𝐀𝐚𝐝𝐫𝐢𝐤𝐚𝐚 𝐋𝐞𝐠𝐚𝐥 𝐒𝐞𝐫𝐯𝐢𝐜𝐞𝐬 (𝐀𝐋𝐒)

Tag: #Law

CESTAT Delhi Overturns Rs. 10 Lakh Customs Penalty Due to Lack of Evidence and Procedural Compliance
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 20.05.2026

CESTAT Delhi Overturns Rs. 10 Lakh Customs Penalty Due to Lack of Evidence and Procedural Compliance

This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), New Delhi, recently delivered a significant order in favor of M/s. Rathi Iron & Steel Ind. Ltd., setting aside a penalty of Rs. 10 lakhs imposed under section 112(b) of the Customs Act, 1962. This article provides a comprehensive overview of the case, the legal arguments, and the Tribunal’s reasoning, offering valuable insights for businesses and legal professionals.

Background of the Case

Rathi Iron & Steel Ind. Ltd., a manufacturer of M.S. Bars and Rods, was registered with the Central Excise Department and later merged with M/s. Jaideep Ispat & Alloys Pvt. Ltd. The case originated from an investigation by the Directorate General of Central Excise Intelligence (DGCEI) against M/s. New Tech Abrasives Ltd. (NTAL), a Special Economic Zone (SEZ) unit, for alleged clandestine removal of M.S. Ingots without customs permission or duty payment.

During searches at NTAL and related premises, authorities recovered documents and computer data. Statements from transporters and buyers suggested that M.S. Ingots were removed at night and delivered to several entities, including Rathi Iron & Steel. Based on these findings, a show cause notice was issued to NTAL and others, including Rathi Iron & Steel, alleging clandestine purchase of ingots and proposing penalties.

Key Allegations and Proceedings
- Allegations: The show cause notice accused Rathi Iron & Steel of purchasing M.S. Ingots illicitly removed from the SEZ by NTAL, making them liable for penalty under section 112(b) of the Customs Act.
- Evidence: The case against Rathi Iron & Steel relied solely on statements from three transporters, which were general, uncorroborated, and did not specify quantity, value, or dates of alleged purchases. No incriminating documents or records were found at the appellant’s premises, nor were statements from its directors or employees recorded.
- Appellant’s Defense: Rathi Iron & Steel categorically denied the allegations, highlighting the lack of direct evidence and the reliance on third-party statements. They argued that the legal requirements for imposing a penalty under section 112(b) were not met.
Legal Arguments

For the Appellant
1. Reliability of Evidence: The transporter statements were vague, identical, and appeared dictated. The procedure under section 138B of the Customs Act, which governs the admissibility of such statements, was not followed.
2. Lack of Direct Evidence: No documents, ledgers, invoices, or transport records linked the appellant to the alleged clandestine goods.
3. Legal Requirements Not Met: Section 112(b) requires proof that the accused acquired or dealt with goods liable for confiscation and had knowledge or reason to believe so. Neither condition was satisfied.
4. No Confiscation Proposed: The show cause notice did not propose confiscation of goods under section 111, a prerequisite for penalty under section 112.
For the Department

The department maintained that the penalty was justified based on the investigation and statements, supporting the Commissioner’s order.

Tribunal’s Findings and Decision

The Tribunal thoroughly examined the evidence and legal provisions:
- Admissibility of Statements: The Tribunal noted that statements under section 108 are relevant only if the procedure under section 138B is followed, which was not done in this case.
- Conditions for Penalty: Both possession/dealing with confiscable goods and knowledge thereof are mandatory for penalty under section 112(b). The Tribunal found no evidence that Rathi Iron & Steel dealt with the goods or had knowledge of their illicit nature.
- Absence of Evidence: No direct or documentary evidence linked the appellant to the alleged offense. The show cause notice lacked specifics regarding the appellant’s involvement.
Final Order: The Tribunal set aside the penalty, holding that the conditions for imposing penalty under section 112(b) were not met. The appeal was allowed in favor of Rathi Iron & Steel Ind. Ltd.

Key Takeaways for Businesses
1. Importance of Direct Evidence: Penalties under customs law require clear, direct evidence of involvement and knowledge.
2. Procedural Safeguards: Authorities must follow proper procedures, especially regarding the admissibility of statements.
3. Legal Recourse: Entities facing penalties should scrutinize the evidence and procedural compliance, as appellate remedies can yield relief if due process is not followed.
Conclusion

The CESTAT’s decision in the Rathi Iron & Steel case underscores the necessity of robust evidence and adherence to legal procedures in customs enforcement. It serves as a reminder that penalties cannot be imposed on mere suspicion or uncorroborated statements, safeguarding the rights of businesses against arbitrary action.

