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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  - They relied on Section 159A of the Customs Act, which allows actions even after exemption notifications are withdrawn or modified.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contended that the show cause notice issued on 27.12.1999 was barred by limitation, as the exemption notification was rescinded on 01.03.1994.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
CESTAT Mumbai Validates MEIS Scrip Payments for Education Cess and Surcharges
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 15.05.2026

CESTAT Mumbai Validates MEIS Scrip Payments for Education Cess and Surcharges

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 order regarding the validity of duty payments made through Merchandise Exports from India Scheme (MEIS) scrips. This article provides a detailed overview of the case, the legal issues involved, and the implications for importers and customs authorities.

Background of the Case

Multiple appeals were filed by the Revenue against importers who had discharged their customs duty liabilities—including Education Cess, Secondary & Higher Education Cess, and Social Welfare Surcharge—using MEIS duty credit scrips. The department contended that such payments were not permissible under the Foreign Trade Policy and relevant notifications, specifically for Education Cess and Secondary & Higher Education Cess prior to February 1, 2018.

Key Legal Issues
1. Scope of MEIS Scrip Utilization:
  - The Foreign Trade Policy 2015-20 and Notification No. 24/2015-Cus restricted MEIS scrip usage to Basic Customs Duty, Social Welfare Surcharge, and specified additional duties.
  - The department argued that there was no explicit provision allowing payment of Education Cess and Secondary & Higher Education Cess via MEIS scrips.
2. CBIC Circular No. 02/2020-Customs (10.01.2020):
  - This circular clarified that past payments of Social Welfare Surcharge through MEIS scrips should not be disturbed and are to be accepted as valid.
  - The core dispute was whether this principle extended to Education Cess and Secondary & Higher Education Cess for past periods.
Tribunal’s Analysis and Findings
- The Tribunal noted that the CBIC Circular, while explicitly mentioning Social Welfare Surcharge, was based on administrative pragmatism and certainty. It emphasized that past payments made through MEIS scrips should be treated as valid discharge of duty.
- The imports in question occurred before the circular’s issuance, and importers had discharged their liabilities without any allegations of fraud or mis-declaration.
- The Tribunal referenced the Madras High Court’s decision in KTV Health Food Pvt. Ltd. v. Commissioner of Customs, which held that payments made through MEIS scrips towards Education Cess and Secondary & Higher Education Cess for past periods cannot be disturbed and are valid.
- The Tribunal also cited its own precedent in Wellknown Polyester Ltd. v. Commissioner of Customs, Mumbai, reinforcing that cash payments should not be insisted upon where MEIS scrips had already been used.
Final Order and Implications
- The Tribunal dismissed the Revenue’s appeals, affirming that payments made through MEIS scrips for Education Cess and Secondary & Higher Education Cess (for the relevant past period) constitute valid discharge of duty liability.
- Insisting on cash recovery would result in double recovery, which is impermissible.
- The order provides clarity and relief to importers who had used MEIS scrips for such payments, ensuring administrative certainty and avoiding retrospective demands.
Conclusion

The CESTAT Mumbai ruling establishes that, for past periods, payments of Education Cess and Secondary & Higher Education Cess made through MEIS scrips are valid. This decision, grounded in CBIC’s administrative guidance and judicial precedents, offers significant clarity for importers and customs authorities alike.

Connected Matter

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

Source: CESTAT Mumbai

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May 15, 2026
Gujarat High Court Quashes Tax Rectification Rejection
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 15.05.2026

Gujarat High Court Quashes Tax Rectification Rejection

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 .

On April 16, 2026, the Gujarat High Court delivered a significant judgment in the case of M/S. Hari Om Hardware and Electrical versus Union of India & Others. The Court quashed the rectification rejection order issued by the tax authorities and remanded the matter for fresh consideration, emphasizing the importance of natural justice in tax proceedings.

Case Background

M/S. Hari Om Hardware and Electrical, a proprietorship firm engaged in trading electronic and hardware products, faced scrutiny regarding its availing of Input Tax Credit (ITC) under the Central Goods and Services Tax (CGST) Act, 2017. Following a series of show-cause notices, the tax authorities passed an order on March 13, 2024. The petitioner challenged this order, citing procedural lapses such as the absence of a summary in Form GST DRC-07 and non-compliance with Rule 142 of the CGST Rules.

