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Madras High Court Quashes Service Tax Notifications and IGST on Ocean Freight as Ultra Vires
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 10.12.2025

Madras High Court Quashes Service Tax Notifications and IGST on Ocean Freight as Ultra Vires

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

In a significant judgment dated October 13, 2025, the Madurai Bench of the Madras High Court, comprising Honourable Justice, delivered a landmark ruling in the cases W.P. (MD) Nos. 1139 & 1143 of 2021 and 14856 & 14857 of 2022. The court declared certain service tax notifications and the imposition of Integrated Goods and Services Tax (IGST) on ocean freight as ultra vires, providing relief to the petitioners.

Background of the Case

The petitions were filed by M/s. TVS Srichakra Limited and M/s. Hitech Arai Private Limited, challenging Notifications No. 14/2017, 15/2017, and 16/2017 issued by the Union Ministry of Finance on April 13, 2017. The petitioners argued that these notifications exceeded the scope of Section 68(2) of the Finance Act, 1994, and violated Articles 14, 19(1)(g), 245, and 269A of the Constitution of India. Additionally, the petitioners sought to quash show-cause notices issued for the collection of service tax and IGST on ocean freight for the period between April 2017 and June 2017.

Court’s Observations

The court noted that similar challenges had been addressed by the Madras, Gujarat, and Bombay High Courts in previous cases, including:
1. M/s. Eastman Spinning Mills (P) Limited Vs. Union of India (Madras High Court, 2025)
2. Sal Steels Limited Vs. Union of India (Gujarat High Court, 2020)
3. Santhan Textile Private Limited Vs. Union of India (Bombay High Court, 2024)
The Gujarat High Court, in the Sal Steels case, had struck down the impugned notifications, ruling that they were ultra vires Sections 64, 66B, 67, and 94 of the Finance Act, 1994. The court held that the notifications lacked proper legal backing to impose service tax and IGST on ocean freight under CIF contracts. Similarly, the Madras High Court in the Eastman Spinning Mills case followed the Gujarat High Court’s decision and quashed the notifications.

Key Judgment

The Madurai Bench of the Madras High Court aligned with the earlier rulings and declared the impugned notifications as ultra vires. The court emphasized that the notifications failed to provide a proper mechanism under Section 68(2) of the Finance Act, 1994, to shift the burden of paying service tax and IGST on ocean freight to the petitioners, who were not the recipients of the taxable service. Consequently, the court quashed the notifications and the related show-cause notices, granting relief to the petitioners.

IGST on Freight

IGST on freight is applicable only when the importer directly pays the freight to the transporter, such as in FOB import contracts or domestic freight services. However, in CIF imports, where freight is included in the supplier’s invoice and paid by the foreign exporter, the importer is not liable to pay IGST under reverse charge. The Supreme Court in Union of India vs. Mohit Minerals (2022) declared the levy of IGST on ocean freight under RCM as unconstitutional and resulting in double taxation. Therefore, no IGST is payable on ocean freight in CIF imports as per the settled legal position.

Implications of the Judgment

This judgment is a significant development for businesses involved in import transactions under CIF contracts. The ruling reinforces the position that service tax and IGST on ocean freight cannot be imposed without proper legal authority. It also highlights the importance of adhering to constitutional provisions and ensuring that tax notifications do not exceed the scope of the enabling legislation.

Conclusion

The Madurai High Court’s decision is a welcome relief for businesses, as it sets a precedent for similar cases across the country. By declaring the service tax notifications and IGST on ocean freight as ultra vires, the court has upheld the principles of constitutional validity and provided clarity on the scope of taxation under the Finance Act, 1994. This judgment is expected to have far-reaching implications for the interpretation of tax laws in India.

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Source: Madras High Court

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December 10, 2025
Penalties Under Sections 114(3) and 114AA of Customs Act Quashed by CESTAT Ahmedabad

ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 09.12.2025

Penalties Under Sections 114(3) and 114AA of Customs Act Quashed by CESTAT Ahmedabad

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

In a significant legal development, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), West Zonal Bench at Ahmedabad, has delivered a landmark judgment in the case of Appellant vs. C.C. – Ahmedabad. The case revolved around the imposition of penalties under Sections 114(3) and 114AA of the Customs Act, 1962, amounting to Rs. 7 Lakh and Rs. 3 Lakh, respectively, on the appellant.

