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Tag: #litigation

CESTAT Ahmedabad Allows Refund to Ship Recyclers
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 07.11.2025

CESTAT Ahmedabad Allows Refund to Ship Recyclers

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

In a landmark decision, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), West Zonal Bench at Ahmedabad, has ruled in favor of M/s Dynamic Ship Recyclers Pvt. Ltd. and other appellants in a series of refund appeals. The judgment, delivered on November 4, 2025, marks a significant win for the appellants in their long-standing battle against the rejection of refund claims by the department.

Background of the Case

The case revolves around the import of a vessel, MT Falcon Spirit, by M/s Dynamic Ship Recyclers Pvt. Ltd. for breaking and recycling purposes. The company filed a refund claim of Rs. 8,23,782 on April 16, 2024, under Section 27 of the Customs Act, 1962. The dispute arose over the classification of fuel and oil contained in the vessel’s bunker tanks. Initially, the department assessed the duty on these items under Chapter 27, separate from the vessel itself. However, following a previous CESTAT order, the Assistant Commissioner of Customs, Bhavnagar, issued a Final Assessment Order on March 20, 2024, stating that the bunker tanks containing oil should be treated as part of the vessel’s machinery and classified under CTH 8908, along with the vessel.

Despite this favorable assessment, the department rejected the refund claims, citing the bar of unjust enrichment under Section 11B of the Customs Act. The appellants, led by Dynamic Ship Recyclers Pvt. Ltd., challenged this decision, arguing that they had not passed on the incidence of customs duty to any other party.

Key Arguments by the Appellants 

The appellants presented compelling evidence to support their claims, including:
1. Sales Data: A comparison of the Bill of Entry with the sales invoices demonstrated that the bunkers were sold at a price below the import price/value on which the duty was assessed. This indicated that the appellants had not recovered the cost of the bunkers, let alone the duty paid on them.
2. Chartered Accountant Certificate: The appellants submitted a certificate from M/s B.R. Popat & Co., Chartered Accountants, which confirmed that the incidence of customs duty paid on the bunkers had not been passed on to any other party. The certificate also stated that the duty was shown as “Customs Duty Receivable” in the company’s accounts.
3. Legal Precedents: The appellants cited several judicial rulings, including Business Overseas Corporation v. CCE (Import and General) New Delhi and Commissioner Central Excise v. Flow Tech Power, which established that selling goods below cost and providing a Chartered Accountant certificate are sufficient to rebut the presumption of unjust enrichment.
The Tribunal’s Observations and Decision

After considering the submissions and evidence, the Tribunal concluded that the appellants had successfully demonstrated that the bar of unjust enrichment was not applicable in their case. The Tribunal noted that the appellants had sold the bunkers at a price significantly lower than the import price, making it impossible for them to recover the customs duty paid. Furthermore, the Chartered Accountant certificate provided by the appellants shifted the burden of proof to the department, which failed to produce any evidence to counter the claims.

The Tribunal also emphasized that the department’s reliance on the premise that the duty was debited to expenses in the Profit and Loss Account was legally untenable. Citing various judicial precedents, the Tribunal reiterated that such a debit does not imply that the incidence of duty was passed on to buyers, especially when the goods were sold below cost.

In light of the overwhelming evidence and legal precedents, the Tribunal allowed the appeals and granted consequential relief to the appellants.

Implications of the Judgment

This decision is a significant victory for Dynamic Ship Recyclers Pvt. Ltd. and other appellants, as it sets a precedent for similar cases involving refund claims and the application of the unjust enrichment bar. The judgment underscores the importance of presenting robust evidence, such as sales data and Chartered Accountant certificates, to establish that the incidence of duty has not been passed on to buyers.

Moreover, the ruling highlights the responsibility of the department to provide concrete evidence when challenging refund claims. The Tribunal’s decision serves as a reminder that mere assumptions or procedural technicalities cannot override substantive evidence.

Conclusion

CESTAT Ahmedabad’s judgment in favor of Dynamic Ship Recyclers Pvt. Ltd. and other appellants is a testament to the importance of adhering to legal principles and ensuring justice in tax-related disputes. This case will undoubtedly serve as a guiding light for future cases involving similar issues, reinforcing the need for fairness and transparency in the adjudication process.

Source: CESTAT Ahmedabad

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November 7, 2025
CESTAT Delhi- Delay in uploading the PIMS certificate did not warrant confiscation or penalties
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 06.11.2025

CESTAT Delhi- Delay in uploading the PIMS certificate did not warrant confiscation or penalties

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

In the realm of international trade, compliance with import regulations is a critical aspect that businesses must navigate carefully. A recent case involving M/s Greenlam Industries Ltd. sheds light on the importance of adhering to procedural requirements while also highlighting the distinction between mandatory and directory provisions in import policies.

