𝐀𝐚𝐝𝐫𝐢𝐤𝐚𝐚 𝐋𝐞𝐠𝐚𝐥 𝐒𝐞𝐫𝐯𝐢𝐜𝐞𝐬 (𝐀𝐋𝐒)

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CESTAT Chennai Quashes Undervaluation Demand
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 03.03.2026

CESTAT Chennai Quashes Undervaluation Demand

Adv Ravi Shekhar Jha

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

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Chennai, recently delivered a significant judgment in the case of M/s. Ankit Impex & M/s. SBB International vs. The Principal Commissioner of Customs. This case revolved around allegations of undervaluation of imported goods and the subsequent imposition of penalties and confiscation of goods under the Customs Act, 1962. The Tribunal’s decision, pronounced on February 4, 2026, has set a precedent for similar cases involving provisional assessments and the invocation of Section 28 of the Customs Act.

Background of the Case

The appellants, M/s. Ankit Impex and M/s. SBB International, had imported goods declared as “Recycled LDPE Granules” under various Bills of Entry, including Bill of Entry No. 268168 dated July 22, 2009. The goods were provisionally assessed, and duties were paid based on the declared value. However, the Directorate of Revenue Intelligence (DRI) initiated an investigation based on intelligence suggesting that the importers were undervaluing their goods to evade customs duties.

During the investigation, incriminating documents, including an actual invoice, were recovered, which allegedly proved that the importers had submitted fabricated invoices to the customs authorities. A Show Cause Notice (SCN) was issued on August 23, 2013, proposing to reject the declared value, re-determine the value based on the recovered invoice, demand differential duty, confiscate the goods, and impose penalties under Sections 112(a), 114A, and 114AA of the Customs Act, 1962.

The Adjudicating Authority passed an Order-in-Original on March 29, 2023, upholding the allegations and imposing penalties. The importers appealed to the Commissioner of Customs (Appeals), who rejected their appeal on December 12, 2024. Subsequently, the importers filed appeals before the CESTAT, Chennai.

Key Issues Raised in the Appeals 
1. Non-availability of Relied Upon Documents (RUDs): The appellants argued that the relied-upon documents mentioned in the SCN were not provided to them, despite repeated requests. The Adjudicating Authority claimed that the documents were provided, but this assertion was contradicted by the Authority’s own findings in the Order-in-Original.
2. Provisional Assessment and Section 28: The appellants contended that the consignments were cleared provisionally, and the assessments were not finalized due to pending test reports. They argued that a demand under Section 28 of the Customs Act, 1962, was premature and legally unsustainable, as the section applies only to finalized assessments.
Tribunal’s Observations and Decision

The Tribunal carefully examined the facts of the case, the rival contentions, and the documents placed on record. It noted several discrepancies in the Adjudicating Authority’s findings, particularly regarding the availability of RUDs. The Tribunal also emphasized that the demands raised under Section 28 were premature, as the assessments were provisional and not finalized.

The Tribunal referred to its own previous decision in the case of M/s. Shami Impex vs. Commissioner of Customs & Ors.  [Final Order Nos. 40819-40823/2024 dated July 9, 2024], which held that demands under Section 28 cannot be raised for provisionally assessed consignments. The Tribunal also cited judgments from the Hon’ble Supreme Court and various High Courts, which consistently held that Section 28 of the Customs Act applies only to finalized assessments.

Based on these findings, the Tribunal set aside the demands, penalties, and confiscation orders imposed by the Adjudicating Authority and the Commissioner (Appeals). The appellants were granted consequential reliefs as per the law.

Key Takeaways from the Judgment 
1. Importance of Relied Upon Documents: The Tribunal highlighted the necessity of providing all relied-upon documents to the appellants along with the SCN. Failure to do so violates the principles of natural justice and undermines the adjudication process.
2. Provisional Assessments and Section 28: The judgment reinforces the principle that demands under Section 28 of the Customs Act, 1962, cannot be raised for provisionally assessed consignments. The section is applicable only after the finalization of assessments.
3. Judicial Precedents: The Tribunal’s decision aligns with previous judgments from the Supreme Court and High Courts, emphasizing the importance of adhering to established legal principles in customs cases.
Conclusion

The CESTAT Chennai’s decision in this case serves as a reminder of the importance of procedural fairness and adherence to legal provisions in customs adjudications. It underscores the need for authorities to provide all relevant documents to appellants and to ensure that assessments are finalized before invoking Section 28 of the Customs Act, 1962. This landmark judgment will undoubtedly serve as a guiding precedent for similar cases in the future, ensuring that justice is served in accordance with the law.

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Source: CESTAT Chennai

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March 3, 2026
CESTAT Kolkata Sets Aside IGST Demand
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 03.03.2026

CESTAT Kolkata Sets Aside IGST Demand

Adv Ravi Shekhar Jha

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

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

Case Background

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

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

Key Arguments by the Appellant 

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

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

CESTAT’s Observations and Ruling

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

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

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

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

Source: CESTAT Kolkata

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March 3, 2026
CESTAT Chennai Upholds Exemption for Imported Speakers
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 02.03.2026

CESTAT Chennai Upholds Exemption for Imported Speakers

Adv Ravi Shekhar Jha

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

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Chennai, recently delivered a significant judgment in the case of M/s. Swamy Engineering Works and its partner, against the Commissioner of Customs, Chennai II Commissionerate. This case, spanning over 17 years, revolved around the classification of imported loudspeakers and the eligibility for exemption under Notification No. 21/2002-Cus. The final verdict, pronounced on February 19, 2026, brought closure to a prolonged legal battle, setting a precedent for similar cases in the future.

