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Tag: #Imports

CESTAT Chandigarh- Import Duty Demand on Bicycle Parts Dropped After Procedural Lapse Under Section 28
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 21.01.2026

CESTAT Chandigarh- Import Duty Demand on Bicycle Parts Dropped After Procedural Lapse Under Section 28

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, and Service Tax Appellate Tribunal (CESTAT) Chandigarh recently delivered a landmark judgment in the case of M/s Gursam International and Appellant vs. Commissioner of Customs, Ludhiana. This case revolved around the evasion of customs duty by misdeclaring the country of origin of imported bicycle parts to avail undue benefits under Notification No. 46/2011-Cus dated 01.06.2011, issued under the Preferential Trade Agreement between ASEAN member states and India.

The case, which spanned several years, involved complex legal questions surrounding the interpretation of Section 28 of the Customs Act, 1962, and its amendments. The final judgment, delivered on January 20, 2026, was based on a majority decision following a difference of opinion between the two members of the original Division Bench.

Background of the Case

The appellants, M/s Gursam International and its manager, were accused of evading customs duty by routing bicycle parts of Chinese origin through Malaysia and falsely declaring Malaysia as the country of origin. This allowed them to claim exemption under Notification No. 46/2011-Cus, which provides preferential treatment to goods originating from ASEAN countries.

The Directorate of Revenue Intelligence (DRI) conducted an investigation and issued show cause notices on October 7, 2016, alleging misdeclaration and evasion of customs duty. The notices were adjudicated on May 28, 2019, by the Commissioner of Customs, Ludhiana, who confirmed the demand for duty along with interest and imposed penalties on the appellants.

Key Legal Issues

The case raised three critical legal questions:
1. Timely Adjudication of Show Cause Notices: Whether the show cause notices issued on October 7, 2016, and adjudicated on May 28, 2019, should stand vacated in terms of Explanation 4 to Section 28 of the Customs Act, 1962.
2. Reassessment Without Challenging Self-Assessment: Whether the show cause notice for recovery under Section 28 of the Customs Act, 1962, can be issued without challenging the self-assessment under Section 17 of the Customs Act, 1962.
3. Admissibility of Electronic Evidence: Whether the documents relied upon by the adjudicating authority, which were retrieved from email accounts, are admissible in the absence of compliance with Section 138C of the Customs Act, 1962.
The Tribunal’s Decision 

Issue 1: Timely Adjudication of Show Cause Notices 

The Member (Judicial) relied on the decision of the Hon’ble Punjab & Haryana High Court in M/s Prabhat Fertilizers & Chemical Works (CWP No. 23433 of 2019), which held that the amendment to Section 28(9) of the Customs Act, 1962, is retroactive, not retrospective. According to this judgment, show cause notices issued prior to March 29, 2018, are deemed to have been issued on that date and must be adjudicated within one year unless extended under Section 28(9A). Since the show cause notice in this case was adjudicated beyond the prescribed timeline, the Member (Judicial) held that the notice stood vacated.

The Member (Technical), however, disagreed, arguing that Explanation 4 to Section 28 explicitly states that show cause notices issued between May 14, 2015, and March 29, 2018, are governed by the old law, not the new one. He also contended that the delay in adjudication was caused by the appellants’ non-cooperation, making the defense of “lapsed notice” inequitable.

The Third Member, Hon’ble, resolved the difference by affirming the view of the Member (Judicial). He emphasized that the decision of the jurisdictional High Court in M/s Prabhat Fertilizers & Chemical Works was binding on the Tribunal, especially since the Hon’ble Supreme Court had upheld the High Court’s decision.

Issue 2: Reassessment Without Challenging Self-Assessment 

The Member (Technical) addressed this issue, holding that Section 28 of the Customs Act serves as the machinery provision for reassessment and recovery of duty. He relied on the Supreme Court’s judgment in Virgo Steel (2002) and Jain Shudh Vanaspati Ltd. (1996), which clarified that the power to recover duty that has escaped collection arises from Section 12 of the Customs Act, and Section 28 provides the procedural framework for such recovery. Therefore, the Revenue was within its rights to issue the show cause notice without challenging the self-assessment under Section 17.

Issue 3: Admissibility of Electronic Evidence 

The Member (Technical) also addressed the admissibility of electronic evidence, holding that the emails retrieved from the appellants’ accounts were primary evidence and did not require a certificate under Section 138C of the Customs Act. He cited the Supreme Court’s judgment in Arjun Panditrao Khotkar vs. Kailash Kushanrao Gorantyal (2020), which clarified that the requirement for a certificate under Section 65B(4) of the Indian Evidence Act is not mandatory when the electronic evidence is primary and has been tendered by the party itself.

Majority Decision

The Third Member’s opinion aligned with the Member (Judicial), leading to a majority decision to allow the appeals. The Tribunal set aside the impugned order and quashed the show cause notices, granting consequential relief to the appellants.

Key Takeaways
1. Timely Adjudication: The case underscores the importance of adhering to statutory timelines for adjudicating show cause notices under Section 28 of the Customs Act, 1962.
2. Binding Precedent: The Tribunal reaffirmed the principle of judicial discipline, emphasizing that decisions of jurisdictional High Courts must be followed, especially when upheld by the Supreme Court.
3. Electronic Evidence: The judgment clarified the distinction between primary and secondary electronic evidence, providing guidance on the applicability of Section 138C of the Customs Act and Section 65B of the Indian Evidence Act.
4. Reassessment Powers: The Tribunal upheld the Revenue’s authority to issue show cause notices under Section 28 without challenging self-assessment under Section 17, relying on established Supreme Court precedents.
Conclusion

The case of M/s Gursam International and Appellant vs. Commissioner of Customs, Ludhiana is a significant judgment that clarifies key aspects of customs law, including the retroactive application of amendments, the interplay between self-assessment and reassessment, and the admissibility of electronic evidence. It serves as a reminder of the importance of adhering to statutory timelines and the binding nature of jurisdictional High Court decisions. This case will undoubtedly serve as a reference point for future disputes involving similar legal issues.

