𝐀𝐚𝐝𝐫𝐢𝐤𝐚𝐚 𝐋𝐞𝐠𝐚𝐥 𝐒𝐞𝐫𝐯𝐢𝐜𝐞𝐬 (𝐀𝐋𝐒)

Tag: #TaxLitigations

CESTAT Ahmedabad Sets Aside Duty Demand in FPS Scrip
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 19.02.2026

CESTAT Ahmedabad Sets Aside Duty Demand in FPS Scrip

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), West Zonal Bench at Ahmedabad, recently delivered a significant judgment in the matter of Customs Appeals No. 10182, 10183, and 10552 of 2024. The case revolved around the alleged misclassification of goods exported under the Focus Market Scheme (FPS) and the subsequent imposition of duty and penalties by the Additional Commissioner of Customs, Mundra. The judgment, pronounced by Hon’ble Member (Judicial), on February 18, 2026, has set a precedent in the interpretation of Section 28AAA of the Customs Act, 1962, and the applicability of penalties under Sections 114(iii) and 114AA.

Background of the Case

The case originated from a Show Cause Notice (SCN) issued by the Directorate of Revenue Intelligence (DRI) on July 2, 2020, to M/s Rishabh Salvage Energy Pvt. Ltd. under Section 28AAA of the Customs Act, 1962. The SCN alleged that the company had misclassified the goods exported under the FPS scheme to claim undue benefits. The goods, described as industrial salt under CTH 2501 0090, were alleged to be common salt falling under CTH 2501 0010, which does not qualify for FPS benefits.

The DRI argued that the company had obtained FPS scrips from the Directorate General of Foreign Trade (DGFT) based on misrepresentation. Consequently, penalties and duty demands were imposed on M/s Rishabh Salvage Energy Pvt. Ltd., its director, and their custom broker, M/s Soham Logistics Pvt. Ltd.

Key Arguments Presented

The appellants contested the allegations, presenting the following key arguments:
1. Classification of Goods: M/s Rishabh Salvage Energy Pvt. Ltd. argued that the exported salt was industrial salt, not common salt, as it contained added anti-caking agents, silica, and iodine. They further stated that the salt was examined by the Department of Salt, which issued an Export Worthiness Certificate.
2. Validity of FPS Scrips: The appellants emphasized that the FPS scrips were issued by the DGFT after reviewing all relevant shipping bills and product classifications. They argued that the DGFT had not canceled the scrips, and as per Circular No. 334/1/2012-TRU dated June 1, 2012, action for recovery of duty can only be initiated after the DGFT cancels the scrips.
3. Precedents and Legal Framework: The appellants relied on previous judgments, including the case of Commissioner of Customs Mumbai-I vs Adani Ports Limited (2024) and Munjal Shova Limited vs CCE & ST-Delhi-IV (2022), to argue that penalties and duty demands cannot be imposed unless the scrips are proven to be fraudulent or canceled by the DGFT.
Tribunal’s Observations and Final Decision

After carefully considering the arguments and evidence presented by both sides, the Tribunal made the following observations:
- The DGFT had not initiated any action to cancel the FPS scrips issued to M/s Rishabh Salvage Energy Pvt. Ltd., which meant the scrips were still valid.
- The lower authorities had acted prematurely by issuing the SCN and imposing penalties without the cancellation of the scrips, which is a prerequisite for such actions as per the Board’s Circular.
- The case of Munjal Shova Limited was not applicable in this matter, as the FPS scrips in question were not proven to be fraudulent or forged.
Based on these findings, the Tribunal ruled in favor of the appellants, setting aside the duty demand, penalties, and redemption fines imposed by the lower authorities. The appeals were allowed, and consequential relief was granted to all parties involved.

Implications of the Judgment

This landmark decision has significant implications for exporters and the customs authorities:
1. Reaffirmation of Legal Principles: The judgment reinforces the principle that penalties and duty demands under Section 28AAA of the Customs Act cannot be imposed unless the DGFT cancels the scrips. This ensures that exporters are not penalized prematurely without proper legal grounds.
2. Protection for Exporters: The Tribunal’s decision provides clarity and protection to exporters who obtain FPS scrips in good faith. It emphasizes the importance of due process and prevents arbitrary actions by customs authorities.
3. Guidance for Future Cases: The judgment serves as a guiding precedent for similar cases, ensuring that the customs authorities adhere to established legal procedures and respect the decisions of the DGFT.
Conclusion

The CESTAT Ahmedabad’s decision in the Customs Appeals No. 10182, 10183, and 10552 of 2024 is a testament to the importance of adhering to legal procedures and respecting the validity of instruments issued by the DGFT. By setting aside the penalties and duty demands, the Tribunal has upheld the rights of the appellants and provided much-needed clarity on the application of Section 28AAA of the Customs Act. This judgment is a significant step towards ensuring fairness and transparency in customs adjudication processes.

Source: CESTAT Ahmedabad

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February 19, 2026
CESTAT Chennai Sets Aside Massive Undervaluation in Confectionery Imports

ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 18.02.2026

CESTAT Chennai Sets Aside Massive Undervaluation in Confectionery Imports

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) Chennai recently delivered a significant judgment on February 17, 2026, addressing 26 customs appeals arising from Order-in-Original No. 70307/2019 dated July 29, 2019. This case involved allegations of misdeclaration, under-invoicing, misuse of Import Export Codes (IECs), and improper customs classification of imported goods. The judgment, delivered by Hon’ble Member Technical and Hon’ble Member Judicial, has set a precedent in customs law and clarified several critical issues.