Source: CESTAT Delhi

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May 20, 2026
Supreme Court Clarifies Customs Classification of Anardana (Dried Pomegranate Seeds) under the Customs Tariff Act, 1975
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 20.05.2026

Supreme Court Clarifies Customs Classification of Anardana (Dried Pomegranate Seeds) under the Customs Tariff Act, 1975

This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .

The Supreme Court of India recently delivered a significant judgment in the case of Commissioner of Customs and Central Excise, Amritsar vs. M/s D.L. Steels and others. The dispute centered on the correct customs classification and duty assessment for dried pomegranate seeds, commonly known as ‘anardana’, imported from Pakistan.

The Core Issue

The main question was whether anardana should be classified under:
- Heading 0813 (“Fruit, dried, other than that of headings 08.01 to 08.06”)—as argued by customs authorities, attracting a higher duty (30% plus cess), or
- Heading 1209 (“Seeds, fruit and spores, of a kind used for sowing”)—as claimed by the importers, attracting a lower duty (5% plus cess).
Case History
1. Initial Assessment: Customs authorities classified anardana under Heading 0813.40.90, imposed higher duty, and levied penalties.
2. Appeal by Importers: The Commissioner (Appeals) sided with the importers, holding that anardana is made from wild pomegranate not consumed as fresh fruit, and thus Heading 0810 (fresh fruit) and by extension 0813 (dried fruit) did not apply. The Import Policy also specifically allowed free import of pomegranate seeds under Heading 1209.99.90.
3. Revenue’s Appeal: The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) upheld the importers’ classification, referencing expert certificates and trade usage, and found no evidence that anardana is considered a dried fruit in trade parlance.
4. Supreme Court Appeal: The Revenue challenged these findings before the Supreme Court.
Supreme Court’s Analysis
- Interpretation Principles: The Court emphasized that words in taxing statutes should be interpreted in their common or trade parlance unless a special definition exists.
- Nature of Anardana: Evidence showed that anardana is made from wild pomegranate (“daru”), which is not consumed as fresh fruit but is dried for use as a spice or acidulant in cooking and Ayurvedic medicine.
- Classification Rules: The Court examined the Harmonised System of Nomenclature (HSN) and General Rules of Interpretation, noting that:
  - Heading 0813 covers dried fruits that, when fresh, are edible fruits classified under Headings 0807 to 0810.
  - Wild pomegranate used for anardana is not consumed as a fresh fruit and thus does not fit this category.
  - Heading 1209, supported by the Import Policy, specifically includes pomegranate seeds and allows their import without licensing restrictions.
- Trade Practice: The Court noted that most anardana exports from India are classified as spices or Ayurvedic medicaments, not as dried fruit.
The Verdict

The Supreme Court dismissed the Revenue’s appeals, confirming that anardana should be classified under Heading 1209.99.90 as seeds, not as dried fruit under Heading 0813.40.90. This means the importers, including D.L. Steels, prevailed.

Implications
- For Importers: The judgment clarifies that dried pomegranate seeds (anardana) attract a lower customs duty, reducing costs for importers.
- For Customs Authorities: The decision underscores the importance of trade usage and specific policy notes in classification disputes.
- For Trade and Industry: The ruling provides certainty and consistency in the treatment of anardana imports, aligning with both trade practice and government policy.
Conclusion

This Supreme Court decision is a landmark for importers of anardana and similar products, reinforcing the principle that classification should reflect trade understanding and specific policy guidance. The case also highlights the need for clear evidence and careful application of customs rules in classification disputes.

Connected Matter

CESTAT Delhi Ruled on Customs Duty and Classification of Imported Mobile Phone Parts

Source: Supreme Court

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May 20, 2026
Calcutta High Court Clarifies Unjust Enrichment and Refund Rights for Government Undertakings Under Customs Act
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 19.05.2026

Calcutta High Court Clarifies Unjust Enrichment and Refund Rights for Government Undertakings Under Customs Act

This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .

The recent judgment by the Calcutta High Court in the case of Dredging Corporation of India Limited (DCI) versus the Commissioner of Customs (Port), Kolkata, addresses crucial issues regarding customs duty assessment, refund claims, and the doctrine of unjust enrichment under the Customs Act, 1962. This article provides a detailed overview of the case, the legal questions involved, and the implications for government undertakings and importers.

Background of the Case

Dredging Corporation of India, a Government of India undertaking, entered into a contract with Kolkata Port Trust for dredging operations. To fulfill this contract, DCI imported a cutter suction dredger along with accessories and spares from a Dutch supplier. The customs authorities provisionally assessed the imported goods, raising doubts about the eligibility of spares and accessories for concessional duty rates under the Accessories (Conditions) Rules, 1963 and Notification No. 133/87-Cus.

