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  • Delhi HC: Importers Cannot Be Penalised for Administrative Failure of Customs Settlement Board

    Delhi HC: Importers Cannot Be Penalised for Administrative Failure of Customs Settlement Board

    Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

    Date: 29.10.2026

    Delhi HC: Importers Cannot Be Penalised for Administrative Failure of Customs Settlement Board

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

    The Delhi High Court has ruled that the statutory clock for customs settlement proceedings must stop when the Interim Board for Settlement is unable to function for want of quorum, protecting applicants from losing their settlement remedy because of an institutional vacancy.

    Background of the dispute

    Holitech India Private Limited, an importer of components used in cellular mobile phones and related products, faced two customs show-cause notices dated 21 September 2023. The notices concerned alleged wrongful use of a customs-duty exemption notification, classification issues, and alleged non-payment of differential duty on unutilised or rejected goods.

    To resolve the disputes through the settlement route under Chapter XIVA of the Customs Act, 1962, Holitech filed settlement applications. After earlier applications were not admitted, fresh applications filed in August 2024 and March 2025 were admitted and taken forward.

    Following amendments introduced through the Finance Act, 2025, pending matters before the Settlement Commission were transferred to the Interim Board for Settlement-I, Delhi. The Board heard Holitech, co-applicants and departmental representatives on 22 August 2025. Holitech also supplied additional written submissions requested by the Board, and the matters were reserved for orders.

    The quorum issue

    Before the Interim Board could issue its orders, one of its members retired on 30 September 2025. From 1 October 2025, the Board lacked the required quorum and could not legally continue with or decide the settlement proceedings.

    The Board’s office later confirmed that the applications had remained pending β€œfor want of quorum” since 1 October 2025. Despite this acknowledged inability to function, communications dated 17 April 2026 treated the proceedings as abated from 8 April 2026 because no settlement order had been passed within the period prescribed by Section 127C of the Customs Act.

    The communications also stated that the jurisdictional customs authorities could resume adjudication of the show-cause notices.

    The legal question

    The central issue before the Delhi High Court was whether settlement proceedings automatically abate when the statutory deadline expires, even though the Interim Board was legally incapable of passing an order because it did not have the required quorum.

    Holitech argued that it had done everything required of it: its applications were admitted, hearings were completed, written submissions were filed and nothing remained pending on its side. It contended that it should not lose a statutory remedy because the adjudicatory forum became non-functional for administrative reasons.

    The respondents argued that the statutory time limit was mandatory and that, once it expired without an order, abatement followed automatically. They maintained that the law contained no express exception for a period when the Board lacked quorum.

    The Court’s reasoning

    The Court rejected a purely literal reading of the statutory time limit. It held that Section 127C must be interpreted as a complete scheme, rather than by isolating the provisions on deadlines and abatement.

    The Court emphasized that the statutory timeline assumes the continued existence of a legally constituted authority capable of carrying out its duties. A body without quorum cannot validly exercise adjudicatory powers or pronounce an order affecting the parties’ rights.

    The Court drew a critical distinction between:

    • a delay caused while a competent authority is able to decide but fails to do so; and
    • a delay caused because the authority itself is legally unable to function.

    Treating these situations identically, the Court said, would produce an unreasonable result. An applicant who had diligently pursued settlement proceedings would lose the remedy through circumstances entirely outside its control, while having no means to secure a decision from a non-functional Board.

    The Court held that the phrase requiring an order within the prescribed period cannot include a period during which the Interim Board had ceased to be an effective adjudicatory forum due to lack of quorum. The time for disposal must therefore exclude the period of institutional incapacity.

    Decision and relief granted

    The Court set aside both communications dated 17 April 2026 that had declared the settlement proceedings abated.

    It ruled that, for Holitech’s applications, the entire period from 1 October 2025 until 4 August 2026 must be excluded when calculating the timeline under Section 127C(8A), read with Section 127C(12), of the Customs Act.

    Because that period could not be counted, the alleged expiry of the statutory period on 8 April 2026 no longer had any legal basis. The settlement applications did not abate.

    The Court also noted that the vacancy had subsequently been filled and that Interim Board for Settlement-I, Delhi had regained the required quorum. It directed the Board to resume Holitech’s applications from the stage immediately before the abatement communications and decide them expeditiously in accordance with law.

    Why the ruling matters

    The decision establishes that statutory deadlines for settlement proceedings cannot be applied in a way that penalizes applicants for the adjudicatory forum’s legal inability to function.

    It preserves the purpose of the customs settlement mechanism: timely and conclusive resolution of disputes, without making access to that remedy dependent on administrative contingencies beyond an applicant’s control. The ruling does not decide the merits of Holitech’s customs disputes. Those issues remain open for determination by the duly constituted Interim Board.

    Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

    Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

    Source: Delhi High Court

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    Ravi Shekhar Jha – Advocate, Bar Council of Delhi

  • CESTAT Kolkata Upholds Classification of Ice-Cream Making Machinery Under CTH 8438

    CESTAT Kolkata Upholds Classification of Ice-Cream Making Machinery Under CTH 8438

    Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

    Date: 28.10.2026

    CESTAT Kolkata Upholds Classification of Ice-Cream Making Machinery Under CTH 8438

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

    The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata has dismissed six Revenue appeals against J.B. Pen Mart, holding that the disputed imported ice-cream making machinery should be classified under Customs Tariff Heading (CTH) 8438 rather than CTH 8418. The Tribunal also rejected Customs’ enhancement of the declared import value because the statutory reassessment procedure was not followed.

    The dispute: classification and valuation of imported machinery

    The case concerned six Bills of Entry filed by J.B. Pen Mart for imported ice-making and ice-cream making equipment during 2017 and 2018. The importer had sought classification under CTH 8438 80 90, covering machinery used in the industrial preparation or manufacture of food and drink.

    Customs authorities reclassified the goods under CTH 8418 69 90, treating them as ice-cream machines or refrigeration-related equipment. They also enhanced the declared value of the imports, resulting in an aggregate differential duty demand of Rs. 12,27,374.98.

    J.B. Pen Mart paid the additional duty to secure clearance of the goods and avoid demurrage, but did so under protest. The company challenged both the classification and the valuation before the Commissioner (Appeals), who ruled in its favour. The Revenue then appealed to CESTAT.

    Tribunal’s finding: no valid reassessment without a speaking order

    A central issue was the Customs department’s failure to issue a speaking order under Section 17(5) of the Customs Act, 1962.

    Where Customs reassesses goods contrary to an importer’s self-assessment on classification or value, the proper officer must issue a reasoned order within 15 days unless the importer has expressly accepted the reassessment in writing. In this case, the Tribunal found that no such order had been issued.

