ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 01.11.2025
βSC Reinforces Attorney-Client Privilege: Summoning Lawyers for Client Information Held Illegalβ
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.
Supreme Court Upholds Advocate-Client Privilege
2025 INSC 1275 | In Re: Summoning Advocates by Investigating Agencies
Background of the Case
The Supreme Court of India, taking suo motu cognizance, addressed a fundamental question: Can investigating agencies summon an advocate to disclose information about a client or case he represents?
The case originated when an advocate was summoned under Section 179 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023 to provide details about a bail matter he handled. The Gujarat High Court dismissed his plea, leading to the present intervention by the Supreme Court.
Core Legal Issue
Whether the investigating agency can compel an advocate to divulge client communications or case details β and if such summons violates Section 132 of the Bhartiya Sakshya Adhiniyam (BSA), 2023, which codifies the doctrine of attorney-client privilege.
Key Legal Provisions Discussed
Section 132 BSA (2023): Protects confidential communication between advocates and clients.
Section 179 BNSS (2023): Empowers officers to summon witnesses.
Section 528 BNSS (2023): Provides for judicial oversight of such summons.
Articles 19(1)(g), 20(3), 21 & 22(1) β Constitutional protection of professional rights, liberty, and the right to legal counsel.
Rule 11, Bar Council of India Rules (1975): Mandates advocates to maintain confidentiality and act with integrity.
Arguments & Perspectives
Bar Associations & Advocates
Summoning advocates infringes the right to practice and attorney-client confidentiality.
Disclosure without client consent violates Section 132 BSA and may lead to professional misconduct.
Judicial oversight is essential before any summons is issued.
State & Union of India
No advocate can be summoned merely for rendering a legal opinion or appearing for a client.
If an advocate participates in an illegal act, the privilege does not apply.
The statutory framework under BNSS & BSA already provides sufficient safeguards.
Courtβs Observations: Role of an Advocate
The Court eloquently reaffirmed the noble role of lawyers as:
Guardians of liberty and officers of justice, not mere agents of clients.
Bound by trust, confidence, and confidentiality.
Essential to ensuring the rule of law and protection of rights.
βThe position of trust the advocate occupies vis-Γ -vis his client cannot be put to test by any attempt to breach professional confidence.β β Justice K. Vinod Chandran
Exceptions to Privilege under Section 132 BSA
Clientβs express consent.
Communication made in furtherance of an illegal purpose.
Observation of a crime or fraud during engagement.
Non-professional communications (outside the course of legal engagement).
In-house counsel exclusion β salaried corporate lawyers are not covered.
Comparative Jurisprudence
The Court cited global precedents to reinforce the principle:
Greenough v. Gaskell (UK, 1833) β Privilege essential for justice.
US v. Upjohn & Co. (1979) β Ensures full disclosure between client and lawyer.
Minister of National Revenue v. Duncan Thompson (Canada, 2016) β Privilege as a principle of fundamental justice.
Akzo Nobel v. European Commission (2010) β Exclusion of in-house counsel privilege.
Judgment Highlights
Investigating agencies cannot summon advocates merely for client or case details.
Any summons must explicitly mention the exception invoked under Section 132 BSA.
Prior written approval of a superior officer (not below the rank of Superintendent of Police) is mandatory.
Advocates have a right to challenge such summons under Section 528 BNSS.
Privilege extends to legal consultations, even outside pending cases.
Documents & digital devices may be produced before a court, but confidentiality must be protected.
Final Ruling
βThe power to summon under Sections 175 & 179 BNSS is not the power to destroy the sanctity of attorney-client communications so long as the constitutional courts stand.β
The Court held the summons issued in the present case illegal, as it sought βtrue details of facts and circumstances of the caseβ from the advocate β a direct violation of Section 132 BSA and the constitutional right to effective legal representation.
Impact & Legal Significance
Reinforces Rule of Law and independence of the Bar.
Prevents coercive misuse of investigative powers.
Clarifies that privilege is client-centric, yet advocates can assert it.
Promotes judicial accountability through Section 528 BNSS oversight.
Draws a balance between investigation and professional confidentiality.
Conclusion
The Supreme Courtβs 2025 decision in In Re: Summoning Advocates marks a watershed moment for the legal profession β reaffirming that the advocate-client relationship is sacred, and confidentiality is the cornerstone of justice. While exceptions exist for illegality and fraud, the Courtβs message is clear:
No lawyer should be made to betray the trust that forms the soul of legal representation.
ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 01.11.2025
CESTAT Delhi- Refund Interest Must Be Paid Directly to Importer Not Credited to Consumer Welfare Fund
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.β
In a significant legal victory, Micromax Informatics Limited has successfully challenged the decision of the Commissioner of Customs (Appeals) regarding the refund and interest on excess countervailing duty (CVD) paid during the import of mobile handsets in 2014-2015. The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, has ruled in favor of Micromax, allowing the company to receive both the principal refund amount and the interest accrued on delayed payments. β
Background of the Case
Micromax Informatics Limited had imported mobile handsets during 2014-2015 and paid CVD at a higher rate without availing exemption under a specific notification. β Following a Supreme Court ruling in the case of M/s SRF Ltd vs. Commissioner of Customs, Chennai, Micromax filed five refund applications for the excess duty paid. β The Assistant Commissioner sanctioned the refund of the principal amount with interest but directed the funds to be credited to the Consumer Welfare Fund, citing unjust enrichment. β
The Department challenged the payment of interest in four appeals before the Commissioner (Appeals), who subsequently set aside the Assistant Commissioner’s orders regarding interest. β Micromax, on the other hand, filed appeals against the decision to credit the refund amount to the Consumer Welfare Fund.