Background of the Case

The case originated from allegations that the appellant was involved in issuing erroneous valuation certificates for export cargo, leading to penalties imposed by the adjudicating authority. Despite the original authority noting that the appellant had no knowledge of the alleged misdeclaration of export cargo, the Commissioner (Appeals) upheld the penalties, citing intentional misconduct.

Key Arguments Presented

The appellant’s legal team highlighted critical discrepancies in the findings of the Commissioner (Appeals). They pointed out that the original adjudicating authority had explicitly stated that the appellant was not aware of the misdeclaration and was not part of any conspiracy. This factual observation was contradicted in the impugned order by the Commissioner (Appeals), who claimed that the appellant knowingly signed false valuation certificates.

To support their case, the appellant’s advocates relied on precedents such as Anchor Logistics vs C.C.  (2013) and Bhatia Shipping Pvt. Limited (2024), which emphasized the necessity of proving knowledge before imposing penalties under Sections 114 and 114AA of the Customs Act. They argued that the absence of knowledge invalidates the penalties imposed.

Tribunal’s Decision

The Hon’ble Member Judicial, presided over the case and delivered the final order on November 21, 2025. After carefully examining the facts and legal precedents, the Tribunal concluded that the penalties imposed on the appellant were unjustified. The court emphasized that knowledge of the alleged misdeclaration is a prerequisite for imposing penalties under Sections 114 and 114AA of the Customs Act. The Tribunal found that the Commissioner (Appeals) had made factually incorrect findings, which contradicted the original adjudicating authority’s observations.

In light of these findings, the Tribunal allowed the appeal and granted consequential relief to the appellant, setting aside the penalties imposed.

Implications of the Judgment

This judgment reinforces the principle that penalties under the Customs Act cannot be imposed without establishing clear evidence of knowledge and intent. It serves as a reminder to authorities to ensure that their findings are consistent and based on factual evidence. The decision also highlights the importance of judicial scrutiny in upholding justice and protecting individuals from unwarranted penalties.

Conclusion

The case of Appellant vs. C.C. – Ahmedabad is a testament to the importance of due process and the role of appellate tribunals in correcting errors in administrative decisions. It underscores the need for fairness and accuracy in adjudication, ensuring that penalties are imposed only when supported by concrete evidence. This victory is not just for the appellant but for the principles of justice and transparency in the legal system.

Source: CESTAT Ahmedabad

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December 9, 2025
CESTAT Chennai Overturns Duty Demand and Penalty on Godrej Consumer Products Ltd. in Target Plus Scheme Dispute
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 09.12.2025

CESTAT Chennai Overturns Duty Demand and Penalty on Godrej Consumer Products Ltd. in Target Plus Scheme Dispute 

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

In a significant judgment, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Chennai, has ruled in favor of M/s. Godrej Consumer Products Ltd., setting aside the duty demand, redemption fine, and penalty imposed by the Commissioner of Customs (Appeals – I), Chennai. This decision marks a crucial win for the appellant in a long-standing dispute over the interpretation of the Target Plus Scheme under Notification No. 73/2006-Cus.

Background of the Case

M/s. Godrej Consumer Products Ltd., a manufacturer-exporter of electronic mosquito repellent machines and related products, had imported ‘PTC Thermistors’ using a duty credit certificate issued under the Target Plus Scheme. The company utilized the imported goods for manufacturing electronic mosquito repellent machines through a job worker, M/s. EMOX Device and Company, and subsequently exported the finished products.

The Department alleged that the appellant violated the conditions of Notification No. 73/2006-Cus, which exempted goods imported under the Target Plus Scheme from customs duty, provided the goods were not transferred or sold. The Department contended that the appellant, as a manufacturer-exporter, was required to use the imported goods in its own manufacturing unit and could not send them to a job worker for processing. Consequently, a Show Cause Notice (SCN) was issued, demanding recovery of Rs. 41,24,764/- in duty, along with interest, a redemption fine of Rs. 25,00,000/-, and a penalty of Rs. 20,000/-.