    The Tribunal rejected the Revenue’s argument that payment of the revised duty amounted to acceptance. It noted that J.B. Pen Mart had paid under protest, sought to avoid port-related charges, and subsequently challenged the reassessment. These facts showed that the importer had not accepted the revised classification or enhanced value.

    As a result, the Tribunal held that the reassessment was unsustainable for breach of statutory procedure and principles of natural justice.

    Why CTH 8438 was preferred over CTH 8418

    The Tribunal also found that the Department’s own past treatment of comparable machinery supported classification under CTH 8438.

    The record showed a consistent history of orders and assessments treating similar ice-cream making equipment as machinery for food preparation under CTH 8438, including:

    • A 2008 departmental review stating that ice-cream candy making machinery was classifiable under CTH 8438.
    • A 2012 Order-in-Appeal that classified an integrated ice-cream production system under CTH 8438 80 90.
    • The 2018 appellate order in J.B. Pen Mart’s own matter.
    • A 2025 Order-in-Appeal involving the same importer, which again held that complete ice-cream making and ice-cube machines belonged under CTH 8438 80 90.
    • A subsequent October 2018 clearance of identical goods for J.B. Pen Mart under CTH 8438.

    The Tribunal distinguished complete machinery used to prepare and dispense edible products from ordinary refrigeration equipment. While Heading 8418 covers refrigerators, freezers, and similar cooling equipment, the imported machines were designed for the production of ice cream and ice cubes as food products. Their principal function was food preparation, making CTH 8438 the more appropriate heading.

    Inconsistent departmental practice benefited the importer

    CESTAT observed that Customs had taken divergent positions over the years, classifying similar goods under CTH 8438 in 2008, 2012, 2018, and 2025, while seeking classification under CTH 8418 for the disputed 2017–2018 imports.

    The Tribunal held that Revenue could not selectively classify identical or similar goods under different tariff headings without cogent reasoning. Because the Department itself had created uncertainty through inconsistent practice, the benefit of that confusion had to go to the importer.

    The Tribunal also noted that prior appellate orders supporting CTH 8438 had not been effectively challenged or stayed by the Department. Those orders therefore continued to carry weight in determining the correct classification.

    Value enhancement was set aside

    The Tribunal upheld the Commissioner (Appeals)’ decision to reject the enhanced import values. Customs had not provided evidence showing why the transaction values declared by J.B. Pen Mart should be rejected, nor had it disclosed a lawful method for determining the enhanced values.

    The order emphasizes that transaction value cannot be discarded merely on assumption or routine assessment practice. Customs must first establish legally valid grounds under the Customs Valuation Rules, 2007. Comparable-import data, if relied upon, must be supported by evidence regarding quality, quantity, country of origin, and timing of imports.

    In this case, there was no evidence that the invoices were unreliable, that the buyer and seller were related, or that any amount over the invoice price had been paid. The failure to issue a Section 17(5) speaking order independently made the value enhancement invalid.

    Key takeaways from the decision

    • Classification must reflect the machine’s principal function. Complete machinery designed for making ice cream and ice cubes as edible products may fall under CTH 8438 as food-preparation machinery rather than under CTH 8418 as cooling equipment.
    • A speaking order is mandatory for disputed reassessments. Customs must issue a reasoned order under Section 17(5) when it changes declared classification or value without the importer’s written acceptance.
    • Payment to avoid demurrage is not acceptance. An importer’s payment of additional duty, particularly under protest, does not eliminate its right to challenge reassessment.
    • Declared value needs evidence to be rejected. Customs cannot enhance value without lawful reasons, supporting evidence, and compliance with the Customs Valuation Rules.
    • Consistency in assessments matters. When the Department has repeatedly accepted a particular classification for similar goods, it must provide strong reasons and follow due process before departing from that position.

    CESTAT Kolkata therefore dismissed the Revenue’s appeals and confirmed the relief granted to J.B. Pen Mart: classification under CTH 8438 and assessment at the importer’s declared values.

    Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

    Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

    Source: CESTAT Kolkata

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  • Supreme Court: Mere Allegations of Drug Trafficking Financing Cannot Establish Guilt Under Section 27A NDPS Act

    Supreme Court: Mere Allegations of Drug Trafficking Financing Cannot Establish Guilt Under Section 27A NDPS Act

    Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

    Date: 28.10.2026

    Supreme Court: Mere Allegations of Drug Trafficking Financing Cannot Establish Guilt Under Section 27A NDPS Act

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

    The Supreme Court of India set aside Mohammed Fasrin’s conviction under the Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS Act), holding that the prosecution failed to produce reliable, corroborated evidence linking him to the alleged heroin-trafficking operation.

    Background of the case

    On 4 January 2003, narcotics officers received information that 7.4 kg of heroin was being transported in a Toyota Qualis parked near Tamil Nadu Hotel on the Madurai–Alagar Koil Road. Officers intercepted the vehicle and recovered seven packets of heroin concealed in a false compartment beneath the front seat.

    Several people found in the vehicle were prosecuted and convicted. Mohammed Fasrin, however, was not found in the vehicle and the prosecution’s case against him rested primarily on two alleged confessional statements:

    • A statement by a co-accused, Hasan Mohamed (A-2)
    • Fasrin’s own statement, recorded after his arrest

    The trial court convicted Fasrin for offences including financing illicit trafficking and involvement in drug-related export or import activity. The Madras High Court upheld that decision. He was sentenced to 15 years’ rigorous imprisonment and a fine of Rs. 1,50,000.

    What the prosecution alleged

    The prosecution alleged that Fasrin was connected to an international heroin-smuggling arrangement. According to the co-accused’s statement, an individual named β€œMohammed” from Bombay had arranged the movement of the heroin. The co-accused was allegedly told that the drugs would be transferred through another person, Nalliappan, and eventually handed to Fasrin.

    This account did not establish a direct connection between Fasrin and the recovered heroin. The alleged chain depended on statements attributed to people who were not examined during the trial.

    Why the Supreme Court overturned the conviction

    No direct or corroborative evidence

    The Court found that there was virtually no independent evidence showing that Fasrin financed, possessed, transported, imported, exported, or otherwise participated in the narcotics operation.

    Neither the alleged Bombay-based Mohammed nor Nalliappan was examined as a witness or made an accused in the case. Their absence left a critical gap in the prosecution’s account of how the heroin was supposedly meant to reach Fasrin.

    A co-accused’s confession was insufficient

    The Court described a co-accused’s confession as a weak form of evidence that must be supported by independent material. Such a statement may provide investigators with a lead, but it cannot by itself prove another person’s guilt.