Background of the Case 

The dispute originated from the import of professional audio equipment, specifically loudspeakers, by M/s. Swamy Engineering Works between 2003 and 2006. The company classified the imported speakers as “cone-type loudspeakers” and claimed exemption from customs duty under Notification No. 21/2002-Cus. However, the Directorate of Revenue Intelligence (DRI) alleged that the speakers were misclassified and did not qualify for the exemption, as they were dome-type loudspeakers. This led to the issuance of a Show Cause Notice on January 30, 2008, followed by multiple rounds of litigation.

Key Issues in the Case 

The case raised several critical questions:
1. Classification of Goods: Were the imported loudspeakers “cone-type” as claimed by the appellants, or “dome-type” as alleged by the Department?
2. Eligibility for Exemption: Did the appellants rightfully claim the benefit of Notification No. 21/2002-Cus.?
3. Extended Period of Limitation: Was the invocation of the extended period of limitation under Section 28(1) of the Customs Act, 1962, justified?
4. Issuance of Notice: Could the Department issue a notice without challenging the original assessment?
5. Confiscation and Penalties: Were the confiscation of goods and imposition of penalties legally sustainable?
The Tribunal’s Observations and Findings

After carefully analyzing the evidence, submissions, and legal precedents, the Tribunal made the following observations:
1. Classification of Goods: The Tribunal concluded that the loudspeakers in question were indeed “cone-type” and not “dome-type.” This decision was based on technical literature, expert certificates, and the examination report, which confirmed the shape of the diaphragm as parabolic (cone-shaped). The Tribunal also noted that the Department had not disputed the examination report, which described the goods as “SPEAKER CONE TYPE.”
2. Eligibility for Exemption: The Tribunal held that the appellants were entitled to the benefit of Notification No. 21/2002-Cus., as the imported goods met the criteria for exemption. The diaphragm shape was the determining factor for classification, and the evidence supported the appellants’ claim.
3. Extended Period of Limitation: The Tribunal found that the invocation of the extended period of limitation was not justified. The dispute was based on technical interpretation and classification, and there was no evidence of suppression of facts, wilful misstatement, or misdeclaration by the appellants.
4. Issuance of Notice: The Tribunal ruled that the Department could not issue a notice under Section 28 of the Customs Act, 1962, without first challenging the original assessment. The sequence of events showed that the goods were correctly described, assessed, and released, negating any allegations of misclassification.
5. Confiscation and Penalties: The Tribunal set aside the confiscation of goods and the imposition of penalties, stating that the allegations of deliberate misdeclaration and evasion of duty were baseless.
Final Verdict

The Tribunal allowed the appeals filed by M/s. Swamy Engineering Works and its partner, with consequential relief as per the law. The judgment emphasized that the classification dispute was a matter of technical interpretation and not a case of deliberate evasion or misdeclaration. The Tribunal also highlighted the importance of adhering to principles of judicial discipline and ensuring that disputes are resolved in a timely and fair manner.

Key Takeaways
1. Technical Classification Matters: The case underscores the importance of accurate classification and technical interpretation in customs disputes. The shape of the diaphragm was a critical factor in determining the type of loudspeaker and its eligibility for exemption.
2. Extended Limitation Period: The judgment clarifies that the extended period of limitation under Section 28(1) of the Customs Act, 1962, cannot be invoked in cases involving technical disputes without evidence of suppression or wilful misstatement.
3. Importance of Procedural Compliance: The Tribunal emphasized that the Department must follow proper procedures, including challenging the original assessment, before issuing a notice under Section 28.
4. Judicial Discipline: The Tribunal adhered to the conclusions of the Chief Commissioner’s Conference and other judicial precedents, ensuring consistency in decision-making.
Conclusion

The CESTAT Chennai’s decision in the case of M/s. Swamy Engineering Works is a landmark judgment that highlights the importance of technical accuracy, procedural compliance, and judicial discipline in customs disputes. By setting aside the impugned order and allowing the appeals, the Tribunal has provided clarity on the classification of goods and the application of exemption notifications under the Customs Act, 1962. This case serves as a valuable reference for importers and legal practitioners dealing with similar issues in the future.

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Source: CESTAT Chennai

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March 2, 2026
CESTAT Delhi- Extended Limitation and Section 114A Penalty Held Unsustainable in Classification Dispute
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 02.03.2026

CESTAT Delhi- Extended Limitation and Section 114A Penalty Held Unsustainable in Classification Dispute

Adv Ravi Shekhar Jha

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

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), New Delhi, recently delivered a significant judgment in the case of M/s Myntra Jabong India Pvt Ltd vs. Principal Commissioner of Customs ACC (Imports). This case revolved around the classification of imported goods, the invocation of the extended period of limitation under Section 28(4) of the Customs Act, and the imposition of penalties under Section 114A of the Customs Act. The judgment, pronounced on February 27, 2026, has set a precedent for similar cases involving disputes over classification and customs duty.

Background of the Case

M/s Myntra Jabong India Pvt Ltd, a leading e-commerce company, imports consumer fashion and lifestyle products, including clothing, footwear, accessories, and beauty products. Between July 2017 and November 2023, the company paid customs duty amounting to Rs. 800 crores for its imports. The dispute in this case pertains to the classification of men’s polyester knitted jackets imported by the company during the period from August 9, 2017, to October 3, 2019.

