𝐀𝐚𝐝𝐫𝐢𝐤𝐚𝐚 𝐋𝐚𝐰 𝐎𝐟𝐟𝐢𝐜𝐞𝐬 (𝐀𝐋𝐎)

Tag: #litigation

High Court of Gujarat Upholds Supreme Court Precedent: Exemption of Biodegradable Packaging from Plastic Waste Rules
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 18.03.2026

High Court of Gujarat Upholds Supreme Court Precedent: Exemption of Biodegradable Packaging from Plastic Waste Rules

Adv Ravi Shekhar Jha

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

In a significant judgment delivered on February 25, 2026, the High Court of Gujarat dismissed Tax Appeal No. 22 of 2020 filed by the Principal Commissioner of Customs against M/s R.M. Dhariwal (HUF). The case revolved around the interpretation of Rule 5(d) and 5(g) of the Plastic Waste (Management and Handling) Rules, 2011, in conjunction with Sections 113(d) and 118(b) of the Customs Act, 1962. The court upheld the decision of the Customs, Excise, & Service Tax Appellate Tribunal (CESTAT), which had ruled in favor of the respondent company.

Background of the Case

The appellant, the Principal Commissioner of Customs, sought to challenge the Tribunal’s judgment dated October 8, 2018, which allowed the export of goods by M/s R.M. Dhariwal (HUF). The goods in question were pan masala, gutkha, and tobacco products packaged in materials alleged to be prohibited under the Plastic Waste (Management and Handling) Rules, 2011. The appellant argued that the packaging material violated Rule 5(d) and 5(g) of the Rules, which prohibit certain types of plastic usage.

The appellant contended that the Tribunal erred in its interpretation of the Rules, 2011, and sought to quash the judgment. The appellant also argued that the provisions of Sections 113(d) and 118(b) of the Customs Act, 1962, were applicable, as the goods were allegedly prohibited for export due to their packaging material.

Respondent’s Argument 

The respondent, represented by Senior Advocate, argued that the substantial question of law proposed by the appellant was not applicable in this case. The respondent pointed out that the Supreme Court had already ruled in similar cases, such as M/s Baba Global Limited, M/s Harsh International & Anr, and M/s R.M. Dhariwal 100% EOU, exempting exporters of pan masala, gutkha, and tobacco products using biodegradable plastics from the application of the Rules, 2011.

The respondent further argued that the provisions of Section 113(d) and Section 118(b) of the Customs Act, 1962, were not applicable. Section 113(d) pertains to goods that are prohibited from export under the Customs Act or any other law, while Section 118(b) deals with the confiscation of prohibited goods and their packaging. Since the goods in question were not prohibited for export, these provisions did not apply.

Court’s Observations and Judgment 

The High Court carefully examined the arguments presented by both parties and reviewed the relevant legal provisions and precedents. The court noted the following key points:
1. Adherence to Supreme Court Precedent: The court emphasized that it could not take a different view from the Supreme Court, which had already exempted similar exporters from the application of the Rules, 2011. The Supreme Court had ruled that the use of biodegradable plastics for packaging pan masala, gutkha, and tobacco products was permissible.
2. Non-Applicability of Customs Act Provisions: The court held that Sections 113(d) and 118(b) of the Customs Act, 1962, were not applicable in this case. These provisions apply to goods that are prohibited under the Customs Act or any other law. Since the goods being exported were not prohibited, the provisions did not apply.
3. Chemical Analysis Reports: The court relied on chemical analysis reports from government institutions, which confirmed that the packaging material used by the respondent was made of biodegradable plastic. This further supported the Tribunal’s decision to allow the export of the goods.
4. No Substantial Question of Law: The court concluded that the appeal did not raise any substantial question of law, as the issue was primarily based on the appreciation of facts, particularly the chemical analysis of the packaging material.
Legal Principle Established

The judgment underscores the importance of adhering to judicial precedents, especially those set by the Supreme Court. The High Court reiterated that it could not deviate from the Supreme Court’s rulings, which had already addressed similar cases and provided exemptions to exporters using biodegradable plastics. Additionally, the court clarified the scope of Sections 113(d) and 118(b) of the Customs Act, emphasizing that these provisions apply only to goods that are explicitly prohibited under the law.

Conclusion

The High Court’s decision in this case highlights the significance of judicial consistency and the role of chemical evidence in determining compliance with environmental regulations. By dismissing the tax appeal, the court reinforced the principle that lower courts must follow the precedents set by higher courts, ensuring uniformity and predictability in the application of the law.

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Source: Gujarat High Court

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March 18, 2026
Delhi High Court Grants Bail to Foreign National in Cocaine Smuggling
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 18.03.2026

Delhi High Court Grants Bail to Foreign National in Cocaine Smuggling

Adv Ravi Shekhar Jha

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

On March 17, 2026, the High Court of Delhi delivered a significant judgment in the case of BAIL APPLN. 4689/2025, granting bail to Appellant, a foreign national accused of smuggling narcotic drugs under the Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS Act). The case has garnered attention due to its implications on procedural compliance, the use of artificial intelligence tools in legal proceedings, and the balance between individual rights and statutory restrictions under the NDPS Act.

Case Background

Appellant, a foreign national, was intercepted by Customs officials at Terminal-3 of Indira Gandhi International Airport on July 2, 2024, based on secret information suggesting she was carrying narcotic drugs. Initially, no contraband was found during the scanning of her baggage and personal search. However, upon further investigation, eight capsules containing cocaine were discovered concealed in her undergarments. Maria admitted to having ingested additional capsules and consented to undergo medical procedures for their extraction.

She was subsequently admitted to Safdarjung Hospital, where 34 more capsules were egested, bringing the total recovery to 42 capsules containing approximately 503 grams of cocaine—a quantity classified as “commercial” under the NDPS Act. Maria was discharged from the hospital on July 6, 2024, and formally arrested on July 7, 2024. A complaint was filed against her on December 25, 2024, and charges were framed on February 21, 2025. The trial is ongoing, with only one of the 26 prosecution witnesses having testified so far.

