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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
Madras High Court Set Aside Customs Penalty Due to Statutory Limitation
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 16.05.2026

Madras High Court Set Aside Customs Penalty Due to Statutory Limitation

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 .

M/s. Vinodhagan Memorial Hospital (P) Ltd. recently secured a significant victory in the Madras High Court, overturning penalties and fines imposed by Customs authorities. This case centered on the interpretation of post-import obligations under a customs exemption notification and the statutory limitation period for enforcement actions.

Background of the Case

In 1992, Vinodhagan Memorial Hospital imported a CT Scanner, availing tax benefits under Notification No.64/88. The exemption required the hospital to provide at least 10% of its services to patients with a monthly income below Rs.500. The Customs Department later alleged that the hospital violated this post-import condition, seeking to impose penalties and confiscate the equipment under Sections 111(o) and 112(a) of the Customs Act.

Legal Issues and Arguments
1. Department’s Position:
  - The Customs authorities argued that the obligation to serve low-income patients was continuous and, upon breach, justified penalties and confiscation.
  - They relied on Section 159A of the Customs Act, which allows actions even after exemption notifications are withdrawn or modified.
2. Appellant’s Defense:
  - The hospital contended that the show cause notice issued on 27.12.1999 was barred by limitation, as the exemption notification was rescinded on 01.03.1994.
  - Under Section 28 of the Customs Act, proceedings for duty recovery or penalties must be initiated within one year, or in exceptional cases, within five years.
  - The limitation period expired on 28.02.1999, but the notice was issued after this date.
Court’s Analysis and Decision
- The High Court examined previous judgments and clarified that Section 159A only saves actions if they are initiated within the statutory limitation period.
- The court found that the Customs Department failed to issue the show cause notice within the prescribed five-year period after the rescission of the exemption notification.
- As a result, the penalty and fine imposed were declared invalid.
Outcome

The appeal was allowed, and all penalties and fines against Vinodhagan Memorial Hospital were set aside. The court emphasized the importance of adhering to statutory limitation periods, even when continuous obligations are involved.

Key Takeaways
1. Limitation Periods Are Critical: Enforcement actions under customs law must respect statutory deadlines, regardless of the nature of the obligation.
2. Continuous Obligations: Even when obligations are ongoing, legal action must be timely.
3. Section 159A’s Scope: Saving clauses do not override limitation periods for penal actions.
Conclusion

This judgment reinforces the principle that statutory limitation periods are fundamental to fair enforcement of customs law. Vinodhagan Memorial Hospital’s victory serves as a precedent for importers facing similar post-import obligations and highlights the need for authorities to act within prescribed timelines.

Source: Madras High Court

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May 16, 2026
CESTAT Delhi- Technical Assistance and License Fees Not Includible in Customs Valuation of Imported Machinery
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 16.05.2026

CESTAT Delhi- Technical Assistance and License Fees Not Includible in Customs Valuation of Imported Machinery

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) in New Delhi recently decided a significant case involving Aglow Chemical Pvt. Ltd. and the Commissioner of Customs. The dispute centered on whether technical assistance charges, license fees, and engineering services should be included in the assessable value of imported plant and machinery under Indian customs law.

Background of the Case
1. Import Details:
  - Aglow Chemical Pvt. Ltd. imported plant and machinery from Cimprogetti Srl, Italy, declaring an assessable value of EUR 1,26,000 based on the invoice for equipment.
  - The total contract with the supplier was EUR 4,20,000, which included EUR 2,94,000 for license, engineering package, and technical assistance.
2. Customs Department’s Position:
  - The Department argued that the entire contract value (EUR 4,20,000) should be considered for customs duty, as the machinery was incomplete and commercially unusable without the associated technical know-how and assistance.
  - They claimed that splitting invoices did not alter the true transaction value and that all payments were inextricably linked to the imported goods.
3. Appellant’s Argument:
  - Aglow Chemical contended that the charges for technical assistance and license fees were independent of the imported equipment and not a condition of sale.
  - They relied on several Supreme Court decisions, asserting that only the value of the imported equipment should be considered for customs purposes.
Legal Analysis

