ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 10.02.2026
High Court of Madras Quashes Customs Department Order
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.
β
On February 2, 2026, the High Court of Madras delivered a landmark judgment in the case of WP No. β 5786 of 2025, brought forward by M/s. β Autoprint Machinery Manufactures Pvt Ltd. β The case revolved around the interpretation of Section 149 of the Customs Act, 1962, and the validity of a circular issued by the Central Board of Excise and Customs (CBEC) that imposed a time limit for filing applications to amend shipping bills. β
This blog delves into the details of the case, the arguments presented, and the implications of the judgment.
Background of the Case
The petitioner, M/s. Autoprint Machinery Manufactures Pvt Ltd, filed a writ petition under Article 226 of the Constitution of India, challenging the impugned order passed by the Commissioner of Customs (Respondent No. β 1). The order, dated November 21, 2024, rejected the petitionerβs application for amending shipping bills under Section 149 of the Customs Act, citing Circular No. 36/2010-Customs issued by CBEC, which imposed a time limit for such amendments. β
The petitioner argued that Section 149 of the Customs Act does not prescribe any time limit for filing applications for amendments to shipping bills or bill of entries. β Therefore, the CBEC circular was deemed to be ultra vires and beyond the scope of the statute. β
Key Issue in the Case
The primary issue before the court was whether the CBEC could issue a circular fixing a time limit for filing applications for amendments under Section 149 of the Customs Act, despite the absence of any such provision in the statute. β
Arguments Presented
Petitionerβs Argument: β
The petitioner contended that the CBEC circular was invalid as it imposed a time limit that was not prescribed under Section 149 of the Customs Act. β
The petitionerβs counsel relied on various judgments from Constitutional Courts across India, which consistently held that statutory provisions cannot be overridden or restricted by administrative circulars. β
Respondentsβ Argument: β
The respondents argued that the circular was issued in accordance with the law and was valid. β
They also informed the court that the same issue was pending before the Honβble Supreme Court in S.L.P. β No. 38482 of 2025, but admitted that no stay had been granted by the Supreme Court on the matter. β
The Courtβs Observations
Justice, presiding over the case, made the following observations:
No Time Limit in Section 149: β
The court noted that Section 149 of the Customs Act does not prescribe any specific time limit for filing applications to amend shipping bills or bill of entries. β Therefore, the CBEC circular imposing a time limit was deemed to be inconsistent with the statute. β
Consistency in Judicial Precedents: β
The court referred to previous judgments from various Constitutional Courts, which had consistently held that administrative circulars cannot impose restrictions that are not explicitly provided for in the statute. β
Pending Supreme Court Case: β
While the respondents highlighted that the issue was under consideration by the Supreme Court, the court clarified that no stay had been granted by the apex court. β Hence, the High Court was not bound to defer its decision.
Equal Treatment for Importers/Exporters: β
The court emphasized that there cannot be different standards for different importers/exporters. β The petitioner should not be penalized simply because the Customs Department had filed an SLP before the Supreme Court. β
The Judgment
The High Court of Madras quashed the impugned order passed by the Commissioner of Customs and remanded the matter back to the 1st respondent for fresh consideration. β The court directed the following:
The 1st respondent must reconsider the petitionerβs application for amendment of shipping bills on merits and in accordance with the law. β
The 1st respondent must not rely on Circular No. β 36/2010-Customs dated 23.09.2010 while making the decision. β
The petitioner must be given an adequate opportunity for a personal hearing, adhering to the principles of natural justice. β
The final order must be passed within 12 weeks from the date of receipt of the courtβs order. β
The petitioner must be allowed to pay the appropriate fees for the application seeking amendment of shipping bills. β
The court also clarified that the final decision of the 1st respondent would be subject to the outcome of the pending Supreme Court case in S.L.P. β No. 38482 of 2025. β
Implications of the Judgment
This judgment is significant for importers and exporters across India as it reinforces the principle that administrative circulars cannot override statutory provisions. By quashing the CBEC circular, the court has upheld the supremacy of the Customs Act and ensured that businesses are not unfairly penalized due to arbitrary time limits imposed by administrative authorities. β
The decision also highlights the importance of adhering to the principles of natural justice, ensuring that affected parties are given a fair opportunity to present their case. β
Conclusion
The High Court of Madras has once again demonstrated its commitment to upholding the rule of law and protecting the rights of businesses. The judgment in WP No. β 5786 of 2025 serves as a reminder that administrative authorities must act within the bounds of the law and cannot impose restrictions that are not explicitly provided for in the statute.
ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 09.02.2026
βAppeals- Decided cases related to Customs Advance Rulingβ
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.
ββ ββ β β ββ β β
Summary: Customs Advance Ruling
This short Article will revolve around the Customs Advance Ruling and decided βAppealβ affirming the principle of natural justice and prevailing customs law.
The legal provisions dealing with advance rulings in Customs matters are contained in Chapter V-B of the Customs Act, 1962. This chapter was significantly revised through the Finance Act, 2018.
A new Section 28EA was introduced to establish the βCustoms Authority for Advance Rulings (CAAR) through the Finance Act, 2018. This provision authorizes the Central Board of Indirect Taxes and Customs (CBIC) to appoint officers of the rank of Principal Commissioner or Commissioner of Customs as the Customs Authority for Advance Rulings, through a notification.
Further, the amended Section 28M states that the CAAR will follow procedures as prescribed by the government. In line with this, CBIC issued the Customs Authority for Advance Rulings Regulations under Notification No. 01/2021-Customs (N.T.) dated 04.01.2021, which was later amended by Notification No. 63/2022-Customs (N.T.) dated 20.07.2022.
These new regulations replaced the earlier 2005 Procedure Regulations of the Authority for Advance Rulings (Customs, Central Excise and Service Tax), which had previously governed jurisdiction, application formats, and procedural aspects of advance rulings under the law.
Jurisdiction:
The jurisdiction of the two authorities shall be determined as per below
S.No.
Customs Authority for Advance Rulings
Jurisdiction to hear applications for Advance Rulings (State-wise and Union territory-wise, etc.)
1
Customs Authority for Advance Rulings, New Delhi.
Jammu & Kashmir, Himachal Pradesh, Punjab, Chandigarh, Uttar Pradesh, NCT of Delhi, Haryana, Uttarakhand, Bihar, Jharkhand, West Bengal, Andaman and Nicobar Islands, Sikkim, Odisha, Rajasthan, Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Tripura and Ladakh.
2
Customs Authority for Advance Rulings, Mumbai.
Andhra Pradesh, Telangana, Karnataka, Kerala, Lakshadweep, Puducherry, Tamil Nadu, Gujarat, Dadra and Nagar Haveli and Daman and Diu, Maharashtra, Goa, Madhya Pradesh and Chhattisgarh.
Applicants from Outside India can also apply for an Advance Ruling under Regulation 6 (2) of the Customs Authority for Advance Rulings Regulations, 2021 but only to the Principal Bench in New Delhi. The Extract of sub-clause 2 is reproduced below-
βThe jurisdiction shall be determined in terms of the address provided by the applicant while making the application, and the Authority for an applicant providing an address other than that of within the territory of India, shall be the Authority situated at 2[New Delhi.]β.
Statutory Provisions:
Customs Authority for Advance Rulings Regulations, 2021
Notification No. 01/2021-Cus (N.T.) dated 4-1-2021 amended by Notification No. 63/2022-Cus (N.T.) dated 20-7-2022. It came into effect from the date of publication in the official Gazette.