Key Arguments

Petitioner’s Arguments

Maria’s counsel raised several points in favor of granting bail:
1. Violation of Constitutional Rights: The petitioner was detained by Customs officials without being produced before a Magistrate within 24 hours of her interception, as mandated by Article 22(2) of the Constitution of India and Section 58 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023. The counsel argued that the 24-hour period should be calculated from the moment her liberty was curtailed, not from the formal arrest on July 7, 2024.
2. Improper Communication of Legal Rights: The petitioner, who primarily speaks Portuguese and French, was served notices under Section 50 of the NDPS Act and Sections 102 and 103 of the Customs Act in English. Customs officials used an artificial intelligence tool, Google Translator, to translate the notices into her native language. However, the translated copies did not include her responses, raising questions about whether she was adequately informed of her legal rights.
3. Trial Delays: The trial was still in its early stages, with only one prosecution witness having testified. The counsel argued that there was no likelihood of the trial concluding in the near future, making the petitioner eligible for bail.
Respondent’s Arguments

The Customs department opposed the bail plea, presenting the following points:
1. Compliance with Procedures: The respondent argued that all statutory procedures and mandatory safeguards were followed, including serving notices under Section 50 of the NDPS Act and Sections 102 and 103 of the Customs Act. The petitioner’s willingness to undergo medical procedures was duly recorded.
2. Flight Risk: As a foreign national with no permanent roots in India, the petitioner was deemed a flight risk. The respondent contended that liberal approaches in cases involving commercial quantities of contraband are not permissible under the NDPS Act.
3. Transparency in Recovery: The Customs department emphasized that the recovery process was transparent, with independent panch witnesses present at every stage.
Court’s Observations

Justice carefully evaluated the arguments and made the following observations:
1. Violation of Legal Procedures: The court noted that the petitioner was not produced before a Magistrate within 24 hours of her interception at the airport, despite the recovery of contraband. The court emphasized that once the contraband was recovered, the petitioner should have been arrested immediately and produced before the Magistrate, even if further recovery was anticipated. The delay in formal arrest and detention at the hospital without judicial authorization constituted a violation of her constitutional rights.
2. Improper Use of AI Tools: The court found that the translated notices generated through Google Translator were incomplete and did not include the petitioner’s responses. This raised doubts about whether she was adequately informed of her legal rights, as required under Section 50 of the NDPS Act.
3. Precedents: The court referred to similar cases, including Kitoko Ngiembo Alain v. Customs and Habiob Bedru Omer v. Customs, where bail was granted due to procedural lapses and violations of constitutional rights.
4. Balancing Rights and Statutory Restrictions: While acknowledging the restrictions under Section 37 of the NDPS Act, the court emphasized that the right to life and liberty under Article 21 of the Constitution must prevail in cases of procedural violations.
Judgment

The court granted bail to Appellant, subject to the following conditions:
1. She must furnish a personal bond of Rs. 25,000/- with one local surety of the same amount.
2. She must disclose her residential address in advance, which the trial court may verify.
3. She must report to the Investigating Officer on the first Sunday of every month at 10:00 AM until the trial concludes.
4. She must not leave the National Capital Region of Delhi without prior permission from the trial court.
5. She must not contact or influence any witnesses directly or indirectly.
6. She must provide a mobile number to the Investigating Officer and ensure it remains active until the trial concludes.
The court also clarified that its observations should not be construed as a final opinion on the merits of the case.

Conclusion

The judgment in BAIL APPLN. 4689/2025 underscores the importance of adhering to procedural safeguards and constitutional rights, even in cases involving serious offenses like drug trafficking. It also highlights the challenges of using artificial intelligence tools in legal proceedings, particularly when dealing with foreign nationals who may not fully understand the language or legal processes. This case serves as a reminder that the principles of justice and due process must be upheld, regardless of the gravity of the allegations.

Source: Delhi High Court

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March 18, 2026
CESTAT Kolkata Sets Aside Penalties in SEIS Scrip Misclassification
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 17.03.2026

CESTAT Kolkata Sets Aside Penalties in SEIS Scrip Misclassification

Adv Ravi Shekhar Jha

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

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Kolkata, recently delivered a significant judgment in the case of M/s. Amity Software Systems Ltd. & Appellant vs. Commissioner of Customs (Port), Kolkata. This case revolved around the classification of exported services under the Service Export from India Scheme (SEIS) and the imposition of penalties under Section 114AA of the Customs Act, 1962. The Tribunal’s decision has set a precedent for cases involving disputes over service classifications and penalties.

Background of the Case

M/s. Amity Software Systems Ltd., a company engaged in providing Information Technology Software Services and implementation of IT services, claimed SEIS scrip benefits from the Directorate General of Foreign Trade (DGFT). These scrips, which are transferable, were sold to buyers. However, the Directorate of Revenue Intelligence (DRI), Ahmedabad, initiated an investigation into the company’s export activities.

The investigation revealed that the services exported by the appellant fell under Group/Division 84 of Annexure 1 of the Explanatory Notes to Provisional CPC issued by DGFT, rather than Group/Division 86, as claimed by the appellant. This distinction was crucial because services under Group 84 are not eligible for SEIS scrip benefits. Consequently, a Show Cause Notice was issued on June 27, 2022, alleging suppression of facts and improper claim of SEIS scrips.

Following due process, the Adjudicating Authority confirmed a customs duty demand of ₹1,08,14,291, along with a penalty of ₹25,00,000 against the appellant company and ₹5,00,000 against its Managing Director. Aggrieved by this decision, the appellants approached the Tribunal.

Arguments Presented by the Appellants 

The appellants, represented by their counsel, argued that:
1. Bonafide Belief in Classification: The company believed that the services rendered fell under Group 86, which includes legal, accounting, auditing, market research, management, and consulting services. They contended that the services were provided exclusively to foreign entities, with payments received in foreign exchange.
2. No Suppression of Facts: The appellants argued that all relevant details were disclosed to the DGFT and customs authorities, and there was no willful suppression of facts as alleged.
3. Payment of Confirmed Demand: To avoid prolonged litigation, the company paid the entire confirmed demand of ₹1,08,14,291 along with interest of ₹51,81,981. They also paid a penalty of ₹20,00,000 imposed by the DGFT under Section 11 of the Foreign Trade (Development and Regulation) Act, 1992.
4. Request for Penalty Waiver: The appellants contested only the penalties imposed under Section 114AA of the Customs Act, 1962, arguing that the issue was one of interpretation and no malafide intent could be attributed to them.
Arguments Presented by the Respondent

The respondent justified the confirmed demand and penalties, stating:
1. Admission of Suppression: The appellants did not contest the DGFT’s findings and paid the penalty imposed, which indicated an admission of suppression.
2. Incorrect Classification: The services exported by the appellants clearly fell under Group 84, making them ineligible for SEIS scrip benefits.
Tribunal’s Observations and Final Order 