Source: CESTAT Chandigarh

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January 21, 2026
CESTAT Delhi Sets Aside Customs Undervaluation Order for Non-Compliance with Sections 138B & 138C
ALO Law Office- IDT Tax I Arbitration I Litigation

Date:21.01.2026

CESTAT Delhi Sets Aside Customs Undervaluation Order for Non-Compliance with Sections 138B & 138C

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), Principal Bench, New Delhi, recently delivered a significant judgment on January 20, 2026, in the case of Aashna Mercantile Pvt. Ltd. & Others vs. Principal Commissioner of Customs (Import). This case revolved around allegations of misdeclaration and undervaluation of imported goods, leading to the imposition of differential duty and penalties under the Customs Act, 1962. The judgment, which set aside the impugned order dated April 23, 2020, has brought to light critical aspects of the Customs Act, particularly sections 108, 138B, and 138C.

Background of the Case

The appeals were filed by Aashna Mercantile Pvt. Ltd. and four co-noticees—Appellants—challenging the order passed by the Principal Commissioner of Customs, ICD-TKD, New Delhi. The order was based on two show-cause notices issued in 2017 and 2018, alleging misdeclaration and undervaluation of imported furniture and furniture parts. The Principal Commissioner had relied on statements recorded under section 108 of the Customs Act and invoices retrieved from the email of the supplier to confirm the demand for differential duty and impose penalties under sections 112, 114A, and 114AA of the Customs Act.

Key Legal Issues Addressed

The Tribunal focused on two critical legal provisions of the Customs Act:

1. Section 138B: Relevancy of Statements 

Section 138B outlines the conditions under which statements recorded under section 108 of the Customs Act can be considered relevant evidence. The Tribunal emphasized that such statements are admissible only if:
- The person who made the statement is examined as a witness before the adjudicating authority.
- The adjudicating authority forms an opinion that the statement should be admitted in evidence in the interest of justice.
- The person against whom the statement is made is given an opportunity to cross-examine the witness.
The Tribunal highlighted that these provisions are mandatory and must be strictly followed. Failure to comply with this procedure renders the statements inadmissible as evidence. In this case, the appellants had retracted their statements made under section 108, and the adjudicating authority did not follow the mandatory procedure under section 138B. As a result, the Tribunal ruled that the statements could not be relied upon to reject the transaction value or impose penalties.

2. Section 138C: Admissibility of Computer Printouts 

Section 138C deals with the admissibility of microfilms, facsimile copies, and computer printouts as evidence. The provision requires specific conditions to be met, including the issuance of a certificate identifying the document and verifying its authenticity. The Tribunal noted that the Principal Commissioner had relied on emails and invoices retrieved from the supplier’s email without ensuring compliance with section 138C. There was no evidence of a Panchnama being drawn for the printouts, nor was there a certificate as required under section 138C. Consequently, the Tribunal held that the emails and invoices could not be relied upon as evidence.

Precedents Cited

The Tribunal referred to several landmark judgments to support its decision, including:
- M/s Surya Wires Pvt. Ltd. vs Principal Commissioner, CGST, Raipur (2025): This case emphasized the mandatory nature of section 138B and the need for cross-examination of witnesses before admitting statements as evidence.
- Ambika International vs. Union of India (2016): The Punjab and Haryana High Court highlighted the importance of following the procedure under section 9D of the Central Excise Act, which is similar to section 138B of the Customs Act.
- Hi Tech Abrasives Ltd. vs. Commissioner of C. Ex. & Cus., Raipur (2018): The Chhattisgarh High Court reiterated the mandatory nature of section 9D and the need for strict compliance.
- Additional Director General (Adjudication) vs. Its My Name Pvt. Ltd. (2020): The Delhi High Court held that statements recorded under section 108 of the Customs Act must undergo the process outlined in section 138B before being considered relevant.
- Additional Director General, Adjudication, Directorate of Revenue Intelligence vs. Suresh Kumar and Co. Impex Pvt. Ltd. & Ors. (2025): The Supreme Court discussed the compliance requirements under section 138C and the evidentiary value of statements recorded under section 108.
Tribunal’s Final Decision 

After a detailed examination of the legal provisions and precedents, the Tribunal concluded that the Principal Commissioner had failed to comply with the mandatory requirements of sections 138B and 138C of the Customs Act. The statements recorded under section 108 and the emails retrieved from the supplier’s account were deemed inadmissible as evidence. Consequently, the Tribunal set aside the impugned order dated April 23, 2020, and allowed all five appeals.

Implications of the Judgment

This judgment underscores the importance of adhering to procedural requirements under the Customs Act when relying on statements and electronic evidence in adjudication proceedings. It serves as a reminder to authorities that failure to comply with mandatory provisions can lead to the rejection of evidence and the setting aside of orders. For importers and businesses, this case highlights the significance of understanding their rights under the law, particularly the right to cross-examine witnesses and challenge the admissibility of evidence.

Conclusion

The CESTAT’s decision in Aashna Mercantile Pvt. Ltd. & Others vs. Principal Commissioner of Customs is a landmark ruling that reinforces the importance of procedural compliance in customs adjudication. By setting aside the impugned order, the Tribunal has upheld the principles of natural justice and due process, ensuring that appellants are not penalized based on inadmissible evidence. This case will undoubtedly serve as a precedent for future disputes involving the admissibility of statements and electronic evidence under the Customs Act.

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Source: CESTAT Delhi

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January 21, 2026
CESTAT Chennai Sets Aside Revocation of Customs Broker Licence
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 20.01.2026

CESTAT Chennai Sets Aside Revocation of Customs Broker Licence

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 landmark decision, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Chennai, has delivered a favorable judgment for M/s. Kripa Absa Jus Cargo Handling Pvt. Ltd., a Customs Broker, by setting aside the revocation of their license, forfeiture of security deposit, and penalty imposed by the Principal Commissioner of Customs (Preventive), Tiruchirappalli. The case, which revolved around alleged violations of the Customs Broker Licensing Regulations (CBLR), 2018, has brought clarity to the obligations and responsibilities of Customs Brokers under the law.