Background of the Case

The case revolved around M/s. Nakshatra International Food Co. (NIFCO), a proprietorship firm owned by Appellant, and other related parties. NIFCO was accused of importing confectionery items such as jellies, puddings, wafers, toffees, candies, chocolates, biscuits, juices, and coffee in retail packs/cartons between 2008 and 2013 through Chennai and Mumbai ports. The Department alleged that NIFCO had misdeclared and under-invoiced the import price and retail sales price (RSP), misclassified certain items, and misused IECs of other entities for imports.

The case involved 566 Bills of Entry, with 388 imports made directly by NIFCO and 178 imports allegedly made using four other IECs. The Department also seized goods worth Rs. 1.46 crore and several incriminating documents, including electronic media, during investigations.

Key Issues Addressed 

The Tribunal addressed several critical issues in its judgment:

A. Legality of Joint or Several Demand of Customs Duties 

The Tribunal held that customs duties cannot be demanded jointly or severally from multiple parties unless it is proven that the goods were imported jointly. In this case, NIFCO was a proprietorship firm, and appellant, as the sole proprietor, was the only legally accountable importer for the 388 Bills of Entry filed under NIFCO’s IEC. The Tribunal also clarified that the concept of “beneficial owner” introduced in 2017 could not be applied retrospectively to imports made between 2008 and 2013.

B. Re-determination of Transaction Values 

The Tribunal found that the rejection of declared transaction values under Rule 12 of the Customs Valuation Rules (CVR), 2007, was not legally sustainable. The Department failed to comply with the mandatory two-step verification process under Rule 12, which requires the proper officer to communicate the grounds for doubting the declared value in writing and provide the importer an opportunity to respond. Furthermore, the Tribunal held that the reliance on proforma invoices to re-determine transaction values was unsustainable, as proforma invoices are merely quotations and not enforceable contracts.

C. Issues Related to RSP and MRP Stickers 

The Tribunal addressed allegations of non-affixing, tampering, and misdeclaration of RSP/MRP stickers. It held that the goods were cleared from customs areas with MRP stickers affixed, as confirmed by statements from CHAs and compliance with FSSAI regulations. The Tribunal also ruled that post-import tampering or altering of MRP stickers by distributors constitutes “manufacturing” under the Central Excise Act, 1944, and any duty recovery should be initiated under excise laws, not customs laws.

D. Admissibility of Electronic Evidence 

The Tribunal found discrepancies in the serial numbers of the seized hard disks and those analyzed by the forensic agency. It also noted the absence of mandatory certification under Section 138C of the Customs Act, 1962, which governs the admissibility of electronic evidence. As a result, the electronic printouts relied upon by the Department were deemed inadmissible.

E. Compliance with Section 138B 

The Tribunal emphasized the importance of adhering to Section 138B of the Customs Act, 1962, which governs the admissibility and relevancy of statements recorded under Section 108. It held that the adjudicating authority failed to conduct chief examinations and denied cross-examination, rendering the reliance on statements legally untenable.

F. Customs Classification 

The Tribunal ruled that the burden of proof for determining the correct customs classification lies with the Department. In the absence of credible evidence, the Tribunal upheld the declared customs classification for the disputed items.

G. Legality of Corrigendum and Revenue Appeals 

The Tribunal found that the corrigendum issued by the adjudicating authority to impose penalties on certain CHAs was not legally tenable, as it went beyond correcting typographical or arithmetical errors. The Tribunal also dismissed the Revenue’s appeals seeking redemption fines and penalties, citing the absence of physical goods for confiscation and lack of evidence of active involvement or mens rea on the part of the CHAs.

Conclusion

The CESTAT Chennai’s judgment in this case is a landmark decision that reinforces the principles of natural justice and adherence to statutory procedures in customs law. By setting aside the impugned Order-in-Original in its entirety, the Tribunal has provided clarity on several contentious issues, including the legality of joint or several demands, re-determination of transaction values, admissibility of electronic evidence, and penalties on CHAs.

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Source: CESTAT Chennai

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February 18, 2026
CESTAT Ahmedabad Overturns Penalties in J3 Grade Stainless Steel Import
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 18.02.2026

CESTAT Ahmedabad Overturns Penalties in J3 Grade Stainless Steel Import

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) West Zonal Bench at Ahmedabad recently delivered a significant judgment in the case of D Bhatia and Company vs Commissioner of Customs-Mundra. This case, marked as Customs Appeal No. 10002 of 2026-SM, revolved around the import of J3 grade Cold Rolled Stainless Steel and the imposition of redemption fine and personal penalty by the customs authorities. The judgment, delivered by Hon’ble Judicial Member has set a precedent for similar cases in the future.

Background of the Case

The appellant, D Bhatia and Company, imported J3 grade Cold Rolled Stainless Steel, which the customs department deemed restricted or prohibited. Consequently, the goods were released after examining valuation issues and imposing a redemption fine and personal penalty. Feeling aggrieved by these penalties, the appellant challenged the decision before the CESTAT.

The appellant’s argument relied heavily on a precedent set in the case of Commissioner of Customs Mundra vs Shree Khatu Shyam Sales and Tubes LLP (2026 (2) TMI 302-CESTAT-AHMEDABAD). In that case, the Division Bench ruled that restrictions on importing J2 grade stainless steel could not be enforced if the concerned Ministry had issued a certificate permitting the import of the grade. The appellant argued that the same principle should apply to J3 grade stainless steel, as a certificate from the Ministry of Steel confirmed its permissibility.