In exercise of the powers conferred by section 157 read with sub-section (1) of section 28H, sub-section (1) of section 28KA and sub-section (1) of section 28M of the Customs Act, 1962 (52 of 1962) and in supersession of the Authority for Advance Rulings (Customs, Central Excise and Service Tax) Procedure Regulations, 2005.
Section-28H: Application for Advance Ruling
(1) An applicant desirous of obtaining an advance ruling under this Chapter may make an application in such form and in such manner 1[and accompanied by such fee] as may be prescribed, stating the question on which the advance ruling is sought.
(2) The question on which the advance ruling is sought shall be in respect of-
(a) classification of goods under the Customs Tariff Act, 1975 (51 of 1975);
(b) applicability of a notification issued under sub-section (1) of section 25, having a bearing on the rate of duty;
(c) the principles to be adopted for the purposes of determination of value of the goods under the provisions of this Act.
2[(d) applicability of notifications issued in respect of tax or duties under this Act or the Customs Tariff Act, 1975 (51 of 1975) or any tax or duty chargeable under any other law for the time being in force in the same manner as duty of customs leviable under this Act or the Customs Tariff Act;]
3[(e) determination of origin of the goods in terms of the rules notified under the Customs Tariff Act, 1975 (51 of 1975) and matters relating thereto.]
4[(f) any other matter as the Central Government may, by notification, specify.]
Regulation 2. Definitions. – In these regulations, unless the context otherwise requires-
(a) “Act” means the Customs Act, 1962 (52 of 1962);
(b) “authorized representative”, –
(i) in relation to an applicant means an authorized representative as defined in sub-section (2) of section 146A of the Act;
(ii) in relation to a Principal Commissioner or Commissioner, means a person –
(A) authorized in writing by the Principal Commissioner or Commissioner to act as an authorized representative; or
(B) appointed by the Central Government as authorized representative or authorized by the Central Board of Indirect Taxes and Customs to appear, plead and act for the Principal Commissioner or Commissioner in any proceeding before the Authority;
(c) “petition” means any petition of interlocutory, incidental or ancillary nature or representation filed in a pending or disposed of application;
(d) “Principal Commissioner or Commissioner”, in respect of an application, means-
(i) the Principal Commissioner or Commissioner of Customs, specified in the application; or
(ii) 1[* * * * *];
(e) “Secretary” means an officer, not below the rank of Assistant Commissioner of Customs or Assistant Commissioner of Central Tax designated as Secretary by the 2[Authority];
(f) “section” means section of the Act;
(g) words and expressions used in these regulations and not defined but defined in the Act shall have same meanings respectively assigned to them in the Act.
Regulation 9. Appeal against advance ruling-
The Principal Commissioner or Commissioner 1[is] authorized to file appeal against the advance ruling in terms of sub-section (1) of section 28KA.
Section 28KA: Appeal
(1) Any officer authorized by the Board, by notification, or the applicant may file an appeal to the 2[High Court] against any ruling or order passed by the Authority, within sixty days from the date of the communication of such ruling or order.
Provided that where the [High Court] is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the period so specified, it may allow a further period of thirty days for filing such appeal.
Appeals Jurisdiction lies with the High Court of the State where the Appellant is located or from the High Court of the State from where the Advance Ruling Application was filed. The High Courts jurisdiction is reproduced below again Authority wise.
S.No.
Customs Authority for Advance Ruling
Jurisdiction of Appeal against Advance Ruling in High Courts of the respective state as per below
1
CAAR New Delhi
Jammu & Kashmir, Himachal Pradesh, Punjab, Chandigarh, Uttar Pradesh, NCT of Delhi, Haryana, Uttarakhand, Bihar, Jharkhand, West Bengal, Andaman and Nicobar Islands, Sikkim, Odisha, Rajasthan, Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Tripura and Ladakh.
2
CAAR Mumbai
Andhra Pradesh, Telangana, Karnataka, Kerala, Lakshadweep, Puducherry, Tamil Nadu, Gujarat, Dadra and Nagar Haveli and Daman and Diu, Maharashtra, Goa, Madhya Pradesh and Chhattisgarh.
Appeals against Customs Authority for Advance Rulings (CAAR) orders are primarily governed by the Customs Act, 1962 (Section 28KA), requiring an appeal to be filed in the High Court within 60 days. While typically a statutory remedy, such orders can also be challenged under Writ Jurisdiction (Articles 226/227) on grounds of violation of natural justice, lack of jurisdiction, or for being arbitrary.
Key Points:
Statutory Appeal: Under Section 28KA of the Customs Act, 1962, any party (applicant or Principal Commissioner/Commissioner of Customs) aggrieved by the advance ruling can appeal to the High Court.
Writ Jurisdiction (Article 226): Although a statutory remedy exists, High Courts may entertain a Writ Petition if the ruling is against principles of natural justice, the authority acted without jurisdiction, or if the ruling is illegal.
Time Limit: The appeal or writ must typically be filed within 60 days from the date of communication of the ruling.
Supreme Court Access: Further appeals against the High Court’s order can be made to the Supreme Court via Special Leave Petition (SLP) under Article 136 of the Constitution.
Finality: The ruling is binding on the applicant and the customs authorities unless there is a change in law or facts.
Writ jurisdiction is generally an exception used when statutory remedies are ineffective or not applicable, rather than a direct substitute for the statutory appeal process, according to legal precedents.
There are few but important High Court decisions where parties challenged orders of the Customs Authority for Advance Rulings (CAAR) / earlier AAR (Customs) through writ petitions under Articles 226/227. Since CAAR is a quasi-judicial authority and the Act does not provide a statutory appeal, High Courts are the primary forum for challenge.
Key High Court Cases Challenging Customs Advance Rulings
Amazon Wholesale India Pvt. Ltd. vs Customs Authority for Advance Rulings (Delhi High Court, 07 August 2024)
1. Introduction
This judgment of the Delhi High Court deals with an important dispute relating to classification of smart devices under the Customs Tariff. The case arose from appeals filed by Amazon Wholesale India Pvt. Ltd. against advance rulings issued by the Customs Authority for Advance Rulings (CAAR).
At the heart of the dispute was a simple but legally significant question: Are Amazon Echo devices merely speakers, or are they communication devices?
The answer to this question determined the applicable tariff heading and eligibility for customs duty exemption.
2. Background of the Dispute
2.1 Parties
Appellant: Amazon Wholesale India Pvt. Ltd.
Respondent: Customs Authority for Advance Rulings (CAAR)
2.2 Products Involved
The classification dispute concerned three Amazon devices:
Echo Dot (5th Generation)
Echo Dot (5th Generation with Clock)
Echo Pop
Amazon approached CAAR to obtain certainty regarding tariff classification before import.
2.3 Decision of CAAR
CAAR classified the devices as loudspeakers under CTH 8518 22 10.
Amazon disagreed and argued that the devices should instead fall under CTH 8517 62 90, which covers equipment used for transmission and reception of data.
This difference in classification had major duty implications, which led Amazon to challenge the ruling before the Delhi High Court.
3. Core Legal Issue
The main question before the Court was:
What is the true nature of Amazon Echo devices?
Are they:
Simple audio output devices (speakers), or
Multifunction smart communication devices?
The answer depended on how customs law treats multifunction and composite machines.
4. Relevant Legal Provisions
The Court relied on several key provisions of customs law and tariff interpretation rules.
4.1 Customs Tariff Headings
Two competing entries were examined:
CTH 8517
Covers devices used for receiving, converting and transmitting data, voice or images.
CTH 8518
Covers loudspeakers, headphones and audio equipment.
The classification depended on which description better captured the real character of the devices.