The petitioner filed an appeal under Section 107 of the CGST Act, which was rejected on March 12, 2025. Subsequently, a rectification application was submitted on March 25, 2025, seeking correction of the appellate order. This application was also rejected by the Additional Commissioner, Surat (Appeals) on December 23, 2025.

Legal Arguments

The petitioner’s counsel relied on a notification dated October 8, 2024, issued by the Ministry of Finance, Central Board of Indirect Taxes and Customs (CBIT). Clause 7 of this notification mandates adherence to the principles of natural justice, especially when a rectification order adversely affects a party. The main contention was that the petitioner was not granted an opportunity of hearing before the rejection of the rectification application.

Court’s Findings

The Court verified the original file and sought clarification from the respondent’s counsel, who admitted that no hearing was provided to the petitioner prior to the impugned order. Recognizing this violation of natural justice, the Court held that the rectification rejection order was unsustainable.

Judgment and Directions
1. Quashing of Order: The High Court quashed the rectification rejection order dated December 23, 2025.
2. Remand for Fresh Consideration: The matter was remanded to the appellate authority to reconsider the rectification application, ensuring compliance with Clause 7 of the CBIT notification and Section 16(5) of the CGST Act.
3. Timeline: The appellate authority was directed to pass a fresh order within 12 weeks.
4. Relief Granted: The writ petition was allowed, granting relief to M/S. Hari Om Hardware and Electrical.
Implications

This judgment underscores the necessity for tax authorities to follow due process and uphold the principles of natural justice. It serves as a reminder that procedural lapses, such as denial of a hearing, can render orders invalid. Taxpayers facing similar issues may find this precedent useful in challenging adverse orders.

Conclusion

The Gujarat High Court’s decision in favor of M/S. Hari Om Hardware and Electrical highlights the judiciary’s commitment to fairness in tax administration. By remanding the matter for fresh consideration, the Court ensures that the petitioner’s rights are protected and that tax authorities adhere to statutory and procedural requirements.

Source: Gujarat High Court

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May 15, 2026
High Court of Andhra Pradesh Quashes State GST Notice and Circular for Lack of Jurisdiction Over IGST on Imports
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 14.05.2026

High Court of Andhra Pradesh Quashes State GST Notice and Circular for Lack of Jurisdiction Over IGST on 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 .

Avanti Feeds Limited, a prominent player in the aquaculture industry, recently found itself at the center of a legal dispute with tax authorities in Andhra Pradesh. The company filed a petition in the High Court of Andhra Pradesh, contesting tax notices and circulars issued by the authorities. This article explores the background, legal arguments, and broader implications of the case.

Background of the Dispute

Tax authorities in Andhra Pradesh issued notices and circulars to Avanti Feeds Limited, demanding compliance with certain tax obligations. The company, believing these demands to be unjust or inconsistent with existing laws, decided to challenge the notices through legal means. The petition was filed in the High Court, marking a significant step in the ongoing dialogue between corporate entities and regulatory bodies.

Key Legal Arguments Presented by Avanti Feeds Limited
1. Questioning the Validity of Notices and Circulars
  - Avanti Feeds Limited argued that the tax notices and circulars were not in accordance with statutory provisions governing taxation.
  - The company claimed that the authorities had overstepped their jurisdiction or misinterpreted relevant laws.
2. Procedural Irregularities
  - The petition highlighted procedural lapses in the issuance of notices, such as lack of proper reasoning or failure to follow due process.
  - Avanti Feeds Limited emphasized the importance of transparency and adherence to legal protocols in tax administration.
3. Impact on Business Operations
  - The company asserted that the tax demands, if enforced, would adversely affect its business operations and financial stability.
  - It sought relief from the court to prevent potential disruption and safeguard its interests.
The Role of the High Court

The High Court of Andhra Pradesh serves as the adjudicating authority in this dispute. Its role includes:
- Examining the legality and fairness of the tax notices and circulars.
- Assessing whether the tax authorities acted within their powers.
- Providing interim relief or directions to ensure justice and prevent undue hardship.
Broader Implications for Businesses