Key Developments
Delhi High Court Intervention: Micromax filed a writ petition before the Delhi High Court, challenging the decision to credit the refund to the Consumer Welfare Fund. During the pendency of the petition, Micromax also filed appeals before the Commissioner (Appeals). β
Commissioner (Appeals) Decision: On March 9, 2022, the Commissioner (Appeals) ruled in favor of Micromax, stating that the principal refund amount should be paid to the company instead of being credited to the Consumer Welfare Fund. β However, the Commissioner (Appeals) did not sanction interest for four refund applications, which led Micromax to file appeals before the CESTAT.
CESTAT Ruling: On October 27, 2025, the CESTAT ruled in favor of Micromax, setting aside the earlier order and allowing the company to receive interest on the principal refund amount. The Tribunal emphasized that since the principal amount was directed to be credited to Micromax’s account, the interest on delayed payment should also be credited to the company.
Implications of the Judgment
This decision is a landmark ruling for businesses dealing with customs and excise matters. It reinforces the principle that when a refund is sanctioned, the rightful claimant is entitled to both the principal amount and the interest accrued due to delays. β The judgment also highlights the importance of challenging decisions that may not align with legal precedents or established laws.
Conclusion
The CESTAT’s decision in favor of Micromax Informatics Limited sets a precedent for similar cases, ensuring that businesses are not unfairly deprived of their rightful refunds and interest. This case underscores the importance of pursuing legal remedies to protect business interests and uphold justice in matters of taxation and customs.
ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 01.11.2025
Understanding the Legal Landscape of Importing Second-Hand Digital Multifunction Devices in India
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 importation of second-hand Digital Multifunction Devices (MFDs) has been a contentious issue in India, with various legal and regulatory challenges faced by importers. β Recent judgments from the High Court of Madras and the Supreme Court of India have provided clarity on the matter, particularly regarding the provisional release of these goods under Section 110A of the Customs Act, 1962. β
The Background
MFDs, which are highly specialized equipment used for printing, copying, and scanning, have been subject to scrutiny by the Customs Department. β The primary concerns revolve around their categorization under import/export regulations, which classify items as prohibited, restricted, or freely importable. β While importers argue that MFDs are freely importable, the Customs Department and other government bodies, such as the Ministry of Electronics and Information Technology (MEITY) and the Ministry of Environment, Forest and Climate Change (MoEFCC), have raised objections, claiming that these goods are restricted or prohibited.
Key Legal Developments
Provisional Release Under Section 110A of the Customs Act β
Section 110A allows for the provisional release of seized goods during investigation or adjudication. β This provision aims to prevent financial losses and operational delays for importers while ensuring that the Customs Department can continue its investigation. β Importers are required to execute a bond or provide a bank guarantee to cover potential duties, fines, or penalties. β
Madras High Court Judgments β
In a landmark judgment dated 10th July 2025 (WP No. 29418 of 2024), the Madras High Court ruled in favor of importers, stating that MFDs qualify as Highly Specialized Equipment (HSE) under Clause 8 of the Compulsory Registration Order (CRO), 2021. The court emphasized that MFDs weighing more than 80 kg and imported in less than 100 units per model per year are exempt from the application of CRO, 2021. β The court also clarified that the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016, do not prohibit the import of MFDs, provided the required documents are submitted to the Customs Authorities.
Tanish Enterprises vs Commissioner of Customs– WP No. 29418 of 2024
The case involves importers seeking provisional release of second-hand digital multifunction devices (MFDs) detained by the Customs Department, which claimed the goods were restricted or prohibited. β The petitioners argued that MFDs are freely importable as Highly Specialized Equipment (HSE) under the Compulsory Registration Order (CRO), 2021, and Foreign Trade Policy (FTP), 2023. The court ruled in favor of the petitioners, directing the Customs Department to provisionally release the goods under Section 110A of the Customs Act, 1962, subject to conditions, while leaving the final adjudication open. β
Key Points:
Issue: Whether second-hand MFDs are freely importable or restricted items requiring BIS certification and DGFT authorization. β
Petitioners’ Claim: MFDs qualify as Highly Specialized Equipment (HSE) and are exempt from restrictions under CRO, 2021, and FTP, 2023. β
Respondents’ Claim: MFDs are restricted or prohibited items requiring compliance with BIS, DGFT, and environmental regulations. β
Court’s Ruling: Directed provisional release of MFDs under Section 110A of the Customs Act, subject to conditions, and left final adjudication open. β
Precedents: Previous rulings by the Madras High Court, Telangana High Court, and Supreme Court upheld the free importability of MFDs. β
Provisional Release: Allows importers to access goods while investigations continue, preventing financial losses due to detention. β
βHD Printers vs Commissioner of Customs- Writ Petition No.39010 of 2025 and W.M.P.No.43694 of 2025
The case involves M/s. HD Printers, represented by its proprietor Mr. Jagan Kumar, filing a writ petition under Article 226 of the Constitution of India. The petitioner sought a Writ of Mandamus directing the Customs Department to allow the provisional release of 120 units of second-hand digital multifunction print and copying machines. β These machines were imported and submitted for clearance with the required documentation, including a report from a DGFT-approved Chartered Engineer. β The Customs Department had initially refused to release the goods, citing restrictions under the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 (HOW Rules). β However, the court referred to a previous judgment (W.P.No.29418 of 2024) and ruled that the case was covered under the earlier order, which allowed provisional release of similar goods. β The court directed the Customs Department to release the goods provisionally, subject to conditions and final adjudication. β
Key Points:
Petitioner: M/s. HD Printers. β
Respondents: Commissioner, Additional Commissioner, and Deputy Commissioner of Customs, Chennai. β
Issue: Provisional release of 120 second-hand digital multifunction print and copying machines. β
Legal Basis: Article 226 of the Constitution of India and Section 110A of the Customs Act, 1962. β
Customs Department’s Argument: Machines classified as “other wastes” under HOW Rules, 2016, requiring prior permission for import. β
Court’s Decision: Directed provisional release of goods within four weeks, subject to conditions and final adjudication.