Key Points of the Judgment
1. Reliance on Precedent: The appellant cited the Shree Khatu Shyam Sales and Tubes LLP case, where the Division Bench ruled that once the Ministry of Steel permits the import of a specific grade, the restriction cannot be enforced for other parties importing the same grade. The court agreed that this precedent applied to the current case.
2. Certificate from the Ministry of Steel: The appellant presented a certificate issued by the Ministry of Steel, which explicitly stated that J3 grade Cold Rolled Stainless Steel was permissible for import. This certificate played a pivotal role in the court’s decision.
3. Identification of Goods: The customs authorities had identified the imported goods as J3 grade stainless steel, aligning with the certificate provided by the appellant.
4. Judgment: Based on the precedent and the certificate, the court ruled in favor of the appellant. The redemption fine and personal penalty imposed by the customs authorities were set aside, and the appeal was allowed with consequential relief.
Implications of the Judgment

This judgment is a significant development in the realm of customs law, particularly concerning the import of restricted or prohibited goods. It underscores the importance of certificates issued by relevant ministries in determining the permissibility of imports. The ruling also highlights the role of precedents in ensuring consistency and fairness in judicial decisions.

For importers, this case serves as a reminder to maintain proper documentation and seek necessary certifications from relevant authorities to avoid penalties and fines. It also demonstrates the importance of challenging decisions that may not align with established legal principles.

Conclusion

The decision in D Bhatia and Company vs Commissioner of Customs-Mundra is a testament to the importance of judicial review in upholding fairness and justice in customs-related matters. By relying on precedent and the certificate from the Ministry of Steel, the CESTAT has provided clarity on the import of J3 grade Cold Rolled Stainless Steel and set a benchmark for similar cases in the future.

Source: CESTAT Ahmedabad

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February 18, 2026
CESTAT Delhi Sets Aside ₹25 Lakh Penalty on Logistics Company
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 17.02.2026

CESTAT Delhi Sets Aside ₹25 Lakh Penalty on Logistics Company

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), Principal Bench, New Delhi, recently delivered a significant judgment on February 12, 2026, in the Customs Appeals No. 58496 and 58497 of 2013. This case involved M/s Committed Logistics Pvt. Ltd. and its Director, who challenged the penalties imposed on them under Section 112(a)(i) of the Customs Act, 1962. The judgment, delivered by Hon’ble Justice, has set a precedent in interpreting the provisions of the Customs Act, particularly Section 108 and Section 138B.

Background of the Case

The appeals arose from an Order-in-Original dated March 31, 2013, passed by the Commissioner of Customs, ICD, Tughlakabad, New Delhi. The Commissioner imposed penalties of Rs. 25 lakhs each on M/s Committed Logistics Pvt. Ltd. and its Director, under Section 112(a)(i) of the Customs Act. The penalties were based on allegations that the appellants had provided delivery orders for 26 containers to fictitious firms, facilitating smuggling activities. The cargo was found to be misdeclared, with goods valued at Rs. 49.31 crores seized.

The allegations against the appellants were primarily based on statements recorded under Section 108 of the Customs Act. These statements indicated that director and his company had issued delivery orders without verifying the identity of the recipients, thereby abetting smuggling activities.

Key Legal Issues 

The Tribunal identified two main issues for consideration:
1. Whether the appellants abetted the act of smuggling, justifying the imposition of penalties under Section 112(a)(i) of the Customs Act.
2. Whether the Commissioner erred in relying solely on statements recorded under Section 108 of the Customs Act to impose penalties.
Legal Analysis

Section 112(a)(i) of the Customs Act 

Section 112(a)(i) of the Customs Act allows for the imposition of penalties on individuals who abet the doing or omission of an act that renders goods liable for confiscation. However, the Supreme Court in Shri Ram vs. The State of U.P. clarified that abetment requires intentional aiding and active complicity. Mere facilitation without knowledge does not constitute abetment.

In this case, the Tribunal noted that there was no allegation or evidence to suggest that the appellants had knowledge of the misdeclaration in the containers. Therefore, the penalty under Section 112(a)(i) could not be imposed solely on the basis of facilitation.

Section 108 and Section 138B of the Customs Act 

Section 108 of the Customs Act empowers customs officers to summon individuals for evidence and document production during inquiries. Statements recorded under this section are admissible as evidence under Section 138B, but only if certain conditions are met:
1. The person who made the statement is dead, cannot be found, or is incapable of giving evidence.
2. The person is examined as a witness before the adjudicating authority, and the authority forms an opinion that the statement should be admitted in the interest of justice.
The Tribunal emphasized that the procedure under Section 138B is mandatory. Statements recorded under Section 108 cannot be relied upon unless the person making the statement is examined as a witness and the adjudicating authority admits the statement as evidence. This ensures fairness and prevents reliance on statements potentially obtained under coercion.

Judgment and Key Takeaways

The Tribunal set aside the penalties imposed on M/s Committed Logistics Pvt. Ltd. and Director, holding that:
1. The appellants could not be penalized under Section 112(a)(i) as there was no evidence of their knowledge of misdeclaration in the containers.
2. The statements recorded under Section 108 of the Customs Act were not admissible as evidence since the mandatory procedure under Section 138B was not followed.
This judgment underscores the importance of adhering to procedural safeguards in adjudication proceedings under the Customs Act. It highlights that penalties cannot be imposed solely on the basis of statements recorded during investigations unless they are properly admitted as evidence.

Implications of the Judgment
1. Strengthening Procedural Fairness: The judgment reinforces the mandatory nature of Section 138B, ensuring that statements recorded during investigations are subjected to judicial scrutiny before being admitted as evidence.
2. Clarification on Abetment: The Tribunal clarified that mere facilitation without knowledge does not amount to abetment under Section 112(a)(i). This protects individuals and businesses from unjust penalties.
3. Precedent for Future Cases: The decision serves as a guiding principle for similar cases, emphasizing the need for evidence of mens rea (intent) and strict adherence to procedural requirements.
Conclusion

The CESTAT’s decision in Customs Appeals No. 58496 and 58497 of 2013 is a landmark judgment that upholds the principles of justice and procedural fairness. It provides clarity on the interpretation of Sections 108, 112(a)(i), and 138B of the Customs Act, ensuring that penalties are imposed only when supported by admissible evidence and intentional complicity. This case serves as a reminder of the importance of due process in customs adjudication and the protection of rights for individuals and businesses.