The Principal Commissioner of Customs alleged that Myntra Jabong had misclassified the imported jackets in the Bills of Entry, leading to short payment of customs duty. The department issued three show-cause notices in 2021 and 2022, invoking the extended period of limitation under Section 28(4) of the Customs Act. The notices also proposed confiscation of goods under Section 111(m) and the imposition of penalties under Section 114A of the Customs Act.

Key Issues in the Case 

The case raised several critical legal questions:
1. Invocation of Extended Period of Limitation: The department alleged that Myntra Jabong had willfully suppressed facts and misdeclared the description and classification of the imported goods, justifying the invocation of the extended period of limitation under Section 28(4) of the Customs Act.
2. Liability for Confiscation and Penalty: The department argued that the imported goods were liable for confiscation under Section 111(m) and that penalties under Section 114A were applicable due to the alleged misclassification and suppression of facts.
3. Suo Moto Payment of Differential Duty: Myntra Jabong contended that it had voluntarily paid the differential customs duty along with interest before the issuance of the show-cause notices, and therefore, the extended period of limitation should not have been invoked.
Arguments Presented

Appellant’s Submissions:
- The company argued that it had made voluntary payments of differential duty and interest before the issuance of the show-cause notices, which negated the claim of suppression.
- It contended that the extended period of limitation could not be invoked as there was no outstanding duty at the time of the notices.
- The appellant emphasized that the classification of goods was based on invoices and packing lists provided by the overseas supplier, and there was no deliberate suppression or misstatement.
- Relying on previous judgments, the appellant argued that disputes over classification do not constitute willful suppression of facts and that penalties under Section 114A were not applicable.
Respondent’s Submissions:
- The department maintained that the extended period of limitation was correctly invoked due to the appellant’s alleged misdeclaration and suppression of facts.
- It argued that the appellant’s actions resulted in short payment of customs duty, making the goods liable for confiscation under Section 111(m) and penalties under Section 114A.
Tribunal’s Observations and Judgment 

The Tribunal carefully examined the arguments and evidence presented by both parties. It referred to previous judgments, including Benetton India Private Limited vs. Additional Commissioner, Customs (Preventive), New Delhi and Uniworth Textiles Ltd. vs. Commissioner of Central Excise, Raipur, to determine whether the extended period of limitation and penalties were applicable.

Key Findings:
1. Extended Period of Limitation: The Tribunal held that the extended period of limitation under Section 28(4) of the Customs Act could not be invoked in this case. It emphasized that the appellant had voluntarily paid the differential duty and interest before the issuance of the show-cause notices, and there was no evidence of willful suppression or intent to evade payment of duty.
2. Classification Dispute: The Tribunal noted that classification disputes are often a matter of interpretation and cannot be equated with suppression of facts. The appellant had disclosed the details of the imported goods in the Bills of Entry, and the department had the opportunity to scrutinize the returns under the self-assessment scheme.
3. Confiscation and Penalty: The Tribunal concluded that the imported goods were not liable for confiscation under Section 111(m) of the Customs Act, nor was the penalty under Section 114A applicable. It referred to the Benetton India case, which had similar facts and legal issues, to support its decision.
Final Order:

The Tribunal set aside the impugned order dated August 31, 2023, passed by the Principal Commissioner of Customs and allowed the appeal in favor of M/s Myntra Jabong India Pvt Ltd.

Implications of the Judgment

This landmark judgment has significant implications for importers and the customs department. It reinforces the principle that the extended period of limitation under Section 28(4) of the Customs Act can only be invoked in cases of willful suppression or intent to evade payment of duty. It also clarifies that classification disputes, which are often subjective, cannot be used as grounds for alleging suppression of facts.

Furthermore, the judgment highlights the importance of the self-assessment scheme introduced in 2011, emphasizing that customs officers have a duty to scrutinize returns and ensure the correctness of duty assessments. Importers cannot be held solely responsible for errors in classification or description, especially when they have acted in good faith and voluntarily paid any differential duty.

Conclusion

The decision in the Myntra Jabong case serves as a reminder of the importance of due diligence in customs compliance while also protecting importers from unwarranted penalties and confiscations. It underscores the need for a balanced approach in resolving classification disputes and interpreting the provisions of the Customs Act. This judgment will likely serve as a reference point for similar cases in the future, ensuring fair treatment for importers and upholding the principles of justice in customs law.

Source: CESTAT Delhi

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March 2, 2026
Kerala High Court Affirms Tribunal’s Directive for Speaking Order in Customs Duty Reassessment Dispute
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 28.02.2026

Kerala High Court Affirms Tribunal’s Directive for Speaking Order in Customs Duty Reassessment Dispute

Adv Ravi Shekhar Jha

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

On December 16, 2024, the High Court of Kerala at Ernakulam, presided over by the Honourable Justice , delivered a significant judgment in the Customs Appeals No. 10 and 11 of 2024. The appeals were filed by the Commissioner of Customs, challenging the final orders issued by the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), South Zonal Bench, Bangalore, on July 26, 2023.

Background of the Case 

The case revolved around the import of “Galvanised Steel Hollow Sections” from China by Jai Hind Traders, represented by its proprietor. The importer had filed bills of entry declaring a specific transaction value for the goods to assess customs duty. However, the Customs Authorities disagreed with the declared value and reassessed the goods at a higher transaction value.

Faced with the prospect of delays and demurrage charges, the importer communicated to the Customs Authorities on March 13, 2015, expressing their willingness to pay the higher reassessed value to expedite the clearance of goods. However, the communication indicated that the acceptance of the reassessed value was not unconditional and was made under protest.