Reference Case: W.P.No.29418 of 2024, which allowed provisional release of similar goods.
Provisional Release Conditions: Execution of a simple bond for 100% of the enhanced value and payment of applicable GST.
Final Adjudication: Customs Department retains the right to reverse the provisional release order during final adjudication. β
Maruti Enterprises vs Commissioner of Customs- WP No. 35987 of 2025
The case involves M/s. Maruti Enterprises, represented by its proprietor Gautam Sharma, filing a writ petition under Article 226 of the Constitution of India for the issuance of a writ of mandamus. β The petitioner seeks the provisional release of two consignments of second-hand digital multifunction print and copying machines (MFDs) imported by them. β The petitioner claims that the goods were examined by a DGFT-approved Chartered Engineer, who provided a report to the Customs Officer. β Despite this, the Customs Department proceeded to forfeit the goods. β The petitioner argues that the issue is covered by a previous order of the Madras High Court, which allowed the provisional release of similar goods under Section 110A of the Customs Act, 1962.
The court referred to the earlier judgment, which clarified that MFDs are not prohibited items under the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016, and are freely importable. β The court directed the Customs Department to grant provisional release of the goods within four weeks, subject to conditions as per the Customs Act, 1962. β The provisional release is subject to final adjudication, and the Customs Department retains the authority to reverse the provisional release order during the final adjudication process. β
Key Points:
Petitioner: M/s. Maruti Enterprises. β
Respondents: Commissioner, Additional Commissioner, and Deputy Commissioner of Customs, Chennai. β
Issue: Provisional release of two consignments of second-hand digital multifunction print and copying machines. β
Legal Basis: Section 110A of the Customs Act, 1962, and Article 226 of the Constitution of India. β
Court’s Reference: Previous Madras High Court order in WP No. β 29418 of 2024, which allowed provisional release of similar goods.
Court’s Decision: Directed the Customs Department to grant provisional release within four weeks, subject to conditions under the Customs Act, 1962. β
Provisional Release Conditions: Subject to final adjudication, and the Customs Department may reverse the provisional release order during the final adjudication process. β
No Costs: The court disposed of the writ petition without imposing any costs. β
Supreme Court Endorsement β
The Supreme Court upheld the decision of the Telangana High Court, which had granted provisional release of MFDs under similar circumstances. β This decision reinforced the stance that MFDs are freely importable and eligible for provisional release. β
Atul Commodities Pvt. Ltd. & Ors. vs Commissioner of Customs- Civil Appeal Nos. 5259/2007, 3226/2007 and 3977/2007
The case revolves around whether second-hand photocopying machines imported by M/s Atul Commodities Pvt. β Ltd. in January 2005 were “freely importable” as capital goods under the Foreign Trade Policy (FTP) 2004-09 or required a license for import. β The Kerala High Court had ruled that such imports required a license, relying on policy circulars issued by the Directorate General of Foreign Trade (DGFT). β However, the Supreme Court held that the DGFT circulars were clarificatory and not amendatory, and only the Central Government had the authority to amend the FTP under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992. β The Court ruled that second-hand photocopying machines were “capital goods” and were freely importable under the FTP 2004-09. β The Supreme Court allowed the appeal of M/s Atul Commodities Pvt. Ltd. and dismissed the appeals filed by the Department. β
Key Points:
Issue: Whether second-hand photocopying machines imported in January 2005 were freely importable as “capital goods” or required a license under the FTP 2004-09. β
High Court Decision: Kerala High Court ruled that the imports required a license, relying on DGFT circulars.
Supreme Court Decision: The Supreme Court held that DGFT circulars were clarificatory, not amendatory, and only the Central Government could amend the FTP under Section 5 of the Foreign Trade Act, 1992. β
Outcome: The Supreme Court ruled that second-hand photocopying machines were “capital goods” and were freely importable under FTP 2004-09. β The judgment of the Kerala High Court was set aside, and the Tribunal’s decision favoring M/s Atul Commodities Pvt. β Ltd. was restored.
Final Verdict: M/s Atul Commodities Pvt. β Ltd. won the case, and the Department’s appeals were dismissed. β
Recent Judgments
Subsequent cases, such as WP No. β 39010 of 2025 and WP No. 35987 of 2025, have followed the precedent set by the Madras High Court and the Supreme Court. These judgments have consistently directed the Customs Department to grant provisional release of MFDs, subject to conditions such as the execution of a bond and payment of applicable GST.