The appellant contested the allegations, arguing that the term “own use” under the notification and the Foreign Trade Policy (FTP) includes the use of job workers for manufacturing resultant products. The appellant relied on various legal precedents and clarifications issued by the Directorate General of Foreign Trade (DGFT) to support its case.

CESTAT Chennai’s Observations 

After hearing both parties, the CESTAT Chennai bench, comprising Hon’ble Member – Technical and Hon’ble Member – Judicial, carefully analyzed the provisions of Notification No. 73/2006-Cus and relevant sections of the FTP. The bench observed the following:
1. No Restriction on Job Work: The tribunal noted that the notification does not explicitly prohibit manufacturer-exporters from utilizing job workers for processing imported goods into finished products. The condition of “own use” does not mandate that the goods must be processed solely within the premises of the manufacturer-exporter.
2. Clarifications from DGFT: The tribunal referred to Public Notice No. 113 (RE-2007)/2004-09 dated 15.02.2008, which clarified that job workers can be used for converting imported goods into resultant products under the Target Plus Scheme. This further supported the appellant’s argument that utilizing job workers does not violate the notification’s conditions.
3. Precedents from Similar Cases: The tribunal relied on previous judgments, including M/s. Silver Line Plastpack Pvt. Ltd. v. CCE & ST, Bhavnagar, which held that “own use” includes the use of job workers for processing imported goods. The tribunal found no evidence that the appellant had transferred or sold the imported goods to the job worker, which would have constituted a violation of the notification.
4. No Evidence of Transfer or Sale: The tribunal emphasized that the investigation did not establish any transfer or sale of the imported goods to the job worker. The goods were merely sent for processing and returned to the appellant for further activities like testing, repacking, and export.
Final Verdict

The CESTAT Chennai concluded that the appellant had not violated the conditions of Notification No. 73/2006-Cus and was entitled to the exemption under the Target Plus Scheme. The tribunal set aside the impugned order, including the duty demand, interest, redemption fine, and penalty, and allowed the appeal with consequential relief.

Key Takeaways

This judgment reinforces the principle that the term “own use” under the Target Plus Scheme includes the utilization of job workers for manufacturing resultant products. It also highlights the importance of adhering to established procedures and obtaining necessary permissions when sending imported goods for job work.

The decision is a significant win for M/s. Godrej Consumer Products Ltd. and sets a precedent for similar cases involving the interpretation of customs notifications and FTP provisions. It underscores the need for clarity in government notifications and policies to avoid disputes and ensure smooth compliance by exporters and manufacturers.

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Source: CESTAT Chennai

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December 9, 2025
CESTAT Chennai Sets Aside Demand on Grounds of Limitation
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 08.12.2025

CESTAT Chennai Sets Aside Demand on Grounds of Limitation

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

In a significant ruling, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Chennai, has delivered a favorable judgment for M/s Jocil Ltd., setting aside the demand for differential duty and penalties imposed by the Commissioner of Customs (Appeals-II), Chennai. The case revolved around the classification of imported goods and the invocation of the extended period of limitation under Section 28 of the Customs Act, 1962.

Background of the Case

M/s Jocil Ltd. had imported 23 consignments of ‘lauric acid’ between March 2012 and August 2012, classifying the goods under tariff item 2915 7090 and availing exemption under Notification No. 46/2011-Cus. However, the Revenue contended that the correct classification was under tariff item 2915 9090, which did not qualify for the exemption. This led to the issuance of a show cause notice (SCN) on August 8, 2013, demanding differential duty of Rs. 22,04,830/- and interest.

The appellant agreed to pay the duty and interest for seven bills of entry within the normal limitation period but contested the demand for the remaining 16 bills of entry, citing the one-year limitation period under Section 28(1)(a) of the Customs Act, 1962. Despite this, the Revenue issued a second SCN on August 18, 2014, invoking the extended period of limitation and alleging willful misclassification.