Following the clearance of goods, the importer requested a “speaking order” from the Customs Authorities, seeking an explanation for the reassessed transaction value. This request was denied by the Customs Authorities, citing Section 17(5) of the Customs Act, 1962. The provision states that a speaking order is not required if the importer or exporter confirms their acceptance of the reassessed value in writing.

Legal Proceedings

Aggrieved by the rejection, Jai Hind Traders approached the First Appellate Authority, which upheld the decision of the Customs Authorities. Subsequently, the importer filed an appeal with the CESTAT, South Zonal Bench, Bangalore. The Tribunal ruled in favor of the importer, stating that the acceptance of the reassessed value was made under protest and was not unconditional. It directed the Customs Authorities to pass a speaking order on the reassessment after hearing the importer.

The Commissioner of Customs then filed two appeals (CUS.Appeal Nos. 10 and 11 of 2024) before the High Court of Kerala, challenging the Tribunal’s decision.

High Court Judgment 

The High Court dismissed both appeals, upholding the Tribunal’s decision. The court emphasized the importance of fairness and transparency in administrative actions, particularly in cases involving reassessment of customs duty. The judgment highlighted the following key points:
1. Interpretation of Section 17(5) of the Customs Act, 1962: The court clarified that the provision requires a speaking order to be issued unless the importer or exporter provides a clear, unconditional, and unambiguous acceptance of the reassessed transaction value. In this case, the importer’s communication indicated acceptance under protest, which necessitated the issuance of a speaking order.
2. Culture of Justification: The court underscored the evolving jurisprudence in India, which has shifted from a “culture of authority” to a “culture of justification.” Citizens are entitled to seek explanations for state actions, and authorities are obligated to provide reasons for their decisions.
3. Tribunal’s Decision: The High Court found no reason to interfere with the Tribunal’s order, which directed the Customs Authorities to pass a speaking order on the reassessment after hearing the importer.
Implications of the Judgment

This judgment reinforces the principle of fairness and accountability in administrative actions. It underscores the importance of providing clear and reasoned explanations for decisions, especially when they impact the rights and interests of individuals or businesses. The ruling also highlights the significance of adhering to statutory provisions, such as Section 17(5) of the Customs Act, to ensure transparency and justice.

Conclusion

The High Court’s decision in CUS.Appeal Nos. 10 and 11 of 2024 serves as a reminder to Customs Authorities and other administrative bodies to act in accordance with the principles of natural justice and statutory requirements. By upholding the Tribunal’s decision, the court has reaffirmed the importance of issuing speaking orders in cases where reassessed values are accepted under protest. This judgment is a step forward in promoting a culture of justification and accountability in administrative processes.

Source: Kerala High Court

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February 28, 2026
CESTAT Chennai- Customs Department Cannot Deny DEPB Benefits Issued by DGFT
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 28.02.2026

CESTAT Chennai- Customs Department Cannot Deny DEPB Benefits Issued by DGFT

Adv Ravi Shekhar Jha

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

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Chennai, recently delivered a significant judgment in the case of M/s. Ganges Internationale Private Limited vs. Commissioner of Customs, Trichy Commissionerate. The case revolved around the denial of Duty Entitlement Pass Book (DEPB) benefits by the Customs Department, despite valid DEPB scrips issued by the Directorate General of Foreign Trade (DGFT). The tribunal ruled in favor of the appellant, setting aside the order of the Commissioner of Customs and providing clarity on the jurisdictional authority of the Customs Department and DGFT in matters related to export incentives.

Background of the Case 

M/s. Ganges Internationale Private Limited, a Chennai-based manufacturer and exporter of transmission line towers and telecom towers, had claimed DEPB benefits for their exports under Sl. No. 24 of Product Group Code 61 (Engineering Products). The Customs Department alleged that the company had misdeclared telecom towers as galvanized transmission line towers to avail higher DEPB benefits, which they were not entitled to. The department argued that the DEPB benefits for telecom towers should have been claimed under Product Group Code 90 – Sl. No. 22D, which offered lower benefits.

The Directorate of Revenue Intelligence (DRI) initiated an investigation based on specific intelligence, leading to the issuance of a Show Cause Notice (SCN) by the Additional Director General of DRI, Chennai. The SCN proposed the cancellation of Let Export Orders (LEOs) issued for 564 shipping bills covering exports from February 2008 to September 2011. It also directed the reassessment of the goods under Section 17 of the Customs Act, 1962, and imposed penalties under Sections 114 and 114AA of the Act.

Key Arguments by the Appellant 

The appellant contested the SCN and the subsequent order, raising several key arguments:
1. Jurisdictional Authority: The appellant argued that the DGFT is the sole authority to determine the eligibility and rate of DEPB benefits. Customs authorities cannot unilaterally deny benefits granted by the DGFT.
2. Time Limitation: The appellant contended that the proceedings were barred by limitation under Section 28 of the Customs Act, which restricts demands to five years.
3. Misinterpretation of SION: The appellant argued that the Standard Input Output Norms (SION) under Sl. No. C220 applied to both transmission line towers and telecom towers, making both eligible for DEPB benefits under Sl. No. 24 of Product Code 61.
4. Misdeclaration Allegations: The appellant refuted the charge of misdeclaration, asserting that the description of goods in the shipping bills was consistent with the Customs Tariff Act, 1975.
5. Improper Reassessment: The appellant argued that reassessment under Section 17 of the Customs Act was not applicable to goods that had already been exported.
Key Findings of the Tribunal 

The CESTAT Chennai bench, comprising Hon’ble Judicial Member and Hon’ble Technical Member, delivered a detailed judgment addressing the issues raised in the appeal. The key findings are as follows:

1. DGFT’s Authority on DEPB Benefits 

The tribunal emphasized that the DGFT is the competent authority to determine the eligibility and rate of DEPB benefits. Customs authorities cannot unilaterally deny benefits granted by the DGFT. The tribunal cited several landmark judgments, including Titan Medical Systems Pvt. Ltd. vs. CC, New Delhi and Adani Exports Ltd. vs. Commissioner of Customs, to support this legal principle.