Background of the Case 

The appeal arose from an incident involving an attempted import by M/s. Petrolube Industry, where undeclared Arecanut/Betel Nut was found concealed behind Bitumen drums. The consignment was intercepted at Nhava Sheva before transshipment to ICD Tughlakabad. Following this, the Principal Commissioner of Customs (Preventive), Tiruchirappalli, issued a Show Cause Notice (SCN) to M/s. Kripa Absa Jus Cargo Handling Pvt. Ltd., alleging violations of Regulations 10(e) and 10(n) of CBLR, 2018. Despite a favorable Inquiry Report exonerating the Customs Broker, the Principal Commissioner revoked their license, forfeited their security deposit of ₹5,00,000, and imposed a penalty of ₹50,000.

Aggrieved by this decision, the Customs Broker filed an appeal before the CESTAT, Chennai.

Key Issues Addressed by the Tribunal 

The Tribunal identified three critical issues for determination:
1. Whether the Appellant violated Regulations 10(e) and 10(n) of CBLR, 2018? 
  - Regulation 10(e) requires Customs Brokers to exercise due diligence in verifying the correctness of information related to cargo clearance.
  - Regulation 10(n) mandates verification of the Importer Exporter Code (IEC), GST Identification Number (GSTIN), identity, and functioning of the client at the declared address using reliable and authentic documents.
The Tribunal found that the Appellant had fully complied with KYC requirements, including obtaining and verifying IEC, GST registration, PAN, Aadhaar, bank details, lease agreements, and conducting address verification via postal confirmation. The Inquiry Officer had already concluded that the Appellant exercised reasonable due diligence and did not violate the regulations. The Tribunal emphasized that Customs Brokers are not investigative agencies and are not required to conduct continuous surveillance or anticipate future misconduct by their clients.
1. Whether the revocation of the license, forfeiture of security deposit, and penalty were justified? 
  - The Tribunal highlighted that punitive actions under CBLR must be proportionate and supported by evidence of misconduct. In this case, the Appellant had not filed a Bill of Entry for the intercepted consignment, and the alleged smuggling occurred before their assignment commenced. Furthermore, there was no evidence of connivance or mens rea on the part of the Appellant.
  - The Tribunal referred to the Delhi High Court judgment in Shakti Cargo Movers v. CC, which held that Customs Brokers cannot be penalized for subsequent misconduct by importers if reasonable verification was conducted at the time of onboarding.
Based on these findings, the Tribunal ruled that the penalties imposed were grossly disproportionate and unjustified.
1. Whether the proceedings were barred by limitation under Regulation 17 of CBLR, 2018? 
  - Regulation 17(1) mandates that a Show Cause Notice must be issued within 90 days from the receipt of the offence report. In this case, the offence report was received on 23.07.2024, but the SCN was issued on 25.10.2024, exceeding the 90-day limit.
  - The Tribunal held that the mandatory timeline under Regulation 17(1) was violated, rendering the proceedings time-barred and legally unsustainable.
Final Decision

After carefully considering the submissions, evidence, and legal precedents, the Tribunal concluded that the Appellant had not violated Regulations 10(e) or 10(n) of CBLR, 2018. It also found that the penalties imposed were disproportionate and the proceedings were vitiated due to the breach of mandatory timelines under Regulation 17(1).

The Tribunal set aside the impugned Order-in-Original No. 02/2025 dated 25.04.2025, directed the Licensing Authority to restore the Customs Broker license, and quashed the forfeiture of the security deposit and penalty imposed.

Key Takeaways from the Judgment
1. Clarification on Customs Broker Obligations: The Tribunal clarified that the obligations under Regulations 10(e) and 10(n) of CBLR, 2018 are limited to reasonable professional diligence and do not require Customs Brokers to act as investigative agencies or conduct continuous surveillance of their clients.
2. Proportionality of Punishment: The judgment emphasized that punitive actions such as license revocation, forfeiture, and penalties must be proportionate and based on established misconduct. Mere suspicion or conjecture cannot justify such severe actions.
3. Adherence to Timelines: The Tribunal reinforced the mandatory nature of timelines prescribed under Regulation 17(1) of CBLR, 2018, ensuring that Customs Brokers are not subjected to prolonged uncertainty or arbitrary deprivation of their rights.
Conclusion

The decision by CESTAT Chennai is a significant victory for M/s. Kripa Absa Jus Cargo Handling Pvt. Ltd. and sets an important precedent for Customs Brokers across the country. It underscores the importance of adhering to statutory timelines, exercising proportionality in punitive actions, and recognizing the limited scope of a Customs Broker’s obligations under the law. This judgment serves as a reminder that regulatory authorities must act within the bounds of the law and ensure fairness in their decisions.

Source: CESTAT Chennai

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January 20, 2026
CESTAT Delhi Allows Exemption for Oxygen Concentrators
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 20.01.2026

CESTAT Delhi Allows Exemption for Oxygen Concentrators

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), Principal Bench, New Delhi, delivered a judgment on January 19, 2026, in the case of M/s Aspen Diagnostics Pvt Ltd vs. Commissioner of Customs, New Delhi (ICD TKD). This case revolved around the interpretation of a customs notification and the eligibility of oxygen concentrators for exemption under Notification No. 20/2020-Cus dated April 9, 2020.

Background of the Case 

The dispute arose when M/s Aspen Diagnostics Pvt Ltd imported oxygen concentrators during the COVID-19 pandemic under Bill of Entry No. 7630674/11.05.2020. The company claimed exemption from customs duty under Notification No. 20/2020-Cus, which provided a ‘nil’ rate of duty for certain medical equipment, including “artificial respiration or other therapeutic respiration apparatus (ventilators).” However, the customs authorities denied the exemption, arguing that oxygen concentrators did not fall under the category of “ventilators” as specified in the notification.

The appellant challenged this decision, arguing that the notification was intended to provide broad relief during the pandemic and should not be narrowly interpreted to exclude oxygen concentrators. The case was first heard by the Commissioner of Customs (Appeals), who upheld the original decision, leading the appellant to approach the CESTAT.