4.2 Rules for Interpretation of Tariff
The Court applied the General Rules for Interpretation (GRI):
Specific description prevails over general description.
Composite goods must be classified based on their essential character.
4.3 Section Note on Composite Machines
A very important rule applied by the Court states that when a machine performs multiple functions, it must be classified according to its principal function.
This principle became the foundation of the entire judgment.
5. Key Legal Principles Applied
5.1 Principal Function Test
The Court emphasised that when a product performs several functions, classification must be based on its main purpose.
The Echo devices:
Respond to voice commands
Connect to the internet
Communicate with cloud services
Transmit and receive data
These features showed that the devices are primarily communication tools, not just speakers.
5.2 End Use Cannot Decide Classification
The Revenue argued that when disconnected from the internet, the devices behave like speakers.
The Court rejected this argument and clarified an important principle:
The way a product might be used cannot override its design and core functionality.
The Court observed that these devices were never intended to be used as ordinary speakers.
5.3 Recognition of Technological Convergence
The Court described the devices as examples of technological convergence.
This means one device performing the roles of multiple traditional devices such as:
Speaker
Assistant
Communication device
Information tool
Because of this convergence, it would be incorrect to classify them using outdated product categories.
5.4 Importance of Global Classification Consistency
India follows the global Harmonised System of Nomenclature (HSN).
The Court highlighted the need for classification to align with international practices in order to maintain uniformity in global trade.
6. Earlier Judgments Relied Upon
The Court relied on important Supreme Court and High Court precedents.
6.1 Carrier Aircon Case
The Supreme Court held that classification must depend on the primary function of the product, not the industry in which it is used.
This case reinforced the idea that end-use is not decisive.
6.2 Xerox India Case
This case involved multifunction printer-scanner-copier machines.
The Supreme Court ruled that such devices must be classified according to their dominant function.
This precedent strongly supported Amazonβs argument.
6.3 Earlier Amazon Echo Judgment (2023)
The Delhi High Court had already examined similar Echo devices earlier and held them to be communication devices.
The Court stated that this earlier decision was binding on CAAR.
7. Courtβs Observations
7.1 CAAR Ignored Binding Precedent
The Court noted that the advance ruling was issued before the earlier High Court judgment on Echo devices.
Therefore, CAAR did not consider a binding precedent that directly addressed the issue.
7.2 Wireless Capability Not Enough for Speaker Classification
The government argued that the addition of the word βwirelessβ in the tariff heading for speakers supported classification under CTH 8518.
The Court disagreed and clarified that:
Just because a speaker can work wirelessly does not mean every wireless device is a speaker.
7.3 Real Nature of the Devices
The Court concluded that these devices are designed mainly to:
Receive and process voice commands
Communicate with cloud servers
Transmit and receive data
Sound output is only one of many functions and not the dominant one.
8. Final Decision of the Court
The Delhi High Court ruled in favour of Amazon.
Key Outcomes
The advance rulings issued by CAAR were set aside.
The devices were held to be classifiable under CTH 8517 62 90.
Amazon was declared eligible for customs duty exemption under Notification No. 57/2017-Customs.
9. Key Takeaways from the Judgment
1. Smart Devices Are Communication Devices
Modern smart devices cannot be classified using outdated categories meant for traditional products.
2. Principal Function is the Deciding Test
When a product performs multiple functions, its main purpose determines classification.
3. Advance Rulings Must Follow Court Judgments
CAAR must follow decisions of the jurisdictional High Court.
4. Strengthening of Digital Economy Jurisprudence
The judgment reflects how customs law is adapting to new technology.
10. Conclusion
This decision is an important milestone in customs classification of smart technology products.
The Delhi High Court recognised the reality of modern digital devices and confirmed that smart speakers are far more than simple audio equipment.
The ruling provides clarity for importers and strengthens the legal framework for classification of multifunction technology products in India.
“Delhi High Court Sets Aside Customs Authority Ruling on SFP Module Classification: A Case Analysis”
Case Title: Nokia Solutions and Networks India Private Limited vs. Customs Authority for Advance Rulings, New Delhi & Others
Case Number: CUSAA 40/2025 & CM APPL. 4834/2025 CUSAA 41/2025 & CM APPL. 4835/2025
Case Summary:
The case involved two appeals filed by Nokia Solutions and Networks India Private Limited under Section 28KA of the Customs Act, challenging the rulings of the Customs Authority for Advance Rulings dated 26th September 2024. The primary issue was the classification of Small Form Factor Pluggable (SFP) modulesβwhether they should be classified as parts of machinery under Customs Tariff Heading (CTH) 8517 7990 or as apparatus/machines under CTH 8517 6290. The appellant argued that the issue was already settled by previous rulings of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) and the Supreme Court, which classified SFP modules as parts under CTH 8517 7990. The High Court reviewed the previous rulings and held that the impugned rulings were unsustainable, allowing the appeals.
Legal Principles Considered:
Principle of Res Judicata:
The court acknowledged that res judicata does not apply to taxation matters but emphasized that the classification of SFP modules had already been settled in previous rulings and accepted by the Department.
Consistency in Classification:
The court stressed that differential classification of identical goods at different locations would undermine the purpose of the Customs Tariff Act and lead to unnecessary litigation.
Statutory Provisions Considered:
Section 28KA of the Customs Act: Governs appeals against rulings of the Customs Authority for Advance Rulings.
Customs Tariff Act, 1975: Specifically, the classification under CTH 8517 7990 and CTH 8517 6290.
Customs Notifications: Notification Nos. 24/2005 and 57/2017, which provide exemptions for goods classified under certain headings.
Case Citations Referred with Summary:
Commissioner of Customs-Mumbai (Air Cargo Import) vs. Reliance Jio Infocomm Ltd. (CESTAT Order dated 29th July 2022):
The CESTAT Mumbai Bench upheld the classification of SFP modules as parts under CTH 8517 7090 (now 8517 7990). It emphasized that the goods were exempted from Basic Customs Duty under relevant notifications and rejected the Department’s attempt to classify them as “Other Machines” under CTH 8517 6290.
The Supreme Court dismissed the Department’s appeal against this order on 27th February 2023, confirming the classification.
IBM India Private Limited vs. Commissioner of Customs (Import):
The CESTAT Mumbai Bench ruled that SFP modules are classifiable under CTH 8517 7090 (now 8517 7990) and eligible for duty exemption under Notification No. 57/2017.
The Supreme Court dismissed the Department’s appeal against this order on 6th January 2025.
Order Passed:
The High Court of Delhi set aside the impugned rulings of the Customs Authority for Advance Rulings dated 26th September 2024. It held that SFP modules are classifiable under Entry 8517 7990 and entitled to applicable exemptions. Both appeals were allowed, and all pending applications were disposed of.
Legal Analysis of Apple India Pvt Ltd vs. Customs Authority for Advance Rulings & Ors: A Case Study on Advance Rulings and Jurisdictional Challenges
Case Title: Apple India Pvt Ltd vs. Customs Authority for Advance Rulings & Ors.
Case Number: Writ Petition (L) No. 13340 of 2025
Case Summary:
The case revolves around the classification of Apple Watch Bands imported by Apple India Pvt Ltd. The petitioner challenged two orders:
CAAR Order (10 March 2025): Declined to entertain the renewal application for the Advance Ruling of 2016, which classified Apple Watch Bands under CTH 8517 7090, citing the pendency of a show cause notice issued by the 2nd Respondent on 27 December 2024.
Adjudication Order (25 March 2025): Issued by the Additional Commissioner of Customs, reclassifying the Apple Watch Bands under CTH 9113 2010 for the period 1 April 2021 to 22 December 2021, contrary to the 2016 Advance Ruling.