Key Events:
1. Provisional Assessment: Three bills of entry were filed in early 1991, and duty was paid provisionally.
2. Dispute on Duty Rate: Customs authorities denied the benefit of concessional rates for spares and accessories, leading to higher duty payments.
3. Appeals and Tribunal Decision: DCI appealed, and the tribunal eventually ruled in their favor, recognizing accessories and spares as indispensable parts of the main vessel.
4. Refund Claim: DCI filed for a refund of excess duty paid, but the claim was initially rejected on grounds of limitation and alleged unjust enrichment.
Legal Issues Considered

The revenue department raised two main questions:
- Whether the tribunal properly appreciated Section 28D of the Customs Act, 1962 (regarding unjust enrichment).
- Whether the tribunal was required to verify the application of Section 28D before upholding the refund order.
The Doctrine of Unjust Enrichment

Unjust enrichment prevents a claimant from receiving a refund if the burden of duty has been passed on to another party. The authorities repeatedly credited the refund amount to the Consumer Welfare Fund, arguing that DCI had not proven the duty was not passed on.

Court’s Analysis:
- The appellate authority found no evidence that DCI had passed on the duty, especially since the imported vessel and its equipment were still in use and not sold.
- Certificates from DCI’s Chartered Accountant and Director (Operations and Technical) confirmed the goods remained with DCI.
- The court distinguished this case from others where unjust enrichment was established, noting that DCI’s situation was unique and the refund claim was not time-barred.
Final Judgment and Implications

The High Court dismissed the revenue’s appeal, affirming that:
1. The refund claim was within the limitation period.
2. The entitlement to refund had attained finality through multiple appellate decisions.
3. The doctrine of unjust enrichment did not apply, as DCI had not passed on the duty burden.
Key Takeaways:
- Government Undertakings: The judgment reinforces that unjust enrichment principles may not apply when goods remain in use and are not sold or transferred.
- Refund Claims: Importers should maintain clear documentation to prove non-transfer of duty burden.
- Legal Precedent: The case sets a precedent for similar disputes involving provisional assessments and refund claims under the Customs Act.
Conclusion

This judgment provides clarity on the application of unjust enrichment in customs refund cases, especially for government undertakings. It underscores the importance of factual evidence and the need for authorities to avoid prolonged litigation when the legal position is clear. Importers and legal practitioners should take note of the court’s reasoning and ensure robust documentation in customs matters.

Source: Calcutta High Court

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May 19, 2026
CESTAT Delhi Ruled on Customs Duty and Classification of Imported Mobile Phone Parts
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 19.05.2026

CESTAT Delhi Ruled on Customs Duty and Classification of Imported Mobile Phone Parts

This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), New Delhi, recently delivered a significant judgment in the case of Ismartu India Pvt. Ltd. This case revolved around the classification and assessment of imported mobile phone parts, the imposition of customs duty, and the interpretation of customs law regarding what constitutes a ‘complete’ mobile phone versus its parts. The outcome has important implications for manufacturers, importers, and customs authorities across India.

Background of the Dispute

Ismartu India Pvt. Ltd., a company engaged in manufacturing and assembling mobile phones, imported various components from Techno Mobile Ltd., Hong Kong. The company declared these imports as ‘Parts of MFR of Mobile Phones’ in its Bill of Entry dated September 14, 2022. However, customs authorities suspected that the imports were actually mobile phones in Completely Knocked Down (CKD) condition, not mere parts, and initiated an investigation.

Key Points of Investigation
1. Department’s Stand:
  - Customs authorities argued that the imported consignments, when assembled, would form complete mobile phones, thus attracting a higher customs duty under tariff item 8517 14 00 (20% BCD), rather than the lower duty applicable to parts.
  - The department relied on Rule 2(a) of the General Rules for the Interpretation of the Customs Tariff (GIR), which allows incomplete or unassembled goods to be classified as complete if they have the essential character of the finished article.
2. Ismartu’s Defense:
  - The company maintained that the imported items were insufficient to manufacture a complete phone, as essential components like batteries and cameras were procured locally.
  - Ismartu provided detailed documentation and a list of locally purchased items for each model, supporting their claim that the imports were not complete mobile phones.
3. Expert Examination:
  - A Chartered Engineer’s report confirmed that the imported parts, even after assembly, would not form a working mobile phone without additional components and software testing.
  - The report emphasized that the goods, though resembling a mobile phone in shape, lacked essential elements for functionality and marketability.
Legal Proceedings and Arguments
- Show Cause Notice: The customs department issued a notice alleging misclassification and short payment of duty, proposing reclassification under the higher duty tariff.
- Principal Commissioner’s Order: The Commissioner upheld the department’s view, confirming the demand for differential duty, interest, penalty, and confiscation of goods with an option for redemption fine.
- Appeal to CESTAT: Ismartu challenged the order, arguing that the burden of proof lay with the department, and that the imported goods did not meet the criteria for classification as complete mobile phones under Rule 2(a) of GIR.
Tribunal’s Analysis and Decision