Source: CESTAT Delhi

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February 17, 2026
CESTAT Chandigarh Sets Aside Reclassification of Alloy Steel Scrap as Alloy Steel Bars
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 17.02.2026

CESTAT Chandigarh Sets Aside Reclassification of Alloy Steel Scrap as Alloy Steel Bars

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 the case of M/s Shri Balaji International vs. Commissioner of Customs, Ludhiana. This case revolved around the classification of imported goods and the subsequent imposition of penalties and fines. The judgment, pronounced on February 16, 2026, provides valuable insights into the interpretation of customs laws and the importance of adhering to section and chapter notes of the Customs Tariff Act.

Background of the Case

M/s Shri Balaji International filed three bills of entry on September 5, 2017, for the clearance of alloy steel scrap under the classification code 7204 2990 of the Customs Tariff Act, 1975. However, upon examination by the Special Intelligence and Investigation Branch (SIIB) of Customs House, Ludhiana, the goods were suspected to be misdeclared. The authorities seized the goods on October 9, 2017, under the belief that they were not scrap but alloy steel bars, which are classified under 7224 9099.

Following an investigation, a show-cause notice was issued on February 8, 2018, and the adjudicating authority reclassified the goods as alloy steel bars, imposing penalties and redemption fines. The appellants challenged this decision before the Commissioner (Appeals), who upheld the lower authority’s order. Consequently, M/s Shri Balaji International filed appeals before the CESTAT.

Key Arguments Presented 

Appellant’s Arguments:
1. Misclassification of Goods: The appellant argued that the Revenue failed to classify the goods as per the relevant section and chapter notes of the Customs Tariff Act. They emphasized that the goods were not usable as alloy steel bars due to their chemical composition and physical condition, and thus should be classified as scrap under 7204 2990.
2. Definition of Waste and Scrap: The appellant referred to Section Note 8 of the Customs Tariff Act, which defines waste and scrap as metal goods that are not usable due to breakage, cutting-up, wear, or other reasons. They contended that the goods met this definition and were unsuitable for their intended use.
3. Chartered Engineer’s Report: The appellant highlighted the findings of the chartered engineer, who confirmed that the goods were off-specification and unsuitable for their intended use due to their chemical composition. The report stated that the material could only be used for melting purposes, further supporting the classification as scrap.
4. Revaluation Concerns: The appellant argued that the authorities revalued the goods without proper justification or reference to contemporaneous prices. They also contended that the case law cited by the Commissioner (Appeals) was not applicable to their situation.
Respondent’s Arguments:

The Revenue reiterated the findings of the lower authorities, emphasizing the chemical composition of the goods as the basis for their classification as alloy steel bars.

Tribunal’s Observations and Decision

After hearing both sides and reviewing the case records, the Tribunal made the following observations:
1. Misinterpretation of Section Notes: The Tribunal found that the original and appellate authorities had ignored the relevant section and chapter notes of the Customs Tariff Act, particularly the definition of waste and scrap under Section Note 8.
2. Chartered Engineer’s Report: The Tribunal noted that the chartered engineer’s report clearly stated that the goods were off-specification and unsuitable for their intended use. The report concluded that the material could only be used for melting purposes, which aligns with the definition of scrap.
3. Lack of Evidence: The Tribunal observed that the Revenue failed to provide concrete evidence to support the classification of the goods as alloy steel bars. The authorities relied solely on the chemical composition without considering the physical condition and usability of the goods.
4. Unsustainable Classification and Revaluation: The Tribunal held that the classification and revaluation of the goods by the authorities were not sustainable under the law. The goods were deemed to be scrap, and the penalties and fines imposed were set aside.
Final Order

The Tribunal allowed the appeals filed by M/s Shri Balaji International, setting aside the impugned orders and granting consequential relief as per the law. This decision underscores the importance of adhering to the definitions and guidelines provided in the Customs Tariff Act when classifying goods.

Key Takeaways
1. Importance of Section Notes: The case highlights the critical role of section and chapter notes in determining the correct classification of goods under the Customs Tariff Act.
2. Role of Expert Opinions: The chartered engineer’s report played a pivotal role in establishing the nature of the goods and their classification as scrap.
3. Burden of Proof: The judgment emphasizes that the burden of proof lies with the Revenue to provide concrete evidence when challenging the classification of goods.
4. Judicial Precedence: The Tribunal clarified that judicial precedence must be applied appropriately, considering the specific facts of each case.
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Source: CESTAT Chandigarh

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February 17, 2026
CESTAT Kolkata Sets Aside Customs Broker License Revocation Over Procedural Lapse
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 16.02.2026

CESTAT Kolkata Sets Aside Customs Broker License Revocation Over Procedural Lapse

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.comor 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 Chatterji & Co. vs. Commissioner of Customs (Port), Kolkata. This case revolved around the revocation of a Customs Broker License under the Customs Brokers Licensing Regulations, 2018 (CBLR 2018). The Tribunal’s decision to set aside the revocation order highlights the importance of adhering to procedural timelines and principles of natural justice in adjudication processes.

Background of the Case

The appellant, M/s Chatterji & Co., was issued a Show Cause Notice (SCN) on July 16, 2019, for alleged violations of the provisions of CBLR 2018. This SCN was based on an Offence Report received from the Directorate of Revenue Intelligence (DRI) on April 30, 2019. Subsequently, the appellant’s Customs Broker License was suspended on May 1, 2019.