The petitioner argued that the 2016 Advance Ruling was valid and binding until 30 March 2025, and the show cause notice issued on 27 December 2024 was without jurisdiction. The petitioner also contended that the CAARβs refusal to entertain the renewal application was based on an incorrect interpretation of Section 28-I(2)(a) of the Customs Act, 1962.
Legal Principles Considered:
Binding Nature of Advance Rulings: The court emphasized that an Advance Ruling remains valid and binding for the specified period unless explicitly revoked or modified.
Jurisdictional Challenges: The court examined whether the CAAR could decline to entertain a renewal application based on proceedings initiated after the application was filed.
Principles of Natural Justice: The court reiterated the importance of considering all contentions raised by the parties and providing a reasoned order.
Statutory Provisions Considered:
Section 28-I of the Customs Act, 1962: Governs the procedure for receiving and deciding applications for Advance Rulings, including renewal applications.
Section 28-I(2)(a): Specifies that the CAAR shall not allow an application where the question raised is already pending before any officer of customs, the Appellate Tribunal, or any court.
Case Citations Referred:
Hyosung Corporation vs. Authority for Advance Rulings (2016) 382 ITR 371: The Delhi High Court held that the question raised in an application for Advance Ruling must be pending before the relevant authority as of the date of filing the application, not the date of its consideration.
SRICO Projects Pvt Ltd vs. Telangana State Authority for Advance Ruling (2022) 106 G.S.T.R. 247 (Tel): The Telangana High Court ruled that proceedings initiated after the filing of an application for Advance Ruling cannot bar the authority from considering the application.
General Motors India Private Limited vs. State of Maharashtra (2024) 12 TMI 728 BHC: This Court held that the pendency of proceedings must be determined as of the date of filing the application for Advance Ruling.
Mohinder Singh Gill & Anr vs. The Chief Election Commissioner, New Delhi & Ors (1978) 1 SCC 405: The Supreme Court held that the validity of a statutory order must be judged based on the reasons mentioned in the order itself and cannot be supplemented by fresh reasons later.
Order Passed:
The CAARβs order dated 10 March 2025, concerning the Apple Watch Bands, was quashed and set aside. The CAAR was directed to decide the petitionerβs renewal application dated 14 November 2024 afresh on its merits and in accordance with the law, ensuring compliance with the principles of natural justice.
The adjudication order dated 25 March 2025 was quashed and set aside. The matter was remanded to the 2nd Respondent for fresh disposal of the show cause notice dated 27 December 2024. The adjudicating authority was directed to consider all contentions raised by the petitioner, including the binding effect of the 2016 Advance Ruling and the impact of the decision in Isha Exim (2023 SCC OnLine Bom 2700).
All contentions of all parties were left open for consideration by the CAAR and the 2nd Respondent.
This case highlights the importance of adhering to statutory provisions governing Advance Rulings and the necessity of considering all contentions raised by parties in adjudication proceedings. It also underscores the principle that statutory orders must be judged based on the reasons explicitly stated within the order itself.
ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 09.02.2026
Madras High Court Quashes Customs Order for Non-Adherence to Mandatory Timelines Under CBLR- 2018
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 idΒ intelconsul@gmail.com or on his Mobile +91-9999005379.Β β Β β ββ β β
The Madras High Court, in a landmark judgment dated January 29, 2026, has quashed an order passed by the Principal Commissioner of Customs (General), Chennai Customs Zone, for failing to adhere to the mandatory timelines prescribed under the Customs Brokers Licensing Regulations (CBLR), 2018. The case, WP No. β 27861 of 2025, was presided over by the Honourable Justice. β
Background of the Case
The petitioner, M/s. Shriwin Shipping and Logistics, represented by its partner, filed a writ petition challenging the impugned order in Original No. β 113023/2025 dated April 7, 2025. β The order imposed a penalty of βΉ15,000 under Regulation 18 of CBLR, 2018. β The petitioner argued that the order was passed without jurisdiction, authority of law, and in violation of the principles of natural justice and fundamental rights guaranteed under the Constitution of India. β
The petitioner contended that the respondent failed to adhere to the mandatory timelines prescribed under Regulation 17 of CBLR, 2018, which stipulates that the entire proceedings must be completed within nine months from the date of the offence report. β In this case, the show-cause notice issued on June 27, 2024, was considered the offence report, and the proceedings should have been completed by March 26, 2025. β However, the impugned order was passed on April 7, 2025, exceeding the prescribed timeline. β
Courtβs Observations
Justice Abdul Quddhose noted that the Division Bench of the Madras High Court had previously ruled in the case of M/s. β Santon Shipping Services vs. β The Commissioner of Customs, Tuticorin and Another (judgment dated October 13, 2017) that the timelines under CBLR, 2018, are mandatory and must be strictly adhered to. β This precedent has been consistently upheld in subsequent cases by the Madras High Court. β
The respondent argued that the timelines under CBLR, 2018, are directory rather than mandatory, citing decisions from other High Courts. β However, the Madras High Court rejected this contention, emphasizing that the Division Benchβs judgment remains binding and has not been overruled by the Supreme Court. β
Key Takeaways from the Judgment
Mandatory Nature of Timelines: The court reaffirmed that the timelines prescribed under Regulation 17 of CBLR, 2018, are mandatory and must be strictly followed. β Any deviation from these timelines renders the proceedings invalid. β
Adherence to Precedent: The court emphasized the importance of adhering to its own precedents, particularly the Division Bench judgment in M/s. β Santon Shipping Services, which has consistently been followed in similar cases. β
Violation of Natural Justice: The court highlighted that the impugned order was passed without following due procedures of law, violating the principles of natural justice and the petitionerβs fundamental rights. β
Quashing of Impugned Order: The court quashed the impugned order dated April 7, 2025, and allowed the writ petition, citing the respondentβs failure to comply with the mandatory timelines. β
Implications of the Judgment
This judgment serves as a significant reminder to authorities to strictly adhere to the timelines prescribed under the Customs Brokers Licensing Regulations, 2018. β It underscores the importance of procedural compliance and the protection of fundamental rights in administrative proceedings. β The decision also highlights the judiciaryβs role in upholding the rule of law and ensuring that government authorities act within the bounds of their jurisdiction. β
Conclusion
The Madras High Courtβs decision in WP No. β 27861 of 2025 is a landmark ruling that reinforces the mandatory nature of timelines under CBLR, 2018. It sets a strong precedent for similar cases and ensures that administrative authorities are held accountable for adhering to legal procedures. β This judgment is a victory for the principles of natural justice and the protection of fundamental rights, and it serves as a crucial reference point for future cases involving the Customs Brokers Licensing Regulations.
ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 09.02.2026
CESTAT Delhi Quashes Gold Smuggling 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 idΒ intelconsul@gmail.comor on his Mobile +91-9999005379.
The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, recently delivered a significant judgment in the case of Customs Appeal No. β 50837 of 2024. β This case, involving allegations of gold smuggling, highlights critical aspects of the Customs Act, 1962, particularly sections 108, 112(b)(i), 114AA, and 123, as well as the procedural requirements under section 138B. β The judgment, pronounced on February 6, 2026, by Honβble Justice, sets a precedent for the admissibility of evidence and the burden of proof in customs-related cases.