This case underscores several important points for businesses operating in India:
1. Legal Recourse Against Tax Authorities
  - Companies have the right to challenge tax demands they believe are unlawful or arbitrary.
  - The judiciary acts as a safeguard against administrative overreach.
2. Importance of Compliance and Documentation
  - Maintaining proper records and understanding statutory requirements is crucial for defending against tax disputes.
3. Precedent for Future Cases
  - The outcome of this case may influence how similar disputes are handled in the future, shaping the relationship between businesses and tax authorities.
Conclusion

The Avanti Feeds Limited petition in the High Court of Andhra Pradesh highlights the complexities of tax administration and the importance of legal safeguards for businesses. As the case unfolds, it will provide valuable insights into the balance between regulatory enforcement and corporate rights, setting a precedent for future interactions between companies and tax authorities.

Source: Andhra Pradesh High Court

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May 14, 2026
CESTAT Kolkata Upholds Validity of Certificates of Origin
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 14.05.2026

CESTAT Kolkata Upholds Validity of Certificates of Origin

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 and Service Tax Appellate Tribunal (CESTAT) Eastern Zonal Bench, Kolkata, recently delivered a significant order in a series of appeals involving Anil Industries and other respondents. The core issue revolved around customs duty assessments and the validity of Certificates of Origin for imported goods.

Background of the Case

The appeals arose from an Order-in-Original issued by the Commissioner of Customs (Preventive), Kolkata. The Revenue (appellant) challenged the dropping of proceedings by the Adjudicating Authority, arguing that the Certificates of Origin submitted by the respondents were not proper and should not be relied upon.

Key Legal Issues
1. Cross-Examination of Witnesses
  - The Adjudicating Authority noted that key witnesses, Shri Narendra Lodaya and Shri Dhaval Lapasiya, did not attend personal hearings or offer themselves for cross-examination, despite efforts by the investigating agency.
  - The absence of cross-examination led to the presumption that the evidence provided by these witnesses could not be relied upon, as per legal principles and the directions of the Hon’ble High Court.
2. Validity of Certificates of Origin
  - The Revenue’s case was based on the allegation that the Certificates of Origin were improper.
  - However, it was admitted that these certificates, issued by the overseas country, remained valid and had not been cancelled by the issuing authorities.
  - The Tribunal emphasized that unless the certificates are proven to be fake or fabricated, or cancelled by the issuing country, they must be accepted as valid documents.
Tribunal’s Findings and Precedents
- The Tribunal referred to previous cases, including CC (Prev), Kolkata Vs Shri Krishan Goswami and Commissioner of Customs (Preventive), West Bengal, Kolkata vrs. RTC Overseas Pvt. Ltd., where similar issues were adjudicated.
- In these cases, the Tribunal upheld the validity of Certificates of Origin when they were not disputed or cancelled by the issuing authorities.
- The Tribunal also highlighted the importance of allowing cross-examination of witnesses, as mandated by the High Court. If witnesses are not produced for cross-examination, their statements cannot be relied upon.
Final Order and Implications
- The Tribunal dismissed the appeals filed by the Revenue, affirming the Adjudicating Authority’s decision to drop the proceedings.
- The order reinforces the principle that valid Certificates of Origin must be accepted unless proven otherwise, and that procedural fairness, including the right to cross-examination, is essential in customs adjudication.
Conclusion

This case sets a clear precedent for customs proceedings involving Certificates of Origin and witness statements. It underscores the necessity for authorities to follow due process and respect the rights of parties to cross-examine witnesses. The Tribunal’s decision provides clarity and guidance for similar cases in the future, ensuring that valid documents and procedural fairness remain central to customs adjudication.

Source: CESTAT Kolkata

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May 14, 2026
CESTAT Allahabad Ruled on Refund of Extra Duty Deposit, Unjust Enrichment, and Limitation u/s 27 of the Customs Act
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 14.05.2026

CESTAT Allahabad Ruled on Refund of Extra Duty Deposit, Unjust Enrichment, and Limitation u/s 27 of the Customs Act

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

The legal dispute between M/s Global YDK Electric Pvt Ltd and the Customs Department, adjudicated by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) Allahabad, centers on the refund of Extra Duty Deposit (EDD) paid during provisional assessment of imported goods. This case highlights the complexities of customs duty refunds, the principle of unjust enrichment, and the interpretation of statutory time limits under the Customs Act, 1962.