Key Issues Examined
- Composite vs. Segregated Contracts:
  - The Tribunal examined whether the supply of technical know-how and engineering services was a condition precedent for the sale of equipment.
  - The contract had two distinct parts: one for technical assistance and license fees, and another for the supply of key components.
- Relevant Legal Precedents:
  - The Tribunal referenced Supreme Court judgments, including Tata Iron and Steel Co. Ltd., Essar Steel Ltd., and Steel Authority of India Ltd., which clarified that charges for post-importation activities or separately contracted services are not to be included in the assessable value unless they are a condition of sale.
- Customs Valuation Rules:
  - Rule 10(1)(c) of the Customs Valuation Rules states that royalties and license fees are only added to the transaction value if they are a condition of sale.
  - The Tribunal found no evidence in the contract that technical services were a prerequisite for purchasing the equipment.
Tribunal’s Findings
1. No Binding Obligation:
  - There was no contractual obligation requiring the buyer to purchase technical services as a precondition for buying the equipment.
  - The technical assistance and license fees were not directly related to the sale of the imported goods.
2. Segregation of Charges:
  - The contract and invoices clearly segregated the charges for equipment and technical services.
  - The Tribunal held that only the value of the imported equipment (EUR 1,26,000) should be considered for customs duty.
3. Setting Aside Department’s Order:
  - The Tribunal set aside the order of the customs authorities, allowing the appeal and ruling that the additional charges for technical assistance and license fees were not includible in the assessable value.
Implications for Importers
- Clarity in Contracts:
  - Importers should ensure contracts clearly distinguish between the value of goods and any associated services or technical assistance.
- Customs Valuation:
  - Only charges that are a condition of sale for the imported goods are includible in the assessable value for customs purposes.
- Legal Precedents:
  - The case reinforces established Supreme Court principles, providing guidance for similar disputes.
Conclusion

The CESTAT decision in favor of Aglow Chemical Pvt. Ltd. underscores the importance of contract clarity and the legal distinction between goods and services in customs valuation. Importers can rely on this precedent to exclude separately contracted technical assistance and license fees from the assessable value, provided they are not a condition of sale.

Source: CESTAT Delhi

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May 16, 2026
Madras High Court Quashes Customs Order on Education Cess Debiting from MEIS Scrips and Upholds Importer’s Right to Refund
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 16.05.2026

Madras High Court Quashes Customs Order on Education Cess Debiting from MEIS Scrips and Upholds Importer’s Right to Refund

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 .

KTV Health Food Pvt. Ltd. recently secured a significant legal win at the Madurai Bench of the Madras High Court regarding the debiting of education cess from MEIS scrips. This case clarifies the legal position on whether education cess and secondary and higher education cess can be paid using MEIS scrips, a question that has implications for importers across India.

Background of the Case
1. Petitioner: KTV Health Food Pvt. Ltd., an importer and manufacturer, imported RBD Palmolein for manufacturing refined oil during 2017-2018.
2. MEIS Scrips: Under the Foreign Trade Policy 2015-20, importers can use MEIS scrips to pay customs duties instead of cash.
3. Dispute: The Customs Department objected to the payment of education cess and secondary and higher education cess (totaling Rs. 66,66,582) via MEIS scrips, insisting these should be paid in cash.
Customs Department’s Stand
- The department cited Notification No.24/2015-Cus and Supreme Court judgment in Unicorn Industries v. Union of India, arguing only basic customs duty and certain additional duties can be debited from MEIS scrips.
- Education cess and secondary and higher education cess, levied under Finance Acts 2004 and 2007, were not eligible for scrip payment.
- Circular No.02/2020-Customs clarified that only past cases of SWS (Social Welfare Surcharge) debits should not be disturbed, not education cess.
Petitioner’s Arguments
- The petitioner argued that education cess and secondary and higher education cess are part of customs duty, as per Finance Acts 2004 and 2007.
- Notification No.24/2015 exempts the whole of customs duty and additional duty when goods are imported against MEIS scrips.
- Circular No.02/2020 should apply to past cases like theirs, ensuring ease of doing business.
Court’s Analysis and Decision
1. Statutory Interpretation:
  - The court examined Finance Acts 2004 and 2007, confirming that education cess and secondary and higher education cess are treated as duties of customs.
  - The court found that the Customs Department’s distinction between customs duty and cess was not supported by law.
2. Circular Application:
  - Clause 11 of Circular No.02/2020 allows past payments made via scrips to be accepted as revenue, without insisting on cash recovery.
  - The court held that denying this benefit to the petitioner was unjustified.
3. Supreme Court Judgment:
  - The court clarified that the Unicorn Industries case was misapplied by the Customs Department and actually supported the petitioner’s position.
Final Orders
- The impugned order demanding cash payment for education cess was quashed.
- The Customs Department was directed to accept the payment made via MEIS scrips and not insist on cash recovery for the education cess and secondary and higher education cess.
Implications for Importers
- This judgment sets a precedent for importers who have paid education cess and secondary and higher education cess via MEIS scrips in the past.
- It ensures that such payments are recognized as valid, supporting ease of doing business and preventing unnecessary cash recoveries.
Conclusion

The Madras High Court’s decision in favor of KTV Health Food Pvt. Ltd. provides clarity and relief to importers regarding the use of MEIS scrips for paying education cess. The judgment reinforces the principle that statutory duties, including cesses, can be paid via scrips and that past payments should not be disturbed, aligning with government policy for ease of business.