2. Misdeclaration Allegations

The tribunal dismissed the Customs Department’s allegations of misdeclaration, noting that the appellant had adopted the description of goods as per the Customs Tariff Act, 1975. The tribunal also clarified that the terms “transmission line towers” and “telecom towers” are not differentiated under the Customs Tariff Act, and the appellant’s classification was consistent with the tariff provisions.

3. Improper Reassessment

The tribunal held that reassessment under Section 17 of the Customs Act applies only to export goods prior to export and not to goods that have already been exported. The Customs Department exceeded its jurisdiction by ordering reassessment of goods that had already been cleared for export.

4. Cancellation of Let Export Orders 

The tribunal ruled that the Commissioner of Customs lacked the authority to cancel Let Export Orders (LEOs) without following the proper legal procedure under Section 129D of the Customs Act. The tribunal noted that the Commissioner had not quoted any statutory provision to justify the cancellation of LEOs.

5. Time Limitation

The tribunal rejected the Customs Department’s argument that the proceedings were not time-barred, emphasizing that the period of limitation under Section 28 of the Customs Act applies to cases involving confiscation and penalties under Sections 113 and 114.

Conclusion

The CESTAT Chennai’s judgment in this case is a landmark decision that reinforces the jurisdictional boundaries between the Customs Department and the DGFT. It underscores the principle that export incentives like DEPB benefits, once granted by the DGFT, cannot be unilaterally denied by Customs authorities. The judgment also provides clarity on the scope of reassessment under Section 17 of the Customs Act and the procedural requirements for canceling Let Export Orders.

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Source: CESTAT Chennai

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February 28, 2026
CESTAT Mumbai- Software Value Not Includable in Assessable Value of Diamond Scanning Machines
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 27.02.2026

CESTAT Mumbai- Software Value Not Includable in Assessable Value of Diamond Scanning Machines

Adv Ravi Shekhar Jha

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

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) Mumbai recently delivered a significant judgment on February 25, 2026, addressing the contentious issue of whether the value of software and hardware can be combined to determine the transaction value of imported diamond cutting and scanning machines under Section 14 of the Customs Act. This decision, which involved 17 appeals, has set a precedent for the treatment of software and hardware in customs duty assessments.

Background of the Case 

Between 2009 and 2012, several appellants, including M/s. Shairu Gems Diamonds Pvt. Ltd., imported diamond processing and scanning machines from M/s. Sarin Technologies Ltd. and M/s. Galatea Ltd., both based in Israel. These machines were equipped with functional software, either preloaded or downloaded in India after installation. The imports were made under the Export Promotion Capital Goods (EPCG) scheme, and customs assessments were conducted by proper officers based on import invoices, bills of lading, and other relevant documents.

In 2013, the Directorate of Revenue Intelligence (DRI) initiated an investigation, alleging that the appellants had undervalued the imported goods by artificially splitting the composite invoices into separate invoices for hardware and software. The DRI claimed that this practice led to the suppression of the software’s value, resulting in lower customs duty payments. Show-cause notices were issued, and the Commissioner of Customs confirmed the allegations, imposing differential duty, interest, penalties, and redemption fines.

Key Issues Addressed 

The appeals raised several critical legal questions:
1. Can the value of software and hardware be combined to determine the transaction value of diamond cutting and scanning machines? 
2. Is the reassessment of goods after clearance permissible under the Customs Act? 
3. Was the invocation of the extended limitation period for reassessment justified? 
4. Are penalties and redemption fines legally sustainable in this case? 
Arguments Presented

Appellants’ Arguments:
- Exclusion of Software Value: The appellants argued that the value of software should not be included in the assessable value of the hardware. They cited landmark Supreme Court judgments, including PSI Data Systems Ltd. v. Collector of Central Excise and Commissioner of Central Excise, Pondicherry v. ACER India Ltd., which established that software and hardware are distinct entities and should be assessed independently.
- Reopening of Assessment: The appellants contended that reopening assessments after final clearance under Section 47 of the Customs Act was impermissible without evidence of fraud, collusion, or misrepresentation. They argued that the Department had all the necessary information at the time of the original assessment and failed to prove any fraudulent intent.
- Penalty and Redemption Fine: The appellants challenged the imposition of penalties and redemption fines, asserting that their imports did not violate any provisions of the Customs Act, EPCG scheme, or Foreign Trade Development Act.
Respondent’s Arguments:
- Inclusion of Software Value: The Department argued that the software was an integral part of the diamond scanning machines and essential for their functionality. They cited the Larger Bench decision in Bhagyanagar Metals Ltd. v. Commissioner of Central Excise Hyderabad, which held that software and hardware should be assessed as a single unit when the software is embedded in the hardware.
- Undervaluation Allegations: The Department presented evidence suggesting that the appellants had artificially bifurcated the value of hardware and software to evade customs duty. They argued that the software’s value was inbuilt into the machines and should have been included in the assessable value.
CESTAT’s Observations and Final Decision