Background of the Case
The appellant, a partner in M/s. β S.R. & Co., filed an appeal to quash the order dated October 11, 2023, passed by the Commissioner (Appeals) Customs, CGST, Central Excise, Indore. β The order had upheld penalties imposed on the appellant under sections 112(b)(i) and 114AA of the Customs Act, 1962, for alleged involvement in gold smuggling activities. β
The case revolved around the seizure of 69 kg of gold bars by the Directorate of Revenue Intelligence (DRI) on March 20, 2021, from two individuals, who were transporting the gold to Indore. β The DRI alleged that the gold was of foreign origin and smuggled into India, and accused the appellant of being a mastermind behind the smuggling operation. β
Key Allegations Against the Appellant β
The show cause notice issued to the appellant alleged the following:
The appellant was involved in smuggling foreign-origin gold, converting it into bars resembling domestic origin gold, and supplying it to M/s. β Pulak Ornaments LLP.
The appellant was aware of the smuggling activities and had telephonically received orders for foreign-origin gold on previous occasions. β
The appellant failed to prove that the seized gold was not smuggled, as required under section 123 of the Customs Act. β
The appellant allegedly fabricated backdated invoices to legitimize the possession of the smuggled gold. β
Key Legal Issues
The case raised several important legal questions:
Admissibility of Statements Under Section 108 of the Customs Act: The appellant argued that the statements recorded under section 108 were inadmissible as the procedure under section 138B was not followed. β Section 138B mandates that statements recorded during an inquiry are relevant only if the person who made the statement is examined as a witness and the adjudicating authority forms an opinion that the statement should be admitted in evidence in the interest of justice. β
Burden of Proof Under Section 123 of the Customs Act: The appellant contended that the burden of proving the gold was not smuggled did not lie on him, as the gold was neither seized from his possession nor did he claim ownership of it. β
Legitimacy of Invoices: The Commissioner (Appeals) rejected the invoices produced by the appellant, alleging they were fabricated and created after the seizure of the gold. β The appellant argued that the invoices were valid and demonstrated legitimate purchase and sale of the gold bars. β
Key Findings of the Tribunal β
The Tribunal made several critical observations in its judgment:
Non-Adherence to Section 138B: The Tribunal held that the statements recorded under section 108 of the Customs Act could not be relied upon as evidence because the mandatory procedure under section 138B was not followed. β The Tribunal emphasized that the statements must be admitted in evidence only after the person making the statement is examined as a witness and the adjudicating authority forms an opinion on their admissibility. β
Burden of Proof Under Section 123: The Tribunal clarified that the burden of proving the gold was not smuggled lies with the person from whose possession the goods were seized. β Since the gold bars were not seized from the appellantβs possession, the burden of proof did not lie on him. β The Tribunal also noted that the gold bars did not have foreign markings and their purity was below 99.9%, which further weakened the departmentβs case. β
Validity of Invoices: The Tribunal observed that invoices produced at a later stage are permissible under the law and cannot be dismissed solely because they were not presented at the time of the search. β The Tribunal cited previous judgments to support this view, emphasizing that the burden of proving the smuggled nature of goods lies with the department.
Final Decision
The Tribunal set aside the penalties imposed on the appellant under sections 112(b)(i) and 114AA of the Customs Act, 1962, and allowed the appeal. β The judgment underscored the importance of adhering to procedural requirements under section 138B and clarified the application of section 123 in cases involving the seizure of goods. β
Key Takeaways
Admissibility of Statements: Statements recorded under section 108 of the Customs Act are not automatically admissible as evidence. β The procedure under section 138B must be strictly followed, including the examination of the person making the statement and providing an opportunity for cross-examination. β
Burden of Proof: Section 123 of the Customs Act places the burden of proof on the person from whose possession the goods are seized. β If the goods are not seized from the appellantβs possession, the burden does not lie on them. β
Legitimacy of Documents: Invoices and other documents produced at a later stage are valid under the law and cannot be dismissed without proper verification. β
Conclusion
The judgment in Customs Appeal No. 50837 of 2024 serves as a reminder of the importance of following due process in customs-related cases. It highlights the need for adjudicating authorities to adhere to statutory provisions and ensure fairness in proceedings. β This case also reinforces the principle that the burden of proof lies with the department in cases where goods are not seized from the possession of the accused. β As the legal landscape continues to evolve, this decision will undoubtedly serve as a guiding precedent for similar cases in the future.
ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 07.02.2026
CESTAT Hyderabad Sets Aside Export Valuation Order
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 idΒ intelconsul@gmail.comor on his Mobile +91-9999005379.β
The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Hyderabad recently delivered a significant judgment in the Customs Appeal No. β 20682 of 2015, which revolved around the valuation of export goods and the rejection of declared transaction values. This case highlights the importance of adhering to legal procedures and principles in determining export valuation under the Customs Act, 1962, and the Export Valuation Rules, 2007. β
Background of the Case
The appellant, M/s S.K. β Sarawagi & Co. Pvt Ltd, engaged in the export of iron ore fines, filed two shipping bills for exporting 10,500 WMT of iron ore fines with 61% Fe content to a buyer in Hong Kong, China. β The declared unit price was USD 115 PDMT FOB, and the moisture content was declared at 9%. β However, the Visakhapatnam Customs House adopted a moisture content of 3% and provisionally assessed the declared price, pending finalization based on test results and submission of final documents. β
Upon finalization, the Original Authority rejected the declared price and adopted USD 128 PDMT FOB, citing contemporaneous export prices of M/s Rungta Sons Pvt Ltd. Additionally, the Original Authority imposed a duty on 3.4% of the export goods, considering the lumps exceeding the tolerance limit of 5% as per Notification No. β 56/2010-Cus. Consequently, the appellant was ordered to pay Rs. β 2,97,081/- along with applicable interest. β
The appellant challenged this decision before the Commissioner (Appeals), who upheld the Original Authority’s order. Dissatisfied with the outcome, the appellant filed an appeal with the CESTAT.
Key Issues in the Case
The primary dispute in this case revolved around the rejection of the declared transaction value of USD 115 PDMT FOB and the adoption of USD 128 PDMT FOB as the assessable value. β The appellant argued that the Original Authority failed to provide valid reasons for rejecting the declared transaction value and did not follow the prescribed procedures under Rule 8 of the Export Valuation Rules, 2007. β
The appellant contended that the adjudicating authority had chosen the highest price from the contemporaneous export prices without considering adjustments for differences in export dates, commercial levels, quantity levels, composition quality, and domestic freight charges. Furthermore, the appellant emphasized that the transaction value, supported by the Bank Realization Certificate (BRC), should be accepted unless there is substantive evidence to prove that the declared value is not genuine. β
Legal Framework for Export Valuation β
Section 14(1) of the Customs Act, 1962, and the Export Valuation Rules, 2007, provide the legal framework for determining the value of export goods. According to Section 14(1), the transaction value, i.e., the price actually paid or payable for the goods, is the basis for valuation, provided the buyer and seller are not related, and the price is the sole consideration for the sale. β
Rule 4(2) of the Export Valuation Rules outlines the factors that must be considered when determining the value of export goods, including differences in export dates, commercial levels, quality, and domestic freight charges. β Additionally, Rule 8 mandates that the proper officer must issue a query memo, provide reasons for doubting the declared transaction value, and offer a personal hearing before rejecting the declared price. β
CESTAT’s Observations and Judgment
After hearing both sides and reviewing the records, the CESTAT found that the adjudicating authority had failed to provide valid reasons for rejecting the declared transaction value. β The authority did not raise any doubts about the transaction value or the BRC, nor did it follow the procedures prescribed under Rule 8 of the Export Valuation Rules.