    Here, the co-accused’s statement was also substantially hearsay: it merely alleged that another person had said the heroin would eventually be handed to Fasrin. The prosecution did not produce evidence to verify that assertion.

    Fasrin’s alleged confession required scrutiny and support

    Fasrin’s own alleged confession was recorded after he had been arrested. The Court proceeded on the assumption that the statement could be admissible, without deciding the wider legal question concerning confessions recorded under Section 67 of the NDPS Act.

    Even on that assumption, the Court held that the prosecution had not shown that the statement was voluntary, free from pressure, and recorded after Fasrin had been informed of his rights. A custodial confession is weak evidence unless supported by reliable corroboration. No such corroboration was available.

    The legal significance of the ruling

    The decision reinforces that serious NDPS allegations do not lower the prosecution’s burden of proof. Convictions for financing illicit drug trafficking under Section 27A require evidence that the accused directly or indirectly financed prohibited activities, or harboured people involved in them.

    The Court’s reasoning highlights three safeguards:

    • Confessional statements need careful evaluation, particularly where they are made in custody.
    • A co-accused’s statement cannot substitute for independent proof against another accused person.
    • Missing links in the prosecution’s narrative matter, especially when key intermediaries are neither examined nor prosecuted.

    Outcome

    The Supreme Court allowed Fasrin’s appeal, set aside the decisions of the trial court and the Madras High Court, and discharged his bail bonds. The ruling makes clear that suspicion and uncorroborated confessions cannot sustain a conviction where the prosecution fails to establish a credible evidentiary link between the accused and the alleged narcotics offence.

    Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

    Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

    Source: Supreme Court

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    Ravi Shekhar Jha – Advocate, Bar Council of Delhi

  • CESTAT Allahabad: Customs Cannot Bypass Mandatory Valuation Rules Through Importer’s Consent Letter

    CESTAT Allahabad: Customs Cannot Bypass Mandatory Valuation Rules Through Importer’s Consent Letter

    Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

    Date: 27.10.2026

    CESTAT Allahabad: Customs Cannot Bypass Mandatory Valuation Rules Through Importer’s Consent Letter

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

    The CESTAT Allahabad held that an importer’s written acceptance of an enhanced customs value does not remove its statutory right to challenge that reassessment, particularly where Customs has not properly disclosed the grounds and evidence for rejecting the declared transaction value.

    Case at a glance

    In Final Order Nos. 70472-70474/2026, decided on 16 October 2026, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Allahabad, allowed three connected appeals filed by Artex Overseas Pvt. Ltd. and Artex Textile Pvt. Ltd. against the Principal Commissioner of Customs, ICD Dadri.

    The dispute concerned imports of polyester knitted fabric from China. Customs had enhanced the declared unit values of the consignments based on alleged contemporaneous import data. The Commissioner (Appeals) rejected the importers’ challenges primarily because they had signed written letters accepting the enhanced values at the time of clearance.

    CESTAT set aside those appellate orders and granted consequential relief in accordance with law.

    Background: declared values were substantially enhanced

    The importers had declared negotiated invoice values for polyester knitted fabric. Customs enhanced those values as follows:

    • Artex Overseas Pvt. Ltd.: declared value of USD 1.00 per kg enhanced to USD 1.77 per kg for three Bills of Entry dated 20 and 24 May 2019.
    • Artex Textile Pvt. Ltd.: declared value of USD 1.05 per kg enhanced to USD 1.85 per kg for Bills of Entry dated 31 March 2020 and 7 April 2020.

    The goods were found to conform to the declarations on examination. However, Customs raised concerns after comparing the consignments with contemporaneous import data and sought more detailed information on the fabric, including composition and dimensions.

    The department then treated the declared values as liable for rejection under Rule 12 of the Customs Valuation Rules, 2007, and reassessed the goods at higher values.

    Importers’ case: acceptance was compelled and lacked legal foundation

    Artex Overseas and Artex Textile argued that they had correctly self-assessed duty on the basis of their invoices and negotiated purchase prices. They maintained that the department did not issue out-of-charge orders and did not act on their requests for provisional assessment.

    According to the importers, they paid duty at the enhanced values under protest to prevent clearance delays and were effectively compelled to issue letters of consent. They repeatedly sought speaking orders explaining the reassessment, but none were issued.

    Their principal legal arguments were:

    • A written acceptance of enhancement does not bar an importer from filing an appeal.
    • Customs must follow Section 14 of the Customs Act, 1962 and the valuation process prescribed by the Customs Valuation Rules, 2007.
    • Rule 12 requires the proper officer to form a reasonable doubt about the truth or accuracy of the declared value and, when required, communicate the grounds in writing.
    • A generic reference to contemporaneous import data is insufficient; Customs must provide material showing genuine comparability, including relevant factors such as quantity, quality, GSM, commercial level and timing of the transaction.
    • Mere reliance on NIDB or external import data cannot, without independent and cogent supporting evidence, justify rejection of the declared transaction value.

    Department’s position: written consent eliminated the need for a speaking order

    The department relied on the importers’ acceptance letters. It argued that the letters recorded that the importers had been informed of the grounds for rejecting their declared values, had seen data relating to similar or identical imports, and had agreed to the enhanced values without seeking a show-cause notice or speaking order.

    On that basis, the department contended that Section 17(5) of the Customs Act relieved Customs of the obligation to issue a speaking order once reassessment was accepted in writing.

    Tribunal’s findings: waiver is limited to the speaking order, not the right to appeal

    The Tribunal found that the Commissioner (Appeals) had focused too narrowly on the acceptance letters and had not applied the full legal principles governing customs valuation.

    CESTAT relied on the Supreme Court’s ruling in Century Metal Recycling Pvt. Ltd. v. Union of India, which confirms that Rule 12(2) cannot be bypassed or waived. The proper officer must form a reasoned view that there is doubt about the declared value and communicate the grounds for that doubt to the importer when required.

    The Tribunal also followed the Delhi High Court’s decision in Niraj Silk Mills v. Commissioner of Customs, which clarified that:

    • Written acceptance under Section 17(5) may waive the procedural requirement for a speaking order.
    • It does not waive or extinguish the importer’s statutory right to challenge the reassessment.
    • A reassessment based only on NIDB data is not sustainable unless supported by independent, cogent evidence and a reasoned justification for departing from the declared value.

    The Tribunal noted that the acceptance letters did not themselves disclose the alleged contemporaneous-import details on which Customs relied.

    The revenue authorities had therefore failed to bridge the gap between a standard-form acceptance and the evidentiary basis required to lawfully reject transaction value.