The Case Overview

M/s Greenlam Industries Ltd., a company based in Rajasthan, filed multiple Bills of Entry (B/E) for importing Base Paper under the Customs Tariff Heading (CTH) 48119099. These imports were subject to the Paper Import Monitoring System (PIMS), a policy introduced by the Central Government under Notification No. 11/2015-2020 dated 25.05.2022. The PIMS mandates importers to register their consignments online and obtain a Registration Number between 75 days to 5 days prior to the expected arrival of the goods.

In this case, the goods arrived at ICD Kathuwas on 5th and 6th October 2022, but the importer registered under PIMS only on 7th and 10th October 2022, which was beyond the prescribed timeline. Consequently, the customs authorities deemed the import non-compliant and ordered the confiscation of goods under Section 111(d) of the Customs Act, 1962, along with a penalty under Section 112(a)(i).

The Appeal and Tribunal’s Decision 

The appellant challenged the confiscation and penalty, arguing that the delay in PIMS registration was due to late receipt of documents from the shipper. The case eventually reached the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), where Hon’ble Member (Judicial) Ms. Binu Tamta presided.

After reviewing the case, the Tribunal observed that the timeline for PIMS registration, as outlined in the notification, used the term “can,” which implies a directory rather than mandatory provision. The Tribunal emphasized that the delay in uploading the PIMS certificate was a procedural lapse and did not substantially affect the compliance with the import policy. The certificate was submitted before the clearance of goods, fulfilling the purpose of the import condition.

The Tribunal referred to precedents, including the Supreme Court’s judgment in Mangalore Chemicals & Fertilisers Ltd vs. Deputy Commissioner, which distinguished between substantive and procedural conditions. It concluded that minor procedural lapses should not lead to severe penalties or confiscation, especially when the substantive requirements are met.

Key Takeaways for Importers
1. Understand Import Regulations Thoroughly: Importers must familiarize themselves with the specific requirements of notifications and policies, such as PIMS, to avoid procedural lapses.
2. Timely Compliance is Crucial: While procedural lapses may not always lead to severe penalties, it is essential to adhere to timelines to avoid unnecessary legal complications.
3. Procedural vs. Substant ive Compliance: The case highlights the importance of distinguishing between mandatory and directory provisions in regulations. While substantive compliance is critical, minor procedural lapses may not necessarily result in severe consequences.
4. Documentation and Communication: Ensure timely receipt of necessary documents from shippers and maintain clear communication to avoid delays in compliance.
Conclusion

The Greenlam Industries case serves as a reminder of the complexities involved in import regulations and the importance of understanding the nuances of compliance. While the Tribunal’s decision to set aside the confiscation and penalty provides relief to the appellant, it underscores the need for importers to be vigilant and proactive in meeting regulatory requirements. By doing so, businesses can avoid legal disputes and ensure smooth operations in the global trade landscape.

Source: CESTAT Delhi

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November 6, 2025
Supreme Court Clarifies Timing and Applicability of Customs Duty Notifications
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 05.11.2025

Supreme Court Clarifies Timing and Applicability of Customs Duty Notifications

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

The Supreme Court of India recently delivered a landmark judgment in the case of Union of India & Ors. vs. M/S G S Chatha Rice Mills & Anr.  (Civil Appeal No. 3249 of 2020), which has significant implications for importers, exporters, and the government. The case revolved around the timing and applicability of a notification issued under Section 8A of the Customs Tariff Act, 1975, which increased customs duty on goods imported from Pakistan to 200%. This judgment provides clarity on how notifications under the Customs Tariff Act are to be applied and whether they can have retrospective effect.

Background of the Case

On February 14, 2019, a terrorist attack occurred in Pulwama, leading to heightened tensions between India and Pakistan. In response, the Indian government issued a notification under Section 8A of the Customs Tariff Act on February 16, 2019, increasing the customs duty on all goods originating from or exported by Pakistan to 200%. The notification was published in the e-Gazette at 20:46:58 hours on the same day.

However, earlier on February 16, 2019, several importers had already presented their bills of entry for home consumption under Section 46 of the Customs Act, 1962. These bills of entry were self-assessed based on the prevailing rate of duty before the notification was issued. The customs authorities later sought to reassess these bills of entry and apply the enhanced duty rate retroactively, leading to a legal challenge by the importers.

Key Legal Questions 

The case raised several important legal questions:
1. When does a notification under Section 8A of the Customs Tariff Act take effect? Is it from the time it is published in the e-Gazette or from the start of the day it is issued? 
2. Can such a notification apply retrospectively to transactions completed earlier on the same day? 
3. Does the principle of disregarding fractions of a day apply to notifications under Section 8A? 
Supreme Court’s Observations

The Supreme Court, in its detailed judgment, addressed these questions and provided clarity on the timing and applicability of notifications under Section 8A of the Customs Tariff Act.

