and Union of India v. Shah Alam, (2009) 16 SCC 644.
The Court also approved the approach in Paramjit Singh & Anr. v. State of Punjab, 1997 (1) CRIMES 242, and Dharamveer Lekhram Sharma & Anr. v. State of Maharashtra & Ors., 2001 (1) CRIMES 586, on the requirement of individual communication.
Final Decision: Acquittal Upheld
The Supreme Court concluded that there were two material violations of Section 50:
First, the accused were not individually informed of their statutory rights and were instead served with a joint communication.
Second, the investigating officer improperly offered the additional option of being searched before a Superintendent who was himself part of the raiding party.
The Court consequently held that the search was vitiated and the resulting conviction was illegal. It upheld the Rajasthan High Court’s acquittal and dismissed the State’s appeal.
Why the Judgment Matters in NDPS Cases
State of Rajasthan v. Parmanand is an important authority on the procedural safeguards surrounding personal searches under the NDPS Act. It establishes that Section 50 compliance cannot be reduced to obtaining a signature on a standard notice.
The decision makes three principles particularly clear: each accused must individually understand the Section 50 right; a joint notice is insufficient; and the searching officer cannot create a third search option involving a member of the raiding party. At the same time, the judgment should not be read as holding that Section 50 applies to every search of a bag or container. The Court specifically clarified that where only a bag is searched and no personal search takes place, Section 50 does not apply. It applied in Parmanand because both the bag and the persons of the accused were searched.
Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.
Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.