The tribunal emphasized that the rejection of transaction value without substantive evidence is legally untenable. β It cited several landmark judgments, including CC, Mumbai Vs Vishal Exports Overseas Ltd and Century Metal Recycling (P) Ltd Vs UOI, which established that transaction value corroborated by sale/purchase contracts and BRC cannot be rejected without valid reasons and evidence. β
The CESTAT concluded that the impugned order of the Commissioner (Appeals) was not proper, legal, or correct. β It set aside the order and remanded the case to the Assessing Officer for finalization of the assessment based on the transaction value as reflected in the BRC. β
Key Takeaways from the Case
Adherence to Legal Procedures: The case underscores the importance of following the prescribed procedures under the Customs Act and Export Valuation Rules when rejecting declared transaction values. β Proper officers must issue query memos, provide reasons for doubt, and offer personal hearings before making a decision. β
Transaction Value as the Basis for Valuation: The transaction value, supported by valid documentation such as the BRC, is the primary basis for export valuation. β It cannot be rejected without substantive evidence proving its inaccuracy or lack of genuineness. β
Contemporaneous Prices: When comparing declared transaction values with contemporaneous export prices, adjudicating authorities must consider all relevant factors, including differences in export dates, quality, and commercial levels. β Arbitrarily choosing the highest price is not permissible. β
Legal Precedents: The judgment highlights the significance of legal precedents in export valuation disputes. β Decisions by higher courts, such as the Supreme Court, provide clear guidelines for assessing transaction values and rejecting declared prices. β
Conclusion
The CESTAT’s decision in Customs Appeal No. β 20682 of 2015 serves as a reminder of the importance of transparency, adherence to legal procedures, and reliance on substantive evidence in export valuation cases. It reinforces the principle that transaction value, supported by valid documentation, should be the primary basis for valuation unless there are compelling reasons to reject it. β This case is a valuable reference for exporters, customs authorities, and legal professionals dealing with valuation disputes under the Customs Act, 1962.
ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 07.02.2026
CESTAT Mumbai Quashes Anti-Dumping Duty
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 idΒ intelconsul@gmail.comor on his Mobile +91-9999005379.
In a landmark decision, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai, has set aside the Order-in-Original No. β 305/2023-24/Commr/NS-I/CAC/JNCH dated 29.03.2024, passed by the Commissioner of Customs (NS-I), Jawaharlal Nehru Customs House (JNCH), Nhava Sheva. β This decision comes as a significant relief for the appellants, including Surbhit Impex Pvt. Ltd. (SIPL) and its associated entities, who were facing allegations of overvaluation of imported goods and evasion of Anti-Dumping Duty (ADD). β
Background of the Case
The case revolved around the import of 38 consignments of melamine by SIPL and B.M. β Jain & Sons Pvt. β Ltd. (BMJSPL), which had merged with SIPL as per an NCLT order dated 06.05.2022. β The Directorate of Revenue Intelligence (DRI), Mumbai Zonal Unit, initiated an investigation based on intelligence reports, alleging that the appellants had deliberately inflated the declared value of imported melamine to evade ADD. β The Commissioner of Customs subsequently passed an order confirming the rejection of the assessable value, imposing ADD, penalties, and redemption fines. β
The appellants challenged the order before the CESTAT, arguing that the transaction value of the imported goods was rejected without valid reasons. They contended that the declared value was higher than the international market price and that the Department had relied on questionable evidence, including electronic data and rubber stamps, without proper verification or cross-examination. β
Key Arguments by the Appellants
Rejection of Transaction Value: The appellants argued that the rejection of the declared transaction value under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 was impermissible. β They highlighted that the declared value was higher than the international market price, and the Department failed to provide valid reasons for rejecting the transaction value. β
Admissibility of Electronic Evidence: The appellants challenged the admissibility of electronic evidence retrieved during the investigation, citing procedural lapses in its seizure and examination. β They argued that the evidence was in editable format and could have been tampered with, and that the necessary compliance under Section 138B and 138C of the Customs Act was not met. β
High Sea Sales Transactions: The appellants emphasized that 27 out of the 38 consignments were purchased on a legally valid High Sea Sale basis, and there was no evidence to suggest that the declared value was manipulated to evade ADD. β
Purpose of ADD: The appellants argued that the sole purpose of ADD is to counteract unfair international trade practices and protect domestic industries, not to generate revenue. β They contended that the Department’s reliance on the ICIS price list was flawed, as it did not represent actual transaction values. β
Key Arguments by the Respondent β
The Respondent, represented by Additional Commissioner, argued that the investigation revealed a deliberate attempt to evade ADD through artificial inflation of CIF value, use of a dummy intermediary, and fabrication of invoices. β The Respondent relied on electronic evidence, including email communications and editable invoices, to substantiate the allegations. β
CESTAT’s Observations and Final Order β
After a detailed examination of the case, the CESTAT bench comprising Honβble (Member Judicial) and Honβble (Member Technical) found several flaws in the order passed by the Commissioner of Customs. The key observations included:
Improper Application of Rule 12: The Tribunal noted that Rule 12 of the Customs Valuation Rules does not empower the proper officer to reduce the declared value to a lower level for imposing ADD. The rejection of the transaction value was deemed impermissible as the declared value was higher than the alleged international market price. β
Lack of Evidence: The Tribunal observed that the Department failed to provide cogent evidence to substantiate the allegations of overvaluation and evasion of ADD. β The electronic evidence presented was deemed inadmissible due to procedural lapses in its seizure and examination. β
Purpose of ADD: The Tribunal emphasized that ADD is a remedial measure designed to protect domestic industries from unfair trade practices, not a tool for revenue generation. β The reliance on the ICIS price list was found to be inconsistent with the principles of Customs Valuation under the General Agreement on Tariffs and Trade (GATT). β
Extended Period of Investigation: The Tribunal noted that the extended period of investigation was not justified, as the Department was aware of the transactions and had assessed the Bills of Entry at the first check. β
Based on these findings, the CESTAT set aside the order passed by the Commissioner of Customs and allowed the appeals with consequential relief.
Implications of the Judgment
This judgment is a significant win for importers, as it reinforces the principles of fair valuation under the Customs Valuation Rules and GATT guidelines. β It highlights the importance of adhering to procedural requirements for the admissibility of evidence and underscores the need for the Department to provide concrete proof when alleging evasion of duties. β
The decision also serves as a reminder that ADD is not a revenue-generating tool but a measure to protect domestic industries from unfair trade practices. β Importers can take solace in the fact that the Tribunal has upheld the importance of transaction value and rejected arbitrary valuation methods. β
Conclusion
The CESTAT Mumbai’s decision in favor of Surbhit Impex Pvt. Ltd. and other appellants sets a precedent for similar cases involving allegations of overvaluation and evasion of ADD. It underscores the need for transparency, adherence to legal procedures, and the importance of evidence in quasi-judicial proceedings. β This judgment is a testament to the robust legal framework that governs customs valuation and anti-dumping measures in India, ensuring fairness and justice for all stakeholders.
ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 06.02.2026
Delhi High Court Sets Aside Customs Advance Ruling on SFP Classification and Grants Exemption
Adv Ravi Shekhar Jha
Β 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 idΒ intelconsul@gmail.comor on his Mobile +91-9999005379.