Background of the Case
1. Parties Involved:
  - Appellant: M/s Global YDK Electric Pvt Ltd, Greater Noida
  - Respondent: Commissioner of Customs, Central Goods & Service Tax, Noida
2. Nature of Dispute:
  - The appellant sought a refund of EDD totaling Rs. 5,08,628, paid against two Bills of Entry (2774040 dated 15.02.2021 and 7055380 dated 12.01.2022).
  - EDD was collected at 5% due to the related supplier status and provisional assessment.
  - After finalization of the Bills of Entry with no addition to declared value, the appellant filed for a refund.
Chronology of Proceedings
1. Initial Refund Claim:
  - Filed on 21.02.2024 for Rs. 5,08,628.
  - Assistant Commissioner sanctioned Rs. 3,26,972 (pertaining to Bill of Entry 2774040) and rejected Rs. 1,81,656 (pertaining to Bill of Entry 7055380) citing limitation.
2. Appeal and Remand:
  - The appellant challenged the rejection, leading to a remand by the Commissioner (Appeals) for proper analysis of unjust enrichment and assessment dates.
3. Adjudicating Authority’s Findings:
  - Confirmed eligibility for refund of Rs. 1,81,656 but ordered transfer to Consumer Welfare Fund, stating the duty incidence was passed to M/s Global Autotech Ltd (the promoter company).
4. Further Appeals:
  - The appellant argued the EDD was paid via a loan from the promoter, which was subsequently repaid, and thus the burden was not passed on.
  - Provided supporting vouchers, bank payment records, and Chartered Accountant certificates.
Key Legal Issues

1. Unjust Enrichment Principle
- Authorities claimed the refund was not due to the appellant as the duty was paid by the promoter company.
- The appellant demonstrated through accounting records and CA certificates that the EDD was a loan, not a transfer of duty burden.
- Tribunal found that the loan transaction was separate from the customs clearance and the burden was not passed to the buyer of goods.
2. Limitation Period for Refund Claims
- Section 27 of the Customs Act requires refund claims within one year of final assessment.
- The Tribunal clarified that EDD is a security deposit, not customs duty, and limitation provisions do not strictly apply.
- Cited relevant High Court and Supreme Court judgments supporting this interpretation.
3. Interest on Refunds
- The appellant claimed entitlement to interest under Section 18(4) of the Customs Act.
- Tribunal agreed, referencing Supreme Court precedents.
Tribunal’s Decision
- The Tribunal allowed the appeal, setting aside the impugned order.
- Recognized the appellant’s right to refund of Rs. 1,81,656, as the burden was not passed on and the EDD was a loan.
- Ordered payment of interest as per statutory provisions.
Implications and Precedents
1. EDD as Security Deposit:
  - EDD collected during provisional assessment is not customs duty and should be refunded if no additional duty is found upon final assessment.
2. Accounting Evidence:
  - Proper documentation (balance sheets, vouchers, CA certificates) is crucial in establishing who bore the duty burden.
3. Legal Precedents:
  - The case references multiple High Court and Supreme Court decisions, reinforcing the distinction between EDD and customs duty and the non-applicability of limitation for refund claims.
Conclusion

This case underscores the importance of clear financial records and legal understanding in customs disputes. The Tribunal’s decision affirms that EDD paid as a loan is refundable to the importer, not subject to unjust enrichment, and eligible for interest. Importers facing similar issues should ensure robust documentation and timely appeals to safeguard their rights.

Source: CESTAT Allahabad

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May 14, 2026
CESTAT Ahmedabad Ruled on Customs Duty Exemptions for Aircraft Importers
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 13.05.2026

CESTAT Ahmedabad Ruled on Customs Duty Exemptions for Aircraft Importers

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) West Zonal Bench at Ahmedabad recently delivered a significant order addressing the eligibility of customs duty exemptions for aircraft importers under Notification No. 21/2002-Cus., as amended by Notification No. 61/2007-Cus. This article provides a comprehensive overview of the tribunal’s findings, the legal context, and the broader implications for aviation operators and customs authorities.