After thoroughly examining the arguments, evidence, and judicial precedents, the CESTAT Mumbai ruled in favor of the appellants. The key observations and conclusions were as follows:
1. Software and Hardware Are Distinct: The Tribunal reaffirmed the Supreme Court’s rulings in PSI Data Systems Ltd. and ACER India Ltd., which established that software and hardware are distinct entities and should be assessed independently. The Tribunal emphasized that the value of software sold along with hardware cannot be included in the assessable value of the hardware for customs duty purposes.
2. Reopening of Assessment Is Impermissible: The Tribunal held that reopening assessments after final clearance under Section 47 of the Customs Act was not legally sustainable without evidence of fraud, collusion, or misrepresentation. The Department’s failure to appeal the original assessment order further invalidated the reassessment.
3. Extended Limitation Period Not Applicable: The Tribunal ruled that the extended limitation period could not be invoked in this case, as the Department had access to all relevant information at the time of the original assessments. The absence of evidence of fraudulent intent or misrepresentation by the appellants further supported this conclusion.
4. Penalties and Redemption Fines Set Aside: The Tribunal found no legal basis for the imposition of penalties and redemption fines, as the imports did not violate any applicable laws or regulations.
Implications of the Judgment 

This landmark decision has significant implications for the customs valuation of imported goods, particularly those involving software and hardware. It reinforces the principle that software and hardware are distinct entities and should be assessed independently, even if the software is essential for the hardware’s functionality. The judgment also underscores the importance of adhering to established legal precedents and highlights the limitations on the Department’s power to reopen assessments.

Conclusion

The CESTAT Mumbai’s decision in these appeals is a victory for the appellants and a reaffirmation of the legal principles established by the Supreme Court. It provides clarity on the treatment of software and hardware in customs duty assessments and sets a precedent for similar cases in the future. This judgment is a reminder of the importance of adhering to legal precedents and ensuring that reassessments are conducted within the bounds of the law.

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Source: CESTAT Mumbai

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February 27, 2026
CESTAT Chandigarh Relaxes BIS QCO Rigor: Confiscation Set Aside, Only Redemption Fine Upheld for Deep Fryer Imports
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 27.02.2026

CESTAT Chandigarh Relaxes BIS QCO Rigor: Confiscation Set Aside, Only Redemption Fine Upheld for Deep Fryer Imports

Adv Ravi Shekhar Jha

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

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Chandigarh, recently delivered a significant judgment in the case of M.G. Bakers Pvt Ltd vs. Commissioner of Customs, Ludhiana. This case revolved around the import of goods requiring Bureau of Indian Standards (BIS) registration and the legal implications of procedural violations under the Customs Act, 1962. The tribunal’s decision highlights key legal principles, including the retrospective application of laws, the importance of mens rea in imposing penalties, and the distinction between procedural and substantive violations.

Background of the Case 

M.G. Bakers Pvt Ltd, the appellant, imported goods, including S/S Deep Fryer models DF 11D-17 and DF 11D-17′, under Tariff Item 84198110 of the Customs Tariff Act, 1975. The goods were declared in Bill of Entry No. 9314687 dated 05.04.2025. During the examination of the goods, it was found that the imported items were covered under the Safety of Household, Commercial and Similar Electrical Appliances (Quality Control) Order, 2024 (QCO 2024), which mandated BIS registration for such imports. However, the appellant did not possess a valid BIS license or registration, leading the Revenue to classify the goods as “prohibited” under Section 2(33) of the Customs Act, 1962. Consequently, the goods were ordered to be confiscated under Section 111(d) of the Act, with an option for redemption upon payment of a fine and re-export.

The appellant contested the confiscation, arguing that the QCO 2024 had been superseded by QCO 2025 [Order No. S.O. 2232(E) dated 19.05.2025], which deferred the requirement for BIS registration to 19.03.2026. The appellant claimed that the government did not intend to impose BIS registration requirements before this date, and therefore, the confiscation and penalty were unjustified.

Arguments Presented

Appellant’s Arguments 
1. Supersession of QCO 2024: The appellant argued that QCO 2025 explicitly superseded QCO 2024 and deferred the BIS registration requirement to 19.03.2026. Thus, there was no legal basis for confiscating the goods or imposing penalties.
2. No Mens Rea: The appellant contended that there was no malafide intent or mens rea in the import process, as the goods were declared correctly in the Bill of Entry and the procedural lapse was unintentional.
3. Procedural Nature of Violation: The appellant emphasized that the requirement for BIS registration was a procedural formality, and the confiscation and penalty were disproportionate to the nature of the violation.
4. Re-export Option: The appellant pointed out that the adjudicating authority had already allowed the re-export of the goods, which implied that the goods were not inherently prohibited.
Department’s Arguments
1. Violation of QCO 2024: The department argued that the goods were imported during the enforcement period of QCO 2024, which required BIS registration. The subsequent QCO 2025 did not have retrospective effect and could not absolve the appellant’s violation.
2. Confiscation and Redemption Fine: The department maintained that the goods were liable for confiscation under Section 111(d) of the Customs Act, 1962, and the appellant was granted the option to re-export the goods upon payment of a redemption fine of Rs. 25,000.
Tribunal’s Observations and Decision 