Key Arguments Presented
1. Appellant’s Contention:
  - The appellant argued that the term “artificial respiration or other therapeutic respiration apparatus (ventilators)” should not be narrowly interpreted to mean only conventional ventilators. Instead, it should encompass all apparatus performing therapeutic respiration functions, including oxygen concentrators.
  - The appellant highlighted the urgency of the pandemic situation, which necessitated broad interpretation of the notification to provide relief to the public.
  - They criticized the reliance on subsequent notifications and press releases to interpret the intent of the original notification, stating that these were not credible instruments for determining the scope of the earlier notification.
  - The appellant also pointed out that the first appellate authority failed to comply with Section 17(5) of the Customs Act, 1962, which mandates a “speaking order” to justify the denial of exemption.
2. Respondent’s Argument:
  - The respondent argued that the exemption was specifically intended for ventilators, as indicated by the parenthetical description in the notification.
  - They relied on a press release issued by the Ministry of Finance and subsequent notifications that explicitly distinguished between ventilators and oxygen concentrators.
  - The respondent also emphasized the technical differences between ventilators and oxygen concentrators, asserting that the latter does not assist respiration through an external source, which is the essence of a ventilator.
The Tribunal’s Observations

The Tribunal made several critical observations while delivering its judgment:
1. Broad Interpretation of Notification:
  - The Tribunal emphasized that the notification under Section 25 of the Customs Act, 1962, should be read holistically. The description of goods eligible for exemption should not be narrowly confined to the parenthetical term “ventilators.”
  - It noted that the term “ventilator” is not explicitly enumerated in the First Schedule to the Customs Tariff Act, 1975, and the description in the notification was designed to cover a broader range of apparatus for artificial or therapeutic respiration.
2. Context of the Pandemic:
  - The Tribunal acknowledged the extraordinary circumstances of the COVID-19 pandemic, which required governments to provide relief in the broadest terms to address the acute respiratory distress faced by the population.
  - It criticized the lower authorities for their narrow interpretation of the notification, which failed to consider the broader intent of the government to provide relief during a public health crisis.
3. Technical and Legal Analysis:
  - The Tribunal analyzed the technical aspects of oxygen concentrators and ventilators, concluding that the source of oxygen supply does not determine whether an apparatus qualifies as one for artificial or therapeutic respiration.
  - It also referred to judicial precedents, including decisions by the High Courts of Bombay and Chhattisgarh, which emphasized the importance of interpreting tax-related notifications in a broader context.
Final Judgment

The Tribunal ruled in favor of M/s Aspen Diagnostics Pvt Ltd, setting aside the impugned order and allowing the appeal. It held that the lower authorities had erred in restricting the benefit of the notification to conventional ventilators and that oxygen concentrators, being apparatus for therapeutic respiration, were eligible for the exemption.

Key Takeaways
1. Holistic Interpretation of Notifications:
  - The judgment underscores the importance of interpreting customs notifications in their entirety, rather than focusing on specific terms or parenthetical descriptions.
2. Context Matters:
  - The Tribunal highlighted the need to consider the broader context, especially during extraordinary circumstances like the COVID-19 pandemic, when government policies are aimed at providing maximum relief.
3. Compliance with Legal Obligations:
  - The judgment criticized the lower authorities for failing to comply with Section 17(5) of the Customs Act, 1962, which requires a detailed explanation for denying exemptions.
4. Precedents in Tax Law Interpretation:
  - The Tribunal relied on previous judicial decisions to support its stance on the interpretation of tax-related notifications, emphasizing the importance of consistency in legal reasoning.
Conclusion

This landmark judgment by the CESTAT serves as a reminder of the need for a fair and holistic approach in interpreting tax notifications, especially during times of crisis. It highlights the importance of considering the broader intent of government policies and adhering to legal obligations to ensure justice for taxpayers. The decision to allow the exemption for oxygen concentrators is a significant step in recognizing the evolving nature of medical technology and the necessity of adapting tax policies to address public health emergencies.

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Source: CESTAT Delhi

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January 20, 2026
Revenue’s Appeal Fails in Valuation & Classification Dispute on Electric Tricycle Controllers
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 19.01.2026

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

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

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

Background of the Case

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

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

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

Key Issues in the Case

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

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

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

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

Final Verdict

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

Implications of the Judgment

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

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

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Source: CESTAT Kolkata

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January 19, 2026
CESTAT Delhi Sets Aside Order on Unjust Enrichment in Customs Duty Refund
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 19.01.2026

CESTAT Delhi Sets Aside Order on Unjust Enrichment in Customs Duty Refund

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), Principal Bench, New Delhi, recently delivered a significant judgment in the case of M/s. Lord Image vs. Commissioner of Customs – Jaipur I (Customs Appeal No. 50283 of 2022). The appeal was filed by M/s. Lord Image challenging the Order-in-Appeal No. 69(SM)/CUS/JPR/2021 dated 26.05.2021, which denied their refund claim on the grounds of unjust enrichment. The judgment, pronounced by Hon’ble Member Judicial, on 06.01.2026, marks a crucial victory for the appellant.

Background of the Case

M/s. Lord Image, a Jaipur-based importer, had imported gold jewelry from Thailand under two Bills of Entry dated 20.10.2011 and 17.11.2012, with a total value of Rs. 40,20,932/-. The goods were classified under sub-heading 711319 of the Customs Tariff Act, 1975, and the appellant claimed duty exemption under Notification No. 82/2004-Cus. and Notification No. 101/2004-Cus., both dated 31.08.2004. However, the department denied the exemption under the Free Trade Agreement (FTA) scheme and issued a show cause notice on 07.09.2013, demanding recovery of short-paid customs duty amounting to Rs. 4,18,297/-. The appellant deposited the amount under protest on 29.12.2012.

The adjudicating authority later dropped the demand for short-paid customs duty through Order-in-Original No. 40/2018-19 dated 29.11.2018, which was accepted by the department. Subsequently, M/s. Lord Image filed a refund claim for Rs. 4,18,297/- on 27.11.2019, supported by a Chartered Accountant Certificate dated 04.01.2020. The refund was sanctioned via Order-in-Original No. 26/2019-20 dated 30.01.2020, as it was filed within the limitation period. However, the department reviewed the order under Review Order No. 01/2020 dated 20.03.2020, claiming that the refund was hit by the principle of unjust enrichment. The department filed an appeal against the refund order, which was decided in their favor by the Commissioner (Appeals), leading to the present appeal before CESTAT.