    Decision and practical significance

    CESTAT held that the case was squarely governed by the Delhi High Court’s ruling in Niraj Silk Mills. It therefore set aside all three Orders-in-Appeal and allowed the appeals of Artex Overseas Pvt. Ltd. and Artex Textile Pvt. Ltd., with consequential relief as permitted by law.

    The ruling reinforces an important safeguard in customs valuation: an importer’s consent to clearance at an enhanced value cannot be treated as a blanket surrender of its right to contest an unlawful reassessment. Customs must still demonstrate, through disclosed and relevant material, why the declared transaction value should be rejected and why the substituted value is legally supportable.

    For importers, the decision underscores that consent letters signed to secure release of detained goods do not necessarily end the valuation dispute.

    For Customs authorities, it emphasizes the need for transparent, evidence-based valuation orders rather than reassessments founded solely on generic references to database values or contemporaneous imports.

    Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

    Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

    Source: CESTAT Allahabad

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    Ravi Shekhar Jha – Advocate, Bar Council of Delhi

  • Supreme Court: Being a B.Tech Graduate Does Not Entitle an NDPS Accused to Bail

    Supreme Court: Being a B.Tech Graduate Does Not Entitle an NDPS Accused to Bail

    Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

    Date: 27.10.2026

    Supreme Court: Being a B.Tech Graduate Does Not Entitle an NDPS Accused to Bail

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

    The Supreme Court of India cancelled the bail granted to Prateek Shukla, holding that the Allahabad High Court had not properly applied the stringent bail standards required under the Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS Act).

    Background of the case

    The case arose from an investigation by the Narcotics Control Bureau (NCB) into suspected diversion of acetic anhydride, a controlled substance that can be used in the illicit manufacture of narcotic drugs. In October 2018, the NCB received information that Altruist Chemicals Private Limited had purchased a substantial quantity of acetic anhydride but had not filed the required quarterly returns for two reporting periods.

    During searches connected with the company, the NCB alleged that it recovered 896 grams of acetic anhydride and 1.885 kg of amphetamine from the company’s registered premises. Investigators also found documents relating to Griffin International, of which Prateek Shukla and Afghan national Bismillah Khan Ahmadzai were stated to be directors.

    The investigation subsequently extended to a godown in Karheda village, Ghaziabad, where the NCB alleged that it recovered 9,650 kg of acetic anhydride along with empty drums. A search of Shukla’s residence allegedly yielded company stamps, banking documents, business papers and other material said to connect multiple entities and co-accused persons.

    Allegations and prosecution case

    The NCB’s complaint alleged that the accused were part of an international drug syndicate involved in the diversion, storage, sale, purchase and export of the controlled substance. Shukla was arrested on 22 October 2018 and was charged under Sections 8, 9A, 25A, 23 and 29 of the NDPS Act.

    The prosecution argued that the material recovered during the investigation established a prima facie connection between Shukla and the alleged conspiracy. It also contended that, given the gravity of NDPS offences, the High Court had granted bail without adequate reasons or proper consideration of the statutory restrictions in Section 37 of the NDPS Act.

    Defence raised by the respondent

    Shukla maintained that he had resigned as a director of Altruist Chemicals on 4 May 2018, after joining the company earlier that year. He argued that the relevant purchases and deliveries of acetic anhydride took place after his resignation and that he had informed the NCB of his departure from the company on 22 May 2018.

    He further contended that he could not be held responsible for the company’s later failure to submit quarterly returns. The High Court accepted his bail plea, observing prima facie that he may not be guilty, while also referring to his clean background and educational qualification.

    Why the Supreme Court intervened

    The Supreme Court found that the High Court’s reasoning did not demonstrate judicial consideration of the seriousness of the allegations or the legal test governing bail under Section 37 of the NDPS Act. It emphasized that merely noting the parties’ submissions is not enough; a bail order must show a reasoned application of the statutory standards.

    The Court specifically criticized the High Court’s reliance on Shukla being educated and holding a Bachelor of Technology degree as a reason to conclude that he was unlikely to commit an offence in the future. It held that this was an extraneous consideration in an NDPS bail decision.

    The Supreme Court also noted that the prosecution’s materials showed Shukla as a director of Altruist Chemicals, while his own bail application referred to transferring 99% of his shareholding to Bismillah Khan Ahmadzai. The Court observed that the respondent’s materials appeared to suppress more than they disclosed, though it did not decide the criminal charges at this stage.

    Supreme Court’s decision

    Allowing the Union of India’s appeal, the Supreme Court set aside the Allahabad High Court’s order dated 7 May 2019. Shukla’s bail was cancelled, and he was directed to surrender immediately.

    Legal significance

    The ruling underscores that bail in serious NDPS cases cannot rest on general observations about an accused person’s education, background or future conduct. Courts must apply the specific statutory safeguards under Section 37 and give reasons that engage with the allegations, the evidence and the gravity of the offence.

    The decision reinforces the Supreme Court’s expectation that bail orders in narcotics cases reflect a careful and legally grounded assessment rather than a cursory evaluation.

    Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

    Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

    Source: Supreme Court

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    Ravi Shekhar Jha – Advocate, Bar Council of Delhi

  • Supreme Court: Narcotics Need Not Be Recovered from Accused’s Body to Establish Conscious Possession

    Supreme Court: Narcotics Need Not Be Recovered from Accused’s Body to Establish Conscious Possession

    Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

    Date: 26.10.2026

    Supreme Court: Narcotics Need Not Be Recovered from Accused’s Body to Establish Conscious Possession

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

    The Supreme Court of India upheld Jeet Ram’s conviction for possessing 13 kg of charas under the NDPS Act, while reducing his sentence from 15 years’ rigorous imprisonment to 10 years because of the case’s age and his advanced age.

    Background of the case

    The case arose from an operation by officers of the Narcotics Control Bureau (NCB), Chandigarh, on 18 June 2001 near the Nangala Devi Temple in Himachal Pradesh. According to the prosecution, NCB officers stopped at a roadside dhaba while travelling from Shimla to Theog. They said they detected the smell of charas and questioned Jeet Ram, who was present at the establishment.

    The officers alleged that Jeet Ram became nervous and attempted to flee. A gunny bag found beneath the dhaba counter was searched, and it was found to contain 13 kg of charas. The contraband was divided into two parcels of 6.5 kg each, with samples drawn, sealed and sent for chemical analysis. The chemical analyst confirmed that the samples were charas.

    Jeet Ram was prosecuted under Section 20 of the Narcotic Drugs and Psychotropic Substances Act, 1985.