Key Arguments by M/s Jocil Ltd.

The appellant argued that:
1. The classification issue was interpretational and did not involve any misdeclaration or suppression of facts.
2. The second SCN was barred by limitation, as the facts were already known to the authorities when the first SCN was issued.
3. Reliance on dictionary definitions and HSN explanatory notes without expert evidence was insufficient to substantiate the Revenue’s claims.
4. The extended period of limitation could not be invoked in cases involving interpretational disputes.
CESTAT’s Observations and Ruling

The Tribunal, comprising Hon’ble Member Technical and Hon’ble Member – Judicial, examined the submissions and legal precedents. The key findings were:
1. The second SCN was issued more than a year after the first SCN, making it wholly barred by limitation as per the Supreme Court’s ruling in Nizam Sugar Factory v. Collector of Central Excise.
2. The classification issue was interpretational, and the appellant’s declaration of goods as ‘lauric acid’ was accurate. Merely claiming a classification under a particular tariff heading does not amount to suppression or misstatement.
3. The Revenue failed to provide expert evidence to substantiate its claims, relying instead on dictionary definitions and HSN notes, which were deemed insufficient.
The Tribunal concluded that the extended period of limitation could not be invoked in this case and set aside the impugned order, allowing the appeal with consequential relief.

Implications of the Judgment

This ruling reinforces the principle that extended limitation cannot be invoked in cases involving interpretational disputes or where there is no evidence of willful suppression or misstatement. It also highlights the importance of adhering to procedural timelines and the need for robust evidence when challenging the classification of goods.

The decision is a significant win for M/s Jocil Ltd. and sets a precedent for similar cases, ensuring that importers are not unfairly penalized for genuine classification disputes. It underscores the importance of legal recourse in protecting the rights of businesses and ensuring fair treatment under the law.

Source: CESTAT Chennai

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December 8, 2025
CESTAT Kolkata Upholds Correct Classification of Biometric Devices in Favor of Importers

ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 08.12.2025

CESTAT Kolkata Upholds Correct Classification of Biometric Devices in Favor of Importers

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

In a significant ruling, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Kolkata, has delivered a judgment favoring FACE IT Systems LLP and Fortuna Impex Pvt. Ltd. in a long-standing dispute over the classification of imported biometric devices. The case revolved around the classification of “Access Controller Face Recognition Systems” imported by the appellants, with the central question being whether these devices should be classified under Customs Tariff Heading (CTH) 8471 or CTH 8543.

Background of the Case

The appellants, FACE IT Systems LLP and Fortuna Impex Pvt. Ltd., imported face recognition systems from China, declaring them under CTH 84716090 as “Data Collection Terminals (based on face recognition).” This classification allowed them to claim NIL duty benefits under Notification No. 024/2005 – Customs dated 01.03.2005. However, the Revenue alleged that the goods were misclassified and should instead fall under CTH 8543, which attracts a basic customs duty of 7.5%.

The dispute escalated when the Special Intelligence and Investigation Branch (SIIB) intercepted the consignments, alleging misclassification and misdeclaration. The Revenue also raised concerns about undeclared items found in the shipment, including old integrated circuit boards and other components. A Show Cause Notice (SCN) was issued, demanding differential duty, interest, and penalties for both the live consignment and past consignments.

Arguments Presented

The appellants argued that the imported devices met the criteria for classification under CTH 8471, which covers Automatic Data Processing Machines. They presented detailed technical reports from STQC IT Service and Jadavpur University, which confirmed that the devices were microcomputer-based systems capable of automatic data processing. The reports highlighted the devices’ ability to store and process data, perform arithmetic computations, and execute programs without human intervention.

The appellants also cited several case laws, including decisions from the Delhi and Ahmedabad benches of the Tribunal, which had previously ruled that similar biometric devices were classifiable under CTH 8471. They contended that the extended period for demanding differential duty on past consignments was not applicable, as the issue was one of interpretation rather than suppression of facts.