After hearing both sides and reviewing the appeal papers, the Tribunal made the following observations:
1. Thin Line Between Group 84 and Group 86: The Tribunal noted that the difference between the descriptions under Group 84 and Group 86 was minimal, making it a matter of interpretation.
2. Bonafide Belief: The Tribunal acknowledged that the appellants could have reasonably believed their services fell under Group 86, given the thin line of distinction between the two groups.
3. Acceptance of DGFT’s Decision: The Tribunal observed that the appellants had accepted the DGFT’s decision and paid the penalty imposed without contesting it further.
4. Penalty Waiver: Considering the appellants’ bonafide belief, their payment of the confirmed demand and interest, and the penalty imposed by the DGFT, the Tribunal set aside the penalties of ₹25,00,000 on the appellant company and ₹5,00,000 on the Managing Director under Section 114AA of the Customs Act, 1962.
5. Consequential Relief: The Tribunal held that the appellants would be eligible for any consequential relief as per the law.
Key Takeaways

This judgment highlights several important aspects of customs and trade law:
1. Importance of Accurate Classification: The case underscores the criticality of correctly classifying services under the DGFT’s Explanatory Notes to Provisional CPC for claiming SEIS scrip benefits.
2. Bonafide Belief and Interpretation: The Tribunal’s decision demonstrates that penalties may be waived in cases where the issue arises from a genuine difference in interpretation and no malafide intent is established.
3. Acceptance of Liability: The appellants’ decision to pay the confirmed demand and interest without contesting it played a significant role in the Tribunal’s decision to waive the penalties.
4. Role of DGFT: The DGFT’s authority in determining the eligibility of services for SEIS scrip benefits was reaffirmed.
Conclusion

The CESTAT Kolkata’s decision in this case is a landmark ruling that provides clarity on the interpretation of service classifications under the DGFT’s Explanatory Notes to Provisional CPC. It also emphasizes the importance of transparency and good faith in dealings with customs and trade authorities. By setting aside the penalties, the Tribunal has reinforced the principle that genuine errors in interpretation should not be penalized harshly, provided there is no evidence of willful suppression or malafide intent. This judgment will serve as a guiding precedent for similar cases in the future.

Source: CESTAT Kolkata

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March 17, 2026
CESTAT Mumbai Sets Aside Enhanced Valuation and Penalty on Flipkart
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 17.03.2026

CESTAT Mumbai Sets Aside Enhanced Valuation and Penalty on Flipkart

Adv Ravi Shekhar Jha

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

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai, recently delivered a landmark judgment in the case of Flipkart India Private Limited vs. Commissioner of Customs (Import), setting aside the enhanced valuation, confiscation, redemption fine, and penalty imposed on Flipkart India Private Limited by the Commissioner of Customs (Appeals), Mumbai Zone-III. The case revolved around the alleged undervaluation of imported goods and the subsequent re-determination of their assessable value by the customs authorities.

Background of the Case 

Flipkart India Private Limited filed Customs Appeal No. 89472 of 2018, challenging the Order-in-Appeal dated January 19, 2018, which upheld the original authority’s decision to enhance the assessable value of imported goods, confiscate them, and impose penalties. The goods in question were 28,600 units of “Power Bank 5200mAH” (part number VXN4062IN) imported from M/s Xiaomi Singapore PTE Limited, Singapore. The declared unit value of the goods was US $3.64, which the customs authorities rejected, citing alleged undervaluation based on contemporaneous import data.

The original authority had re-determined the assessable value of the goods at Rs. 454.50 per unit, based on the import value of similar goods supplied to M/s Beetel Teletech Limited at Rs. 454.50 per unit. The customs authorities also imposed a redemption fine and penalty under Sections 125(1) and 112(a) of the Customs Act, 1962, and confiscated the goods under Section 111(m) of the Act.

Key Issues in the Case 

The Tribunal was tasked with determining two critical issues:
1. Whether the enhancement of the value of imported goods based on the value of similar goods was sustainable under Section 14 of the Customs Act, 1962, and the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 (CVR).
2. Whether the consequential actions of confiscation, imposition of redemption fine, and penalty were legally justified under the Customs Act, 1962.
Arguments Presented

Arguments by Flipkart India Private Limited 

The learned advocate for Flipkart India Private Limited argued that:
1. The declared transaction value of US $3.64 per unit was accurate and should have been accepted under Rule 3 of the CVR, as it was based on a valid supply agreement with the foreign supplier, M/s Xiaomi Singapore PTE Limited.
2. The customs authorities failed to consider the value of identical goods imported by Flipkart from the same supplier during the same period, which were cleared without dispute at the declared value.
3. The re-determined value of Rs. 454.50 per unit was based on a single transaction of 10,000 units imported by M/s Beetel Teletech Limited, which was not comparable to Flipkart’s wholesale-level import of 28,600 units as part of a larger purchase order for 2,00,000 units.
4. The customs authorities did not follow the sequential application of Rules 4 to 9 of the CVR, as mandated by law, and failed to provide evidence of mis-declaration or flowback of additional consideration.
5. The alleged undervaluation was based on a misinterpretation of the INCO terms in the proforma invoice, which was later clarified by the supplier.
Arguments by the Revenue 

The learned authorized representative for the Revenue justified the impugned order, arguing that:
1. The enhancement of the value was based on contemporaneous import data of similar goods, which was valid under Rule 5 of the CVR.
2. The mis-declaration of INCO terms and undervaluation empowered the customs authorities to reject the declared value and impose penalties and fines.
Tribunal’s Observations and Findings 

After carefully examining the submissions and evidence presented by both sides, the Tribunal made the following observations:
1. Rejection of Declared Value: The Tribunal noted that the customs authorities had failed to consider the transaction value of identical goods imported by Flipkart from the same supplier during the same period. The declared value of US $3.64 per unit for 1,71,400 units of identical goods was accepted by the same Customs Commissionerate without dispute. The authorities instead relied on a single transaction of 10,000 units imported by M/s Beetel Teletech Limited at Rs. 454.50 per unit, which was not comparable in terms of commercial level and quantity.
2. Sequential Application of CVR Rules: The Tribunal emphasized that the customs authorities did not follow the sequential application of Rules 4 to 9 of the CVR, as required by law. The authorities directly invoked Rule 5 without considering the transaction value under Rule 3 or the value of identical goods under Rule 4.
3. Mis-declaration of INCO Terms: The Tribunal found that the alleged mis-declaration of INCO terms was adequately explained by the supplier’s letter dated March 9, 2015, which clarified that the terms of sale were on a “CIP” basis. The customs authorities failed to provide evidence to support their claim that the declared value was incorrect.
4. Confiscation, Fine, and Penalty: The Tribunal held that the confiscation of goods under Section 111(m) of the Customs Act, 1962, and the imposition of redemption fine and penalty were not justified, as the customs officers who examined the goods did not report any mis-declaration, and the mandatory requirements for labeling were complied with.
5. Judicial Precedents: The Tribunal relied on several judicial precedents, including Suyog Extrusions, Sarto Electro Equipment Ltd., Agarwal Foundries (P) Ltd., and South India Television (P) Ltd., to conclude that the transaction value cannot be rejected without evidence of contemporaneous imports of identical or similar goods at higher prices.
Final Decision

The Tribunal set aside the impugned order dated January 19, 2018, and allowed the appeal filed by Flipkart India Private Limited. The Tribunal ruled that the re-determination of the assessable value, confiscation of goods, and imposition of redemption fine and penalty were not sustainable under the Customs Act, 1962, and the CVR, 2007.