    Trial court acquittal and High Court reversal

    The Sessions Court in Shimla acquitted Jeet Ram in 2003. It identified several weaknesses in the prosecution’s case, including:

    • the absence of independent witnesses;
    • doubts over whether the charas was recovered from Jeet Ram’s dhaba or from his conscious possession;
    • alleged non-compliance with Section 50 of the NDPS Act;
    • concerns about the handling of seals and possible tampering of samples; and
    • the perceived improbability of leaving a large quantity of charas in an accessible gunny bag.

    The NCB appealed. The Himachal Pradesh High Court reappraised the evidence, overturned the acquittal and convicted Jeet Ram. It imposed 15 years’ rigorous imprisonment, a fine of Rs. 2,00,000, and one additional year of imprisonment in default of payment.

    Supreme Court’s findings

    The Supreme Court held that the High Court was entitled to review the evidence and reverse the acquittal because the trial court’s conclusions were contrary to the record. It reiterated that an appellate court has broad authority to review, reappreciate and reconsider evidence in an appeal against acquittal.

    However, the Court also restated an important safeguard: when two reasonable conclusions are genuinely possible on the evidence, an appellate court should ordinarily not disturb an acquittal. In this case, it found that the trial court’s view was not a reasonably possible one on the evidence presented.

    Why the Court accepted the prosecution case

    Section 50 did not apply to the bag search. The Court held that Section 50 safeguards apply to a personal search, not to the search of a bag or other object. Therefore, the trial court was wrong to treat the alleged non-compliance with Section 50 as a reason for acquittal.

    No adverse inference from lack of independent witnesses. The recovery allegedly occurred around 10:30 p.m. at a dhaba away from the village. The persons present were either linked to Jeet Ram or employed at the dhaba. The Court held that the lack of an independent witness, by itself, did not undermine credible official testimony.

    Conscious possession was established. Jeet Ram was present at the counter, where the gunny bag was found. The dhaba stood on land owned by his wife, and there was evidence that he described himself as its owner. The Court concluded that he had physical control over the contraband and knowledge of its presence and character.

    Tampering concerns were unsupported. A Judicial Magistrate had signed the samples and bulk parcels on 19 June 2001. The Court also noted that no suggestion of tampering had been put to the relevant NCB witnesses during the proceedings.

    The statutory presumption applied. The Court stated that, once possession was established and Jeet Ram did not adequately explain it, the presumption under Section 54 of the NDPS Act operated against him. It also noted that his version in his Section 313 CrPC statement was not supported by the witnesses he referred to or by defence evidence.

    Sentence reduced from 15 to 10 years

    Although the conviction was maintained, the Court found the original sentence excessive in the particular circumstances. The incident was nearly two decades old by the time of judgment, and Jeet Ram was about 65 years old. He had also claimed to be a priest at the nearby temple.

    The Court therefore reduced the custodial sentence to 10 years’ rigorous imprisonment. The fine of Rs. 2,00,000 was retained.

    Legal significance

    The ruling reinforces two significant principles in criminal appeals and NDPS prosecutions:

    1. Appellate courts may reverse an acquittal after a full review of the evidence when the trial court’s findings are unsupported or unreasonable. But they should not interfere merely because a second reasonable view is available.
    2. Conscious possession may be inferred from the facts and surrounding circumstances, including control over the premises and proximity to the contraband. A search of a bag is not treated as a personal search requiring Section 50 compliance.

    The judgment ultimately confirms that procedural concerns must be assessed against the complete evidentiary record, while sentencing may still be tailored to the individual circumstances of the accused.

    Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

    Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

    Source: Supreme Court

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  • CESTAT Kolkata: Foreign Origin and Smuggled Character Are Two Distinct Questions Under Customs Law

    CESTAT Kolkata: Foreign Origin and Smuggled Character Are Two Distinct Questions Under Customs Law

    Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

    Date: 26.10.2026

    CESTAT Kolkata: Foreign Origin and Smuggled Character Are Two Distinct Questions Under Customs Law

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

    The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata has allowed nine connected appeals concerning the seizure of 39.156 metric tonnes of betel nuts, ruling that Customs did not establish that the goods were of foreign origin or had been smuggled into India.

    In Final Order Nos. 76499-76507/2026, pronounced on 15 October 2026, the Tribunal set aside the confiscation order and all related penalties. The decision underscores an important principle in customs law: for non-notified goods such as betel nuts, the burden remains on the Revenue to prove smuggling with reliable evidence rather than assumptions, inconclusive reports, or uncorroborated statements.

    Background: Two Trucks Intercepted Near Siliguri

    The case arose from a Directorate of Revenue Intelligence (DRI) operation on 3 March 2019. Acting on intelligence that allegedly smuggled betel nuts from Myanmar were being transported through the Siliguri area, officers intercepted two trucks at Goaltuli More on the Fulbari-Ghoshpukur Bypass Road in Darjeeling district, West Bengal.

    The trucks, bearing registration numbers AP-27TX-6129 and WB-65C-5608, were carrying betel nuts stated to have been loaded at Vairengte, Mizoram, for delivery to consignees in Hooghly and Nabadwip, West Bengal. The drivers produced transport documents, tax invoices, consignment notes and e-way bills. One consignment was documented as supplied by M/s A.D. Store to M/s Papai Traders, while the other was documented as supplied by M/s Zotei Enterprise to Shri Narayan Karmakar.

    Following a search at the DRI office in Siliguri, officers found:

    • 209 bags weighing 16.302 MT in truck AP-27TX-6129;
    • 293 bags weighing 22.854 MT in truck WB-65C-5608; and
    • A combined quantity of 39.156 MT, valued by Customs at Rs. 1,07,67,900.

    Customs seized the goods, the two carrier vehicles, related documents and two mobile phones. The department alleged that the betel nuts had been smuggled from Myanmar through the Indo-Myanmar border and were therefore liable to confiscation under Sections 111(b) and 111(d) of the Customs Act, 1962.

    Customs Case and Earlier Orders

    The Revenue relied mainly on statements recorded from the truck drivers and helpers, investigation into the consignors and consignees, call-detail records, and a report from the Arecanut Research and Development Foundation (ARDF), Mangalore.

    The ARDF report stated that the samples β€œseems to be of North-East including Myanmar region.” It also noted mould infestation and non-compliance with BIS standards. Customs treated this report, along with the statements and surrounding circumstances, as support for the allegation that the consignments were of Myanmar origin and had entered India illegally.

    On 28 August 2020, the adjudicating authority ordered absolute confiscation of the betel nuts and imposed penalties on the persons connected with the consignments. The Commissioner of Customs (Appeals) upheld that order on 23 February 2022.