After hearing both parties and reviewing the evidence, the tribunal made the following observations:
1. Retrospective Application of Law: The tribunal agreed with the department that QCO 2025, which deferred the BIS registration requirement to 19.03.2026, did not have retrospective effect. Therefore, the appellant’s violation under QCO 2024 at the time of import was valid.
2. Procedural Violation: The tribunal noted that the violation was procedural in nature, as the BIS registration was a requirement for the foreign manufacturer or supplier, not the appellant. The tribunal emphasized that procedural violations do not warrant severe penalties like confiscation.
3. Mens Rea and Penalty: The tribunal highlighted that mens rea (intent or knowledge of wrongdoing) is essential for imposing penalties. Since the department failed to prove any malafide intent on the part of the appellant, the tribunal found no justification for imposing a penalty.
4. Proportionality of Punishment: The tribunal determined that confiscation of goods was not warranted in this case. Instead, it reduced the redemption fine from Rs. 25,000 to Rs. 15,000, considering the procedural nature of the violation.
Final Order

The tribunal ruled in favor of M.G. Bakers Pvt Ltd, setting aside the penalty and reducing the redemption fine to Rs. 15,000. The department was directed to release the goods to the appellant upon payment of the reduced fine within one week of receiving the certified copy of the order.

Key Takeaways

This case underscores several important legal principles:
1. Retrospective Application of Laws: Laws and regulations are generally not applied retroactively unless explicitly stated. In this case, the tribunal upheld the principle that QCO 2025 could not absolve violations committed under QCO 2024.
2. Mens Rea in Penalty Imposition: The tribunal reiterated that penalties cannot be imposed without proving malafide intent or mens rea. Procedural violations without intent to evade or deceive do not warrant penalties.
3. Proportionality in Punishment: The tribunal emphasized the importance of proportionality in legal decisions, reducing the redemption fine and setting aside the penalty to ensure justice.
4. Procedural vs. Substantive Violations: The tribunal distinguished between procedural and substantive violations, ruling that procedural lapses should not lead to severe consequences like confiscation.
Conclusion

The judgment in M.G. Bakers Pvt Ltd vs. Commissioner of Customs, Ludhiana serves as a reminder of the importance of adhering to legal principles such as mens rea, proportionality, and the non-retrospective application of laws. It also highlights the need for clarity in regulatory requirements to avoid unnecessary disputes and penalties. This case is a valuable reference for importers and legal practitioners navigating the complexities of customs regulations and procedural compliance.

Source: CESTAT Chandigarh

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February 27, 2026
CESTAT Chennai Dismisses Revenue Appeal Over Non-Issuance of Show Cause Notice: Upholds Principles of Natural Justice
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 26.02.2026

CESTAT Chennai Dismisses Revenue Appeal Over Non-Issuance of Show Cause Notice: Upholds Principles of Natural Justice

Adv Ravi Shekhar Jha

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

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Chennai, recently delivered its Final Order No. 40284/2026 on February 23, 2026, concerning Customs Appeal No. 40943 of 2016 and Customs Cross Appeal No. 40945 of 2016. This case revolved around a dispute between the Commissioner of Customs, Chennai VII Commissionerate, and M/s. Larsen & Toubro Ltd. regarding the classification and differential duty demand on imported goods.

Background of the Case

The case originated from an Order-in-Appeal (C.Cus.I. No. 705/2015) dated October 30, 2015, issued by the Commissioner of Customs (Appeals-I). The Revenue filed an appeal against this order, claiming that the Appellate Authority failed to consider the fact that a show cause notice had been issued within the stipulated time. The Revenue argued that the Commissioner (Appeals) had set aside the lower authority’s order based on the alleged non-issuance of a show cause notice, which they claimed was a misrepresentation of facts by the importer.

On the other hand, M/s. Larsen & Toubro Ltd. filed a cross-appeal, denying the allegations made by the Revenue. They contended that no show cause notice was ever issued to them, and the Order-in-Original was issued in violation of the principles of natural justice. They also argued that the differential duty demand was time-barred and that the imported item—a specialized orthopedic table—was misclassified by the Department.

Key Issues in the Case

The primary issue before the Tribunal was whether a show cause notice was issued and served on M/s. Larsen & Toubro Ltd. for re-determining the classification of the imported goods, which were described as “Operating Table Orthopaedics Hydraulic with Remote Model No. YSAMMITZ RC40 (Medical Equipment).” The importer had classified the goods under CTH No. 90189099 as “other Medical Equipment and Appliances,” while the Department argued that the goods should be classified under CTH 9402, resulting in a differential duty demand of Rs. 4,89,431.

Tribunal’s Observations and Findings
1. Absence of Show Cause Notice: The Tribunal noted that the Department failed to produce any evidence of the issuance or service of a show cause notice, despite asserting its existence. Section 28(1) of the Customs Act mandates the issuance of a notice within one year of the relevant date if the classification is proposed to be revised, which was not adhered to in this case.
2. Misapplication of Section 28(2): The Original Authority had invoked Section 28(2) of the Customs Act, which provides for the waiver of a show cause notice under specific conditions, such as the payment of duty and interest by the importer. However, the Commissioner (Appeals) found that these preconditions were not met, and the invocation of Section 28(2) was incorrect.
3. Violation of Principles of Natural Justice: The Tribunal emphasized that the absence of a show cause notice was a clear violation of the principles of natural justice. The Respondent was not given an opportunity to present their case, which is a fundamental requirement under Section 28(1) of the Customs Act.
4. Failure to Provide Evidence: Despite being given ample time—nearly ten years—the Department failed to produce the alleged show cause notice, even during the hearing before the Tribunal. This failure undermined the Revenue’s appeal and confirmed the absence of the notice.
Final Decision

After thoroughly examining the records and hearing arguments from both sides, the Tribunal concluded that the Revenue’s appeal lacked merit. The absence of a show cause notice was deemed fatal to the case, and the Tribunal upheld the Order-in-Appeal issued by the Commissioner (Appeals). Consequently, the Revenue’s appeal was dismissed.