Key Findings
1. Burden of Proof:
  - The Tribunal emphasized that the onus to prove misclassification rests with the department, not the importer.
  - The Chartered Engineer’s reports did not conclusively establish that the imported goods had the essential character of a complete mobile phone.
2. Interpretation of Rule 2(a) of GIR:
  - The Tribunal noted that for goods to be classified as complete under Rule 2(a), they must possess the essential characteristics of the finished product.
  - In this case, the absence of batteries, cameras, and the need for further assembly and testing meant the imports could not be considered complete mobile phones.
3. Reference to Judicial Precedents:
  - The Tribunal cited Supreme Court judgments reinforcing that the department must provide evidence when challenging an assessee’s classification.
Final Order
- The CESTAT set aside the Principal Commissioner’s order, ruling in favor of Ismartu India Pvt. Ltd.
- The Tribunal held that the imported goods were indeed parts and not complete mobile phones, and thus not liable for the higher customs duty or penalties imposed.
Implications of the Judgment
- For Importers: This ruling clarifies that importing parts for assembly, with essential components sourced locally, does not automatically amount to importing complete goods in CKD condition.
- For Customs Authorities: The decision underscores the need for concrete evidence and proper application of interpretative rules before reclassifying goods and imposing penalties.
- For the Industry: The judgment provides greater certainty and protection for manufacturers relying on a mix of imported and locally sourced components.
Conclusion

The CESTAT Delhi’s decision in the Ismartu India case is a landmark in the interpretation of customs law regarding classification of imported goods. It reinforces the principle that the burden of proof lies with the authorities and that incomplete imports, lacking essential components, cannot be treated as complete products for the purpose of higher customs duty. This judgment is expected to guide future disputes and bring clarity to the importation and assembly practices in the electronics sector.

Connected Matter

Supreme Court Clarifies Customs Classification of Anardana (Dried Pomegranate Seeds) under the Customs Tariff Act, 1975

Source: CESTAT Delhi

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May 19, 2026
Orissa HC Affirms Export Duty on Iron Ore Fines Must Be Assessed on Wet Metric Ton (WMT) Basis, Not Contract Specifications
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 19.05.2026

Orissa HC Affirms Export Duty on Iron Ore Fines Must Be Assessed on Wet Metric Ton (WMT) Basis, Not Contract Specifications

This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .

The Orissa High Court recently delivered a significant judgment in the case of Commissioner of Customs (Preventive), Bhubaneswar vs. M/s. Kai International Pvt. Ltd., addressing the method for determining export duty on iron ore fines. This article provides a detailed overview of the case, the legal arguments, and the implications for exporters and customs authorities.

Background of the Case

The dispute arose from the final assessment of export duty on iron ore fines exported by Kai International Pvt. Ltd. The Customs Department had initially provisionally assessed the goods, pending submission of certificates and test reports. Upon final assessment, a demand for export duty was raised, which the exporter challenged through successive appeals.

Key Legal Question

The central legal question was:

“For the purpose of determining export duty, where the export is being made under contract specifications, can there be reliance on the contractual specifications for determining whether export duty is payable?”

Arguments Presented

Customs Department (Appellant)
1. Reliance on Test Reports: The department argued that test reports based on samples drawn at the time of export should determine the Fe (iron) content, which affects export duty liability.
2. Contract Specifications: They contended that contract specifications (often based on Dry Metric Ton or DMT) should be considered for duty assessment, especially if the Fe content exceeds 58% DMT.
3. Legal Precedents: The department cited previous tribunal and Supreme Court decisions supporting their position.
Exporter (Respondent)
1. Assessment Basis: The exporter argued that the final assessment was made based on private test reports and not the government laboratory report, which was submitted later and was questionable in its timing and reliability.
2. Duty on WMT Basis: They emphasized that export duty should be assessed on Wet Metric Ton (WMT) basis, as clarified by government circulars and judicial precedents, not on DMT (trade contract) basis.
3. Consistency in Legal Position: The exporter pointed out that the customs authorities had previously accepted the private test report and could not now take a contradictory stance.
Court’s Analysis and Findings
1. Assessment Method: The Court found that both the assessing authority and the first appellate authority had relied on the private test report and DMT basis for their decisions. However, the legal standard for export duty assessment is the WMT basis, as clarified by government circulars and supported by the Bombay High Court in V.M. Salgaocar and Brother Pvt. Ltd. v. Assistant Commissioner of Customs.
2. Doubtful Test Reports: The Court noted inconsistencies and doubts regarding the timing and reliability of the government laboratory test report, further supporting the exporter’s position.
3. Legal Doctrine: The Court applied the principle that a litigant cannot assume inconsistent positions in court, reinforcing that the customs department could not change its stance at different stages of litigation.
4. Circulars and Precedents: The Court referred to government circulars and Supreme Court observations, confirming that export duty on iron ore fines should be assessed on WMT basis, not DMT.
Final Judgment