Connected Matter

CESTAT Mumbai Validates MEIS Scrip Payments for Education Cess and Surcharges

Source: Madras High Court

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May 16, 2026
CESTAT Allahabad Decision on Certificates of Origin, Customs Valuation, and Electronic Evidence Admissibility
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 15.05.2026

CESTAT Allahabad Decision on Certificates of Origin, Customs Valuation, and Electronic Evidence Admissibility

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) Allahabad recently adjudicated a significant case involving M/s Uttam Steel Alloys Pvt. Ltd. and its directors, addressing allegations of misrepresentation, customs duty evasion, and the authenticity of Certificates of Origin (COO) for imported steel products. This article provides a comprehensive overview of the dispute, the legal arguments, and the Tribunal’s final decision.

Background of the Case

M/s Uttam Steel Alloys Pvt. Ltd., an exporter and importer of steel products, faced accusations from the Directorate of Revenue Intelligence (DRI) of wrongfully availing preferential customs duty rates by submitting allegedly fake COO certificates for Cold Rolled Stainless Steel (CRSS) Coils imported from various countries, including Malaysia, Hong Kong, UAE, Indonesia, and China. The dispute centered on whether the goods were genuinely of the declared origin or were routed from China to other countries to evade higher duties.

Key Allegations and Actions by Customs Authorities
1. Rejection of COO Certificates:
  - Customs authorities rejected COO certificates for 28 Bills of Entry, disallowing preferential duty benefits under Notification No.46/2011-Cus.
  - 24 Bills of Entry were challenged on the grounds that goods were of Chinese origin, not the declared countries.
2. Valuation Dispute:
  - The declared value of goods in 79 Bills of Entry (Rs.17.8 crore) was rejected and re-determined at Rs.29.5 crore, leading to a demand for differential customs duty of Rs.10.22 crore.
3. Penalties and Recovery:
  - Penalties equal to the differential duty were imposed under Section 114A of the Customs Act.
  - The authorities relied heavily on electronic evidence (WhatsApp chats, emails, invoices) extracted from devices seized during searches.
Legal Arguments by the Appellant

The company and its directors, represented by legal counsel, raised several key defenses:
1. Admissibility of Electronic Evidence:
  - Challenged the use of electronic evidence (printouts from devices) without proper certification under Section 65B of the Indian Evidence Act and Section 138C of the Customs Act.
  - Cited Supreme Court and Tribunal precedents requiring strict compliance for electronic evidence to be admissible.
2. Authenticity of COO Certificates:
  - Argued that unless COO certificates are proven fake through verification with issuing authorities, their validity cannot be questioned.
  - Noted that in cases where certificates were found unauthentic, duties were already paid and accepted by customs.
3. Valuation and Under-Valuation Claims:
  - Asserted that proforma invoices are mere quotations and cannot be used to enhance declared values.
  - Emphasized that no evidence of excess payment or contemporaneous imports at higher values was presented.
4. Statements and Confessions:
  - Claimed statements by directors were not voluntary and lacked corroborative evidence.
  - Requested cross-examination of key witnesses, which was not granted.
Tribunal’s Findings and Decision

The Tribunal made several important observations:
1. Electronic Evidence:
  - Held that electronic evidence without proper certification is inadmissible.
  - Noted that no independent investigation corroborated the electronic documents.
2. COO Certificates:
  - Stressed that COO certificates issued by competent authorities must be given due weight unless proven otherwise.
  - Found no evidence of fake certificates for most imports.
3. Valuation:
  - Ruled that Customs Valuation Rules apply only to goods not yet cleared for home consumption.
  - Enhancement of value based solely on proforma invoices was not legally sustainable.
4. Penalties:
  - Since the main allegations were not sustained, penalties on the company and directors were dropped.
Impact and Legal Precedents

This case reinforces several legal principles:
- Strict Compliance for Electronic Evidence: Only properly certified electronic records are admissible in customs proceedings.
- COO Certificate Verification: Customs authorities must verify authenticity before denying benefits.
- Valuation Rules: Enhancement of value must be based on contemporaneous data and actual payments, not mere quotations.
- Natural Justice: Statements must be voluntary and corroborated; cross-examination is a right when witness testimony is relied upon.
Conclusion

The Tribunal set aside the impugned order, allowing all appeals filed by Uttam Steel Alloys Pvt. Ltd. and its directors, and granted consequential relief. This judgment underscores the importance of procedural safeguards, evidentiary standards, and fair investigation in customs disputes, setting a precedent for future cases involving import documentation and duty assessments.

Source: CESTAT Allahabad

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May 15, 2026