Background: The Dispute Over Aircraft Import Exemptions

Multiple appeals were filed by various aviation companies and individuals against orders confirming differential customs duty and imposing penalties. The central issue was whether the appellants had improperly availed themselves of customs duty exemptions for importing aircraft, specifically under the conditions set out in Notification No. 21/2002-Cus. The customs authorities argued that the aircraft were not used in accordance with the notification’s requirements, particularly regarding the distinction between non-scheduled (passenger) and non-scheduled (charter) services.

Key Legal Provisions and Definitions
- Notification No. 21/2002-Cus. (as amended): Grants customs duty exemption to aircraft imported for non-scheduled (passenger) or non-scheduled (charter) services, subject to specific conditions.
- Condition No. 104: Requires the importer to be an approved operator and to furnish an undertaking that the aircraft will be used only for the specified non-scheduled services.
- Relevant Definitions:
  - Non-scheduled (passenger) services: Air transport services other than scheduled (passenger) air transport services.
  - Non-scheduled (charter) services: Services provided by a non-scheduled (charter) air transport operator for charter or hire, with published tariff and DGCA approval.
Tribunal’s Analysis and Findings

1. Eligibility for Exemption
- The tribunal clarified that the exemption is available to both non-scheduled (passenger) and non-scheduled (charter) service operators.
- There is no prohibition in the notification or the Civil Aviation Requirements (CAR) against a non-scheduled (passenger) service permit holder conducting charter operations.
- The DGCA’s clarifications and CAR 1999 explicitly allow non-scheduled operators to conduct charter operations.
2. Use of Aircraft and Remuneration
- The tribunal emphasized that as long as the aircraft is used for air transport services for remuneration, it qualifies as public transport and not private use.
- Even if some flights are conducted without remuneration, if the operator’s business includes carriage by air for hire or reward, such flights are still considered public transport.
3. Publication of Tariff and Issuance of Tickets
- There is no requirement under the notification or the Aircraft Rules for non-scheduled (passenger) service operators to publish tariffs or issue passenger tickets.
- The absence of a published tariff does not convert the use of the aircraft into private use.
4. Role of DGCA and Customs Authorities
- The tribunal held that compliance with operational conditions is primarily monitored by the DGCA and the Civil Aviation Ministry.
- Customs authorities can act only if the DGCA finds a violation of the permit conditions.
- Renewal of permits by the DGCA without objection supports the operator’s compliance.
5. Distinction from Other Judicial Decisions
- The tribunal distinguished the present cases from the Delhi High Court’s decision in East India Hotels Ltd., where the aircraft was always used without remuneration and thus did not qualify as public transport.
- In the present cases, evidence showed that the aircraft were used for hire or reward, supporting the claim for exemption.
Implications for Aviation Operators
1. Clarity on Permitted Operations:
  - Operators holding non-scheduled (passenger) permits can legally conduct charter operations without risking exemption denial, provided they comply with DGCA guidelines and use the aircraft for remuneration.
2. Documentation and Compliance:
  - Maintaining records of flights, invoices, and evidence of remuneration is crucial to demonstrate compliance with exemption conditions.
3. Customs and DGCA Coordination:
  - Operators should ensure ongoing compliance with DGCA requirements, as customs authorities rely on DGCA findings to assess exemption eligibility.
4. No Need for Published Tariff:
  - Non-scheduled (passenger) operators are not required to publish tariffs or issue tickets, simplifying operational requirements.
Conclusion

The tribunal’s order provides much-needed clarity for aircraft importers and operators regarding the scope of customs duty exemptions. By affirming that non-scheduled (passenger) operators can conduct charter operations and that compliance is primarily a matter for the DGCA, the decision reduces regulatory uncertainty and supports the growth of non-scheduled aviation services in India. Operators should, however, maintain robust documentation and ensure all operations are for hire or reward to safeguard their exemption status.

Connected Matter

Delhi High Court Addresses Aircraft Usage and Customs Duty Exemption Dispute

Source: CESTAT Ahmedabad

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May 13, 2026