1. Nature of the Notification 

The Court clarified that a notification issued under Section 8A is a form of delegated legislation. While it has the force of law, it is not equivalent to a “Central Act” or “Regulation” as defined under the General Clauses Act, 1897. Therefore, Section 5(3) of the General Clauses Act, which allows Central Acts to take effect from the expiration of the previous day, does not apply to such notifications.

2. Timing of Notification 

The Court emphasized that the notification under Section 8A takes effect only from the time it is published in the e-Gazette. In this case, the notification became effective at 20:46:58 hours on February 16, 2019. It cannot apply to bills of entry presented before this time. The Court noted that the exact time of publication in the e-Gazette is critical in determining the enforceability of such notifications, especially in the era of electronic governance.

3. Retrospectivity

The Court held that Section 8A does not empower the Central Government to issue notifications with retrospective effect. The enhanced rate of duty can only apply prospectively, starting from the time of publication. The Court emphasized that delegated legislation does not have retrospective effect unless explicitly authorized by the parent statute.

4. Reassessment

The Court ruled that the customs authorities could not reassess bills of entry that were presented and self-assessed before the notification was published. The rate of duty applicable at the time of presentation of the bill of entry is final and cannot be altered retroactively. The Court also clarified that the power of reassessment under Section 17(4) of the Customs Act cannot be used to apply a new rate of duty to transactions that were completed before the notification was issued.

Key Takeaways from the Judgment
1. Publication Time Matters: The Supreme Court highlighted the importance of the exact time of publication in the e-Gazette for determining the enforceability of notifications. In this case, the notification took effect only from 20:46:58 hours on February 16, 2019, and could not apply to transactions completed earlier that day.
2. No Retrospective Effect: Delegated legislation, such as notifications under Section 8A, cannot have retrospective effect unless explicitly authorized by the parent statute. This ensures that importers are not unfairly penalized for transactions completed before the notification was issued.
3. Legal Certainty for Importers: The judgment reinforces the principle that importers are entitled to rely on the rate of duty in force at the time of presenting their bills of entry. This provides much-needed transparency and predictability in tax administration.
4. Impact of Electronic Governance: The Court acknowledged the evolving role of technology in regulatory governance. With the shift to electronic systems for filing bills of entry and publishing notifications, the timing of publication has become a critical factor in determining the applicability of laws.
Implications of the Judgment

This judgment has far-reaching implications for importers, exporters, and the government. It ensures that importers are not subjected to sudden and retrospective changes in duty rates, protecting their rights and fostering trust in the legal system. It also emphasizes the importance of precise timing in the publication of notifications, particularly in the digital age.

For the government, the judgment serves as a reminder to ensure timely publication of notifications and to avoid retrospective application of laws unless explicitly authorized by the parent statute. It also highlights the need for clear and consistent regulatory frameworks that align with modern technological advancements.

Conclusion

The Supreme Court’s decision in this case is a significant step forward in ensuring fairness and clarity in the application of fiscal laws, particularly in the context of international trade. By upholding the principle of prospective application of delegated legislation and emphasizing the importance of publication timing, the Court has reinforced the need for transparency and predictability in tax administration.

This judgment will undoubtedly serve as a precedent for future cases involving the timing and applicability of notifications under fiscal laws, ensuring that the rights of importers and exporters are protected while maintaining the integrity of the legal system.

Source: Supreme Court

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November 5, 2025
L&T granted relief by CESTAT Chennai as it Sets Aside Customs Duty Demand Over Procedural Lapses and Limitation Issues
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 04.11.2025

L&T granted relief by CESTAT Chennai as it Sets Aside Customs Duty Demand Over Procedural Lapses and Limitation Issues

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

In a significant judgment, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Chennai, has ruled in favor of M/s Larsen & Toubro Ltd. (L&T Construction) in a series of appeals challenging the Order-in-Original No. 35511/2015 dated 27.02.2015 issued by the Commissioner of Customs, Chennai-II. The case revolved around allegations of suppression of freight and other charges during the importation of used machinery from M/s Sharaf Foundations, Dubai, and the subsequent demand for differential duty, interest, penalties, and confiscation under various provisions of the Customs Act, 1962.

Background of the Case

The dispute originated from a Show Cause Notice (SCN) issued on 08.10.2014, alleging that M/s L&T Ltd. had misdeclared freight and other charges paid to their overseas supplier, M/s Sharaf Foundations, Dubai. The SCN proposed reassessment of the declared value under Rule 9 and Rule 10 of the Customs Valuation Rules, 2007, read with Section 14 of the Customs Act, 1962. It also sought to invoke Section 28 for the demand of differential duty, interest, and penalties under Sections 112(a), 114A, and 114AA.

M/s L&T Ltd. contested the allegations, submitting a detailed explanation and a worksheet to justify their stand. They argued that they had paid duty on freight, overhead expenses, and yard charges, and that the proceedings under the SCN should have been terminated as per Section 28(5) of the Customs Act. They also raised objections to the issuance of the SCN beyond the normal period of limitation and the non-issuance of a mandatory notice under Section 28(6).