Key Takeaways
1. Importance of Transaction Value: The judgment reinforces the principle that the transaction value declared by the importer should be accepted unless there is concrete evidence to prove undervaluation or mis-declaration.
2. Sequential Application of CVR Rules: Customs authorities must follow the sequential application of Rules 4 to 9 of the CVR when determining the assessable value of imported goods.
3. Burden of Proof: The onus is on the customs authorities to prove that the declared value is incorrect, supported by evidence of contemporaneous imports of identical or similar goods at higher prices.
4. Commercial Level and Quantity: The price of imported goods at the wholesale level cannot be compared to the price of goods
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Source: CESTAT Mumbai

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March 17, 2026
CESTAT Chandigarh- Inconclusive Test Reports Cannot Justify Reclassification or Penalties in Customs Disputes
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 16.03.2026

CESTAT Chandigarh- Inconclusive Test Reports Cannot Justify Reclassification or Penalties in Customs Disputes

Adv Ravi Shekhar Jha

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

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Chandigarh, recently delivered a significant judgment in a series of appeals concerning the classification of imported goods. The case revolved around whether the imported goods declared as “Pressed Distillate Oil” (PDO) could be classified as “Base Oil” based on inconclusive test reports from the Central Revenue Control Laboratory (CRCL). This decision has far-reaching implications for importers and the customs authorities, particularly in cases involving disputes over product classification and valuation.

Background of the Case

The appeals stemmed from two separate cases:
1. Appeals by M/s S.K. Petrochem and Shri Jeevan Jain M/s S.K. Petrochem imported consignments of “Pressed Distillate Oil” and filed four Bills of Entry for clearance. The CRCL test report indicated that the samples had characteristics of “Base Oil,” leading to the seizure of goods and issuance of a Show Cause Notice proposing reclassification, penalties, and fines. The adjudicating authority confirmed the proposals, imposing penalties under Section 114A of the Customs Act, 1962. M/s S.K. Petrochem and Shri Jeevan Jain challenged the order.
2. Appeals by Revenue Against M/s Om Udyog M/s Om Udyog imported similar consignments and filed two Bills of Entry, declaring the goods as “Pressed Distillate Oil.” The CRCL test report suggested the goods had characteristics of “Base Oil,” leading to their seizure and reclassification. However, the Commissioner (Appeals) set aside the original order, dropping the proceedings against M/s Om Udyog. The Revenue challenged this decision.
Key Issues in the Case 

The primary issue was whether the goods declared as “Pressed Distillate Oil” could be conclusively classified as “Base Oil” based on the CRCL test reports. The tribunal also examined whether the adjudicating authority’s refusal to allow cross-examination of the chemical examiner constituted a violation of natural justice.

Arguments Presented
- Appellants’ Arguments: The appellants argued that the CRCL test reports were inconclusive, as they merely stated that the samples had characteristics of “Base Oil” without definitively classifying the goods as such. They contended that the denial of cross-examination of the chemical examiner was a violation of natural justice. The appellants cited previous judgments, including the CESTAT Chandigarh’s decision in the case of M/s Golden Enterprises, which held that inconclusive test reports could not be the basis for reclassification and penalties.
- Revenue’s Arguments: The Revenue defended the original orders, reiterating that the CRCL test reports were sufficient to classify the goods as “Base Oil” and justify the penalties and fines imposed.
Tribunal’s Observations and Findings 

After hearing both sides and reviewing the case records, the tribunal made the following observations:
1. Inconclusive Test Reports: The CRCL test reports merely indicated that the samples had characteristics of “Base Oil” but did not categorically classify the goods as such. The tribunal noted that the chemical examiner’s report lacked definitive findings and failed to address whether the goods were “Base Oil” or “Pressed Distillate Oil.”
2. Violation of Natural Justice: The tribunal emphasized that the adjudicating authority’s refusal to allow cross-examination of the chemical examiner constituted a serious violation of the principles of natural justice. Cross-examination would have provided clarity and potentially resolved the ambiguity in the test reports.
3. Precedents: The tribunal referred to its earlier decision in the case of M/s Golden Enterprises, which was upheld by the Supreme Court. In that case, the court ruled that inconclusive test reports could not be the basis for reclassification or allegations of misdeclaration.
4. Benefit of Doubt: Given the lack of conclusive evidence, the tribunal decided to give the benefit of the doubt to the importers. It held that the Revenue had failed to establish that the goods were “Base Oil” and not “Pressed Distillate Oil.”
Final Decision

The tribunal delivered its final order on March 9, 2026:
1. The appeals filed by M/s S.K. Petrochem and Shri Jeevan Jain were allowed, with consequential relief as per the law.
2. The appeals filed by the Revenue against M/s Om Udyog were dismissed, upholding the Commissioner (Appeals)’ decision to drop the proceedings.
Implications of the Judgment

This landmark decision underscores the importance of adhering to the principles of natural justice in adjudication processes. It highlights the need for conclusive evidence when alleging misdeclaration or reclassification of imported goods. The judgment also sets a precedent for future cases involving disputes over product classification, emphasizing that inconclusive test reports cannot be the sole basis for imposing penalties or fines.

Conclusion

The CESTAT Chandigarh’s decision in these appeals serves as a reminder to customs authorities to ensure thorough investigations and adherence to procedural fairness. For importers, the judgment provides reassurance that they will not be penalized based on inconclusive evidence. As global trade continues to grow, such decisions play a crucial role in maintaining a fair and transparent customs framework.

Source: CESTAT Chandigarh

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March 16, 2026
Delhi High Court Dismisses Customs Appeal in Customs Broker License Dispute
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 16.03.2026

Delhi High Court Dismisses Customs Appeal in Customs Broker License Dispute

Adv Ravi Shekhar Jha

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

On March 12, 2026, the High Court of Delhi delivered a significant judgment in the case of Commissioner of Customs Airport and General vs. M/S Entire Logistics Pvt Ltd. The case revolved around the revocation of the Customs Broker License of M/S Entire Logistics Pvt Ltd by the Commissioner of Customs, which was subsequently overturned by the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT). The High Court upheld the decision of CESTAT, dismissing the appeal filed by the Commissioner of Customs.