On the other hand, the Revenue argued that the devices were electrical machinery and should be classified under CTH 8543. They also justified the confiscation of undeclared items and the penalties imposed on the appellants.

CESTAT’s Decision

After a detailed examination of the technical reports, case laws, and arguments from both sides, the Tribunal concluded that the imported devices were indeed Automatic Data Processing Machines and should be classified under CTH 8471. The Tribunal rejected the Revenue’s claim that the devices were electrical machinery under CTH 8543, stating that the devices did not meet the criteria for such classification.

The Tribunal also set aside the confirmed demand for the extended period in the case of FACE IT Systems LLP, ruling that the issue was one of classification interpretation and not suppression of facts. Consequently, the penalties imposed on the appellants and other notices were also dismissed.

Key Takeaways

This ruling is a landmark decision in the realm of customs classification disputes, particularly for importers dealing with advanced biometric devices. The judgment underscores the importance of technical evaluations and expert opinions in determining the correct classification of goods. It also highlights the need for clarity in customs regulations to avoid disputes arising from differing interpretations.

Conclusion

The CESTAT Kolkata’s decision to uphold the classification of the biometric devices under CTH 8471 is a significant win for FACE IT Systems LLP and Fortuna Impex Pvt. Ltd. The ruling not only provides relief to the appellants but also sets a precedent for similar cases in the future. Importers dealing with advanced technology can take solace in the fact that the Tribunal recognizes the evolving nature of technology and its implications for customs classification.

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Source: CESTAT Kolkata

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December 8, 2025
Calcutta High Court Quashes Anti-Dumping Duty on Titanium Dioxide Imports
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 06.12.2025

Calcutta High Court Quashes Anti-Dumping Duty on Titanium Dioxide Imports

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

In a significant judgment, the Calcutta High Court recently quashed the anti-dumping duty imposed on Titanium Dioxide (Rutile Sulphate) imports from China. The case, filed by the Indian Paint Association against the Union of India and others, highlighted procedural irregularities and non-disclosure of essential information by the Directorate General of Trade Remedies (DGTR).

Background of the Case

The Indian Paint Association, representing a major portion of the domestic paint industry, filed a writ petition challenging the DGTR’s final findings and the subsequent anti-dumping duty imposed by the Central Government. The petitioner argued that Rutile Sulphate was not commercially produced or sold by the domestic industry, and the DGTR failed to provide a non-confidential summary of the confidential information submitted by the domestic industry. This lack of transparency, according to the petitioner, violated the principles of natural justice and the procedural safeguards outlined in the Customs Tariff Act, 1975, and the Anti-Dumping Rules, 1995.

Key Issues Raised

The case revolved around several critical issues:
1. Territorial Jurisdiction: The court ruled that the impact of the anti-dumping duty was felt at the petitioner’s registered office in Kolkata, establishing jurisdiction for the Calcutta High Court to hear the case.
2. Premature Challenge: The court clarified that the amended Customs Tariff Act now allows appeals against the determination itself, making the challenge valid and not premature.
3. Alternative Remedy: Although an appellate mechanism exists under Section 9C of the Customs Tariff Act, the court noted that the relevant anti-dumping bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) had not been functional for over a year, justifying the writ petition.
4. Procedural Irregularities: The court found that the DGTR failed to provide essential facts and non-confidential summaries of confidential information, preventing the petitioner from effectively contesting the findings.
5. Violation of Natural Justice: The court held that the DGTR’s actions violated principles of natural justice and procedural safeguards under the Anti-Dumping Rules and the WTO’s Anti-Dumping Agreement.
Court’s Decision

Justice ruled that the DGTR’s final findings were vitiated due to procedural lapses and non-compliance with the principles of natural justice. Consequently, the anti-dumping duty imposed by the Central Government was also quashed. The court remanded the matter back to the DGTR for reconsideration, directing it to address the petitioner’s concerns and comply with the procedural requirements under Rule 7(2) of the Anti-Dumping Rules.