The appellant challenged the suspension order, and the CESTAT Kolkata, in its Final Order No. 75731/2024 dated April 19, 2024, set aside the suspension order, citing delayed action by the Revenue authorities. However, the Principal Commissioner of Customs later revoked the appellant’s license through an Order-in-Original (OIO) dated August 16, 2022, which led the appellant to file an appeal before the Tribunal.

Key Arguments Presented 
1. Violation of Procedural Timelines: The appellant argued that the OIO was passed beyond the stipulated time frame under Regulation 17(7) of CBLR 2018. According to this regulation, the Principal Commissioner or Commissioner of Customs must pass an order of suspension or revocation within 90 days from the date of submission of the Inquiry Report by the Deputy Commissioner or Assistant Commissioner of Customs. In this case, the Inquiry Report was submitted on March 28, 2022, but the OIO was passed on August 16, 2022—well beyond the 90-day limit.
2. Previous Tribunal Orders: The appellant highlighted two previous orders by the Tribunal that set aside similar actions taken by the Revenue authorities. These orders demonstrated that the alleged contraventions were not substantiated and that the suspension of the appellant’s license was unjustified.
3. Compliance with CBLR 2018: The appellant contended that they had fulfilled the requirements under Regulation 10(a), (d), and (e) of CBLR 2018, further challenging the grounds for revocation of their license.
Tribunal’s Observations

The Tribunal carefully examined the timeline of events and the provisions of Regulation 17(7) of CBLR 2018. It noted that the Inquiry Report was submitted on March 28, 2022, and the OIO was passed on August 16, 2022—more than 130 days later. This was a clear violation of the 90-day time limit prescribed under Regulation 17(7). The Tribunal emphasized that the regulation does not provide any saving clause for exceeding this time limit, making the delay a procedural lapse.

The Tribunal also acknowledged its previous orders, which had set aside the suspension of the appellant’s license due to delayed action by the Revenue authorities. These orders further supported the appellant’s case.

Final Decision

In its judgment, the Tribunal set aside the impugned order, allowing the appeal filed by M/s Chatterji & Co. The Tribunal held that the revocation of the Customs Broker License was invalid due to the procedural lapse in adhering to the time limit under Regulation 17(7) of CBLR 2018. The appellant was deemed eligible for consequential relief as per the law.

Key Takeaways
1. Adherence to Procedural Timelines: The case underscores the importance of strict compliance with procedural timelines in adjudication processes. The Tribunal’s decision serves as a reminder to authorities to ensure timely action to uphold the principles of natural justice.
2. Significance of Previous Judicial Precedents: The Tribunal’s acknowledgment of its earlier orders highlights the importance of consistency in judicial decisions and the role of precedents in shaping outcomes.
3. Protection of Rights Under CBLR 2018: The judgment reinforces the safeguards provided under CBLR 2018 to Customs Brokers, ensuring that their licenses cannot be arbitrarily revoked without following due process.
Conclusion

The CESTAT Kolkata’s decision in this case is a landmark ruling that emphasizes the need for procedural fairness and timely action by adjudicating authorities. It serves as a precedent for similar cases and provides reassurance to Customs Brokers that their rights under CBLR 2018 will be protected. This judgment is a testament to the judiciary’s role in upholding justice and ensuring accountability in administrative processes.

Source: CESTAT Kolkata

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February 16, 2026
CESTAT Mumbai Sets Aside IGST Demand and Penalties
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 16.02.2026

CESTAT Mumbai Sets Aside IGST Demand and Penalties

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.comor on his Mobile +91-9999005379.

In a significant judgment, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai, has ruled in favor of Quality Systems and Equipments P. Ltd, setting aside the Order-in-Original No. 145/2024-25/Commr/NS-V/JNCH dated 12.09.2024 passed by the Commissioner of Customs (NS-V), Nhava Sheva. The case revolved around the classification and applicable Integrated Goods and Services Tax (IGST) rate on imported parts of poultry-keeping machinery.

Background of the Case

Quality Systems and Equipments P. Ltd, the appellant, imported “Poultry Keeping Machinery” and its parts between September 2017 and December 2021. The company classified these goods under CTSH 84362900 and CTSH 84369100, paying IGST at a rate of 12% as per Serial No. 199 of Schedule II of IGST Notification No. 1/2017-IGST (Rate) dated 28.06.2017. However, during a post-clearance audit, the customs department raised concerns, alleging that the parts should have been classified under Serial No. 453 of Schedule III of the same notification, which attracts an IGST rate of 18%.

A show-cause notice was issued, and the Commissioner of Customs adjudicated the matter, confirming a differential IGST demand of Rs. 63,36,223/- along with applicable interest and imposing a redemption fine of Rs. 1 crore for confiscation of goods under Section 111(m) of the Customs Act, 1964. Penalties under Sections 114A, 114AA, and 112(a) of the Customs Act were also imposed.

Appellant’s Arguments

During the appeal hearing, the appellant’s counsel, argued that the company was not given a fair opportunity to present its case before the Commissioner. The appellant had requested an adjournment for the hearing scheduled on 20.08.2024 due to the unavailability of its director, but no further notice was issued for another hearing. Consequently, the order was passed without considering the appellant’s submissions.

The appellant further contended that the GST Council had already recommended that parts of poultry-keeping machinery under tariff item 84369100 should be classified under Serial No. 199 of Schedule II, attracting a 12% IGST rate. This recommendation was notified and clarified through CBIC Circular No. 229/23/2024-GST dated 15.07.2024, which was issued before the Commissioner passed the order. Additionally, Circular No. 236/30/2024-GST dated 11.10.2024 clarified that past cases involving competing GST rates should be regularized on an “as is where is basis,” treating payments at the lower rate as fully compliant.