The Orissa High Court answered the legal question in the negative, ruling in favor of the exporter:
- Export duty must be assessed on the Wet Metric Ton (WMT) basis, not on contract specifications (DMT).
- The appeal by the Customs Department was dismissed.
Implications of the Judgment
1. Uniform Assessment: The judgment reinforces the need for uniformity and transparency in export duty assessment, aligning with government circulars.
2. Clarity for Exporters: Exporters of iron ore fines can rely on WMT-based assessment for export duty, reducing disputes over contract-based specifications.
3. Legal Consistency: The decision upholds the principle that authorities cannot shift their legal positions arbitrarily during litigation.
Conclusion

This judgment provides much-needed clarity on the method for assessing export duty on iron ore fines, ensuring that the process is fair, consistent, and in line with established legal and administrative guidelines. Exporters and customs officials alike should take note of this precedent for future transactions and assessments.

Source: Orissa High Court

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May 19, 2026
Delhi High Court Dismisses Revenue’s Appeal Over Procedural Delay in Customs Valuation
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 19.05.2026

Delhi High Court Dismisses Revenue’s Appeal Over Procedural Delay in Customs Valuation

This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .

The Delhi High Court recently delivered a significant judgment in the case involving the Commissioner of Customs (Airport and General) and M/s. Bergen Engines India Pvt. Ltd., addressing key procedural and substantive issues in customs valuation and appellate practice.

Background of the Case

The dispute centered on the customs valuation of goods imported by Bergen Engines India Pvt. Ltd. from related foreign suppliers. The Adjudicating Authority initially examined whether the declared value of the imported goods was influenced by the relationship between the importer and the suppliers, as defined under Rule 2(2) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.

After a detailed review of the written submissions and supporting documents, the Authority concluded that the declared invoice value was not influenced by the relationship. As a result, the transaction value was accepted under Rule 3(3)(a) of the Valuation Rules, subject to standard checks and scrutiny.

Sequence of Appeals and Procedural Delays
1. First Appeal: The Revenue challenged the Adjudicating Authority’s order before the Commissioner of Customs (Appeals), but the appeal was rejected on 6 October 2017.
2. CESTAT Appeal: The Revenue then appealed to the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) on 18 January 2018. However, the appeal was found defective, and the Registry issued defect notices on 6 February and 5 March 2018, asking the Revenue to rectify the issues.
3. Failure to Cure Defects: The Revenue did not address the defects, leading the Registry to return the appeal on 8 May 2018. Although there was some dispute about the receipt of earlier notices, it was undisputed that the final return letter was received by the Revenue.
4. Significant Delay: Despite receiving the returned appeal, the Revenue did not take prompt action. It filed a fresh appeal only on 10 February 2022—over four years later—seeking condonation of the delay.
Tribunal and High Court Findings
- CESTAT’s Decision: The Tribunal found the Revenue’s explanation for the delay insufficient. Most reasons cited were internal communication lapses and attempts to ascertain the appeal’s status. The Tribunal noted that the Deputy Commissioner of Customs (Review) had acknowledged, through verbal inquiries, that the appeal papers had been returned, yet no timely action was taken.
- High Court’s Ruling: The High Court upheld the Tribunal’s decision, stating that the order was well reasoned and that no substantial questions of law arose. The Court emphasized that procedural diligence is essential and that unexplained or unjustified delays cannot be condoned without sufficient cause.
Key Takeaways for Stakeholders
1. Importance of Timely Action: Government departments and litigants must act promptly when notified of procedural defects in appeals. Delays, especially those caused by internal miscommunication, are unlikely to be condoned by appellate bodies or courts.
2. Documentation and Communication: Proper record-keeping and prompt response to defect notices are critical in legal proceedings. Failure to do so can result in dismissal of appeals, regardless of the merits of the underlying case.
3. Customs Valuation Principles: The case reaffirms that the declared value of imported goods from related parties can be accepted if there is no evidence of influence due to the relationship, provided all documentation is in order.
Conclusion

The Bergen Engines case serves as a reminder of the importance of procedural compliance in customs and tax litigation. The High Court’s dismissal of the Revenue’s appeal underscores that legal remedies are contingent not only on substantive grounds but also on strict adherence to procedural requirements.

Source: Delhi High Court

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May 19, 2026
CESTAT Hyderabad set aside the customs reclassification of the goods as insecticides
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 18.05.2026

CESTAT Hyderabad set aside the customs reclassification of the goods as insecticides

This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .

Jasmine Biotechnologies, based in Telangana, faced a series of customs appeals after importing products from Beijing Kingbo Biotech Co., Ltd., China. The goods were declared as “Kingbo K Bio-Fertilizers/exodus” under the customs heading for fertilizers. However, customs authorities classified them as insecticides, citing the presence of compounds like Oxymatrin, Matrin, Dehydromatrin, and Dehydrooxymatrin, and imposed confiscation and penalties under the Customs Act, 1962.

The Customs Dispute
- Initial Classification: Jasmine Biotechnologies declared the imports as bio-fertilizers (Chapter Heading 3101 0099).
- Customs Allegation: Authorities argued the products were insecticides (Chapter Heading 3808 9199) due to the presence of Oxymatrin, requiring registration under the Insecticides Act, 1968.
- Testing: Samples were sent to RCOF, Bangalore and IICT, Hyderabad. Reports showed the presence of plant alkaloids but did not conclusively identify synthetic pesticides.
Key Arguments by Jasmine Biotechnologies
1. Laboratory Reports Inconclusive: The test results did not show any peaks related to pesticides. The reports only indicated naturally occurring plant alkaloids, not synthetic insecticides.
2. No Evidence of Misdeclaration: Imports were made openly with full documentation. There was no deliberate misstatement or suppression.
3. Violation of Natural Justice: The company was denied the opportunity to cross-examine laboratory experts, undermining the fairness of the proceedings.
4. Product Nature: The goods were marketed as plant protectors and agricultural supplements, not as insecticides.
Tribunal Findings
- Ambiguity in Reports: The tribunal noted that laboratory reports were ambiguous and did not categorically certify the goods as insecticides.
- No Prohibited Goods: There was no evidence that the imported products were banned or prohibited under Indian law.
- No Deliberate Misdeclaration: The tribunal found no proof of intentional misstatement or fraud.
- Principles of Natural Justice Violated: Denial of cross-examination of technical experts was a serious procedural flaw.
- Interpretational Dispute: The case was deemed an interpretational dispute over classification, not a case of suppression or fraud.
Final Order and Relief
- Reclassification Quashed: The tribunal set aside the customs reclassification of the goods as insecticides.
- Confiscation and Penalties Removed: Orders for confiscation, customs duty, interest, redemption fine, and penalties were quashed.
- Appeals Allowed: Jasmine Biotechnologies and its proprietor received consequential relief.
Implications for Importers
1. Importance of Product Classification: Accurate classification and clear documentation are crucial for importers to avoid disputes.
2. Role of Laboratory Evidence: Laboratory reports must be conclusive and subject to cross-examination to be legally admissible.
3. Natural Justice in Proceedings: Denial of procedural rights can render customs orders unsustainable.
4. Dual-Use Products: Agricultural products with both nutritional and pest-resistant properties require careful statutory determination before being classified as insecticides.
Conclusion

The tribunal’s decision in favor of Jasmine Biotechnologies highlights the need for clear evidence, fair procedures, and proper classification in customs disputes. Importers should ensure transparency and maintain comprehensive records to defend their interests in similar cases.

Source: CESTAT Hyderabad

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May 18, 2026
CESTAT Delhi Clarifies Customs Classification of Blood Glucose Meters
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 18.05.2026

CESTAT Delhi Clarifies Customs Classification of Blood Glucose Meters

This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .

Blood glucose meters, commonly known as glucometers, are essential medical devices used for monitoring blood sugar levels. The classification of these devices under Indian customs law has significant implications for import duty and tax exemptions. A recent order by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) in New Delhi has clarified the correct classification and duty assessment for these instruments, impacting importers and the healthcare industry.

Background of the Case

Aspen Diagnostics Pvt Ltd, a company specializing in laboratory and patient care equipment, imported blood glucose meters, urine analyzers, and other diagnostic devices between September 2020 and December 2021. The company classified these goods under Customs Tariff Item (CTI) 9027 80 90, which allowed them to claim a nil rate of basic customs duty under Notification No.24/2005-cus. They also paid Integrated Goods and Service Tax (IGST) at rates specified in relevant notifications:
- Glucometers: 12% IGST
- Other diagnostic goods: 18% IGST
Dispute and Arguments

The customs authorities challenged Aspen Diagnostics’ classification, arguing that blood glucose meters should be classified under CTI 9018 90 99, which covers medical diagnostic instruments. This reclassification would result in higher duties and penalties. Aspen Diagnostics contested this, citing previous tribunal decisions, particularly the Bayer Pharmaceuticals Pvt. Ltd. case, which classified glucometers under CTI 9027 80 90 as instruments for chemical analysis.