Tribunal’s Observations

Tribunal noted several key points in their judgment:
1. Non-Issuance of Mandatory Notice: The Tribunal observed that Section 28(6) of the Customs Act mandates the issuance of a notice if the proper officer believes there is a short payment of duty or penalty. The failure to issue this notice rendered the provision ineffective and undermined the legal process.
2. Extended Period of Limitation: The Tribunal highlighted that the SCN was issued beyond the normal period of limitation, and the allegations of suppression were not substantiated with evidence of intent to evade duty. The Tribunal emphasized that the conditions for invoking the extended period under Section 28 were not met.
3. Interpretational Issues: The Adjudicating Authority itself admitted that the difference in duty calculation was not solely due to factual discrepancies but also involved interpretational issues. This further weakened the allegation of suppression.
Final Order

In light of these observations, the Tribunal set aside the impugned Order-in-Original and allowed the appeals filed by M/s Larsen & Toubro Ltd. with consequential benefits as per law. The Tribunal also disposed of the Department’s appeal and the cross-objections filed by the importer, stating that the Revenue’s grievance merged with the impugned order, which was deemed unsustainable.

Key Takeaways

This judgment underscores the importance of adhering to procedural requirements under the Customs Act, particularly the issuance of mandatory notices under Section 28(6). It also highlights the significance of proving intent to evade duty when invoking the extended period of limitation. The decision serves as a reminder to both importers and the Revenue to ensure compliance with legal provisions and procedural mandates.

The ruling is a major victory for M/s Larsen & Toubro Ltd., reaffirming the principle that procedural lapses and unsubstantiated allegations cannot form the basis for imposing demands and penalties. This case sets a precedent for similar disputes and reinforces the need for transparency and fairness in customs adjudication processes.

Source: CESTAT Chennai

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November 4, 2025
CESTAT Delhi Overturns Drawback Denial of Texcomash Export
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 04.11.2025

CESTAT Delhi Overturns Drawback Denial of Texcomash Export

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

In a landmark decision, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, has ruled in favor of M/s Texcomash Export, allowing their appeal against the Order-in-Original No. 6/88/2005 dated 13.07.2005. The case revolved around the disallowance of a drawback amount of Rs. 31,66,822/- and the confiscation of goods related to 9 shipments of ladies’ garments exported by the appellant.

Background of the Case

The dispute dates back to export shipments made by M/s Texcomash Export between September 1994 and October 1994. The appellant exported 29 shipments of children’s garments and 9 shipments of ladies’ garments to Russia under the duty drawback scheme. However, the customs authorities alleged that the goods were over-invoiced to claim inflated drawback amounts. Following investigations, the value of the goods was reassessed, and the drawback amount was reduced. The appellant challenged the decision, leading to multiple rounds of litigation.

The primary contention in the case was whether M/s Texcomash Export was entitled to claim drawback for the 9 shipments of ladies’ garments, which were delivered to Dubai instead of Russia. The department argued that the goods did not reach Russia, violating the Reserve Bank of India (RBI) Circular No. 30/1993, which prohibited third-country exports financed by state credit funds. Consequently, the drawback was disallowed, and the goods were ordered to be confiscated.

Key Arguments

Appellant’s Arguments:
1. The appellant contended that the show cause notice was issued by an unauthorized officer, violating the Drawback Rules.
2. They argued that the Drawback Rules, 1995, invoked by the department, were not applicable to exports made in 1994, as the rules were not retrospective.
3. The appellant highlighted that the goods had been exported to a place outside India, fulfilling the definition of “export” under the Drawback Rules.
4. They emphasized that the remittances for the exports were received in India, and the RBI had released the funds, indicating compliance with the relevant regulations.
Department’s Arguments:
1. The department claimed that the goods were delivered to Dubai instead of Russia, violating the RBI Circular and making the drawback inadmissible.
2. They argued that the remittances received by the appellant could not be treated as export proceeds for the Russian consignee.
3. The department maintained that the confiscation of goods and disallowance of the drawback were justified under the Customs Act and Drawback Rules.
CESTAT’s Decision

The key observations and findings of the Tribunal were:
1. Definition of Export: The Tribunal clarified that under the Drawback Rules, export is defined as taking goods out of India to a place outside India. Since the goods were delivered to Dubai, the export was deemed complete, and the appellant was entitled to claim the drawback.
2. Non-Retrospective Application of Rules: The Tribunal held that the Drawback Rules, 1995, could not be applied retrospectively to exports made in 1994. Therefore, the department’s reliance on these rules was deemed legally impermissible.
3. Invalid Confiscation: The Tribunal noted that the goods were released provisionally in 1995-96, making their confiscation in the impugned order untenable.
4. RBI Circular: The Tribunal observed that the RBI had released the remittances in Indian rupees from state credit funds, which contradicted the department’s claim of a violation of the RBI Circular.
5. Lack of Evidence: The department failed to provide sufficient evidence to support its findings that the appellant was not entitled to the drawback.
Conclusion

In light of the above findings, the Tribunal set aside the impugned order and allowed the appeal, granting M/s Texcomash Export the drawback amount of Rs. 31,66,822/- for the 9 shipments of ladies’ garments. This decision is a significant victory for exporters, reaffirming their rights under the Drawback Rules and emphasizing the importance of adhering to legal provisions and procedures.