Background of the Case

The dispute originated from a show cause notice issued to M/S Entire Logistics Pvt Ltd on December 30, 2022, alleging violations of Regulations 10(a), 10(d), 10(e), and 10(n) of the Customs Brokers Licensing Regulations (CBLR), 2018. The Commissioner of Customs passed an Order-in-Original on February 14, 2024, revoking the Customs Broker License of the respondent. However, this order was challenged before CESTAT, which quashed the revocation on August 28, 2024, citing procedural lapses and lack of clarity in the show cause notice.

The Commissioner of Customs subsequently filed an appeal under Section 130 of the Customs Act, 1962, before the High Court of Delhi, seeking to overturn the CESTAT decision.

Arguments Presented
1. Appellant’s Arguments:
  - The appellant argued that the show cause notice clearly outlined the violations of Regulations 10(a), 10(d), 10(e), and 10(n) of CBLR, 2018.
  - The appellant contended that the show cause notice referred to specific material from another notice issued under the Customs Act, 1962, which substantiated the alleged violations.
  - It was claimed that the inquiry report and Order-in-Original provided sufficient notice to the respondent regarding the violations.
2. Respondent’s Arguments:
  - The respondent argued that the show cause notice was vague and lacked specific allegations, making it difficult to understand the exact nature of the violations.
  - The respondent contended that the Order-in-Original went beyond the scope of the show cause notice, relying on material not explicitly mentioned in the notice.
  - The respondent emphasized that the lack of clarity in the show cause notice violated the principles of natural justice.
High Court’s Observations

The High Court carefully examined the arguments and the relevant legal provisions. Key observations included:
1. Vagueness of the Show Cause Notice:
  - The Court noted that the show cause notice failed to specify how the alleged violations fell within the ambit of the cited regulations. This lack of clarity made it difficult for the respondent to prepare an adequate defense.
2. Violation of Principles of Natural Justice:
  - The Court emphasized that the show cause notice is the foundation of any legal proceedings. If the notice is vague or lacks specific details, it violates the principles of natural justice, as the noticee is not given a fair opportunity to respond to the allegations.
3. Order-in-Original Exceeding Scope:
  - The Court agreed with CESTAT’s finding that the Order-in-Original had relied on material not included in the show cause notice, thereby exceeding its scope.
4. No Substantial Question of Law:
  - The Court concluded that the appeal did not involve any substantial question of law, as the issues raised were factual and procedural rather than legal.
Judgment

The High Court dismissed the appeal, upholding the CESTAT’s decision to quash the revocation of the Customs Broker License. The Court reiterated the importance of adhering to the principles of natural justice and ensuring that show cause notices are clear and specific.

Key Takeaways
1. Importance of Clarity in Show Cause Notices:
  - This case highlights the critical role of clarity and specificity in show cause notices. Authorities must ensure that notices provide sufficient details to enable the noticee to respond effectively.
2. Adherence to Principles of Natural Justice:
  - The judgment underscores the importance of adhering to the principles of natural justice in administrative proceedings. Any deviation from these principles can render the proceedings invalid.
3. Scope of Orders:
  - Authorities must ensure that orders are confined to the scope of the show cause notice and do not rely on extraneous material.
Conclusion

The High Court’s decision in this case serves as a reminder to regulatory authorities to exercise due diligence while issuing show cause notices and passing orders. It also reinforces the judiciary’s commitment to upholding the principles of natural justice and ensuring fairness in administrative proceedings.

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Source: Delhi High Court

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March 16, 2026
CESTAT Mumbai Overturns Duty Demand in SAD Exemption Dispute
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 14.03.2026

CESTAT Mumbai Overturns Duty Demand in SAD Exemption Dispute

Adv Ravi Shekhar Jha

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

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai, recently delivered a landmark judgment in favor of India Steel Works Limited and its General Manager, in the Customs Appeal Nos. 86427 and 86428 of 2016. The appeals challenged the Order-in-Original No. 21/2015-16/RT-13/NS-GEN dated February 29, 2016, issued by the Principal Commissioner of Customs (NS-GEN), Jawaharlal Nehru Custom House (JNCH), Nhava Sheva. The case revolved around the eligibility of India Steel Works Limited to claim exemption from the Special Additional Duty of Customs (SAD) under Notification No. 45/2005-Customs dated May 16, 2005.

Background of the Case 

India Steel Works Limited, a manufacturer of stainless steel products, imported goods such as waste and scrap of stainless steel, stainless steel billets, and ferro alloys through the Free Trade Warehousing Zone (FTWZ) operated by M/s Arshiya Supply Chain Management Limited. These goods were used in the production of stainless steel products, which were later sold in the Domestic Tariff Area (DTA) upon payment of applicable VAT/sales tax. The company availed the SAD exemption benefit under Notification No. 45/2005-Customs, which provides exemption from the whole of SAD for goods cleared from SEZ/FTWZ to DTA, provided the goods are not exempt from sales tax or VAT.

However, based on intelligence developed by the Directorate General of Central Excise Intelligence (DGCEI), Mumbai Zonal Unit, a Show Cause Notice (SCN) dated June 16, 2015, was issued to the appellants. The SCN alleged that India Steel Works Limited had wrongly availed the SAD exemption benefit and demanded Rs. 4,06,30,866/- in SAD along with interest under Section 28(4) of the Customs Act, 1962. The SCN also proposed the confiscation of goods under Section 111(o) and the imposition of penalties under Sections 112 and 114AA of the Customs Act.

The Principal Commissioner of Customs upheld the SCN, confirming the duty demands, confiscation of goods, and penalties. Aggrieved by this decision, the appellants filed appeals before the CESTAT.