The appellant relied on Supreme Court judgments in Suchitra Components Ltd. Vs . Commissioner (2008) and Ranadey Micronutrients Vs. Collector of Central Excise (1996), which established that beneficial circulars should be applied retrospectively and are binding on departmental officers.

Respondent’s Arguments

The respondent argued that the Commissioner had conducted a proper legal analysis and that the circulars issued after the show-cause notice and adjudication could not have retrospective application. The respondent cited the Supreme Court judgment in Union of India Vs. Intercontinental Consultants and Technocrats Private Ltd (2018), which held that circulars issued after adjudication cannot alter the legal position at the time of the order.

CESTAT’s Observations and Final Order 

After reviewing the appeal papers, written submissions, and case laws, the CESTAT bench comprising Hon’ble Judicial Member and Hon’ble Technical Member found merit in the appellant’s arguments. The Tribunal noted that the appellant had paid IGST at the rate of 12% as per the prevailing notification and that the clarificatory circulars issued by CBIC had retrospective application, as they were beneficial to the assessee.

The Tribunal also observed procedural lapses in the adjudication process, as the appellant was not given a fair opportunity to present its case. The Commissioner failed to consider the clarifications provided in the CBIC circulars, which were already in effect at the time of adjudication.

In its final order, the Tribunal set aside the Commissioner’s order, stating that the appellant had duly discharged IGST at the correct rate of 12% for the imported parts of poultry-keeping machinery during the relevant period. The Tribunal also granted consequential relief to the appellant.

Key Takeaways
1. Retrospective Application of Beneficial Circulars: The judgment reinforces the principle that beneficial circulars issued by the government have retrospective application and are binding on departmental officers.
2. Importance of Procedural Fairness: The Tribunal emphasized the need for providing appellants with a fair opportunity to present their case during adjudication.
3. Classification and Tax Rates: The case highlights the complexities involved in the classification of goods and the determination of applicable tax rates under GST notifications.
4. Judicial Precedents: The reliance on Supreme Court judgments underscores the importance of established legal principles in resolving disputes.
Conclusion

The CESTAT Mumbai’s decision in favor of Quality Systems and Equipments P. Ltd is a landmark ruling that upholds the principles of fairness and the retrospective application of beneficial circulars. This judgment serves as a reminder to both taxpayers and tax authorities to adhere to procedural norms and consider all relevant developments during adjudication. It also highlights the importance of staying updated with changes in tax laws and notifications to ensure compliance and avoid disputes.

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Source: CESTAT Mumbai

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February 16, 2026
CESTAT Delhi Sets Aside Penalty on Customs Broker
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 14.02.2026

CESTAT Delhi Sets Aside Penalty on Customs Broker

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.comor on his Mobile +91-9999005379.

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, recently delivered a significant judgment in the case of Cargo Placement & Shipping Agencies Pvt. Ltd. vs Commissioner of Customs, ICD Tughalkabad, New Delhi. This case revolved around the imposition of penalties under Section 112(a)(i) of the Customs Act, 1962, and the alleged violation of the Customs House Agents Licensing Regulations, 2004 (CHALR, 2004). The judgment, pronounced on February 12, 2026, provides valuable insights into the legal interpretation of customs regulations and the imposition of penalties.

Background of the Case

The appellant, M/s Cargo Placement & Shipping Agencies Pvt. Ltd., is a customs broker licensed under CHALR, 2004. The case arose from allegations that the appellant failed to exercise due diligence and supervision over its employees, leading to the filing of fraudulent Bills of Entry for illegal imports. Specifically, the appellant’s G-Card holder, was accused of filing Bills of Entry for fictitious firms without verifying the authenticity of the documents or the importers. The General Manager of the appellant, was also alleged to have abetted the smuggling of goods by directing the G-Card holder to file the Bills of Entry without proper verification.

The Commissioner of Customs issued a show-cause notice to the appellant on February 3, 2011, alleging violations of Regulation 19 of CHALR, 2004, and proposed action under Regulation 20 of CHALR, 2004. Additionally, the notice mentioned that the appellant was liable for penalty under Section 112(a)(i) of the Customs Act, 1962, for acts of omission and commission in dealing with goods liable to confiscation.

Key Issues in the Case

The primary issues in this case were:
1. Whether the appellant violated Regulation 19 of CHALR, 2004, by failing to supervise its employees and ensure proper conduct.
2. Whether the appellant was liable for penalty under Section 112(a)(i) of the Customs Act, 1962, for acts of omission and commission related to illegal imports.
Arguments Presented

Appellant’s Arguments:
- The appellant contended that the allegations against it pertained to violations of Regulation 19 of CHALR, 2004, which could not be used as grounds for imposing penalties under Section 112(a)(i) of the Customs Act.
- The appellant argued that the show-cause notice did not provide sufficient reasons or evidence to justify the imposition of penalties under Section 112(a)(i).
- The appellant relied on the Delhi High Court’s judgment in Commissioner of Customs (Import & General), New Delhi vs Buhariwal Logistics, which held that mere violation of CHALR regulations does not justify penalties under Sections 112 and 114AA of the Customs Act unless there is tangible evidence of the employer’s knowledge of illegal acts committed by employees.
Respondent’s Arguments:
- The department argued that the impugned order was valid and supported by sufficient evidence, which established the appellant’s acts of omission and commission, rendering it liable for penalties under Section 112(a)(i) of the Customs Act.
Tribunal’s Observations and Judgment

The Tribunal carefully examined the show-cause notice and the impugned order. It noted that the primary allegations against the appellant were related to violations of Regulation 19 of CHALR, 2004, which require customs brokers to exercise supervision over their employees to ensure proper conduct. However, the Tribunal observed that the show-cause notice did not provide any specific reasons or evidence to justify the imposition of penalties under Section 112(a)(i) of the Customs Act.