Notification on Special Economic Zones (Fourth Amendment) Rules, 2024 β
The document is a notification issued by the Ministry of Commerce and Industry, Department of Commerce, dated June 20, 2024. β It announces the Special Economic Zones (Fourth Amendment) Rules, 2024, which amend the Special Economic Zones Rules, 2006. β The amendments focus on rule 18, sub-rule (4), clause (d), specifically modifying the provisions related to reconditioning, repair, and re-engineering activities within Special Economic Zones (SEZs). β
Key changes include:
Reconditioning, repair, and re-engineering are permitted under the condition that exports must have a one-to-one correlation with imports, and all processed products must be exported. β
Non-hazardous metal and metal-alloy wastes generated from these activities may be sold in the Domestic Tariff Area (DTA) under certain conditions:
The waste must be in metallic, non-dispersible form without contaminants listed under Basel No. β B1010 in Part D of Schedule III of the Hazardous and Other Wastes Rules, 2016. β
Sale in the DTA is subject to payment of applicable customs duty and treated as import. β
Such sales are allowed only to actual users or traders authorized by the State Pollution Control Board on a one-time basis. β
Verification of specified documents by Customs Authority is required. β
The rules come into effect upon publication in the Official Gazette. β The notification also references previous amendments to the principal rules, last updated on June 6, 2024. β
Key Takeaways for Importers
Provisional Release: Importers can seek provisional release of detained goods under Section 110A of the Customs Act, provided they fulfill the conditions set by the Customs Department. β
Exemption Criteria: MFDs that meet the criteria for HSE under Clause 8 of CRO, 2021, are exempt from the application of the order. β Importers must ensure their goods weigh more than 80 kg and are imported in less than 100 units per model per year. β
Compliance with HOW Rules: Importers must submit the required documents as per Schedule VIII of the HOW Rules to the Customs Authorities at the time of import. β
Final Adjudication: Provisional release does not guarantee the final outcome. β The Customs Department retains the authority to reverse the provisional release order during final adjudication. β
Conclusion
The legal clarity provided by the courts is a significant relief for importers of second-hand MFDs. β However, it is crucial for importers to ensure compliance with all regulatory requirements and maintain proper documentation to avoid complications during the import process. As the legal landscape continues to evolve, staying updated on relevant judgments and notifications is essential for smooth business operations.
ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 31.10.2025
CESTAT Ahmedabad Overturns Penalties and Redemption Fine in Tug βAllianceβ Smuggling
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), Ahmedabad, recently delivered a significant judgment in the case of Customs Appeal No. β 11938 of 2015 and related appeals, concerning the alleged illegal supply of goods to a foreign vessel, MT CANTA, by the tug βAllianceβ. β The case, which involved multiple appellants, including individuals and companies, revolved around allegations of smuggling and violations of the Customs Act, 1962. β
Background of the Case
The case originated from intelligence reports suggesting that the tug βAllianceβ, owned by M/s. β K.B. Shipping & Company, had illegally supplied 20 KL of diesel oil, welding rods, grinders, and discs to the foreign vessel MT CANTA in high seas without filing export documents or obtaining proper customs clearance. β The Directorate of Revenue Intelligence (DRI) investigated the matter, leading to the issuance of a Show Cause Notice on March 11, 2014. β
The Adjudicating Authority found the goods liable for confiscation under Sections 113(f) and (g) of the Customs Act, 1962, and imposed penalties on several individuals and entities under Sections 114(iii) and 114AA of the Act. β Additionally, the tug βAllianceβ was confiscated, with an option for redemption upon payment of a fine of Rs. β 30,00,000.
The appellants challenged the Order-in-Original, arguing that the penalties and fines were imposed without proper consideration of their submissions and in violation of the principles of natural justice. β They contended that they were not given an opportunity to cross-examine key witnesses and that the penalties were unjustified due to a lack of evidence proving their involvement or knowledge of the alleged illegal activities. β
Tribunalβs Observations and Decision β
After a detailed examination of the case, The Tribunal made the following key observations:
No Evidence of Prior Knowledge or Connivance: The Tribunal found no evidence to suggest that the appellants, including Appellants, had prior knowledge or were involved in the illegal activities carried out by the tugβs Master, and Supervisor. β The Tribunal noted that the appellants had trusted their employees to follow proper procedures, but the employees failed to comply with customs regulations.
Violation of Principles of Natural Justice: The Tribunal highlighted that the appellants were denied the opportunity to cross-examine key witnesses, which violated the principles of natural justice. β This was a significant procedural lapse in the adjudication process. β
Wrongful Imposition of Penalties: The Tribunal ruled that penalties under Sections 114(iii) and 114AA of the Customs Act were wrongly imposed on the appellants, as there was no evidence of their direct involvement or intent to violate customs laws.
Redemption Fine on Tug βAllianceβ Not Sustainable: The Tribunal observed that the tug βAllianceβ was under the operational control of M/s. β K.B. Shipping & Co. at the time of the alleged incident, and the actual owners, M/s. β V.S. Marine Services, were not involved in or aware of the illegal activities. β Therefore, the redemption fine of Rs. 30,00,000 imposed on the tug was deemed unsustainable. β
Final Verdict
The Tribunal set aside the impugned order passed by the Commissioner of Customs (Appeals) and allowed the appeals filed by the appellants. β The penalties imposed on the appellants under Sections 114(iii) and 114AA of the Customs Act were revoked, and the redemption fine on the tug βAllianceβ was also annulled.
ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 31.10.2025
CESTAT Delhi – Import Valuation Cannot Include Advertising or Management Fees
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. β
In a landmark decision, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), New Delhi, has ruled in favor of M/s Triumph Motorcycles (India) Pvt. Ltd., setting aside the order passed by the Additional Director General (Adjudication), Directorate of Revenue Intelligence (DRI), New Delhi. β The case revolved around the inclusion of Advertisement and Promotional Expenses (APE) and Management Service Fees (MSF) in the transaction value of imported goods under Rule 10(1)(e) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. β
Background of the Case
Triumph Motorcycles (India) Pvt. β Ltd., a subsidiary of Triumph Motorcycles (Singapore) Pte. β Ltd., imports motorcycles, parts, accessories, and clothing from its affiliated companies, Triumph Motorcycles Ltd., UK, and Triumph Motorcycles (Thailand) Ltd. β The company entered into a Distributor Agreement and a Management Services Agreement with Triumph UK, which were renewed in 2017.
The DRI initiated an investigation and issued a show-cause notice in 2019, alleging that the APE and MSF incurred by Triumph India were a “condition of sale” of the imported goods and should be added to the transaction value under Rule 10(1)(e). β The Additional Director General passed an order in 2020, confirming the demand for differential customs duty amounting to βΉ21.85 crore, along with interest and penalties.
Key Issues in the Appeal β
The appeal raised several critical issues, including:
Whether APE incurred by Triumph India should be added to the value of imported goods under Rule 10(1)(e). β
Whether MSF remitted to Triumph UK should be included in the transaction value. β
Whether the extended period of limitation was applicable. β
Whether interest and penalties under Sections 28AA and 114A of the Customs Act were justified. β
Tribunal’s Observations and Ruling
After a detailed examination of the Distributor Agreement, Management Services Agreement, and relevant provisions of the Customs Act and 2007 Valuation Rules, the Tribunal ruled in favor of Triumph India. Key observations included:
APE Expenses: The Tribunal held that advertising and promotional expenses incurred by Triumph India were undertaken “on its own account” to promote its own business and were not a “condition of sale” of the imported goods. β The Tribunal referred to the Interpretative Note to Rule 3(2)(b), which clearly states that marketing activities undertaken by the buyer on its own account cannot be added to the transaction value of imported goods. β
MSF Payments: The Tribunal found that the Management Services Agreement was an independent commercial transaction unrelated to the import of goods. β Payments made under this agreement were for business support services and had no direct correlation with the imported goods. β The Tribunal cited previous rulings, including Thyssenkrupp Elevator (I) P. Ltd. vs. ACC (Import & General), New Delhi, to support its decision. β
Interest and Penalty: Since neither APE nor MSF could be added to the transaction value, the Tribunal ruled that interest under Section 28AA and penalty under Section 114A of the Customs Act were not applicable. β
Extended Limitation Period: The Tribunal did not find it necessary to examine the invocation of the extended period of limitation, as the impugned order was already set aside. β
Final Verdict
The Tribunal concluded that the impugned order dated 24.09.2020 could not be sustained and set it aside, allowing the appeal filed by Triumph Motorcycles (India) Pvt. β Ltd.
Implications of the Judgment
This decision is a significant win for Triumph Motorcycles India and sets a precedent for similar cases involving the inclusion of APE and MSF in the transaction value of imported goods. The ruling reinforces the principle that expenses incurred by an importer on its own account for marketing and promotional activities cannot be considered a “condition of sale” under Rule 10(1)(e) of the 2007 Valuation Rules. β Additionally, it highlights the importance of distinguishing between independent commercial agreements and obligations tied to the sale of imported goods. β
This judgment is expected to provide clarity and relief to importers facing similar disputes, ensuring that only legitimate costs directly related to the import of goods are included in the transaction value for customs duty purposes. β
ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 30.10.2025
CESTAT Delhi Overturns Penalties in Customs Valuation Dispute
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), Principal Bench, New Delhi, delivered a judgment on October 29, 2025, in the case of Appellant vs. Principal Commissioner of Customs. β The Tribunal set aside penalties imposed under Sections 112(b)(ii) and 114AA of the Customs Act, 1962, highlighting critical procedural lapses and the importance of adhering to legal safeguards during investigations and adjudication. β
Background of the Case
The appellant a partner in M/s Chandra Impex, challenged the order passed by the Principal Commissioner of Customs, ICD TKD, New Delhi, which imposed penalties of Rs. 5 lakhs under Section 112(b)(ii) and Rs. β 50 lakhs under Section 114AA of the Customs Act. β The case revolved around allegations of undervaluation of imported goods, specifically spray paints, in the 14th consignment imported by M/s Chandra Chemicals, a firm owned by the appellant’s father.
The department alleged that the appellant had submitted fraudulent commercial invoices to declare lower transaction values, while the actual values were reflected in proforma invoices retrieved from his email account during an investigation. β The appellant, however, retracted his statement made under Section 108 of the Customs Act, claiming coercion and undue pressure during the investigation.
Key Issues Raised
The appellant’s counsel argued that the statement recorded under Section 108 of the Customs Act could not be relied upon due to the following reasons:
The statement was retracted immediately, citing coercion and threats. β
The provisions of Section 138B of the Customs Act, which mandate examination and cross-examination of the person making the statement, were not followed. β
The proforma invoices retrieved from the appellant’s email were not recorded under a panchnama, nor were they properly substantiated as evidence. β
The department failed to provide evidence linking the proforma invoices to the alleged undervaluation of goods. β
CESTATβs Observations
The Tribunal meticulously analyzed the procedural requirements under Sections 108 and 138B of the Customs Act. β It emphasized that statements recorded during investigations must be admitted as evidence only after the adjudicating authority examines the person making the statement and provides an opportunity for cross-examination. β Failure to follow this mandatory procedure renders such statements inadmissible. β
The Tribunal also noted:
The appellantβs retraction of his statement highlighted the possibility of coercion during the investigation. β
The proforma invoices relied upon by the department were not properly substantiated or linked to the alleged undervaluation. β
The earlier 13 consignments had been cleared after physical examination by customs authorities, and no evidence was presented to prove undervaluation in those cases. β
Final Decision
The Tribunal concluded that the charge of undervaluation could not be substantiated, and the transaction value declared in the commercial invoices could not be rejected under Rule 12 of the Customs Valuation Rules, 2007. β Consequently, the confiscation of goods under Section 111(m) of the Customs Act and the imposition of penalties under Sections 112(b)(ii) and 114AA were deemed unsustainable.