Arguments Presented

Appellants’ Arguments 
1. Eligibility for SAD Exemption: The appellants argued that the issue of eligibility for SAD exemption on clearance from FTWZ to DTA had already been conclusively settled in favor of appellants in multiple decisions by the Tribunal. They contended that stock transfers from FTWZ to DTA cannot be equated with exemptions from sales tax/VAT.
2. Disclosure of Facts: The appellants maintained that they had made complete disclosures to the Department and followed all prescribed procedures. They argued that there was no suppression of facts or malafide intent.
3. Industry-Wide Issue: The appellants highlighted that the issue was subject to varying interpretations by different government wings, and they had acted in good faith based on assurances from the Development Commissioner of SEZ/FTWZ and the FTWZ unit.
4. Time-Barred Demand: The appellants contended that the demand for the disputed period (April 2012 to March 2013) was barred by the limitation period, as the SCN was issued beyond the normal period of one year.
Revenue’s Arguments 
1. Clarification from Ministry of Finance: The Revenue argued that Customs Circular No. 44/2013 dated December 30, 2013, clarified that SAD exemption was not available for goods cleared from SEZ/FTWZ to DTA on a stock transfer basis for self-consumption.
2. Misleading Undertaking: The Revenue alleged that the appellants had provided misleading undertakings and suppressed facts to avail the SAD exemption.
CESTAT’s Observations and Ruling 

After hearing both sides and reviewing the case records, the Tribunal made the following observations:
1. Judicial Precedents: The Tribunal referred to several previous rulings, including CRI Limited vs. Commissioner of Customs and Serum Institute of India vs. Commissioner of Central Excise, which had upheld the eligibility for SAD exemption under similar circumstances. The Tribunal noted that the facts of the present case were identical to those in the CRI Limited case, which was upheld by the Supreme Court.
2. Notification Interpretation: The Tribunal emphasized that Notification No. 45/2005-Customs exempts all goods cleared from SEZ/FTWZ to DTA, provided the goods are not exempt from sales tax/VAT. The nature of clearance—whether by sale or stock transfer—was not specified in the notification, and the proviso regarding exemption from VAT was not applicable in this case.
3. No Suppression of Facts: The Tribunal found that the appellants had acted in good faith, relying on assurances from the Development Commissioner of SEZ/FTWZ and the FTWZ unit. There was no evidence of malafide intent or suppression of facts.
4. Time-Barred Demand: The Tribunal ruled that the demand for the disputed period was time-barred, as the SCN was issued beyond the normal limitation period of one year. The extended period of limitation could not be invoked due to the absence of suppression or misstatement.
Final Order

The Tribunal set aside the impugned order on the grounds of limitation and ruled in favor of the appellants. The adjudged demands, confiscation of goods, and penalties were all quashed.

Key Takeaways
1. SAD Exemption: The judgment reinforces the principle that SAD exemption under Notification No. 45/2005-Customs is applicable to goods cleared from SEZ/FTWZ to DTA, even on a stock transfer basis, provided the goods are not exempt from sales tax/VAT.
2. Importance of Disclosure: The Tribunal highlighted the significance of full disclosure and compliance with prescribed procedures to avoid allegations of suppression or malafide intent.
3. Limitation Period: The ruling underscores the importance of adhering to the limitation period for issuing SCNs, and that extended periods cannot be invoked without evidence of suppression or misstatement.
4. Judicial Precedents: The judgment demonstrates the importance of consistency in judicial decisions, with the Tribunal relying on previous rulings to arrive at its conclusion.
This decision is a significant win for India Steel Works Limited and sets a precedent for similar cases involving SAD exemption claims under Notification No. 45/2005-Customs. It also serves as a reminder to both taxpayers and authorities about the importance of adhering to legal provisions and established judicial principles.

Source: CESTAT Mumbai

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March 14, 2026
Understanding Section 135, GIR, and the Legal Implications of the Bombay High Court Judgment
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 14.03.2026

Understanding Section 135, GIR, and the Legal Implications of the Bombay High Court Judgment

Adv Ravi Shekhar Jha

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

The Customs Act, 1962, is a pivotal legislation in India that governs the import and export of goods, ensuring compliance with customs duties and preventing illegal activities such as smuggling. One of the most significant provisions under this Act is Section 135, which deals with penalties for offences related to customs violations. Recently, the Bombay High Court delivered a landmark judgment that delved into the procedural aspects of investigations under the Customs Act, particularly in relation to Section 135 and the General Interpretative Rules (GIR) for classification of goods.

Section 135 of the Customs Act, 1962: An Overview 

Section 135 of the Customs Act lays down penalties for offences such as misdeclaration of value, fraudulent evasion of duty, and dealing with prohibited goods. The section is divided into two parts:
1. Section 135(1): This subsection prescribes penalties for individuals who:
  - Misdeclare the value of goods or fraudulently evade or attempt to evade customs duty.
  - Acquire possession of goods liable for confiscation under Sections 111 or 113 of the Customs Act.
  - Attempt to export goods that are liable for confiscation under Section 113.
The penalties under Section 135(1) are categorized based on the severity of the offence:
1. If the market price of the goods exceeds ₹1 crore, or the evasion of duty exceeds ₹30 lakh, or the goods are prohibited as notified by the Central Government, the offence is punishable with imprisonment for up to 7 years and a fine. The minimum imprisonment is one year unless special reasons are recorded.
2. For other cases, the punishment may extend to 3 years of imprisonment, a fine, or both.
3. Section 135(2): This subsection deals with repeat offenders. If a person convicted under Section 135 or Section 136(1) is convicted again for a similar offence, they may face imprisonment for up to 7 years and a fine, with a minimum imprisonment of one year unless special reasons are recorded.
General Interpretative Rules (GIR) and Classification of Goods

The General Interpretative Rules (GIR) are a set of guidelines used for the classification of goods under the Harmonized System of Nomenclature (HSN). These rules are critical for determining the correct classification of goods for customs purposes, which directly impacts the applicable duty rates.

The GIR consists of six rules:
1. Rule 1: Classification is determined according to the terms of the headings and any relevant section or chapter notes.
2. Rule 2: Covers incomplete or unfinished goods and mixtures or combinations of materials.
3. Rule 3: Provides guidance for classifying goods that could fall under multiple headings.
4. Rule 4: States that goods not specifically covered by any heading should be classified under the heading most akin to them.
5. Rule 5: Deals with cases where goods are sold in sets or containers.
6. Rule 6: Specifies that classification should be determined at the subheading level.
The GIR plays a crucial role in ensuring uniformity and consistency in the classification of goods, which is essential for the proper implementation of customs laws, including Section 135.

The Bombay High Court Judgment: Key Legal Principles

The Bombay High Court judgment in the case involving Adani Power Limited and the Directorate of Revenue Intelligence (DRI) provides significant insights into the procedural requirements for investigations under the Customs Act. The case revolved around allegations of overvaluation of Indonesian coal imports by Adani Group companies, which allegedly led to the evasion of customs duties and manipulation of power tariff compensation.