The Tribunal referred to the Delhi High Court’s judgment in Buhariwal Logistics, which clarified that a violation of CHALR regulations does not automatically warrant penalties under the Customs Act unless there is evidence of the employer’s knowledge of illegal acts committed by employees. The Tribunal emphasized that the Commissioner had failed to establish such knowledge or intent on the part of the appellant.

Consequently, the Tribunal held that the imposition of penalties under Section 112(a)(i) of the Customs Act was unsustainable. The impugned order dated March 31, 2013, was set aside, and the appeal was allowed.

Key Takeaways
1. Importance of Specific Allegations: The judgment highlights the necessity for show-cause notices to clearly specify the grounds for imposing penalties under the Customs Act. Mere mention of a section without substantiating evidence is insufficient.
2. Distinction Between CHALR Violations and Customs Act Penalties: The Tribunal reinforced the principle that violations of CHALR regulations do not automatically lead to penalties under the Customs Act unless there is evidence of the employer’s knowledge or involvement in illegal activities.
3. Due Diligence and Supervision: Customs brokers must exercise due diligence and ensure proper supervision of their employees to comply with CHALR regulations and avoid legal consequences.
4. Judicial Precedents Matter: The Tribunal’s reliance on the Delhi High Court’s judgment in Buhariwal Logistics underscores the importance of judicial precedents in interpreting legal provisions and ensuring consistency in decisions.
Conclusion

The case of Cargo Placement & Shipping Agencies Pvt. Ltd. vs Commissioner of Customs serves as a crucial reminder for customs brokers to adhere strictly to CHALR regulations and exercise due diligence in their operations. It also underscores the importance of precise and evidence-backed allegations in legal proceedings. This judgment not only provides clarity on the interplay between CHALR regulations and the Customs Act but also reinforces the principle that penalties under the Customs Act require concrete evidence of knowledge or involvement in illegal activities.

Source: CESTAT Delhi

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February 14, 2026
Karnataka High Court Ruled in Favor of Vidya Herbs in Customs Dispute Over Import Declaration
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 14.02.2026

Karnataka High Court Ruled in Favor of Vidya Herbs in Customs Dispute Over Import Declaration

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 January 16, 2024, the High Court of Karnataka at Bengaluru delivered a significant judgment in the case of CSTA No. 6 of 2023, involving the Commissioner of Customs, Mangalore, and Vidya Herbs Private Limited. The case revolved around the import of goods by Vidya Herbs, a 100% Export Oriented Unit (EOU), and the subsequent dispute regarding the classification and declaration of the imported goods.

Background of the Case

Vidya Herbs Private Limited, a 100% EOU, filed a Bill of Entry on November 16, 2022, to clear goods declared as “Vietnam Robusta Coffee Beans” with a declared value of ₹96,09,828. The company sought to avail the benefit of Notification No. 52/2003-Customs dated July 22, 2003, which provides certain exemptions for EOUs. The Bill of Entry was cleared through the Risk Management System (RMS) without assessment.

However, during an open examination, Customs Officers observed that the imported goods were coffee husks instead of coffee beans, as declared. The goods were subjected to further examination, and Vidya Herbs sought clearance under the Import of Goods at Concessional Rate of Duty Rules (IGCR), 2017, claiming the goods were classifiable under HS Code 09011145 and intended for use in manufacturing herbal extracts.

Vidya Herbs acknowledged the mismatch in the declaration and expressed willingness to pay the applicable duty to amend the Bill of Entry and clear the goods. Despite this, the Commissioner of Customs passed an Order-in-Original on February 1, 2023, determining the assessable value at ₹96,09,828, confiscating the goods under Sections 111(f), (l), (m), and (o) of the Customs Act, 1962, and ordering their release upon payment of a redemption fine of ₹10 lakhs.

Appeal to CESTAT and Subsequent High Court Proceedings 

Vidya Herbs challenged the Order-in-Original before the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), South Regional Bench, Bengaluru. The CESTAT ruled in favor of Vidya Herbs, stating that the import policy requires a liberal approach to promote the activities of EOUs. The tribunal emphasized that the Customs Authority’s role is to verify the compliance of imported goods with import documents and approvals. It also noted that the goods were not seized, and the transaction was revenue-neutral since the goods were intended for re-export.

The Commissioner of Customs subsequently filed an appeal in the High Court of Karnataka, arguing that the CESTAT erred in allowing the appeal as the investigation was incomplete. The Revenue also pointed out that Vidya Herbs had admitted to the mismatch in the import documents and expressed willingness to pay the applicable duty.

High Court Judgment 

After hearing arguments from both sides, the High Court dismissed the appeal filed by the Commissioner of Customs. The court noted the following key points:
1. No Seizure of Goods: The court agreed with Vidya Herbs’ argument that confiscation could not be ordered unless the goods were seized. Since the goods were not seized, the confiscation order was deemed unsustainable.
2. Revenue Neutrality: The court acknowledged that Vidya Herbs is a 100% EOU, and the imported goods were intended for processing and re-export. Unless the Customs Authority could prove that the goods were sold in the domestic market or not re-exported, the issue remained revenue-neutral.
3. Liberal Approach for EOUs: The court upheld the CESTAT’s view that a liberal approach should be taken under the import policy to promote the activities of EOUs. It also noted that the CESTAT had reserved the liberty for Vidya Herbs to submit a fresh application under Rule 5(1)(a) of the IGCR Rules, 2017.
Final Order

The High Court concluded that the Revenue had no valid grievance against the CESTAT’s order. The appeal was dismissed, and the substantial questions of law raised by the Revenue were answered in favor of Vidya Herbs Private Limited. The court also ruled that no costs would be imposed.