Implications of the Judgment

This judgment underscores the importance of transparency and adherence to procedural safeguards in anti-dumping investigations. It also highlights the judiciary’s role in ensuring fairness and accountability in administrative actions. The decision is a significant win for the Indian Paint Association and sets a precedent for future cases involving anti-dumping duties.

The case serves as a reminder that procedural fairness and compliance with statutory provisions are essential in protecting the rights of stakeholders and maintaining the integrity of trade remedies. As the matter is now remanded back to the DGTR, all eyes will be on the authority to ensure a fair and transparent reconsideration of the case.

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Source: Calcutta High Court

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December 6, 2025
CESTAT Delhi Sets Aside Demand for Cost Recovery Charges
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 05.12.2025

CESTAT Delhi Sets Aside Demand for Cost Recovery Charges

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

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), New Delhi, recently delivered a significant judgment in the case of M/s Thar Dry Port vs. Principal Commissioner of Customs (Preventive), Jodhpur. This decision, pronounced on December 4, 2025, has far-reaching implications for customs custodians and the legality of cost recovery charges under the Handling of Cargo in Customs Areas Regulations, 2009 (HCCAR, 2009).

Background of the Case

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

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

Key Issues Addressed

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

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

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

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

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

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Source: CESTAT Delhi

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December 5, 2025
Delhi High Court Upholds Principles of Natural Justice in Customs Dispute
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 04.12.2025

Delhi High Court Upholds Principles of Natural Justice in Customs Dispute

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

In a significant development, the Delhi High Court, on November 24, 2025, delivered a judgment in the case of Govind Global Ventures Pvt. Ltd. vs. The Commissioner of Customs (Adjudication), addressing critical issues of procedural fairness and compliance with the principles of natural justice. The case revolved around a customs dispute where the petitioner challenged an ex parte order passed by the Commissioner of Customs (Adjudication), New Delhi.

Background of the Case

The petitioner, Govind Global Ventures Pvt. Ltd., filed a writ petition under Articles 226 and 227 of the Constitution of India, challenging the Order-in-Original dated July 26, 2024, and a subsequent corrigendum issued on October 9, 2024. The petitioner alleged that notices for personal hearings, issued in early 2024, were never received, and the impugned order was passed without granting them an opportunity to be heard.

The petitioner further contended that even the impugned order was not served properly, and they only became aware of it upon approaching the Department. The case raised concerns about procedural lapses, including the lack of delivery receipts and tracking reports for notices sent via speed post.

Key Observations by the Court

The High Court, presided over by Justice , noted several procedural irregularities in the case. The court observed that:
1. Failure to Prove Service of Notices: The Department was unable to provide delivery reports for the notices and the impugned order, despite filing tracking receipts for speed post dispatches.
2. Violation of Natural Justice: The impugned order was passed ex parte, depriving the petitioner of an opportunity to present their case.
3. Deposit Already Made: The petitioner had already deposited Rs. 39,00,000 during the investigation, which exceeded the usual pre-deposit requirement for filing an appeal.
Court’s Decision

In the interest of justice, the High Court set aside the impugned order and remanded the matter back to the Adjudicating Authority for fresh adjudication. The court directed the Department to furnish all relevant documents (RUDs) to the petitioner by December 20, 2025, and allowed the petitioner to file a reply by January 20, 2026. A personal hearing was also mandated, with notices to be served via email and mobile communication.

The court emphasized the importance of maintaining proper tracking receipts and delivery reports for future notices to ensure procedural transparency.

Implications of the Judgment

This judgment underscores the judiciary’s commitment to upholding the principles of natural justice and ensuring fair treatment in adjudication processes. By remanding the case for fresh adjudication, the court has provided the petitioner with an opportunity to present their case and address the allegations raised in the Show Cause Notice.

Additionally, the judgment serves as a reminder to government departments to adhere to procedural requirements and maintain proper records to avoid disputes over service of notices.

Conclusion

The Delhi High Court’s decision in this case highlights the importance of procedural fairness in legal proceedings. By setting aside the impugned order and remanding the matter for fresh adjudication, the court has reinforced the need for transparency and accountability in administrative actions. This case serves as a precedent for ensuring that parties are given a fair opportunity to be heard, especially in matters involving significant financial implications.