ββ ββ β β ββ β β
Case Title: Nokia Solutions and Networks India Private Limited vs. Customs Authority for Advance Rulings, New Delhi & Others
Case Number: CUSAA 40/2025 & CM APPL. 4834/2025 CUSAA 41/2025 & CM APPL. 4835/2025
Case Summary:
The case involved two appeals filed by Nokia Solutions and Networks India Private Limited under Section 28KA of the Customs Act, challenging the rulings of the Customs Authority for Advance Rulings dated 26th September 2024. The primary issue was the classification of Small Form Factor Pluggable (SFP) modulesβwhether they should be classified as parts of machinery under Customs Tariff Heading (CTH) 8517 7990 or as apparatus/machines under CTH 8517 6290. The appellant argued that the issue was already settled by previous rulings of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) and the Supreme Court, which classified SFP modules as parts under CTH 8517 7990. The High Court reviewed the previous rulings and held that the impugned rulings were unsustainable, allowing the appeals.
Legal Principles Considered:
Principle of Res Judicata:
The court acknowledged that res judicata does not apply to taxation matters but emphasized that the classification of SFP modules had already been settled in previous rulings and accepted by the Department.
Consistency in Classification:
The court stressed that differential classification of identical goods at different locations would undermine the purpose of the Customs Tariff Act and lead to unnecessary litigation.
Statutory Provisions Considered:
Section 28KA of the Customs Act: Governs appeals against rulings of the Customs Authority for Advance Rulings.
Customs Tariff Act, 1975: Specifically, the classification under CTH 8517 7990 and CTH 8517 6290.
Customs Notifications: Notification Nos. 24/2005 and 57/2017, which provide exemptions for goods classified under certain headings.
Case Citations Referred with Summary:
Commissioner of Customs-Mumbai (Air Cargo Import) vs. Reliance Jio Infocomm Ltd. (CESTAT Order dated 29th July 2022):
The CESTAT Mumbai Bench upheld the classification of SFP modules as parts under CTH 8517 7090 (now 8517 7990). It emphasized that the goods were exempted from Basic Customs Duty under relevant notifications and rejected the Department’s attempt to classify them as “Other Machines” under CTH 8517 6290.
The Supreme Court dismissed the Department’s appeal against this order on 27th February 2023, confirming the classification.
IBM India Private Limited vs. Commissioner of Customs (Import):
The CESTAT Mumbai Bench ruled that SFP modules are classifiable under CTH 8517 7090 (now 8517 7990) and eligible for duty exemption under Notification No. 57/2017.
The Supreme Court dismissed the Department’s appeal against this order on 6th January 2025.
Order Passed:
The High Court of Delhi set aside the impugned rulings of the Customs Authority for Advance Rulings dated 26th September 2024. It held that SFP modules are classifiable under Entry 8517 7990 and entitled to applicable exemptions. Both appeals were allowed, and all pending applications were disposed of.
ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 06.02.2026
Bombay High Court Sets Aside CAAR and Adjudication Orders in Apple Watch Bands 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.comor on his Mobile +91-9999005379.
Case Title: Apple India Pvt Ltd vs. Customs Authority for Advance Rulings & Ors.
Case Number: Writ Petition (L) No. 13340 of 2025
Case Summary:
The case revolves around the classification of Apple Watch Bands imported by Apple India Pvt Ltd. The petitioner challenged two orders:
CAAR Order (10 March 2025): Declined to entertain the renewal application for the Advance Ruling of 2016, which classified Apple Watch Bands under CTH 8517 7090, citing the pendency of a show cause notice issued by the 2nd Respondent on 27 December 2024.
Adjudication Order (25 March 2025): Issued by the Additional Commissioner of Customs, reclassifying the Apple Watch Bands under CTH 9113 2010 for the period 1 April 2021 to 22 December 2021, contrary to the 2016 Advance Ruling.
The petitioner argued that the 2016 Advance Ruling was valid and binding until 30 March 2025, and the show cause notice issued on 27 December 2024 was without jurisdiction. The petitioner also contended that the CAARβs refusal to entertain the renewal application was based on an incorrect interpretation of Section 28-I(2)(a) of the Customs Act, 1962.
Legal Principles Considered:
Binding Nature of Advance Rulings: The court emphasized that an Advance Ruling remains valid and binding for the specified period unless explicitly revoked or modified.
Jurisdictional Challenges: The court examined whether the CAAR could decline to entertain a renewal application based on proceedings initiated after the application was filed.
Principles of Natural Justice: The court reiterated the importance of considering all contentions raised by the parties and providing a reasoned order.
Statutory Provisions Considered:
Section 28-I of the Customs Act, 1962: Governs the procedure for receiving and deciding applications for Advance Rulings, including renewal applications.
Section 28-I(2)(a): Specifies that the CAAR shall not allow an application where the question raised is already pending before any officer of customs, the Appellate Tribunal, or any court.
Case Citations Referred:
Hyosung Corporation vs. Authority for Advance Rulings (2016) 382 ITR 371: The Delhi High Court held that the question raised in an application for Advance Ruling must be pending before the relevant authority as of the date of filing the application, not the date of its consideration.
SRICO Projects Pvt Ltd vs. Telangana State Authority for Advance Ruling (2022) 106 G.S.T.R. 247 (Tel): The Telangana High Court ruled that proceedings initiated after the filing of an application for Advance Ruling cannot bar the authority from considering the application.
General Motors India Private Limited vs. State of Maharashtra (2024) 12 TMI 728 BHC: This Court held that the pendency of proceedings must be determined as of the date of filing the application for Advance Ruling.
Mohinder Singh Gill & Anr vs. The Chief Election Commissioner, New Delhi & Ors (1978) 1 SCC 405: The Supreme Court held that the validity of a statutory order must be judged based on the reasons mentioned in the order itself and cannot be supplemented by fresh reasons later.
Order Passed:
The CAARβs order dated 10 March 2025, concerning the Apple Watch Bands, was quashed and set aside. The CAAR was directed to decide the petitionerβs renewal application dated 14 November 2024 afresh on its merits and in accordance with the law, ensuring compliance with the principles of natural justice.
The adjudication order dated 25 March 2025 was quashed and set aside. The matter was remanded to the 2nd Respondent for fresh disposal of the show cause notice dated 27 December 2024. The adjudicating authority was directed to consider all contentions raised by the petitioner, including the binding effect of the 2016 Advance Ruling and the impact of the decision in Isha Exim (2023 SCC OnLine Bom 2700).
All contentions of all parties were left open for consideration by the CAAR and the 2nd Respondent.
This case highlights the importance of adhering to statutory provisions governing Advance Rulings and the necessity of considering all contentions raised by parties in adjudication proceedings. It also underscores the principle that statutory orders must be judged based on the reasons explicitly stated within the order itself.
ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 05.02.2026
CESTAT Mumbai Protects Importers Using Transferable Duty Scrips
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 idΒ intelconsul@gmail.com or on his Mobile +91-9999005379.β β β β β
The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai, recently delivered a significant judgment in a series of appeals concerning the validity of duty credit scrips/licenses obtained fraudulently by original license holders and their subsequent impact on bona fide transferees. β This decision, encapsulated in Final Order No. β A/85228-85240/2026, has far-reaching implications for importers and the customs framework in India.