Key Takeaways
Adherence to Legal Safeguards: The judgment underscores the importance of following mandatory procedures under Sections 108 and 138B of the Customs Act to ensure fairness and justice during investigations and adjudication. β
Protection Against Coercion: The Tribunal highlighted the need to safeguard individuals from coercion or undue pressure during investigations, ensuring that statements are voluntary and admissible. β
Evidence-Based Adjudication: Reliance on unsubstantiated evidence, such as proforma invoices, without proper linkage or corroboration, cannot form the basis for penalties or confiscation.
Conclusion
This landmark decision by CESTAT serves as a reminder of the critical role of procedural compliance in customs investigations and adjudication. It reinforces the principle that justice must not only be done but also be seen to be done, ensuring that individuals are not penalized based on assumptions or procedural lapses. β The ruling is a significant step toward upholding transparency and fairness in customs law enforcement.
ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 29.10.2025
CESTAT Chennai Sets Aside Extended Limitation and Differential Duty Demands in Iron Ore 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 significant judgment, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Chennai, has ruled in favor of M/s Bharat Mines and Minerals and M/s V S Lad & Sons in a long-standing dispute over export duty on iron ore. The case revolved around two key issues: the redetermination of export value and the applicability of differential customs duty based on a change in tax rates. β
Background of the Case
The appellants, both partnership firms engaged in mining and exporting iron ore, faced allegations from the Department of Revenue Intelligence (DRI). β The department claimed that the exporters had realized higher values for their shipments than declared at the time of export, leading to demands for differential duty, interest, penalties, and confiscation of goods. β Additionally, M/s Bharat Mines and Minerals faced a separate demand for differential customs duty due to a change in tax rates under Notification No. β 79/2008-Cus, dated June 13, 2008.
The appeals were filed after the adjudicating authorities confirmed the demands and imposed penalties. β The appellants argued that the exports occurred before the introduction of the self-assessment mechanism under Section 17 of the Customs Act, 1962, which came into effect on April 8, 2011. β They contended that the proper officer had the responsibility to assess the goods at the time of export, and the department’s failure to do so could not be used to penalize them retrospectively. β
Key Issues Addressed β
Redetermination of Export Value and Extended Limitation Period β The Tribunal ruled that under the pre-2011 regime, it was the responsibility of the proper officer to verify, examine, and assess the goods at the time of export. β Since the appellants had disclosed all relevant documents and information, the department’s failure to assess the goods properly at the time of export could not justify invoking the extended limitation period to demand differential duty or impose penalties. β The Tribunal emphasized that the department’s indolence in fulfilling its duties should not be detrimental to the appellants. β
Applicability of Differential Customs Duty Based on Notification No. β 79/2008-Cus The Tribunal clarified that the relevant date for determining the rate of duty is the date on which the “Let Export Order” is issued by the proper officer under Section 51 of the Customs Act. β In this case, the Let Export Order was issued on June 9, 2008, prior to the change in duty rates on June 13, 2008. β Therefore, the demand for differential duty based on the new rates was deemed untenable. β
Key Takeaways from the Judgment
Non-Retrospective Application of Self-Assessment: The Tribunal reiterated that the self-assessment mechanism introduced in 2011 cannot be applied retrospectively to transactions that occurred before its implementation. β
Responsibility of Proper Officers: The judgment highlighted the duty of proper officers to assess goods at the time of export and emphasized that exporters cannot be penalized for the department’s failure to perform its obligations. β
Wet Metric Ton (WMT) vs. Dry Metric Ton (DMT) Method: The Tribunal upheld the established practice of using the WMT method for determining the Fe content in iron ore for export duty purposes, as per the Supreme Court’s decision in Gangadhar Narsingdas Aggarwal’s case. The DMT method was deemed applicable only after May 1, 2022, following amendments introduced by the Finance Act, 2022. β
Relevant Date for Duty Assessment: The Tribunal reaffirmed that the date of the Let Export Order is the decisive factor for determining the applicable rate of duty, not the date of loading. β
Conclusion
This landmark ruling by the CESTAT Chennai Bench underscores the importance of adhering to established legal principles and procedures in customs assessments. It provides clarity on the determination of export duty rates and the responsibilities of customs officers, ensuring that exporters are not unfairly penalized for procedural lapses by the department. β The decision is expected to have far-reaching implications for similar cases and offers much-needed relief to exporters navigating complex customs regulations.
ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 28.10.2025
CESTAT Delhi Overturns Export Duty Demand
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), Principal Bench, New Delhi, has set aside the impugned order passed by the Commissioner of Customs (Adjudication), New Delhi, in a case involving export duty on iron ore fines. This decision not only reinforces judicial discipline but also clarifies key aspects of customs law, particularly regarding the assessment of shipping bills and the determination of Fe content in iron ore fines.