Tribunal’s Analysis and Ruling

The tribunal examined the competing tariff headings:
1. Heading 9027: Instruments and apparatus for physical or chemical analysis (e.g., spectrometers, gas analysis apparatus).
2. Heading 9018: Instruments and appliances used in medical, surgical, dental, or veterinary sciences.
Key points from the tribunal’s reasoning:
- The essential function of a glucometer is to draw blood and analyze it for glucose content, which constitutes chemical analysis.
- Glucometers are widely used by individuals at home, not just by medical professionals, making them distinct from devices covered under Heading 9018.
- The Harmonized System of Nomenclature (HSN) Explanatory Notes support classification under Heading 9027 for instruments used in laboratories or for chemical analysis.
- Previous decisions (Bayer Pharmaceuticals and Abbott Healthcare) and affirmation by the Supreme Court reinforce this classification.
Outcome and Implications

The tribunal set aside the customs authority’s order, confirming that blood glucose meters are to be classified under CTI 9027 80 90. This classification entitles importers to duty exemptions under Notification No.24/2005-cus, reducing costs and supporting wider access to these essential devices.

Practical Impact
- Importers: Can continue to classify glucometers under CTI 9027 80 90 and claim duty exemptions.
- Healthcare Providers: Benefit from lower costs and easier access to diagnostic devices.
- Regulatory Clarity: The decision provides clear guidance for future imports and customs assessments.
Conclusion

The CESTAT Delhi order is a landmark decision for the classification of blood glucose meters and similar diagnostic instruments. By affirming their status as instruments for chemical analysis, the tribunal has ensured favorable duty treatment and regulatory clarity for importers and the healthcare sector.

Source: CESTAT Delhi

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May 18, 2026
CESTAT Ahmedabad Ruled on Retrospective Exemption: Setting Aside Customs Duty and Penalties in Advance Authorization Imports
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 18.05.2026

CESTAT Ahmedabad Ruled on Retrospective Exemption: Setting Aside Customs Duty and Penalties in Advance Authorization Imports

This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) Ahmedabad recently delivered a significant order concerning customs duty disputes involving Ratnaveer Stainless Products Pvt Ltd and related parties. The case centered on the eligibility for exemption from Countervailing Duty (CVD) under advance authorization during a specific period in 2017, following changes in government notifications.

Background of the Case
1. Parties Involved:
  - Ratnaveer Stainless Products Pvt Ltd (Importer)
  - Shri Vijay R Sanghvi (Director)
  - Shri Aranamkotte Madhavan Rajan (Director of CHA firm M/s. Suraj Forwarders Pvt Ltd)
  - Commissioner of Customs, Ahmedabad (Respondent)
2. Nature of Imports:
  - Hot/Cold Rolled Stainless Steel flat products imported from China under Chapter 72 of the Customs Tariff Act, 1975.
3. Period in Question:
  - 07.09.2017 to 12.10.2017, when CVD was imposed via Notification 01/2017-Cus. (CVD).
Dispute and Investigation
- The Directorate of Revenue Intelligence (DRI) alleged that importers wrongly claimed exemption from CVD under advance authorization, which was not available during the specified period.
- Show cause notices were issued demanding CVD, interest, and penalties, and proposing confiscation of goods.
- The Commissioner adjudicated, confirming the demand and imposing penalties, but did not levy redemption fine as goods were not physically available.
Key Legal Arguments by Appellants
1. Advance Authorization Validity:
  - Appellants argued that their advance authorizations were valid and that clearances were permitted by customs authorities against executed bonds.
2. Notification Changes:
  - Notification No. 79/2017-Cus dated 13.10.2017 amended the earlier notification to include CVD in the list of exempt duties, using the term “substitution,” which appellants argued should apply retrospectively.
3. Government Policy:
  - Central Government policy aims not to tax exports, either by refunding duties or exempting them at import.
4. Legal Precedents:
  - Appellants cited Supreme Court and High Court decisions supporting retrospective application of exemption notifications and the principle that duties should not be levied on exports.
5. No Prohibition or Intent to Evade:
  - Appellants contended there was no prohibition or intent to evade duty, and penalties were unjustified.
Tribunal’s Findings and Decision
- The Tribunal referenced the CESTAT Allahabad decision in Vishal Metal Industries, which held that exemption notifications should be applied retrospectively and that importers are entitled to refunds of CVD paid during the disputed period.
- Multiple High Court judgments were cited, confirming the retrospective applicability of Notification No. 79/2017-Cus and supporting refund claims for CVD.
- The Tribunal found the issue to be settled (no longer res-integra) and allowed all appeals, setting aside the impugned order, including demands and penalties.
Implications
1. Retrospective Exemption:
  - Importers who paid CVD during 07.09.2017 to 12.10.2017 under advance authorization are entitled to refunds, as the exemption notification is deemed retrospective.
2. No Penalties:
  - Penalties imposed on directors and CHA were set aside, recognizing the bona fide nature of the dispute and lack of intent to evade duty.
3. Policy Clarity:
  - The order reinforces the principle that export-oriented imports under advance authorization should not be burdened with duties, aligning with government policy.
Conclusion

The CESTAT Ahmedabad’s order provides clarity and relief to importers affected by the brief period of CVD imposition on advance authorization imports. It underscores the importance of retrospective application of exemption notifications and affirms the government’s commitment to facilitating exports by exempting duties on inputs used for export production.