Key Takeaways

This judgment highlights the importance of adhering to the principles of revenue neutrality and the need for a liberal approach in cases involving Export Oriented Units. It also underscores the significance of proper procedures, such as the requirement for seizure before confiscation, in customs-related disputes.

The case serves as a reminder for importers to ensure accurate declarations in their import documents to avoid legal complications. At the same time, it emphasizes the role of Customs Authorities in verifying compliance without unnecessarily penalizing EOUs that contribute to export activities.

Conclusion

The High Court’s decision in favor of Vidya Herbs Private Limited is a landmark ruling that reinforces the principles of fairness and transparency in customs proceedings. It sets a precedent for similar cases involving EOUs and highlights the importance of balancing regulatory compliance with the promotion of export-oriented businesses.

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Source: Karnataka High Court

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February 14, 2026
CESTAT Chennai Quashes Customs Demand in Joss Powder Classification Dispute
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 13.02.2026

CESTAT Chennai Quashes Customs Demand in Joss Powder Classification 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), Chennai, recently delivered a significant judgment in the case of M/s. Good Luck Syndicate vs. The Commissioner of Customs, Chennai. This case revolved around the classification of “Joss Powder” under the Customs Tariff Act, 1975, and raised critical questions about the sustainability of the demand, the applicability of the extended period of limitation, and the imposition of penalties under Section 114A of the Customs Act, 1962.

Background of the Case

M/s. Good Luck Syndicate, the appellant, imported Joss Powder, classifying it under Customs Tariff Heading (CTH) 44050000, which attracted Basic Customs Duty (BCD) at 5% under Notification No. 46/2011-Cus. and Countervailing Duty (CVD) at ‘Nil’. However, the Adjudicating Authority reclassified the goods under CTH 12119039, leading to a demand for differential duty. This decision was made without issuing a Show Cause Notice (SCN) or providing the appellant an opportunity for a personal hearing.

Aggrieved by the demand, the appellant filed an appeal before the Commissioner of Customs (Appeals-II), Chennai. Simultaneously, the Revenue also filed an appeal seeking the imposition of penalties under Section 114A of the Customs Act, 1962. The First Appellate Authority, in its Order-in-Appeal, imposed penalties and remanded the matter to the Original Authority for verification of the appellant’s eligibility for the concessional rate under Notification No. 46/2011-Cus.

Key Issues Raised in the Appeals 

The appeals filed by M/s. Good Luck Syndicate raised the following critical issues:
1. Sustainability of the Demand: Whether the demand raised in the impugned order was valid.
2. Limitation Period: Whether the demand raised in the SCN was barred by limitation under Section 28 of the Customs Act, 1962.
3. Imposition of Penalty: Whether the First Appellate Authority was correct in imposing a penalty under Section 114A and remanding the matter for verification of eligibility under Notification No. 46/2011-Cus.
Tribunal’s Observations and Findings

The Tribunal, comprising Hon’ble Member – Judicial and Hon’ble Member – Technical, carefully examined the facts and legal provisions surrounding the case. The key observations and findings were as follows:
1. Classification of Joss Powder: The Tribunal noted that the Adjudicating Authority had relied on Note 1(a) to Chapter 44 of the Customs Tariff Act, 1975, which excludes wood in powdered form used primarily in perfumery from the purview of Chapter 44. However, the appellant argued that Joss Powder, derived from the bark of the lit-sea tree, is essentially sawdust with adhesive or binder properties and does not possess any perfumery or medicinal characteristics. The Tribunal agreed with the appellant’s contention, stating that the product does not fall under CTH 1211, which covers plants and parts of plants used primarily in perfumery, pharmaceuticals, or for insecticidal purposes.
2. Extended Period of Limitation: The Tribunal observed that the SCN issued on 18.10.2013 was beyond the normal limitation period of one year under Section 28 of the Customs Act, 1962. The extended period of five years could only be invoked in cases involving collusion, willful misstatement, or suppression of facts, none of which were established in this case. The Tribunal relied on precedents set by the Hon’ble Supreme Court in cases such as Nizam Sugar Factory vs. Collector of Central Excise and ECE Industries Ltd. vs. CCE New Delhi, which emphasized the strict application of limitation provisions.
3. Imposition of Penalty and Remand Directions: The Tribunal found that the First Appellate Authority had exceeded its jurisdiction by imposing penalties under Section 114A and remanding the matter for verification of eligibility under Notification No. 46/2011-Cus. These directions were not part of the Review Order of the Commissioner dated 27.05.2015, nor were they supported by any allegations in the SCN. The Tribunal held that these directions were unwarranted and deserved to be set aside.
Final Order

After considering the submissions and evidence, the Tribunal set aside the impugned Order-in-Appeal Nos. 771 & 772/2015 dated 30.08.2015. The appeals filed by M/s. Good Luck Syndicate were allowed with consequential benefits as per law. The Tribunal’s decision was pronounced in an open court on 12.02.2026.

Key Takeaways

This judgment highlights several important aspects of customs law:
1. Proper Classification: The classification of goods under the Customs Tariff Act must be based on their actual characteristics and intended use, rather than arbitrary assumptions.
2. Adherence to Legal Procedures: Authorities must strictly follow procedural requirements, including issuing SCNs and providing opportunities for personal hearings, to ensure fairness and transparency.
3. Limitation Period: The extended period of limitation under Section 28 of the Customs Act can only be invoked in cases involving specific circumstances like collusion or suppression of facts.
4. Jurisdiction of Appellate Authorities: Appellate authorities must act within the scope of their powers and avoid exceeding their jurisdiction.
This case serves as a reminder of the importance of adhering to legal principles and procedures in customs matters. It also underscores the role of appellate tribunals in ensuring justice and protecting the rights of importers and exporters.

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Source: CESTAT Chennai

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February 13, 2026