    The affected parties, including Debasish Saha of M/s Papai Traders, Dipak Saha, Narayan Karmakar, Sujit Mitra, Md. Shamim Uddin, Zoramthari, Nilkamal Saha, Anjan Kumar Paul and Lalenkawli, then appealed to CESTAT.

    Tribunal’s Findings: Evidence Did Not Prove Smuggling

    The Tribunal found that the department’s evidence was insufficient to establish either foreign origin or illegal importation.

    1. The ARDF opinion was not conclusive

    CESTAT noted that the ARDF report did not say the goods were of Myanmar origin. Its wordingβ€”that the samples β€œseems to be of North-East including Myanmar region”—was held to be inconclusive. A reference to a broad region that includes Myanmar could not, by itself, prove that the goods originated in Myanmar.

    The Tribunal also relied on judicial precedents that question the evidentiary value of such reports where there is no recognised scientific or objective test capable of determining the territorial origin of betel nuts.

    2. Betel nuts are non-notified goods

    A central point in the ruling was that betel nuts are not notified under Section 123 of the Customs Act. As a result, the statutory burden does not shift to the person from whom the goods are seized. Instead, Customs must prove that the goods are smuggled.

    The Tribunal held that the Revenue could not meet this burden merely by relying on suspicion, a tentative expert opinion, or statements. Even if goods were assumed to be of foreign origin, that alone would not establish illegal importation; positive evidence of smuggling was still required.

    3. The seizure location and accompanying documents mattered

    The goods were intercepted in West Bengal, not at the Indo-Myanmar border. The trucks also carried invoices and other commercial transport documents identifying Mizoram-based suppliers and West Bengal consignees.

    The Tribunal held that these facts did not permit an automatic inference that the goods had crossed the border illegally. The documentary trail could not be displaced without cogent contrary evidence.

    4. Precedents required proof, not presumption

    The order relied on the Calcutta High Court’s ruling in Commissioner of Customs, Central Excise and Service Tax, Siliguri v. Subodh Das, which was subsequently affirmed by the Supreme Court. That line of authority establishes that, for non-notified betel nuts, Customs must discharge the burden of proving foreign origin and smuggled character.

    The Tribunal also referred to Maqsood Alam v. Commissioner of Customs, Lucknow and Maa Kamakhya Trader v. Commissioner of Customs (Preventive). These decisions emphasise that visual assessments, inconclusive opinions and strong suspicion cannot replace objective evidence of smuggling.

    Outcome: Confiscation and Penalties Quashed

    CESTAT concluded that the Revenue had failed to prove that the seized betel nuts were smuggled goods. It therefore set aside the confiscation of the 39.156 MT consignment and held that no penalties could be imposed on the appellants.

    The Tribunal allowed all connected appeals and overturned the Order-in-Appeal dated 23 February 2022.

    Key Legal Significance

    This ruling reinforces that customs enforcement actions involving non-notified goods must rest on clear, affirmative and legally reliable evidence. In particular:

    • A tentative report suggesting a possible regional origin is not proof of foreign origin.
    • Foreign origin, even if established, does not automatically prove that goods were illegally imported.
    • For non-notified goods, Customs bears the burden of proving smuggling.
    • Confiscation and penalties cannot be sustained on presumptions, suspicion or inadequately supported statements.

    The decision provides a significant restatement of evidentiary standards in betel-nut smuggling cases, particularly where seizures occur away from an international border and goods are accompanied by commercial documentation.

    Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

    Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

    Source: CESTAT Kolkata

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  • Bombay HC: Trademark Registration Does Not Automatically Protect a Pharma Company from Infringement Proceedings

    Bombay HC: Trademark Registration Does Not Automatically Protect a Pharma Company from Infringement Proceedings

    Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

    Date: 26.10.2026

    Bombay HC: Trademark Registration Does Not Automatically Protect a Pharma Company from Infringement Proceedings

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

    The Bombay High Court granted Franco Indian Pharmaceuticals Pvt. Ltd. an interim injunction restraining Corona Remedies Pvt. Ltd. from using the mark STIMULET for pharmaceutical products, finding it deceptively similar to Franco Indian’s long-standing STIMULIV mark.

    The dispute at a glance

    The case concerned two pharmaceutical companies and competing marks:

    • Franco Indian Pharmaceuticals: owner of STIMULIV, an Ayurvedic liver-related preparation sold as syrup and tablets.
    • Corona Remedies: user of STIMULET, an allopathic product used in treatments relating to breast cancer disorders and infertility.

    Although the medicines served different therapeutic purposes, the Court held that the similarity of the names created an unacceptable risk in the pharmaceutical context.

    Why the Court found the marks similar

    The Court treated similarity as the threshold issue. Visually, the two marks share the same dominant portion, β€œSTIMUL,” and differ only in their last two letters: β€œIV” versus β€œET.” The Court concluded that this was not enough to create a reliable phonetic distinction, particularly in India, where English pronunciation may vary widely.

    The Court also rejected the argument that the products’ distinct uses eliminated the risk of confusion. Instead, it emphasized that even slight confusion should be avoided when medicines are involved, especially where one product concerns sensitive treatments such as cancer and infertility.

    Franco Indian’s stronger prior rights

    Franco Indian adopted STIMULIV on 28 June 1974 and obtained registration in 1976 for pharmaceutical preparations related to liver and allied disorders. Its mark was registered in Part A of the old trade mark register, which required distinctiveness.

    The Court found prima facie evidence of sustained and substantial use:

    • Invoices and documentation traced use of STIMULIV back decades.
    • STIMULIV sales reached Rs. 1,311.70 lakhs in 2019–20.
    • Franco Indian’s sales had continued without interruption and showed growth over time.

    By contrast, Corona Remedies claimed adoption of STIMULET in 2010. Its own records showed a multi-year gap in use after 2011–12, before sales resumed. The Court noted that Corona’s 2019–20 sales of approximately Rs. 346.51 lakhs were materially lower than Franco Indian’s sales.

    This evidence supported Franco Indian’s claim to stronger goodwill, reputation, and common-law rights as the prior and continuous user.

    Registration did not end the dispute

    Corona Remedies argued that, because both marks were registered, Franco Indian could not pursue an infringement action. The Court rejected that position.

    It held that a defendant’s registration does not bar an infringement suit. In a conflict between registered proprietors of similar marks, the Court may assess which party has better rights under common law, including priority, continuity of use, sales, and goodwill.

    On those factors, the Court found that Franco Indian’s position was substantially stronger: it had earlier registration, earlier use by decades, continuous sales, and a stronger commercial presence.

    A key inconsistency in Corona Remedies’ defence

    Corona Remedies contended that β€œSTIMUL” or similar expressions were common to the trade. But it had also sought registration for STIMULET and asserted that its own mark was distinctive and capable of identifying its goods.