Arguments Presented

Appellant’s Submissions: The appellant argued that the Order-in-Original dated 30.01.2020 had correctly considered both the limitation period and the principle of unjust enrichment. The Chartered Accountant Certificate clearly certified that the burden of customs duty was borne by the appellant and was not passed on to customers. The invoices for selling gold did not include any customs duty, and the department’s reliance on book entries in the profit and loss account was insufficient to prove unjust enrichment. The appellant emphasized that the findings of the Commissioner (Appeals) ignored documentary evidence and were contrary to the Customs Act, 1962.

Department’s Submissions: The department contended that the customs duty was booked as an expense under “Direct and Manufacturing Expenses” in the profit and loss account, indicating that the burden of duty was passed on to customers. They argued that the refund claim was rightly denied under the principle of unjust enrichment.

CESTAT’s Observations and Decision 

After hearing both parties and reviewing the evidence, CESTAT made the following key observations:
1. Nature of Deposit: The customs duty deposited by the appellant during the investigation was deemed a revenue deposit made under protest. CESTAT relied on precedents, including the Hon’ble Supreme Court’s decision in Sooraj Mull Baijnath Industries (P) Ltd. and EBIZ Com Pvt Ltd., which held that such deposits must be refunded with interest as they are not subject to unjust enrichment.
2. Chartered Accountant Certificate: The certificate submitted by the appellant confirmed that the customs duty burden was not passed on to customers. It certified that the duty was booked under “Import Duty Paid” in the profit and loss account, leading to a reduction in profit, and was not included in the sale value of goods.
3. Invoices as Evidence: The Tribunal emphasized that invoices are the best evidence to determine whether the duty burden was passed on to customers. The appellant’s invoices showed no mention of customs duty, proving that the duty was not included in the sale price.
4. Misinterpretation by Commissioner (Appeals): CESTAT held that the Commissioner (Appeals) erred in relying solely on book entries in the profit and loss account without considering the invoices and other documentary evidence. The findings were deemed inconsistent with established legal principles.
5. Legal Precedents: The Tribunal referred to various judgments, including Vishal Video & Appliances Pvt. Ltd. and Organan (India) Ltd., which established that the principle of unjust enrichment does not apply when the duty burden is not passed on to customers.
Final Order

CESTAT set aside the impugned order and allowed the appeal, holding that the refund claim was not hit by the principle of unjust enrichment. The Tribunal concluded that the appellant had successfully demonstrated that the burden of customs duty was borne by them and not passed on to customers.

Key Takeaways
1. Importance of Documentary Evidence: This case highlights the significance of invoices and Chartered Accountant Certificates in proving that the burden of customs duty has not been passed on to customers.
2. Nature of Deposits: Deposits made under protest during investigations are treated as revenue deposits, and the principle of unjust enrichment does not apply to such cases.
3. Legal Precedents: The judgment reinforces established legal principles regarding unjust enrichment and refund claims under the Customs Act, 1962.
4. Role of Adjudicating Authorities: The case underscores the importance of thorough examination of evidence by adjudicating authorities to ensure justice.
Conclusion

The judgment in favor of M/s. Lord Image is a landmark decision that upholds the principles of justice and fairness in refund claims under the Customs Act. It serves as a reminder to both importers and authorities to rely on concrete evidence and established legal precedents while adjudicating disputes. This case sets a precedent for similar cases and provides clarity on the application of the principle of unjust enrichment in customs duty refunds.

Source: CESTAT Delhi

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January 19, 2026
CESTAT Delhi Overturns Department’s Reclassification of Fuel Injection Valves as Diesel Engine Parts
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 17.01.2026

CESTAT Delhi Overturns Department’s Reclassification of Fuel Injection Valves as Diesel Engine Parts

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 Senior India Pvt. Ltd. vs. Commissioner of Customs. This case revolved around the classification of pressure relief valves imported by Senior India Pvt. Ltd. under the Customs Tariff Act, 1975. The decision, pronounced on January 7, 2026, has provided clarity on the classification of such goods under the Customs Tariff Items (CTI).

Background of the Case

Senior India Pvt. Ltd., a company engaged in manufacturing common rail and other parts for fuel injection equipment for diesel engines, imported pressure relief valves through a Bill of Entry dated March 15, 2019. The company classified the goods under CTI 8481 40 00, which covers “Safety or Relief Valves.” However, the Customs Department contended that the goods should be classified under CTI 8409 99 41, which pertains to “Other parts of diesel engines for motor vehicles.”

The dispute arose when the department directed the reassessment of the Bill of Entry under CTI 8409 99 41, arguing that the pressure relief valves were parts of diesel engines and not standalone valves. Senior India Pvt. Ltd. filed an appeal to challenge this classification.

Key Arguments Presented

Appellant’s Arguments
1. Correct Classification Under CTI 8481 40 00: The appellant argued that the pressure relief valves are specifically designed to relieve excess pressure in the common rail fuel injection system, which is a metallic pipe-like structure. The valves function by opening an aperture automatically when the pressure exceeds the prescribed limit, aligning with the description of “Safety or Relief Valves” under CTI 8481 40 00.
2. HSN Explanatory Notes: The appellant referred to the Harmonized System of Nomenclature (HSN) Explanatory Notes, which state that valves remain classified under heading 8481 even if specialized for use on a particular machine or apparatus.
3. Incorrect Interpretation by Commissioner (Appeals): The appellant contended that the Commissioner (Appeals) misinterpreted the HSN Explanatory Notes and incorrectly classified the goods under CTI 8409 99 41. The appellant emphasized that the pressure relief valves are complete valves in themselves and do not regulate the flow of fluid but merely relieve excess pressure.
Department’s Arguments
1. Classification Under CTI 8409 99 41: The department argued that the pressure relief valves are part of the common rail fuel injection system, which is a component of diesel engines used in motor vehicles. As such, the goods should be classified under CTI 8409 99 41 as “Other parts of diesel engines for motor vehicles.”
2. Exclusion from CTH 8481: The department referred to the HSN Explanatory Notes, which exclude machinery parts that regulate the flow of fluid inside a machine, even if they incorporate a complete valve, from classification under CTH 8481.
3. Specific Use in Diesel Engines: The department emphasized that the pressure relief valves are specifically designed for use in diesel engines and have no independent application outside of the common rail fuel injection system.
CESTAT’s Observations and Decision