Key Allegations

The DRI alleged that Adani Group companies:
- Overstated the import value of Indonesian coal compared to its actual export value.
- Misdeclared the grade and value of coal to evade customs duties.
- Benefited from concessional duty rates under the ASEAN-India Free Trade Agreement (AIFTA) while overstating the value of imported coal.
The DRI sought to issue Letters of Rogatory (LRs) under Section 166A of the CrPC to collect evidence from foreign jurisdictions, including Singapore, UAE, Hong Kong, and the British Virgin Islands.

Legal Issues Addressed 

The court examined whether the DRI had legally and validly commenced its investigation into the alleged offences under Section 135 of the Customs Act and whether it was entitled to invoke Section 166A of the CrPC for issuing Letters of Rogatory.

Court’s Observations 
1. Procedural Safeguards Under CrPC: The court emphasized that the Customs Act does not provide a specific procedure for initiating investigations into cognizable or non-cognizable offences. Therefore, the procedural safeguards under Chapter XII of the CrPC, including Sections 154 and 155, must be followed.
2. Non-Obstante Clause in Section 166A: The court clarified that the non-obstante clause in Section 166A of the CrPC does not override the mandatory procedural safeguards in Chapter XII of the CrPC. Section 166A can only be invoked during a valid investigation initiated under Sections 154 or 155.
3. Customs Act as a Special Law: While the Customs Act is a special law, it does not provide a comprehensive procedure for initiating investigations. In the absence of such provisions, the procedural framework of the CrPC must be followed.
4. Invalidity of Letters of Rogatory: The court held that the Letters of Rogatory issued by the Magistrate were invalid because the investigation was not initiated in compliance with the mandatory procedural requirements of the CrPC.
Impact on Section 135 and GIR 

The judgment highlights the importance of adhering to procedural safeguards when investigating offences under Section 135 of the Customs Act. Misdeclaration of goods, as alleged in this case, often involves complex issues of classification under the General Interpretative Rules (GIR). Accurate classification is crucial to determine the correct duty rates and avoid penalties under Section 135.

Conclusion

The Bombay High Court judgment underscores the interplay between the Customs Act, the CrPC, and the General Interpretative Rules (GIR). It establishes that procedural safeguards under the CrPC must be followed for investigations under the Customs Act, even when the Act classifies offences as cognizable or non-cognizable. The judgment also highlights the critical role of GIR in ensuring accurate classification of goods, which is essential for compliance with customs laws and avoiding penalties under Section 135.

Source: Bombay High Court

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March 14, 2026
CESTAT Delhi Sets Aside Customs Duty, Penalty, and Redemption Fine on Imported Marble Blocks
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 13.03.2026

CESTAT Delhi Sets Aside Customs Duty, Penalty, and Redemption Fine on Imported Marble Blocks

Adv Ravi Shekhar Jha

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

On March 9, 2026, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, delivered a significant judgment in the case of M/s Abhishek Exports, M/s Jain Grani Marmo (P) Ltd., and M/s Pacific Industries Ltd. The case revolved around the demand for customs duties, penalties, and redemption fines imposed on imported marble blocks used by 100% Export Oriented Units (EOUs) for domestic tariff area (DTA) sales. This article delves into the details of the case, the arguments presented, and the tribunal’s findings.

Background of the Case

The appellants—M/s Abhishek Exports, M/s Jain Grani Marmo (P) Ltd., and M/s Pacific Industries Ltd.—are 100% Export Oriented Units (EOUs) engaged in the production of marble slabs and tiles. EOUs are permitted to import capital goods and raw materials duty-free under the Foreign Trade Policy (FTP) 2004-2009, provided they export their final products. However, paragraph 6.8 of the FTP allows EOUs to sell a limited quantity of finished products, rejects, waste, scrap, remnants, and by-products in the Domestic Tariff Area (DTA) under certain conditions.

In 2005, the Directorate General of Foreign Trade (DGFT) issued Notification No. 24 (RE-2005)/2004-2009, which excluded marble from the list of items that could be sold by EOUs in the DTA. The appellants challenged this notification in the Rajasthan High Court, which issued a stay order permitting DTA sales of marble slabs subject to payment of full duties as per the FTP.

Key Issues in the Case 

The case raised several critical questions:
1. Demand for Customs Duties on Imported Marble Blocks: The department alleged that the appellants violated the conditions of the DGFT notification by selling marble slabs in the DTA without exporting the finished products. Consequently, customs duties were demanded on the imported marble blocks.
2. Extended Period of Limitation: The department invoked the extended period of limitation, alleging suppression of facts and non-disclosure of DTA clearances.
3. Penalties Under Section 114A: The department imposed penalties under Section 114A of the Customs Act, claiming collusion, willful misstatement, or suppression of facts.
4. Confiscation and Redemption Fine: The department held the imported marble blocks liable for confiscation under Sections 111(d) and 111(o) of the Customs Act and imposed redemption fines in lieu of confiscation.
Arguments Presented

Appellants’ Submissions 
1. Payment of Duties: The appellants argued that they had cleared finished products to the DTA after paying full excise duties equivalent to the aggregate customs duties, as per the proviso to Section 3(1) of the Central Excise Act, 1944.
2. High Court Stay Orders: The High Court had permitted DTA sales upon payment of full duties, and the appellants complied with this directive.
3. No Collusion or Suppression: The appellants contended that there was no collusion, willful misstatement, or suppression of facts, and all clearances were made transparently under the High Court’s stay orders.
4. Non-Applicability of Confiscation: The appellants argued that the imported marble blocks were not liable to confiscation under Sections 111(d) and 111(o) of the Customs Act, as their import was authorized by the Development Commissioner and cleared by the proper officer.
Revenue’s Submissions 
1. Strict Interpretation of Exemption Notifications: The Revenue argued that the exemption notification for imported marble blocks was subject to strict conditions, which the appellants allegedly violated.
2. Extended Limitation Period: The Revenue claimed that the appellants did not disclose DTA clearances, justifying the invocation of the extended period of limitation.
3. Confiscation and Redemption Fine: The Revenue contended that the imported marble blocks were liable to confiscation under Sections 111(d) and 111(o) of the Customs Act, and redemption fines were correctly imposed.
Tribunal’s Findings 

After considering the submissions and reviewing the records, the tribunal made the following key findings:
1. Customs Duty Demand: The tribunal held that the demand for customs duties on the imported marble blocks was unsustainable. The appellants had paid central excise duties equal to the customs duties on the finished marble slabs cleared to the DTA, as per the High Court’s stay orders. Since the value of finished products is higher than the raw materials, there was no loss of revenue.
2. Extended Limitation Period: The tribunal did not delve into the question of limitation, as the demand for customs duties was set aside on merits.
3. Penalty Under Section 114A: The tribunal ruled that penalties under Section 114A could not be imposed, as the duty itself was not payable and there was no evidence of collusion, willful misstatement, or suppression of facts.
4. Confiscation and Redemption Fine: The tribunal found that the imported marble blocks were not liable to confiscation under Sections 111(d) and 111(o) of the Customs Act. The High Court’s stay orders had sanctioned the DTA clearances, and the goods were not available for confiscation. Redemption fines were also deemed unsustainable, as they are optional and the goods were not seized or provisionally released on bond.
Conclusion

The tribunal’s decision in this case is a landmark ruling that clarifies several critical aspects of customs and excise law, particularly concerning EOUs and DTA sales. The judgment underscores the importance of adhering to judicial orders and highlights the limitations of the Revenue’s authority in cases where High Court stay orders are in effect. By setting aside the demands for customs duties, penalties, and redemption fines, the tribunal has provided significant relief to the appellants and reinforced the principle that judicial orders must be respected.