Source: CESTAT Delhi

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November 4, 2025
Madras High Court Strikes Down Customs Public Notice on GST for Auctioned Cargo
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 04.11.2025

Madras High Court Strikes Down Customs Public Notice on GST for Auctioned Cargo

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

The Madras High Court, in a landmark judgment delivered on October 23, 2025, quashed a Public Notice issued by the Joint Commissioner of Customs (Chennai-IV) dated February 12, 2021, regarding the applicability of GST on the clearance of uncleared/unclaimed cargo. The judgment was delivered by Hon’ble Justice in response to three writ petitions filed by M/s. National Association of Container Freight Stations and M/s. German Express Shipping Agency (India) Pvt. Ltd.

Background of the Case

The petitioners, who are Container Freight Stations (CFS), challenged the Public Notice issued by the Customs Department, which directed custodians not to collect GST on goods sold through auction under Section 48 of the Customs Act, 1962. The petitioners argued that the notice was contrary to the provisions of the Customs Act, 1962, and the Central Goods and Services Tax (CGST) Act, 2017, and was issued without jurisdiction.

The petitioners contended that the auction of unclaimed or uncleared cargo constitutes a supply of goods under Section 7(1) of the CGST Act, making it liable for GST under Section 9(1) of the CGST Act. They further argued that the custodian provides a service by auctioning the goods, which also attracts GST. The respondents, however, maintained that the bid amount for auctioned goods already includes IGST, and collecting GST on the bid amount would lead to double taxation.

Key Observations by the Court

The following key observations in the judgment:
1. Jurisdiction of Customs Authorities: The court held that the Customs Department does not have the jurisdiction to issue a Public Notice directing custodians not to collect GST. The authority to regulate GST collection lies solely with the GST authorities under the CGST Act.
2. Separate Taxable Transactions: The court clarified that IGST paid on import is a levy under Section 3(7) of the Customs Tariff Act read with Section 5 of the IGST Act, whereas GST on auction sales is a levy under Section 9 of the CGST Act. These are distinct transactions and cannot be considered as double taxation.
3. Auction Sale as Supply of Goods: The court emphasized that when goods are sold through auction, the title of the goods is transferred to the auction purchaser, and the goods lose their character as imported goods. The auction sale is a taxable supply under the CGST Act, and GST must be collected on the sale price.
4. Role of CFS as Service Providers: The court noted that CFS, as custodians under Sections 45 and 141(2) of the Customs Act, provide services such as storage, delivery, and auctioning of goods. These services are liable for GST, and custodians must collect and remit GST to the exchequer.
Judgment and Impact

The court quashed the Public Notice dated February 12, 2021, issued by the Joint Commissioner of Customs, declaring it as wholly without jurisdiction and contrary to the provisions of the CGST Act, 2017, and the Customs Act, 1962. The consequential notice issued by the Deputy Commissioner of Customs was also quashed.

This judgment reinforces the principle that customs authorities cannot interfere in matters related to GST collection, which falls under the exclusive domain of GST authorities. It also clarifies the distinction between IGST on imports and GST on auction sales, ensuring compliance with the legal framework.

Conclusion

The Madras High Court’s decision is a significant step in upholding the jurisdictional boundaries between customs and GST authorities. It provides clarity to custodians and auction purchasers regarding their tax liabilities and ensures that the process of auctioning unclaimed cargo is conducted in accordance with the law. This judgment is expected to have a far-reaching impact on the operations of Container Freight Stations and the interpretation of tax laws in similar cases.

Source: Madras High Court

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November 4, 2025
CESTAT Delhi Sets Aside Revocation of Customs Broker License
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 03.11.2025

CESTAT Delhi Sets Aside Revocation of Customs Broker License

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

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, recently delivered a significant judgment in the case of M/s Dehasu Logistics India Pvt Ltd. vs. Commissioner of Customs-Airport & General. The case revolved around the revocation of the customs broker license of the appellant, M/s Dehasu Logistics India Pvt Ltd., and the forfeiture of their security deposit, along with the imposition of penalties. The Tribunal, in its final order dated 15th October 2025, set aside the impugned order passed by the Commissioner of Customs, citing a violation of the principles of natural justice.