After carefully analyzing the arguments and evidence presented by both parties, the Tribunal made the following observations:
1. Function of Pressure Relief Valves: The Tribunal noted that the pressure relief valves are complete valves in themselves and are not machinery parts incorporating a valve. Their sole function is to relieve excess pressure in the common rail fuel injection system, and they do not regulate or control the flow of fluid.
2. Applicability of HSN Explanatory Notes: The Tribunal emphasized that the HSN Explanatory Notes to CTH 8481 clearly state that valves remain classified under this heading even if specialized for use on a particular machine or apparatus. The pressure relief valves meet the criteria for classification under CTI 8481 40 00.
3. Exclusion from CTI 8409 99 41: The Tribunal rejected the department’s argument that the goods should be classified under CTI 8409 99 41. It clarified that Section Note 2(a) to Section XVI of the Customs Tariff excludes CTH 8409 from its purview when the goods are specifically covered under another heading, such as CTH 8481.
4. Precedents: The Tribunal referred to previous decisions, including Commissioner of Central Excise, Aurangabad vs. Motor Industries Company Ltd. and Kirloskar Pneumatic Co. Ltd. vs. Collector of Customs, Bombay, which supported the classification of specialized valves under CTH 8481.
Final Verdict

The Tribunal concluded that the pressure relief valves imported by Senior India Pvt. Ltd. were correctly classified under CTI 8481 40 00 as “Safety or Relief Valves.” The impugned order passed by the Commissioner (Appeals) was set aside, and the appeal was allowed.

Key Takeaways from the Judgment
1. Importance of HSN Explanatory Notes: The judgment highlights the significance of HSN Explanatory Notes in determining the correct classification of goods under the Customs Tariff Act.
2. Specific vs. General Classification: When goods are specifically covered under a particular heading, they must be classified under that heading, even if they are designed for use as part of a specific machine.
3. Functionality Matters: The function of the goods plays a crucial role in determining their classification. In this case, the pressure relief valves were classified based on their function of relieving pressure, rather than regulating or controlling fluid flow.
4. Precedents in Classification Disputes: The Tribunal relied on previous decisions to reinforce its reasoning, demonstrating the importance of judicial precedents in customs classification matters.
Conclusion

The CESTAT’s decision in this case serves as a landmark judgment in the realm of customs classification. It underscores the need for a detailed understanding of the functionality and design of imported goods, as well as the importance of adhering to the HSN Explanatory Notes and Section Notes of the Customs Tariff Act. This ruling not only provides clarity on the classification of pressure relief valves but also sets a precedent for similar disputes in the future.

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Source: CESTAT Delhi

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January 17, 2026
CESTAT Chennai Sets Aside Duty Demand on Re-Import; Holds Temporary Export Not a ‘Supply’ Under GST
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 17.01.2026

CESTAT Chennai Sets Aside Duty Demand on Re-Import; Holds Temporary Export Not a ‘Supply’ Under GST

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, and Service Tax Appellate Tribunal (CESTAT) Chennai recently delivered a significant judgment in the case of M/s. NTC Logistics India Pvt. Ltd. vs. Commissioner of Customs, Chennai-II (Imports). This case revolved around the interpretation of customs duty exemptions under Notification No. 45/2017-Customs dated 30.06.2017, particularly concerning the re-import of goods exported for temporary use abroad. The judgment, delivered on January 9, 2026, provides clarity on the applicability of exemption provisions and the concept of “supply” under the GST framework.

Case Background

M/s. NTC Logistics India Pvt. Ltd., the appellant, is a logistics and transportation service provider with operations both within and outside India. The company undertook a project in Sri Lanka for Vestas Asia Pacific A/s, Denmark, which involved setting up a 103 MW Wind Power Project. To execute the project, the appellant transported specialized equipment such as cranes, trailers, trucks, and tools from India to Sri Lanka. These goods were exported under shipping bills filed with “No Foreign Exchange” (NFE) and GR waiver, and the appellant claimed exemption from customs duties under Sl. No. 5 of Notification No. 45/2017-Customs.

The exemption under Sl. No. 5 of the notification applies to goods of Indian origin that are exported otherwise than by way of supply and re-imported within three years. The appellant argued that the movement of goods to Sri Lanka did not constitute a “supply” under Section 7 of the Central Goods and Services Tax Act, 2017, as there was no transfer of ownership or consideration involved. The goods remained the property of the appellant, and the only payment received was for transportation services, which were declared as “export of services” in their GST returns.

The Dispute

The controversy arose when the Customs Department conducted a post-clearance audit and noticed that the shipping bills mentioned a Letter of Undertaking (LUT). Based on this, the department assumed that the goods had been exported under Bond or LUT without payment of Integrated Goods and Services Tax (IGST). Consequently, the department issued an Audit Consultative Letter proposing the demand for IGST on the re-imported goods, along with Basic Customs Duty (BCD), Social Welfare Surcharge (SWS), and penalties.

The appellant contended that the movement of goods to Sri Lanka was not a “supply” and therefore did not attract IGST at the time of export. They argued that the mention of LUT in the shipping bills was a procedural requirement and did not alter the nature of the transaction. Despite these explanations, the Commissioner of Customs issued a Show Cause Notice and passed an Order-in-Original confirming the demand for customs duties, confiscation of goods, redemption fines, and penalties.

Key Issues Examined by the Tribunal 

The tribunal identified three core issues for consideration:
1. Does the temporary movement of goods from India to Sri Lanka for the appellant’s own use in executing a service contract constitute “supply”? 
2. Is the re-import of such goods eligible for exemption under Sl. No. 5 of Notification No. 45/2017-Customs?
3. Has the Commissioner proven “suppression” to invoke the extended period of limitation? 
Tribunal’s Observations and Judgment
1. Temporary Movement of Goods as “Supply”: The tribunal held that the movement of goods from India to Sri Lanka did not constitute a “supply” under GST laws. Section 7 of the CGST Act defines “supply” as an activity made for consideration and in the course of business, subject to certain exceptions. Since the goods were moved without consideration, without transfer of ownership, and solely for the appellant’s own use in providing transportation services, the transaction did not meet the definition of “supply.” The tribunal also referred to CBIC Circular No. 80/54/2018-GST, which clarified that inter-State movement of equipment by a service provider for their own use does not constitute “supply.”
2. Exemption Under Sl. No. 5 of Notification No. 45/2017-Customs: The tribunal found that the appellant’s re-import of goods met the conditions of Sl. No. 5 of the notification. The goods were of Indian origin, exported otherwise than by way of supply, and re-imported within the prescribed three-year period. The tribunal clarified that Sl. No. 5 is a distinct and independent entry in the notification, and its conditions cannot be conflated with those of Sl. No. 1(d), which applies to goods exported under Bond or LUT without payment of IGST. The tribunal emphasized that the mention of LUT in the shipping bills was a procedural requirement and did not affect the substantive eligibility for exemption.
3. Suppression and Extended Period of Limitation: The tribunal rejected the Commissioner’s claim of suppression, stating that the appellant had disclosed all material facts through statutory documents. The mention of LUT in the shipping bills was not a deliberate act to evade duty but a procedural necessity. The tribunal cited several Supreme Court judgments to emphasize that suppression must involve a deliberate act to evade duty, which was not the case here.
Conclusion