Source: CESTAT Ahmedabad

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May 18, 2026
CESTAT Mumbai Upholds JSW Steel’s Right to Refund and Interest on Extra Duty Deposit
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 16.05.2026

CESTAT Mumbai Upholds JSW Steel’s Right to Refund and Interest on Extra Duty Deposit

This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai recently delivered a significant judgment in the case involving JSW Steel Limited and the Commissioner of Customs, Goa. The dispute centered on the refund of Extra Duty Deposit (EDD) paid during provisional assessments for imported coal, and the entitlement to interest on delayed refunds. This article provides a comprehensive overview of the case, its legal context, and the implications for importers and customs authorities.

Background of the Case
1. Parties Involved:
  - Appellant: Commissioner of Customs, Goa
  - Respondent: JSW Steel Limited, Mumbai
2. Nature of Imports:
  - JSW Steel imported various grades of coal from its related overseas supplier, JSW International Tradecorp Pte. Ltd., Singapore.
  - 42 consignments were imported during 2014-2016, assessed provisionally due to the related party nature and pending valuation investigation by the Special Valuation Branch (SVB).
3. Provisional Assessment & EDD:
  - Provisional assessments were made under Section 18 of the Customs Act, 1962, requiring JSW Steel to pay 1% of the declared assessable value as EDD, as per CBEC Circular No. 11/2001.
  - EDD is a deposit collected to ensure timely submission of documents for SVB investigation, not a duty per se.
Legal Issues and Tribunal Findings

1. Finalization of Provisional Assessments
- SVB, Mumbai, after detailed investigation, accepted the declared transaction value, confirming no influence of relationship on pricing.
- All pending provisional assessments were ordered to be finalized, and EDD was deemed refundable.
2. Refund Application and Delay
- JSW Steel filed a refund claim for EDD on 23.03.2016, received by Customs on 30.03.2016.
- The refund was initially denied due to alleged incomplete finalization of Bills of Entry (B/Es) and missing documents.
- JSW Steel refuted this, citing SVB’s order and CBEC instructions, and refiled the application as requested.
- Refund of Rs. 21,17,32,793 was sanctioned on 27.07.2017, but no interest was paid for the delay.
3. Entitlement to Interest on Delayed Refund
- The Tribunal examined whether JSW Steel was entitled to interest under Section 27A of the Customs Act for the period of delay.
- It was held that:
  - EDD is a deposit, not a duty, but its refund is governed by Section 18 and Section 27A.
  - Interest is payable if refund is not made within three months from the date of receipt of a complete application.
  - The delay was attributable to the department, not the importer, as all documents were submitted and SVB order had attained finality.
4. Relevant Legal Provisions and Precedents
- Customs Act, 1962: Sections 2(2), 14, 17, 18, 27, 27A.
- CBEC Circulars: Emphasize expeditious finalization of provisional assessments and refund processing.
- Case Law:
  - Ranbaxy Laboratories Ltd. v. Union of India (SC): Interest on refund is automatic after three months from application.
  - Dalmia Cement (Madras HC): EDD refund must be made with interest; delay is not justified.
  - Bihar Foundry & Castings Ltd. (Jharkhand HC): Provisional assessments must be finalized within six months.
Key Takeaways for Importers and Customs Authorities
1. EDD is Refundable:
  - EDD collected during SVB investigation is refundable once the transaction value is accepted and provisional assessments are finalized.
2. Interest on Delayed Refund:
  - If refund is not processed within three months of a complete application, interest at the rate prescribed by the government (typically 6% per annum) is payable.
3. Departmental Responsibility:
  - Customs authorities must finalize provisional assessments and process refunds expeditiously, as per CBEC instructions and legal mandates.
4. No Unjust Enrichment:
  - Importers must demonstrate that the refund does not result in unjust enrichment, typically via a Chartered Accountant’s certificate.
Implications of the Tribunal’s Decision
- The Tribunal’s order reinforces the rights of importers to timely refunds and interest, holding customs authorities accountable for delays.
- It clarifies the distinction between EDD and customs duty, and the legal framework for refund and interest claims.
- The decision sets a precedent for similar cases involving provisional assessments, SVB investigations, and related party transactions.
Conclusion

The CESTAT Mumbai’s decision in favor of JSW Steel Limited marks a significant development in customs law, ensuring that importers are not penalized for departmental delays in finalizing provisional assessments and processing refunds. The case underscores the importance of compliance with statutory timelines and CBEC instructions, and provides clear guidance on the entitlement to interest for delayed refunds of EDD.

Source: CESTAT Mumbai

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May 16, 2026