Source: Delhi High Court

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December 4, 2025
Delhi High Court Rejects Novo Nordisk’s Interim Injunction in Semaglutide Patent Dispute Against Dr. Reddy’s Laboratories
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 04.12.2025

Delhi High Court Rejects Novo Nordisk’s Interim Injunction in Semaglutide Patent Dispute Against Dr. Reddy’s Laboratories

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

On December 2, 2025, the Delhi High Court delivered a significant judgment in the case of Novo Nordisk AS vs. Dr. Reddy’s Laboratories Limited & Anr.  (CS(COMM) 565/2025), addressing a patent infringement dispute over the pharmaceutical compound Semaglutide. The case revolved around Novo Nordisk’s claim that Dr. Reddy’s Laboratories infringed its patent (Patent No. IN’697) for the drug Semaglutide, marketed under the brand names Ozempic, Wegovy, and Rybelsus.

Background of the Case

Novo Nordisk, a global healthcare company specializing in diabetes treatment, filed the suit alleging that Dr. Reddy’s Laboratories and OneSource Specialty Pharma Limited were manufacturing and exporting Semaglutide-based drugs without authorization. Novo Nordisk sought an interim injunction to restrain the defendants from manufacturing and exporting the drug, claiming infringement of its patent.

The defendants argued that the Semaglutide compound was already disclosed in a prior patent, IN’964 (Genus Patent), filed by Novo Nordisk in 2004. They contended that the Semaglutide compound was not novel and lacked an inventive step, making the Suit Patent/IN’697 vulnerable to revocation under Section 64 of the Indian Patents Act, 1970.

Key Issues Addressed

The court focused on the following key issues:
1. Anticipation by Prior Claiming (Section 64(1)(a)): The defendants argued that the Semaglutide compound was already claimed in the Genus Patent/IN’964. The court found that the Genus Patent/IN’964 contained specific claims and disclosures that enabled a “person skilled in the art” to arrive at the Semaglutide compound, making the Suit Patent/IN’697 vulnerable to revocation under Section 64(1)(a).
2. Anticipation by Prior Publication (Section 64(1)(e)): The court held that the Genus Patent/IN’964, published before the priority date of the Suit Patent/IN’697, disclosed the Semaglutide compound, making the latter patent vulnerable under Section 64(1)(e).
3. Obviousness (Section 64(1)(f)): The court determined that the Semaglutide compound was an obvious modification of Example 61 in the Genus Patent/IN’964, given the teachings in the prior arts, including Deacon [1998] and Knudsen [2004]. The court applied the “person in the know” test, considering the common inventors between the Genus Patent/IN’964 and the Suit Patent/IN’697, and concluded that the modifications were within the skillset of the inventors.
4. Evergreening: The court noted that Novo Nordisk had invented the Semaglutide compound in 2004, contemporaneous with the filing of the Genus Patent/IN’964. The court found that the filing of the Suit Patent/IN’697 was an attempt to extend the monopoly on the Semaglutide compound, resulting in double patenting and evergreening.
Court’s Decision

The court denied Novo Nordisk’s request for an interim injunction, allowing Dr. Reddy’s Laboratories to continue manufacturing the drug in India and exporting it to countries where Novo Nordisk does not hold a patent. However, the court directed the defendants to maintain detailed records of their manufacturing and export activities and prohibited them from selling the drug in India until the expiry of the Suit Patent/IN’697 on March 20, 2026.

Key Takeaways
1. No Presumption of Patent Validity: The court reiterated that under Indian patent law, there is no presumption of validity for granted patents, and defendants can challenge the validity of a patent even at the interim stage.
2. Evergreening and Double Patenting: The court emphasized that patent law does not permit inventors to extend their monopoly through successive patents for the same invention, as this would be against public interest.
3. Importance of Clearing the Way: The court criticized the defendants for failing to challenge the Suit Patent/IN’697 before commencing manufacturing, highlighting the importance of clearing the way in patent disputes.
Implications

This judgment is a landmark decision in the realm of patent law, particularly in the pharmaceutical sector. It underscores the importance of assessing patent validity under Indian law and highlights the judiciary’s stance against evergreening practices that could harm public interest. The case also serves as a reminder for companies to clear the way before engaging in activities that may infringe on existing patents.