Key Takeaways
1. Importance of Adhering to Legal Procedures: The case highlights the critical importance of following legal procedures, such as issuing and serving a show cause notice, to ensure compliance with the principles of natural justice.
2. Burden of Proof: The burden of proving the issuance and service of a show cause notice lies with the Department. Failure to provide evidence can lead to the dismissal of the appeal.
3. Timely Action: The Tribunal emphasized the importance of adhering to statutory timelines, as the notice for personal hearing was issued beyond the one-year limitation period prescribed under Section 28(1).
4. Misapplication of Legal Provisions: The case underscores the need for authorities to correctly apply legal provisions, as the misapplication of Section 28(2) weakened the Department’s position.
Conclusion

The Final Order No. 40284/2026 serves as a reminder of the significance of procedural compliance and the principles of natural justice in customs-related disputes. It also highlights the necessity for authorities to substantiate their claims with concrete evidence, especially when challenging decisions made by appellate bodies. This case sets a precedent for similar disputes and reinforces the importance of transparency and accountability in the adjudication process.

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Source: CESTAT Chennai

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February 26, 2026
CESTAT Delhi Set aside the penalty imposed under Section 114A of the Customs Act, 1962
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 26.02.2026

CESTAT Delhi Set aside the penalty imposed under Section 114A of the Customs Act, 1962

Adv Ravi Shekhar Jha

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

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, recently delivered a significant judgment in the case of M/s Allengers Medical Systems Ltd. vs. Commissioner of Customs (Customs Appeal No. 51218 of 2025). This case revolved around the imposition of penalty under Section 114A of the Customs Act, 1962, and the eligibility of exemption under Notification No. 50/2017-CUS, as amended by Notification No. 2/2022-CUS.

Background of the Case

M/s Allengers Medical Systems Ltd., a company based in Mohali, Punjab, imported Carbon Fiber Table Tops and Carbon Fiber Tables under various Bills of Entry between August 18, 2022, and March 9, 2023. The company self-assessed the customs duty, claiming exemption under Notification No. 50/2017-CUS, as amended by Notification No. 2/2022-CUS (Sl. No. 564). However, the Customs Department contended that the amendment excluded carbon fiber tables from the exemption, leading to a demand for differential customs duty of Rs. 57,18,554/- along with interest. Additionally, a penalty of Rs. 57,18,554/- was imposed under Section 114A of the Customs Act, 1962.

The appellant argued that the exemption notification excluded only diagnostic tables, while the imported goods were interventional tables, which were not excluded. Despite this, the appellant paid the demanded duty and interest before the issuance of the Show Cause Notice (SCN) dated June 6, 2024, in an attempt to resolve the matter. However, the SCN also proposed penalties under Section 114A, which the appellant contested in the appeal.

Key Legal Issue

The primary issue before the Tribunal was whether the penalty imposed under Section 114A of the Customs Act was justified in the given circumstances. Section 114A stipulates that penalties can be imposed for non-payment or short payment of duty due to collusion, wilful misstatement, or suppression of facts.

Tribunal’s Observations and Decision

The Tribunal carefully examined the submissions made by both parties. The appellant argued that the self-assessment of duty was based on its understanding of the exemption notification, and there was no collusion, wilful misstatement, or suppression of facts. The appellant maintained that it was eligible for the exemption but chose not to contest the demand for duty and interest to settle the matter amicably.

The Tribunal noted that the remedy for incorrect self-assessment is re-assessment, and an incorrect self-assessment cannot automatically be deemed as collusion, wilful misstatement, or suppression of facts. The appellant had acted in good faith, believing it was entitled to the exemption, and had voluntarily paid the duty and interest before the issuance of the SCN. Therefore, the Tribunal concluded that the penalty under Section 114A was not justified in this case.

Final Order

The Tribunal allowed the appeal and modified the impugned order by setting aside the penalty imposed under Section 114A of the Customs Act. The appellant was granted consequential relief, and the judgment was pronounced in open court.

Key Takeaways from the Judgment
1. Self-Assessment vs. Re-Assessment: The Tribunal clarified that incorrect self-assessment does not automatically imply collusion, wilful misstatement, or suppression of facts. The proper remedy for incorrect self-assessment is re-assessment.
2. Good Faith Actions: The appellant’s voluntary payment of duty and interest before the issuance of the SCN demonstrated its intent to resolve the matter amicably, which played a crucial role in the Tribunal’s decision to set aside the penalty.
3. Penalty under Section 114A: The judgment emphasized that penalties under Section 114A can only be imposed if there is evidence of collusion, wilful misstatement, or suppression of facts. In the absence of such evidence, penalties cannot be justified.
4. Importance of Clear Notifications: The case highlights the need for clarity in exemption notifications to avoid disputes and misinterpretations.
Conclusion

The decision in the M/s Allengers Medical Systems Ltd. case serves as a significant precedent in interpreting Section 114A of the Customs Act, 1962. It underscores the importance of distinguishing between genuine errors in self-assessment and deliberate acts of evasion. This judgment is a reminder to importers and businesses to act in good faith and ensure compliance with customs regulations while also advocating for clear and unambiguous notifications to prevent unnecessary litigation.

Source: CESTAT Delhi

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February 26, 2026