Background of the Case

The dispute originated from an Order-in-Original dated 12th September 2024, wherein the Commissioner of Customs revoked the customs broker license of M/s Dehasu Logistics India Pvt Ltd. The appellant challenged this order before the Tribunal, which initially decided the appeal on 4th November 2024. However, the department filed an appeal before the Delhi High Court, which directed the Tribunal to reconsider the matter and deliver a decision before 15th December 2025.

Key Arguments by the Appellant 

The appellant, represented by Advocate, raised two primary arguments:
1. Vagueness of the Show Cause Notice: The appellant contended that the show cause notice merely reproduced the order passed by the Additional Commissioner of Customs without specifying the reasons for alleged violations of regulations under the Customs Broker Licensing Regulations (CBLR), 2018.
2. Violation of Principles of Natural Justice: The appellant argued that the Commissioner of Customs had disagreed with the findings of the Inquiry Officer without providing reasons for the disagreement or an opportunity for the appellant to submit a representation.
Findings of the Inquiry Officer 

The Inquiry Officer meticulously examined the alleged violations of regulations 10(d), 10(e), 10(q), and 13(12) of the CBLR, 2018. The inquiry report concluded that the appellant had not violated any of the provisions and had complied with the regulations. Key findings included:
- No discrepancies were found in the export shipments handled by the appellant.
- The appellant had advised their client to comply with the Customs Act and related regulations.
- The appellant had exercised due diligence and cooperated with customs authorities during investigations.
- The appellant had ensured proper conduct of their employees, who were duly approved by the Customs Department.
Tribunal’s Observations

The Tribunal noted that while the Commissioner of Customs is not bound to accept the findings of the Inquiry Officer, it is mandatory to communicate the reasons for disagreement to the customs broker and provide an opportunity to respond. This principle was upheld in the Delhi High Court judgment in the Him Logistics case, which emphasized the importance of adhering to the principles of natural justice.

In the present case, the Commissioner failed to provide the appellant with the reasons for disagreement with the inquiry report, which was in favor of the appellant. This procedural lapse led the Tribunal to conclude that the impugned order was in violation of the principles of natural justice.

Final Decision

The Tribunal set aside the order dated 12th September 2024, revoking the customs broker license of M/s Dehasu Logistics India Pvt Ltd. The appeal was allowed, and the Tribunal emphasized the necessity of following due process and ensuring compliance with the principles of natural justice.

Source: CESTAT Delhi

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November 3, 2025
CESTAT Chennai Sets Aside Penalty in PVC Flex Banner Import
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 03.11.2025

CESTAT Chennai Sets Aside Penalty in PVC Flex Banner Import

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

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Chennai, recently delivered a significant judgment in the case concerning the import of PVC flex banners allegedly misdeclared as originating from Malaysia to evade anti-dumping duties. The case involved multiple appellants, including Appellants and M/s. Calcutta Canvas Co., who challenged the Order-in-Original No. 50362/2016 dated 30.09.2016 passed by the Commissioner of Customs, Chennai-II.

Background of the Case

The Directorate of Revenue Intelligence (DRI), Chennai Zonal Unit, initiated an investigation based on intelligence reports alleging that Indian importers were importing PVC flex banners of Chinese origin through Malaysia. The investigation claimed that the goods were misdeclared as being of Malaysian origin to avoid anti-dumping duties. The investigation led to the seizure of goods and documents, and a Show Cause Notice (SCN) was issued on 18.02.2016, proposing differential duty, confiscation of goods, and penalties.

The appellants argued that the allegations were based on presumptions and lacked substantive evidence. They contended that the Certificate of Origin (COO) issued by the Malaysian Government was valid and could not be disregarded without proper verification. Furthermore, they challenged the admissibility of electronic evidence cited in the SCN, citing procedural lapses in data retrieval and certification under Section 138C of the Customs Act, 1962.

Key Arguments and Judgments 
1. Certificate of Origin (COO): The appellants argued that the COO certificates issued by the Malaysian Ministry of International Trade and Industry were valid and should not be arbitrarily disregarded. They cited several case laws emphasizing the importance of verifying the authenticity of such certificates before making allegations of fraud. The Tribunal agreed, stating that the revenue authorities failed to follow the prescribed procedures for verifying the COO certificates with Malaysian authorities.
2. Admissibility of Electronic Evidence: The Tribunal noted that the electronic evidence relied upon by the revenue authorities was not admissible due to the absence of a certificate under Section 138C(4) of the Customs Act, 1962. The Tribunal referred to landmark judgments, including Anvar P.V. vs. P.K. Basheer and Arjun Panditrao Khotkar vs. Kailash Kishanrao Goratyal, which established the mandatory requirement of certification for electronic evidence under Section 65B of the Indian Evidence Act.
3. Valuation of Goods: The Tribunal found that the valuation method used by the revenue authorities was not supported by the Customs Valuation Rules, 2007. The alleged undervaluation of goods was not substantiated with credible evidence.
4. Imposition of Penalty: The Tribunal held that the charge against Shri Manoj Arjun Gore of obtaining fake COO certificates was not proven, as the revenue authorities did not investigate the authenticity of the certificates with Malaysian authorities. Consequently, the imposition of penalties on the appellants was deemed unjustifiable.
Final Order

After a detailed examination of the case, the Tribunal concluded that the revenue authorities failed to provide substantial evidence to support their allegations. The impugned order was set aside, and the appellants were granted consequential relief as per the law.