Source: Delhi High Court

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December 4, 2025
High Court of Gujarat Quashes Public Notice Mandating Import Permit for Acrylonitrile

ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 04.12.2025

High Court of Gujarat Quashes Public Notice Mandating Import Permit for Acrylonitrile

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

In a landmark judgment delivered on November 19, 2025, the High Court of Gujarat at Ahmedabad, comprising Honorable Justice, ruled in favor of APCOTEX Industries Ltd., quashing the Public Notice F. No. 04-01/2022-CIR-I dated February 17, 2022. This decision has significant implications for industries importing Acrylonitrile for non-insecticidal purposes.

Background of the Case

APCOTEX Industries Ltd., a leading manufacturer of synthetic rubbers, filed a writ petition challenging the mandatory requirement of an import permit for Acrylonitrile, a key raw material used in their production process. The petitioners argued that Acrylonitrile, classified under Tariff Item 29261000, is imported for non-insecticidal purposes and should be exempt from the provisions of the Insecticides Act, 1968, as per Section 38 of the Act.

The dispute arose from the Public Notice issued by respondent no. 7, which mandated import permits for Acrylonitrile, even for non-insecticidal use. APCOTEX contended that this notice contradicted the exemptions provided under Section 38 of the Act, which clearly states that substances intended for non-insecticidal purposes are not subject to the Act’s provisions.

Key Arguments

The petitioners relied on the Kerala High Court’s decision in The Deputy Commissioner of Customs (Gr.VII), Cochin v. M. Chandrasekhar, Chennai, which held that substances used for non-insecticidal purposes are exempt from import permit requirements under the Insecticides Act. They further argued that the end-use bond submitted to the authorities ensures compliance with non-insecticidal usage, making the import permit redundant.

On the other hand, the respondents defended the Public Notice, asserting that registration and import permits are mandatory under Sections 9 and 38 of the Act, regardless of the intended use.

Court’s Observations

After hearing both parties, the Court examined the provisions of the Insecticides Act, 1968, particularly Sections 9 and 38. It noted that Section 38 explicitly exempts substances intended for non-insecticidal purposes from the Act’s requirements. The Court emphasized that Acrylonitrile, used by APCOTEX for manufacturing synthetic rubbers, falls under this exemption.

The judgment also referred to the Kerala High Court’s ruling, which supported the petitioners’ stance. Furthermore, the Court highlighted that no notification or rule mandates import permits for Acrylonitrile under the latest Foreign Trade Policy.

Judgment

The High Court quashed the Public Notice dated February 17, 2022, to the extent it applied to Acrylonitrile imported for non-insecticidal purposes. It ruled that the requirement for an import permit was contrary to the exemptions provided under Section 38 of the Insecticides Act, 1968. The Court made the rule absolute, allowing APCOTEX Industries Ltd. and other petitioners to import Acrylonitrile without the need for an import permit.

Implications of the Judgment

This decision is a significant relief for industries relying on Acrylonitrile as a raw material for non-insecticidal purposes. It reinforces the principle that exemptions under Section 38 of the Insecticides Act must be respected, ensuring smoother import processes for substances used in manufacturing.

The judgment also sets a precedent for similar cases, providing clarity on the application of the Insecticides Act to non-insecticidal imports. It underscores the importance of aligning administrative decisions with legislative intent, preventing unnecessary regulatory hurdles for businesses.

Conclusion

The High Court of Gujarat’s ruling is a victory for manufacturers and importers, safeguarding their rights under the law. By quashing the Public Notice, the Court has upheld the principle of exemption for non-insecticidal imports, paving the way for a more streamlined and business-friendly regulatory environment.

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Source: Gujarat High Court

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December 4, 2025