The tribunal set aside the impugned order, allowing the appeal with consequential benefits. It held that the appellant was entitled to exemption under Sl. No. 5 of Notification No. 45/2017-Customs and that the denial of exemption based on procedural declarations was legally unsustainable. The tribunal also ruled that the extended period of limitation was wrongly invoked and that the confiscation of goods was unwarranted.

Key Takeaways
1. Clarification on “Supply”: The judgment reinforces the principle that mere movement of goods without consideration or transfer of ownership does not constitute “supply” under GST laws.
2. Exemption Notifications: Exemption notifications must be interpreted strictly but not in a manner that defeats their legislative intent. Procedural declarations cannot override substantive eligibility for exemptions.
3. Extended Limitation Period: The burden of proving suppression or fraud lies with the Revenue, and mere procedural errors cannot justify invoking the extended period of limitation.
4. Circulars vs. Notifications: Circulars cannot override or amend statutory notifications. The tribunal emphasized that the legislative provisions in the notification take precedence over any circulars.
This judgment is a significant development in the interpretation of customs and GST laws, providing clarity on the treatment of temporary movement of goods for service contracts abroad and the applicability of exemption notifications. It serves as a reminder that taxation must be based on clear statutory provisions and not on procedural technicalities or assumptions.

Source: CESTAT Chennai

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January 17, 2026
CESTAT Delhi Ruled in Favor of Global Links: Customs Broker Licence Revocation Set Aside
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 16.01.2026

CESTAT Delhi Ruled in Favor of Global Links: Customs Broker Licence Revocation Set Aside

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 legal development, M/s Global Links, a Customs Broker based in New Delhi, emerged victorious in a case before the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi. The case revolved around the revocation of the Customs Broker licence of M/s Global Links, along with the imposition of a penalty of Rs. 50,000 and the forfeiture of their security deposit by the Principal Commissioner of Customs (Airport & General), New Delhi. The final judgment, delivered on January 14, 2026, brought relief to the appellant, as the tribunal set aside the impugned order and ruled in their favor.

Background of the Case

M/s Global Links, a licensed Customs Broker under the Customs Broker Licensing Regulations (CBLR), 2018, filed three Bills of Entry at Mumbai port in January 2023 on behalf of two importers, M/s Dreams Inc. and M/s Aahanna Associates. Following intelligence reports, the Central Intelligence Unit at Mumbai flagged the consignments for examination. Upon inspection, discrepancies were found, including mis-declared descriptions, quantities, and values of goods, undeclared items, violations of Bureau of Indian Standards (BIS) certification requirements, contraventions of RE-44 Notification, and breaches of Legal Metrology provisions.

Subsequently, the Principal Commissioner of Customs (Airport & General), New Delhi, initiated action against the importers, M/s Global Links, and its employees. The Customs Broker licence of M/s Global Links was suspended on March 13, 2023, and the suspension was confirmed on May 9, 2023. A show-cause notice was issued on June 16, 2023, proposing the revocation of the licence, imposition of penalties, and forfeiture of the security deposit for alleged violations of Regulations 10(d), 10(e), 10(f), 10(m), and 13(12) of the CBLR.

Key Issues in the Case

The tribunal was tasked with addressing two primary questions:
1. Whether M/s Global Links had violated the specified regulations under the CBLR based on the evidence presented.
2. Whether the penalties imposed on the appellant were proportionate to the alleged violations.
The regulations in question included:
- Regulation 10(d): Advising clients to comply with customs laws and notifying authorities in case of non-compliance.
- Regulation 10(e): Exercising due diligence to ensure the correctness of information provided to clients.
- Regulation 10(f): Not withholding information related to cargo clearance from clients.
- Regulation 10(m): Discharging duties with utmost speed and efficiency.
- Regulation 13(12): Supervising employees to ensure proper conduct and taking responsibility for their actions.
Tribunal’s Observations and Judgment

After hearing arguments from both sides and reviewing the evidence, the tribunal made the following observations:
1. No Authority to Examine Goods: The tribunal noted that Customs Brokers do not have the authority to physically examine goods, as this responsibility lies solely with Customs Officers and custodians. Therefore, the misdeclaration of goods by the importers could not be held against M/s Global Links.
2. Violation of Legal Requirements: While the imports violated various legal requirements, including BIS certification, RE-44 Notification, and Legal Metrology provisions, the tribunal emphasized that the Customs Broker’s role is limited to advising clients and exercising due diligence.
3. Statements Not Admitted as Evidence: The Commissioner relied heavily on statements made by the importers under Section 108 of the Customs Act, 1962, to establish violations of the CBLR regulations. However, the tribunal pointed out that these statements were not admitted as evidence under Section 138B of the Act. The Commissioner failed to examine the importers as witnesses and did not record an opinion to admit their statements as evidence. As a result, the findings based on these statements were deemed unsustainable.
4. Proportionality of Penalty: The tribunal also questioned the proportionality of the penalty imposed on M/s Global Links, given the lack of admissible evidence to substantiate the alleged violations.
Final Verdict

In light of the above observations, the tribunal concluded that the findings in the impugned order regarding violations of the CBLR regulations were not supported by admissible evidence. Consequently, the tribunal set aside the order, revoked the penalties, and allowed the appeal with consequential relief to M/s Global Links.