    The Court found this position difficult to sustain. A party claiming distinctiveness for its own STIMULET mark could not persuasively deny the distinctiveness of the earlier STIMULIV mark on the basis that the shared element was generic or widely used.

    The Court’s order

    The Court made Franco Indian’s interim application absolute and restrained Corona Remedies from using STIMULET in relation to pharmaceutical products. It also dismissed Corona Remedies’ application seeking rejection of Franco Indian’s plaint, finding no fraud, suppression, or material concealment.

    No order as to costs was made.

    What this decision means

    The ruling reinforces the heightened caution applied to pharmaceutical trade marks. Differences in medical use, patient category, or prescription status may not defeat an injunction where the names are visually and phonetically close. In such disputes, priority of use, continuity, sales evidence, and goodwill can outweigh a later user’s registration of a similar mark.

    Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

    Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

    Source: Bombay High Court

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  • Bombay HC: Section 27A NDPS Cannot Be Invoked Merely for Paying for Drugs Intended for Personal Consumption

    Bombay HC: Section 27A NDPS Cannot Be Invoked Merely for Paying for Drugs Intended for Personal Consumption

    Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

    Date: 24.10.2026

    Bombay HC: Section 27A NDPS Cannot Be Invoked Merely for Paying for Drugs Intended for Personal Consumption

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

    The Bombay High Court granted bail to actor Rhea Chakraborty on 7 October 2020, holding that the material then available did not show her involvement in commercial-quantity drug offences or in financing illicit drug trafficking under Section 27A of the NDPS Act.

    Background of the case

    Rhea Chakraborty was arrested by the Narcotics Control Bureau (NCB) on 8 September 2020 in connection with Crime No. 16/2020. The case arose from an NCB investigation into an alleged drug-supply network. The agency alleged that Chakraborty had helped procure drugs for Sushant Singh Rajput, managed or contributed to payments, and was connected to deliveries involving his associates and her brother, Showik Chakraborty.

    The NCB relied on statements of co-accused persons, alleged WhatsApp communications, and claimed financial transactions. It argued that Chakraborty had facilitated drug deliveries and payments and was therefore liable for offences including financing illicit traffic and harbouring offenders under Section 27A of the Narcotic Drugs and Psychotropic Substances Act, 1985.

    Chakraborty denied that Section 27A applied. Her defence emphasized that no contraband was recovered from her or from Rajput’s residence, that the allegations concerned procurement for alleged personal consumption, and that she had no connection with the commercial quantity of LSD recovered from another accused, Anuj Keshwani.

    NCB investigation was separate from the death investigation

    One preliminary issue was whether the NCB had authority to investigate because the Supreme Court had directed the CBI to investigate the death of Sushant Singh Rajput and related circumstances.

    The High Court rejected the challenge to the NCB’s jurisdiction. It found that the NCB inquiry began independently after information led to the arrest of Abbas Lakhani and later expanded through disclosures and recoveries involving multiple alleged drug suppliers. The court held that the drug-trafficking investigation was distinct from the inquiry into Rajput’s death, even though allegations regarding Rajput’s alleged drug use emerged during the investigation.

    All NDPS offences are non-bailable, court says

    The judgment examined whether offences involving small quantities under the NDPS Act could be treated as bailable under the Criminal Procedure Code.

    The court concluded that all offences under the NDPS Act are non-bailable. It relied on the Supreme Court’s interpretation in State of Punjab v. Baldev Singh, which described Section 37 as making all NDPS offences cognizable and non-bailable. The court distinguished between two issues:

    • Whether an offence is bailable: The court held that NDPS offences are non-bailable.
    • Whether Section 37’s stricter bail conditions apply: Those special restrictions apply to offences under Sections 19, 24 and 27A, and to offences involving commercial quantities.

    This distinction was important because a non-bailable offence does not automatically trigger the stringent β€œtwin conditions” of Section 37.

    What the court said about financing and harbouring

    The High Court’s central legal finding concerned Section 27A, which punishes financing illicit traffic and harbouring persons engaged in it.

    The court held that β€œfinancing” means more than paying money for a particular drug purchase. In its interpretation, financing requires providing funds or financial support that makes an illicit drug trade or business operational or sustains it. Treating every payment connected with a drug transaction as financing would erase the NDPS Act’s separate punishment framework based on quantity.

    Similarly, the court found that β€œharbouring” requires more than allowing a person to reside somewhere or providing ordinary support. It involves sheltering or concealing a person engaged in the prohibited activity, with the necessary mental element and in a manner connected to avoiding apprehension.

    Applying these principles, the court held that allegations that Chakraborty spent money to procure drugs for Rajput’s alleged consumption did not, by themselves, amount to financing illicit traffic. It also found no basis to say that she harboured him: he lived in his own house, no criminal case was pending against him at the relevant time, and there was no indication that he was being concealed from law enforcement.

    Why bail was granted

    The court noted that no contraband was recovered from Chakraborty or from Rajput’s residence. It also found that the investigation had not produced material showing that her alleged conduct involved a commercial quantity of narcotic drugs or psychotropic substances.

    The court further observed that:

    • Chakraborty had no criminal antecedents.
    • The available allegations did not show that she was part of a chain of drug dealers.
    • There was no allegation that she forwarded drugs to others for monetary or other gain.
    • The NCB did not seek her custodial interrogation at her first remand, which the court treated as relevant to whether continued custody was necessary.
    • The concern that she would alert others or cause destruction of evidence had no identified factual basis.

    The court also rejected the argument that a celebrity or public figure should face a harsher approach to bail. It stated that everyone is equal before the law and that neither special privilege nor special liability should follow from a person’s status.

    Bail conditions

    The court directed Chakraborty’s release on a personal-recognizance bond of Rs. 1 lakh with one or two sureties of the same amount. It imposed several conditions, including:

    • depositing her passport with the investigating agency;
    • not leaving India without prior permission from the NDPS Special Court;
    • informing the investigating officer in advance before travelling outside Greater Mumbai;
    • reporting monthly to the investigating agency for six months;
    • attending court proceedings unless prevented by reasonable cause; and
    • not tampering with evidence or the investigation.

    She was initially allowed to furnish cash bail of Rs. 1 lakh for one month while arranging sureties. The court also required her to report to the nearest police station for ten days after release.

    Significance of the ruling

    The ruling is significant for its detailed interpretation of Section 27A of the NDPS Act. It draws a clear legal boundary between an allegation of paying for or arranging drugs for consumption and the far more serious accusation of financing an illicit drug-trafficking operation. The decision also reinforces that Section 37’s strict bail restrictions apply independently to Section 27A and commercial-quantity offences.