This case serves as a precedent for similar disputes involving EOUs and DTA sales, offering clarity on the interpretation of customs and excise laws in the context of the Foreign Trade Policy and related notifications. It also emphasizes the need for a balanced approach that considers both the interests of the Revenue and the rights of taxpayers.

Source: CESTAT Delhi

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March 13, 2026
CESTAT Kolkata Clarifies Anti-Dumping Duty Applicability During Notification Gap Period
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 13.03.2026

CESTAT Kolkata Clarifies Anti-Dumping Duty Applicability During Notification Gap Period

Adv Ravi Shekhar Jha

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

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Kolkata recently delivered a landmark judgment in the case of M/s. SIBCO Overseas Pvt. Ltd. v. Commissioner of Customs (Port), Kolkata. This case revolved around the retrospective applicability of Anti-Dumping Duty (ADD) on imported PVC Flex Banner from China during a period when no provisional or definitive ADD notification was in force. The judgment provides critical insights into the legal framework governing ADD and its retrospective application under Indian law.

Background of the Case

M/s. SIBCO Overseas Pvt. Ltd. imported PVC Flex Banner from China on June 4, 2011, under Bill of Entry No. 3702906. At the time of import, no ADD notification was in force, as the provisional ADD imposed under Notification No. 79/2010-CUS dated July 30, 2010, had expired on January 29, 2011. Subsequently, Notification No. 82/2011-CUS dated August 25, 2011, imposed definitive ADD with retrospective effect for five years from July 30, 2010, the date of imposition of the provisional ADD.

The appellant challenged the retrospective applicability of the definitive ADD, arguing that no ADD notification was operative at the time of import. Additionally, the appellant raised concerns about the delayed finalization of the provisional assessment, which took over ten years to complete.

Key Legal Issues 

The case presented two primary legal questions:
1. Retrospective Applicability of ADD: Could definitive ADD be levied retrospectively during the gap period between the expiration of the provisional ADD and the issuance of the definitive ADD notification?
2. Delayed Finalization of Provisional Assessment: Was the delay in finalizing the provisional assessment legally permissible?
Legal Framework

The case involved the interpretation of several legal provisions, including:
- Section 18 of the Customs Act, 1962: Governs provisional assessment of duty and its finalization.
- Section 9A of the Customs Tariff Act, 1975: Provides for the imposition of ADD on dumped articles.
- Customs Tariff (Identification, Assessment, and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995: Specifies the procedures for imposing ADD, including provisions for provisional and definitive duties.
- Customs (Finalization of Provisional Assessment) Regulations, 2018: Introduced timelines for finalizing provisional assessments.
Tribunal’s Observations

1. Retrospective Applicability of ADD 

The Tribunal relied heavily on the Supreme Court’s judgment in Commissioner of Customs, Bangalore v. G.M. Exports (2015), which categorically held that ADD cannot be levied during the “gap period” between the expiration of provisional ADD and the imposition of definitive ADD. The Court emphasized that retrospective levy of ADD is permissible only under specific circumstances outlined in Section 9A(3) of the Customs Tariff Act, and any attempt to levy ADD during the gap period would render the relevant provisions ultra vires.

The Tribunal also referred to other judicial precedents, including:
- Hi-tech Computers v. Commissioner of Customs, Bangalore (2023): Held that ADD cannot be levied during the gap period.
- Harsh Commodities Pvt. Ltd. v. Commissioner of Customs, Kandla (2020): Confirmed that ADD cannot be imposed during the lapse between provisional and definitive notifications.
- Forech India Ltd. v. Designated Authority (2018): Stated that ADD cannot be revived after its lapse without strict adherence to legal timelines.
2. Delayed Finalization of Provisional Assessment 

The Tribunal noted that while the delay in finalizing the provisional assessment was concerning, it could not be legally faulted because the Customs (Finalization of Provisional Assessment) Regulations, 2018, which introduced strict timelines for finalization, were not in force at the time of the import. The Tribunal also observed that the delay was partly attributable to the appellant’s delayed response to the authorities’ communications.

Key Takeaways from the Judgment
1. No ADD During Gap Period: The Tribunal reaffirmed that ADD cannot be levied during the gap period between the expiration of provisional ADD and the issuance of definitive ADD notification. This principle is in line with the Supreme Court’s judgment in G.M. Exports and India’s obligations under the WTO Anti-Dumping Agreement.
2. Retrospective Levy Requires Strict Compliance: The retrospective imposition of ADD is permissible only under the strict conditions outlined in Section 9A(3) of the Customs Tariff Act and the ADD Rules. Any deviation from these conditions renders the levy unsustainable.
3. Delayed Finalization of Provisional Assessments: While the Tribunal acknowledged the delay in finalizing the provisional assessment, it noted that the absence of strict timelines at the material time made it legally permissible. However, the Tribunal emphasized the importance of timely action by authorities to maintain trust in the system.
4. Jurisdiction of Tribunal Benches: The Tribunal clarified that its jurisdiction to hear appeals related to ADD is not restricted to Special Benches unless the appeal pertains specifically to the determination of the existence, degree, and effect of dumping under Section 9C(1) of the Customs Tariff Act.
Conclusion

The judgment in the case of M/s. SIBCO Overseas Pvt. Ltd. v. Commissioner of Customs (Port), Kolkata, is a significant development in the realm of anti-dumping law in India. It underscores the importance of adhering to legal provisions and timelines for the imposition and finalization of ADD. The Tribunal’s decision not only provides clarity on the retrospective applicability of ADD but also highlights the need for administrative efficiency in finalizing provisional assessments.

Source: CESTAT Kolkata

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March 13, 2026