Source: CESTAT Chennai

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November 3, 2025
CESTAT Kolkata- Differential Customs Duty Demand and Confiscation Order Declared Unsustainable
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 03.11.2025

CESTAT Kolkata- Differential Customs Duty Demand and Confiscation Order Declared Unsustainable

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

In a significant ruling, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Kolkata, has set aside the demand for differential Customs Duty (CVD) imposed on M/s Reach Infocom Tech Pvt. Ltd. and its Director. The case revolved around allegations of undervaluation of imported goods, specifically mobile phones and laptops, due to discrepancies in the declared Retail Sale Price (RSP) at the time of import and the RSP found during a subsequent investigation.

Background of the Case

M/s Reach Infocom Tech Pvt. Ltd. (RITPL) is engaged in the import and sale of mobile phones and laptops under the brand name “REACH.” The company had imported goods from China between 2015 and 2017, paying the appropriate Customs Duty, including Countervailing Duty (CVD), based on the declared RSP. However, during a search conducted by the Directorate of Revenue Intelligence (DRI) in 2019, discrepancies were allegedly found between the declared RSP and the RSP displayed on goods seized during the investigation. This led to the issuance of two Show Cause Notices (SCNs) and a subsequent demand for differential CVD amounting to Rs. 2,92,54,340, along with interest, penalties, and redemption fines.

Key Arguments by the Appellant 

The appellants, represented by their legal counsel, raised several critical points challenging the demand:
1. Jurisdictional Overreach: The appellants argued that Customs authorities lacked jurisdiction to demand differential CVD for goods that had already been assessed and cleared for home consumption. They contended that any subsequent activity, such as affixing new MRP stickers, constituted “manufacture” under Section 2(f)(iii) of the Central Excise Act, 1944, and any duty liability arising from such activities should fall under the purview of Central Excise authorities, not Customs.
2. Lack of Evidence: The appellants highlighted that the demand was based on assumptions and generalizations rather than concrete evidence. The Department failed to provide proof of any single transaction where goods were sold at a price higher than the declared MRP.
3. Non-compliance with Legal Procedures: The appellants pointed out that the statements relied upon by the Department were recorded under Section 108 of the Customs Act but were not subjected to the mandatory procedure under Section 138B, which requires examination and cross-examination of witnesses before admitting their statements as evidence.
4. Time-Barred Demand: The appellants argued that the extended period of limitation could not be invoked for the second SCN issued in 2020, as the facts of the case were already known to the Department when the first SCN was issued in 2019.
5. Finality of Self-Assessed Bills of Entry: The appellants contended that the self-assessed Bills of Entry for the imported goods were not challenged by the Department, and as per the Supreme Court’s ruling in the ITC Ltd. case, the Department cannot reassess the original assessments indirectly.
Tribunal’s Observations and Ruling 

After hearing both sides, the Tribunal made the following key observations:
1. No Provision for Re-Determination of CVD: The Tribunal held that Section 3(2) of the Customs Tariff Act, read with Section 4A of the Central Excise Act, does not provide any mechanism for re-determining the CVD when it is paid based on the declared RSP at the time of import.
2. Activity Constitutes “Manufacture”: The Tribunal agreed with the appellants that affixing new MRP stickers on goods listed under the Third Schedule of the Central Excise Act amounts to “manufacture.” As such, any duty liability arising from this activity should be under the Central Excise Act, not Customs Law.
3. Non-Admissibility of Statements: The Tribunal emphasized that the Department failed to follow the mandatory procedure under Section 138B of the Customs Act, rendering the recorded statements inadmissible as evidence.
4. Erroneous Quantification of Duty: The Tribunal found that the Department’s method of calculating differential duty was flawed, as it relied on RSPs from unrelated e-commerce websites without corroborating evidence.
5. Time-Barred Demand: The Tribunal ruled that the extended period of limitation could not be invoked for the second SCN, as the facts were already within the Department’s knowledge when the first SCN was issued.
6. Confiscation and Redemption Fine Unsustainable: The Tribunal held that confiscation and redemption fines were not legally sustainable, as the goods were not available for confiscation and had been cleared without any bond.
Final Verdict

The Tribunal set aside the impugned order in its entirety, both on merits and on account of time-bar. The appeals filed by M/s Reach Infocom Tech Pvt. Ltd. and its Director were allowed, and they were granted consequential relief as per law.