Implications of the Judgment

This judgment underscores the importance of adhering to procedural requirements when relying on statements as evidence in legal proceedings. It also highlights the limited role of Customs Brokers in the examination of goods and emphasizes the need for proportionality in imposing penalties.

For M/s Global Links, this victory not only reinstates their Customs Broker licence but also serves as a vindication of their professional conduct. The case serves as a reminder to both Customs authorities and Customs Brokers about the importance of following due process and clearly defining the scope of responsibilities.

Conclusion

The CESTAT’s decision in favor of M/s Global Links is a landmark ruling that reinforces the principles of justice and due process in customs-related disputes. It provides clarity on the obligations of Customs Brokers under the CBLR and sets a precedent for future cases involving similar issues. As the customs landscape continues to evolve, this judgment will undoubtedly serve as a guiding light for stakeholders in the industry.

Source: CESTAT Delhi

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January 16, 2026
Delhi High Court Strikes Down DGFT Circular related to Focus Product Scheme (FPS): A Victory for Exporters and Policy Transparency
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 16.01.2026

Delhi High Court Strikes Down DGFT Circular related to Focus Product Scheme (FPS): A Victory for Exporters and Policy Transparency

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.

On January 13, 2026, the High Court of Delhi delivered a significant judgment in favor of exporters, dismissing appeals filed by the Directorate General of Foreign Trade (DGFT) and upholding the decision of a learned Single Judge to strike down the DGFT Policy Circular dated October 21, 2011. This case, involving multiple appeals, revolved around the legality of the DGFT circular and its retrospective application, which had restricted the scope of export incentives under the Focus Product Scheme (FPS).

Background of the Case

The dispute originated from the Foreign Trade Policy (FTP) 2009-2014, which was issued under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 (FTDR Act). The FTP provided export incentives under the Focus Product Scheme (FPS) to promote exports and increase foreign exchange earnings. Appendix 37D of the Handbook of Procedures (HBP), which was notified under the FTP, listed products eligible for FPS benefits. Serial No. 33 in Table 4 of Appendix 37D specifically mentioned “Technical Textiles – Woven Fabrics of Synthetic Filament Yarn” under ITC (HS) Code 5407 as eligible for FPS benefits.

However, the DGFT issued Policy Circular No. 42 (RE-2010)/2009-14 on October 21, 2011, which restricted FPS benefits to only 33 items listed in an annexure to the circular. This circular also applied retrospectively from April 1, 2011, effectively disqualifying many exporters who had already shipped products under the assumption that they were eligible for FPS benefits.

The Legal Challenge

The DGFT circular was challenged by several exporters, including Malik Tanning Industries, Good One Traders Pvt. Ltd., BRD International, High Value Exim Pvt. Ltd., Attire Designers Pvt. Ltd., and Welldone Exim Pvt. Ltd. These exporters argued that their products, described as “polyester printed-dyed texturized fabrics,” fell within the broad description of “woven fabrics of synthetic filament yarn” under ITC (HS) Code 5407 and were therefore entitled to FPS benefits as per the original provisions of the FTP and HBP.

The learned Single Judge of the High Court of Delhi upheld the challenge, striking down the DGFT circular on the grounds that it was not merely clarificatory but instead sought to restrict the scope of eligible products under the FPS. The DGFT appealed this decision, leading to the present case.

Key Issues in the Case

The appeals raised several critical legal questions:
1. Legality of the DGFT Circular: Did the DGFT have the authority to issue a circular that restricted the scope of products eligible for FPS benefits under the FTP and HBP?
2. Retrospective Application: Was the DGFT empowered to make the circular retrospectively applicable from April 1, 2011, thereby denying benefits to exporters who had already shipped products under the original provisions?
3. Interpretation of Serial No. 33 in Appendix 37D: Should the entry “Technical Textiles – Woven Fabrics of Synthetic Filament Yarn” be interpreted narrowly to include only the 33 items listed in the annexure to the circular?
The High Court’s Analysis 

The Division Bench of the High Court, comprising Justice, upheld the learned Single Judge’s judgment and dismissed the DGFT’s appeals. The court provided a detailed analysis of the case, addressing the key issues as follows:
1. DGFT’s Authority: The court emphasized that the power to frame the FTP under the FTDR Act rests solely with the Central Government. The DGFT’s role is limited to implementing the FTP and providing clarifications in case of ambiguities. The court found that the DGFT had overstepped its authority by issuing a circular that effectively amended the provisions of the FTP and HBP.
2. Retrospective Application: The court held that neither the Central Government nor the DGFT has the power to issue policies or amendments with retrospective effect. Citing the Supreme Court’s judgment in Union of India v. Asian Food Industries, the court reiterated that a vested or accrued right cannot be taken away by retrospective amendments.
3. Interpretation of Serial No. 33: The court agreed with the learned Single Judge that the entry “Technical Textiles – Woven Fabrics of Synthetic Filament Yarn” must be read as a whole. The DGFT’s interpretation, which focused solely on the term “technical textiles” and ignored “woven fabrics of synthetic filament yarn,” was deemed erroneous. The court noted that the products exported by the respondents clearly fell within the description of “woven fabrics of synthetic filament yarn” under ITC (HS) Code 5407 and were therefore entitled to FPS benefits.
Key Takeaways from the Judgment

The High Court’s judgment has several important implications for exporters and policymakers:
1. Clarifications vs. Amendments: The court made it clear that the DGFT cannot use clarificatory circulars to amend the provisions of the FTP or HBP. Any changes to the scope of export incentives must be made through proper amendments to the FTP or HBP, following due process.
2. Protection Against Retrospective Changes: Exporters are protected from retrospective changes to export incentive schemes, ensuring that their vested rights are not arbitrarily taken away.
3. Broad Interpretation of Policy Entries: The court emphasized the importance of interpreting policy entries in their entirety, rather than selectively focusing on specific terms. This ensures that the original intent of the policy is preserved.
Conclusion

The High Court’s decision to strike down the DGFT Policy Circular dated October 21, 2011, is a landmark judgment that upholds the rights of exporters and reinforces the principle that policy changes cannot be made retrospectively. By dismissing the DGFT’s appeals, the court has sent a strong message about the limits of administrative authority and the importance of adhering to statutory provisions.

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Source: Delhi High Court

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January 16, 2026