    However, the prosecution must first show material capable of connecting the accused to those specific offences. In Chakraborty’s case, the High Court found that threshold was not met at the bail stage, while making clear that its observations were confined to deciding bail rather than determining guilt at trial.

    Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

    Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

    Source: Bombay High Court

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  • Calcutta HC: Patent Applications Cannot Be Rejected on Public Health Grounds Without Scientific Evidence

    Calcutta HC: Patent Applications Cannot Be Rejected on Public Health Grounds Without Scientific Evidence

    Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

    Date: 24.10.2026

    Calcutta HC: Patent Applications Cannot Be Rejected on Public Health Grounds Without Scientific Evidence

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

    The Calcutta High Court has set aside the Patent Controller’s rejection of ITC Limited’s application for a β€œHeater Assembly to Generate Aerosol,” holding that the decision under Section 3(b) of the Patents Act lacked adequate reasons, misconstrued the invention, and breached principles of natural justice.

    Background of the dispute

    ITC’s patent application concerns a heater assembly designed for handheld aerosol-generating devices. Its stated technical purpose is to provide uniform heat distribution across an aerosol-forming substrate. The substrate may be solid or liquid and may, but need not, contain tobacco compounds.

    On 21 August 2024, the Controller of Patents rejected the application under Section 3(b) of the Patents Act, 1970. That provision excludes inventions whose primary or intended use, or commercial exploitation, would be contrary to public order or morality or seriously prejudice human, animal or plant life, health, or the environment.

    The Controller treated the invention as one exclusively connected with tobacco-containing substrates and concluded that it was harmful to human life and health. ITC appealed this decision before the Intellectual Property Rights Division of the Calcutta High Court.

    What the High Court decided

    In its judgment dated 20 May 2025, Justice Ravi Krishan Kapur set aside the rejection order and remanded the application to the Controller for a fresh decision. The Controller must reconsider the matter in accordance with law, after giving the parties a hearing, within three months of communication of the Court’s order.

    The Court did not grant the patent or decide the application’s merits. Instead, it found that the earlier decision-making process and reasoning were legally deficient.

    Key findings

    1. Section 3(b) requires an assessment of the invention’s actual primary or intended use

    The Court emphasized that Section 3(b) focuses on the primary or intended use or commercial exploitation of the specific invention. The inquiry cannot rest on an assumption that every possible use of a product associated with tobacco necessarily makes the invention unpatentable.

    The heater assembly was not limited to tobacco substrates. By treating the invention as necessarily and exclusively tobacco-based, the Controller fundamentally misunderstood its scope.

    2. A patent does not give permission to commercialize an invention

    A central point in the ruling is the distinction between a patent right and regulatory permission. A patent is an exclusionary or negative right: it enables the patentee to prevent others from making, using, selling, or exploiting the claimed invention without consent. It does not itself authorize the patent holder to manufacture, sell, market, or use the invention.

    The Court held that the Controller’s reasoning wrongly assumed that granting a patent would automatically permit commercialization of the product. Whether a product may lawfully be made, marketed, or sold is governed by other applicable laws and regulations, not by the patent grant alone.

    3. Health and morality objections need cogent reasoning and evidence

    The Court found that the conclusion that the invention caused serious prejudice to human life and health was unsupported by reasons or justification. Tobacco-related products are not, by themselves, categorically unpatentable in India.

    A refusal under Section 3(b) must show a clear connection between the invention’s actual intended use and the alleged harm, supported by cogent reasoning. The Court rejected a subjective or preconceived view that all tobacco-related products necessarily fall within the statutory exclusion, particularly where there is no independent scientific or technical evidence supporting the conclusion.

    4. β€œPublic order” and β€œmorality” cannot be applied as vague objections

    The Court held that the Controller’s finding that the invention was contrary to public order and morality was cryptic and unreasoned. It noted that Section 3(b) should not become a vehicle for refusing patents based solely on broad, subjective concerns about morality, public order, or health.

    In interpreting the provision, the Court referred to international patent-law concepts, including the notion of ordre public in TRIPS and the European Patent Convention. These materials indicate that the exclusion is directed at inventions likely to induce riot, public disorder, criminal conduct, or generally offensive behaviour, rather than at every invention that may raise a policy concern.

    5. New materials could not be relied on without giving ITC an opportunity to respond

    The Controller relied on three additional documents in the rejection order even though those documents had not been disclosed in the First Examination Report or hearing notices. ITC was therefore denied the opportunity to address them.

    The Court treated this as a serious procedural defect and a violation of natural justice. A patent applicant must have a fair opportunity to respond to material relied upon in a decision against it.

    6. The e-cigarette prohibition law did not justify the rejection order

    During the appeal, the Controller relied on the Prohibition of Electronic Cigarettes Act, 2019. However, the Court noted that this ground was not part of the original rejection order or the pleadings.

    The Court further observed that the 2019 legislation regulates activities such as production, manufacture, import, export, sale, distribution, storage, and advertising. It does not itself determine whether a patent should be granted. The Controller could not defend the rejection by adding new grounds after issuing the decision.

    7. Constitutional and public-health provisions were improperly invoked

    The Controller had relied on Article 47 of the Constitution, which directs the State to improve public health. The Court held that this reliance was misplaced in deciding patentability under Section 3(b). It also found that Section 83(e) of the Patents Act had been incorrectly applied on the assumption that a patent grant necessarily results in commercialization and public-health consequences.

    Why the ruling matters

    The decision reinforces several important limits on patent examination in India:

    • Patentability must be assessed on the claimed invention, not on assumptions about a particular product category.
    • Section 3(b) demands evidence-based and reasoned analysis, especially where an objection concerns health, public order, or morality.
    • A patent is not a regulatory licence. Granting a patent does not authorize commercial activity prohibited or regulated under other laws.
    • Procedural fairness is essential. Applicants must be informed of and allowed to answer the material used against their applications.
    • Post-hoc reasons cannot repair an invalid order. The Controller’s decision must stand or fall on the reasons contained in the order itself.

    Outcome

    The High Court set aside the Controller’s rejection of ITC’s patent application and returned the matter for fresh consideration. All substantive questions remain open, meaning the Controller must now reassess the application independently, give the parties a proper hearing, and issue a reasoned decision based on the law and the record.

    The ruling clarifies that Section 3(b) is a narrow, evidence-based safeguard against genuinely harmful or morally impermissible inventions, not a blanket basis for rejecting inventions merely because they may be associated with tobacco or aerosol-generating products.

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    Source: Calcutta High Court

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