Background of the Case
The case revolved around four appeals filed by M/s Disha Realcon Pvt. β Ltd., Appellants, and M/s S.M. Ayat Niryat Pvt. β Ltd. The appellants challenged the confirmation of export duty demands and penalties imposed by the Commissioner of Customs (Adjudication). β The dispute stemmed from the Directorate of Revenue Intelligence (DRI) alleging that the appellants evaded export duty by splitting consignments into multiple shipping bills and availing exemptions for iron ore fines with Fe content below 58%. β
The DRI proposed recalculating the Fe content of the exported iron ore fines on a dry basis, contrary to the Supreme Court’s ruling in Union of India vs. β Gangadhar Narsingdas Aggarwal and the Central Board of Excise and Customs (CBEC) Circular No. β 04/2012-Cus, which mandated Fe content determination on a wet basis. β
Key Issues Addressed
The Tribunal examined two critical issues:
Assessment of Multiple Shipping Bills Together: The Tribunal clarified that the Customs Act does not empower officers to assess multiple shipping bills together. β Each shipping bill must be assessed individually, and the classification, valuation, and determination of parameters like Fe content must be done separately for each shipping bill. β The Tribunal emphasized that the issuance of a single Bill of Lading for goods covered under multiple shipping bills does not justify their combined assessment. β
Determination of Fe Content: The Tribunal reaffirmed the Supreme Court’s decision in Gangadhar Narsingdas, which held that Fe content in iron ore fines must be determined on a wet basis, considering all impurities, including moisture. β The Commissionerβs decision to calculate Fe content on a dry basis was deemed a violation of judicial discipline and CBECβs directives. β
Key Findings
The Tribunal made the following observations:
The Customs Act does not allow the assessment of multiple shipping bills together. β
Exporters are within their rights to file multiple shipping bills for goods exported in the same vessel. β
The Fe content of iron ore fines must be determined on a wet basis, as per the Supreme Courtβs ruling and CBECβs Circular. β
The Commissioner of Customs (Adjudication) erred in assessing Fe content on a dry basis and in combining multiple shipping bills for assessment. β
Outcome
The Tribunal set aside the impugned order dated November 30, 2022, and allowed all four appeals with consequential reliefs to the appellants. β This decision is a significant victory for exporters and reinforces the importance of adhering to judicial precedents and established legal principles.
Implications of the Ruling
This landmark judgment has far-reaching implications for exporters and the customs authorities:
Reaffirmation of Judicial Discipline: The Tribunalβs decision underscores the importance of adhering to Supreme Court rulings and CBEC directives, ensuring consistency and fairness in the application of customs laws. β
Clarity on Shipping Bill Assessments: The ruling clarifies that each shipping bill must be assessed individually, preventing arbitrary practices of combining multiple shipping bills for reassessment. β
Standardization of Fe Content Determination: By upholding the wet basis method for determining Fe content, the Tribunal has provided clarity and consistency for exporters dealing with iron ore fines. β
Conclusion
The CESTATβs decision in this case is a testament to the importance of upholding judicial discipline and ensuring fair treatment of exporters under the law. It serves as a reminder to customs authorities to adhere to established legal principles and precedents while assessing duties and penalties. This ruling is a significant step towards ensuring transparency and fairness in Indiaβs customs framework, fostering trust and confidence among exporters.
ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 28.10.2025
CESTAT Mumbai- No Service Tax Liability on Foreign Bank Charges under Reverse Charge Mechanism
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), Mumbai, has delivered a judgment in favor of ICICI Bank Limited, setting aside service tax demands imposed by the Commissioner of Service Tax-I/IV, Mumbai. This decision, issued on October 23, 2025, addresses a long-standing dispute regarding the applicability of service tax under the Reverse Charge Mechanism (RCM) on foreign bank charges in export/import transactions.
Background of the Case
The appeals filed by ICICI Bank Limited challenged three Orders-in-Original issued by the Commissioner of Service Tax-I/IV, Mumbai. β These orders demanded service tax, interest, and penalties for the periods between July 2012 and June 2017. β The dispute revolved around whether Indian banks, acting as intermediaries for exporters and importers, should be considered recipients of services provided by foreign banks and, consequently, liable to pay service tax under RCM. β
The Department argued that foreign banks deduct charges for processing import/export documents and remittances, and Indian banks, as recipients of these services, are liable to pay service tax under Notification No. β 30/2012-Service Tax dated June 20, 2012. β
Key Issues in the Case β
The Tribunal identified two primary issues for determination:
Whether Indian banks are the recipients of services in export/import transactions involving the transfer/exchange of documents and money on behalf of their client exporters/importers. β
Whether Indian banks are liable to pay service tax on foreign bank charges under the Reverse Charge Mechanism. β
Arguments Presented
Appellant’s Arguments:
ICICI Bank argued that they act as advising banks for Indian exporters and facilitate transactions but are not recipients of services from foreign banks. β
The foreign bank charges are deducted from the remittance amount and paid by the exporter/importer directly, not by the Indian bank. β
The bank emphasized that there is no flow of consideration from the Indian bank to the foreign bank, which is a necessary condition for service tax liability under RCM. β
The bank cited several precedents, including the State Bank of Bikaner & Jaipur case, which held that Indian banks are not liable for service tax on foreign bank charges under RCM. β
Revenue’s Arguments:
The Department contended that Indian banks are recipients of services provided by foreign banks and are liable to pay service tax under RCM. β
They relied on a Trade Notice issued by the Chief Commissioner, Central Excise, Mumbai Zone-I, which clarified that Indian banks should pay service tax on foreign bank charges. β
Tribunal’s Observations and Decision
After hearing both sides and reviewing the case records, the Tribunal concluded that Indian banks are not the recipients of services provided by foreign banks in export/import transactions. β The Tribunal relied heavily on the precedent set by the State Bank of Bikaner & Jaipur case, which established that Indian banks merely act as facilitators for their clients and do not receive services from foreign banks.