Source: CESTAT Kolkata

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November 3, 2025
Bombay High Court Rebukes DRI for Illegal Recall of Cleared Goods
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 01.11.2025

Bombay High Court Rebukes DRI for Illegal Recall of Cleared Goods

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

The High Court of Bombay recently delivered a significant judgment in the case of Make India Impex vs. Union of India & Ors. (Writ Petition No. 11099 of 2025). This case revolved around the alleged arbitrary and high-handed actions of a Senior Intelligence Officer (Respondent No. 6) from the Department of Revenue Intelligence (DRI), Mumbai Zonal Unit, concerning the import of dry dates by the Petitioner, Make India Impex.

Background of the Case

The Petitioner, Make India Impex, filed a writ petition seeking the release of approximately 56 tons of dry dates imported under Bill of Entry No. 3375923, dated 19 July 2025. The goods were cleared by the Customs Authorities under Section 47 of the Customs Act, 1962, after due verification and payment of assessed customs duty amounting to Rs. 6,30,361.7. The goods were physically transported out of the jurisdiction of the Customs Authorities on 24 July 2025.

However, the sixth Respondent allegedly acted on intelligence suggesting that the goods originated from Karachi, Pakistan, and were routed through Dubai, UAE, to circumvent the prohibition on importing goods from Pakistan under DGFT Notification No. 06/2025-26 dated 2 May 2025. The sixth Respondent allegedly coerced the Customs Broker and Transporter to return the cleared goods to the Container Freight Station (CFS) without following due legal procedures.

Key Issues Raised
1. Allegations of Arbitrary Actions by Respondent No. 6: The Petitioner alleged that the sixth Respondent acted without lawful authority, using threats and coercion to force the return of the cleared goods to the CFS. This action resulted in the cancellation of the Petitioner’s supply contract and financial losses.
2. Violation of Legal Procedures: The sixth Respondent’s actions were challenged for ignoring the statutory clearance order under Section 47 of the Customs Act and failing to comply with principles of natural justice.
3. Country of Origin Dispute: The sixth Respondent claimed that the dry dates were of Pakistani origin, which would make them prohibited under the DGFT notification. However, the Petitioner provided documentation, including certificates from UAE authorities, to prove the goods originated from Dubai.
4. Lack of Evidence and Procedural Compliance: The Court noted that the sixth Respondent failed to provide contemporaneous records or notations to justify his actions under Section 106 of the Customs Act, which governs the power to stop and search conveyances.
Court’s Observations

The Court made several critical observations:
1. Prima Facie Merit in Petitioner’s Allegations: The Court found merit in the Petitioner’s claims of arbitrary and high-handed actions by the sixth Respondent. It noted that the goods were cleared after thorough verification by the Customs Authorities, and the sixth Respondent’s actions disregarded the statutory clearance order.
2. Non-Compliance with Legal Procedures: The Court emphasized that the sixth Respondent’s actions were not backed by any legal provisions or procedures. The absence of contemporaneous records or a formal “reason to believe” undermined the legitimacy of the Respondent’s actions.
3. Principles of Natural Justice: The Court reiterated that any action with civil consequences must comply with principles of natural justice and fairness. The sixth Respondent failed to provide the Petitioner with an opportunity to respond or justify his actions through proper legal channels.
4. Discretion in Releasing Prohibited Goods: The Court acknowledged that even if the goods were found to be prohibited, the Customs Authorities have the discretion to release them upon payment of a redemption fine or penalty. The Court emphasized that this discretion must be exercised judicially and not arbitrarily.
Court’s Decision

The High Court issued the following directions:
1. Issuance of Show Cause Notice: The Respondents were granted four weeks to issue a show cause notice to the Petitioner regarding the status of the imported goods. The notice must include all adverse material and provide the Petitioner an opportunity to respond.
2. Timely Disposal of the Notice: The Respondents were directed to dispose of the show cause notice within six weeks of receiving the Petitioner’s response.
3. Release of Goods: If the Respondents fail to issue or dispose of the show cause notice within the stipulated timeline, they must release the detained goods. The release may be conditional upon the payment of a redemption fine or provision of a bank guarantee.
4. Contentions on Prohibited Goods: The Court left the determination of whether the goods were prohibited to the Proper Officer, who would decide based on the show cause notice.
Similar Connected Article from the past: Can DRI hold an Out of Charge (OOC) Shipment

Conclusion

This judgment underscores the importance of adhering to legal procedures and principles of natural justice in administrative actions. It highlights the need for statutory functionaries to act within the bounds of the law and avoid arbitrary or high-handed actions. The Court’s decision strikes a balance between upholding the rule of law and protecting the interests of both the Petitioner and the revenue authorities. This case serves as a reminder that while government officials are empowered to enforce laws, their actions must be backed by legal provisions and comply with established procedures. The judgment also emphasizes the need for timely resolution of disputes to prevent undue hardship, especially when dealing with perishable goods.

Source: Bombay High Court

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November 1, 2025