The Tribunal also referred to the Madras High Court’s judgment in the BGR Energy Systems Limited case, which clarified that the liability to pay service tax on foreign bank charges lies with the exporter/importer, not the Indian bank.
Final Verdict
The Tribunal ruled that the service tax demands, interest, and penalties imposed on ICICI Bank Limited were not legally sustainable. β Consequently, the impugned orders were set aside, and the appeals filed by ICICI Bank Limited were allowed. β
Key Takeaways
No Service Tax Liability for Indian Banks: Indian banks acting as intermediaries in export/import transactions are not considered recipients of services from foreign banks and are not liable to pay service tax under RCM for foreign bank charges. β
Precedents Matter: The Tribunal’s decision was heavily influenced by previous rulings, particularly the State Bank of Bikaner & Jaipur case and the BGR Energy Systems Limited judgment. β
Clarity on RCM Applicability: The judgment reinforces the principle that service tax under RCM is applicable only when there is a clear flow of consideration from the service recipient to the service provider. β
Conclusion
This landmark decision provides much-needed clarity on the taxability of foreign bank charges in export/import transactions. β It is a significant relief for Indian banks, as it exempts them from service tax liability under RCM for such charges. β The ruling also underscores the importance of legal precedents and the need for clear guidelines in interpreting tax laws. This case will undoubtedly serve as a reference point for similar disputes in the future.
ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 27.10.2025
CESTAT Kolkata Dismissed DRIβs Allegations of Fe Content Manipulation
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, and Service Tax Appellate Tribunal (CESTAT), Eastern Zonal Bench, Kolkata, has rejected the appeal filed by the Revenue against M/s Kashvi Power and Steel Pvt. Limited (KPSPL) in Customs Appeal No. 75043 of 2022. β The case revolved around allegations of export duty evasion by mis-declaring the iron content (‘Fe’) in iron ore fines exported by KPSPL through Paradip Port, Odisha. β
Background of the Case
M/s KPSPL, engaged in trading iron ore in domestic and international markets, was accused of evading export duty by misrepresenting the iron content in their shipments. β According to the Directorate of Revenue Intelligence (DRI), KPSPL allegedly manipulated test reports to declare lower iron content (‘Fe’) in their shipments, thereby claiming a nil export duty rate for iron ore fines with less than 58% Fe content. β The investigation revealed that KPSPL had exported iron ore fines through multiple shipping bills between 2016 and 2018, allegedly splitting consignments to avoid paying the higher export duty of 30% applicable to iron ore fines with Fe content above 58%. β
A Show Cause Notice (SCN) was issued to KPSPL, demanding differential export duty of βΉ17.59 crore, along with interest and penalties. β However, the Principal Commissioner of Customs (Preventive), Bhubaneswar, dropped the proceedings, citing unsustainable evidence. β Aggrieved by this decision, the Revenue filed an appeal with the CESTAT.
Key Issues in the Appeal
The Revenue raised several points in its appeal, including:
The Adjudicating Authority (AA) relied solely on test reports from the Central Revenue Control Laboratories (CRCL), Kolkata, and disregarded test reports from private testing agencies. β
The AA allegedly ignored the analysis of Fe content conducted at the discharge port in China by the China Entry-Exit Inspection and Quarantine Bureau (CIQ). β
The AA failed to consider the alleged manipulation of test reports and splitting of consignments by KPSPL. β
Tribunal’s Observations and Ruling β
After hearing both sides and reviewing the evidence, the Tribunal upheld the findings of the Adjudicating Authority and rejected the Revenue’s appeal. The key observations and conclusions were:
Reliability of Test Reports: The Tribunal emphasized that the CRCL test reports, based on samples drawn by Customs authorities in the presence of KPSPL representatives, were more credible than private lab reports. β It cited the Supreme Court’s decision in Steer Overseas Pvt. β Ltd. v. Commissioner [2022 (381) E.L.T. β A34 (S.C.)], which held that private lab reports based on samples drawn without Customs oversight cannot override CRCL reports. β
Valuation of Goods: The Tribunal found no evidence of suppression or misdeclaration of Fe content by KPSPL. β The declared values in the shipping bills matched the final invoices and bank realization certificates (BRCs), indicating no undervaluation. β
Discharge Port Analysis: The Tribunal ruled that the CIQ test reports from the discharge port in China were irrelevant for customs duty assessment, as the contracts between KPSPL and its overseas buyers were based on load port test results. β
Alleged Manipulation of Consignments: The Tribunal found no substantial evidence to support the Revenue’s claim that KPSPL had manipulated test reports or artificially split consignments to evade export duty.
Refund of Deposited Amount β
During the investigation, KPSPL had deposited βΉ2.5 crore towards potential duty liability. β With the Tribunal ruling in favor of KPSPL, it ordered the refund of the deposited amount along with applicable interest. β
Conclusion
This ruling highlights the importance of adhering to established procedures for sample collection and testing in customs cases. β The Tribunal’s decision underscores the credibility of CRCL test reports over private lab analyses and reinforces the principle that adjudication must be based on substantial evidence rather than mere allegations. β The case serves as a reminder to exporters about the importance of accurate self-assessment under the Customs Act, 1962, while also emphasizing the need for the Revenue to follow due process and present credible evidence in cases of alleged duty evasion.