Background of the Case
The appellants in these cases had imported goods using transferable Duty Credit Scrips/Licenses such as Duty Entitlement Passbook Scheme (DEPB) and Duty-Free Import Authorization (DFIA). β These scrips/licenses were purchased from original license holders for valuable consideration and were valid at the time of import. β However, the competent licensing authorities later canceled these scrips/licenses, citing that the original license holders had obtained them fraudulently by submitting forged export documents. β
Following the cancellation, the customs authorities issued Show Cause Notices (SCNs) to the importers (transferees of the scrips/licenses), demanding duty under Section 28(1) of the Customs Act, 1962. β The SCNs also proposed confiscation of goods under Section 111(m) and (o) and the imposition of penalties under Sections 114A/112 of the Customs Act, 1962. β
The appellants contested the SCNs, arguing that the scrips/licenses were valid at the time of import and clearance of goods. β They contended that the subsequent cancellation of the scrips/licenses should not affect their prior importation activities, as they were bona fide transferees who had purchased the licenses without knowledge of any fraud. β
Key Issue for Consideration
The primary issue before the Tribunal was whether goods imported by bona fide transferees under valid Duty Credit Scrips/Licenses could be denied duty exemption due to the subsequent cancellation of the scrips/licenses on the grounds of fraud committed by the original license holders. β
Tribunal’s Observations and Decision β
The Tribunal examined the case records and heard arguments from both sides. β It noted that the Government of India issues export incentive schemes, such as DEPB and DFIA, to encourage exports and earn foreign exchange. β These scrips/licenses are transferable and can be used by importers to import goods duty-free. β
The Tribunal emphasized that as long as the scrips/licenses were valid and issued by the competent licensing authority at the time of import, the subsequent cancellation due to fraud by the original license holder should not affect the bona fide transferee. β The Tribunal clarified that a license obtained by fraud is not void ab initio but merely voidable. β Therefore, if the transferee purchased the license in good faith without knowledge of the fraud, they should not be penalized for the actions of the original license holder. β
The Tribunal referred to previous judgments, including the case of Apar Industries Limited vs. Commissioner of Customs (Export Promotion), Mumbai, which established that a license obtained by fraud is not void ab initio and remains valid until canceled. β It also distinguished cases where licenses were forged or fake, stating that in such instances, the exemption would not be available as the documents were never valid in the first place. β
Final Verdict
After thorough deliberation, the Tribunal concluded that the impugned orders confirming the demands against the appellants lacked merit. β It held that the goods imported by the appellants were not liable for confiscation under Section 111 of the Customs Act, and the penalties imposed under Section 112 were not sustainable. β Consequently, the Tribunal set aside the impugned orders and allowed the appeals in favor of the appellants. β
Implications of the Judgment
This landmark decision has significant implications for importers and the customs framework in India:
Protection for Bona Fide Transferees: The judgment reinforces the principle that bona fide transferees of valid duty credit scrips/licenses cannot be penalized for fraudulent actions committed by the original license holders. β
Clarity on Fraudulent Licenses: The Tribunal has drawn a clear distinction between licenses obtained through fraud (which are voidable) and forged or fake licenses (which are void ab initio). β This distinction is crucial for importers relying on transferable licenses for duty-free imports. β
Encouragement for Trade: By upholding the validity of licenses at the time of import, the judgment supports the government’s objective of promoting exports and facilitating international trade. β
Legal Precedent: The decision sets a precedent for similar cases, providing clarity and consistency in the interpretation of customs laws related to duty credit scrips/licenses.
Conclusion
The CESTAT’s decision in these appeals is a significant development in the realm of customs law. It underscores the importance of protecting bona fide importers who rely on valid licenses for their transactions while ensuring that fraudulent activities by original license holders are addressed appropriately. β This judgment not only provides relief to the appellants but also serves as a guiding principle for future cases involving duty credit scrips/licenses and fraudulent practices. β Importers and legal practitioners should take note of this decision to better understand their rights and obligations under the Customs Act, 1962.
ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 04.02.2026
CESTAT Ahmedabad Ruled on Import Restrictions and Compliance with Customs Act
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 idΒ intelconsul@gmail.comor on his Mobile +91-9999005379. β β β β β
In a significant ruling, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), West Zonal Bench at Ahmedabad, delivered a judgment on February 4, 2026, in the case of Commissioner of Customs, Mundra Customs vs. Shree Khatu Shyam Steel & Tubes LLP. This case revolved around the import of Cold Rolled Stainless Steel (CRSS) Coils Grade J2 and raised critical questions about import restrictions, procedural compliance under the Customs Act, 1962, and the legal validity of circulars issued by the Ministry of Steel. β
Background of the Case
The dispute originated when Shree Khatu Shyam Steel & Tubes LLP imported CRSS Coils Grade J2 from China under House Bill of Lading No. FS241205001 dated December 3, 2024, and filed Bill of Entry No. β 8109186 on January 31, 2025, at Mundra Port. β The Ministry of Steel had issued a one-time NOC (No Objection Certificate) for shipments where the Bill of Lading was generated on or before December 3, 2024. β However, the Customs Department alleged that the Master Bill of Lading for the shipment was issued on January 4, 2025, after the cutoff date, making the goods prohibited for import under the Ministry of Steelβs circular dated October 20, 2023.
The goods were seized on February 27, 2025, under Section 110(1) of the Customs Act, 1962, and the importer requested a waiver of the Show Cause Notice (SCN) and personal hearing to expedite the adjudication process. Despite the waiver, the adjudication order was not passed within the mandatory six-month period stipulated under Section 110(2) of the Customs Act, leading to the seizure becoming illegal. β
Key Legal Issues
The case raised several important legal questions:
Validity of the Ministry of Steelβs Circulars: The department relied on circulars issued by the Ministry of Steel, which mandated importers to obtain NOCs for steel grades not covered under the Steel and Steel Products (Quality Control) Order, 2024. β The respondent argued that these circulars imposed restrictions without statutory authority, as the imported goods were not covered under the Quality Control Order. β
Procedural Compliance Under Section 110(2): The respondent contended that the department failed to issue an SCN or adjudicate the seizure within the mandatory six-month period, rendering the seizure illegal and necessitating the unconditional release of the goods. β
Distinction Between House Bill of Lading and Master Bill of Lading: The department argued that the one-time NOC applied exclusively to shipments where the Master Bill of Lading was issued on or before December 3, 2024, and not to House Bills of Lading with earlier dates. β
Key Findings of the Tribunal
1. Procedural Compliance Under Section 110(2): β
The Tribunal emphasized the mandatory nature of Section 110(2) of the Customs Act, which requires the issuance of an SCN within six months of the seizure. β The Tribunal relied on the landmark judgment of the Delhi High Court in Shiv Shakti Trading Company vs. Commissioner of Customs (Preventive), which held that the waiver of an SCN does not absolve the department of its obligation to adjudicate within the statutory timeframe. β The Tribunal ruled that the departmentβs failure to issue an SCN or adjudicate within six months rendered the seizure illegal, and the goods were liable for immediate release. β
2. Validity of Ministry of Steelβs Circulars: β
The Tribunal noted that the circulars issued by the Ministry of Steel could not impose additional restrictions on imports without statutory authority. β It relied on precedents such as Atul Commodities Pvt. β Ltd. vs. Commissioner of Customs, Cochin and UOI vs. Inter βcontinental India Pvt. β Ltd., which established that substantive restrictions on trade must be imposed through legislation or statutory notifications, not through executive circulars. β
3. Nature of the Imported Goods: β
The Tribunal found that the imported CRSS Coils Grade J2 were not covered under the Steel and Steel Products (Quality Control) Order, 2024, and were therefore not subject to BIS standards or restrictions. β The goods were identified and verified through Positive Metal Identification (PMI) tests, confirming their compliance with the declared specifications. β
Impact of the Judgment β
1. Procedural Safeguards for Importers:
The judgment reinforces the importance of procedural compliance under Section 110(2) of the Customs Act, ensuring that importers are not subjected to indefinite delays in adjudication. It underscores the statutory obligation of the department to act within the prescribed timeframe, balancing the Stateβs power of investigation with the rights of importers.
2. Limits on Executive Authority:
The ruling highlights the limitations of executive circulars in imposing trade restrictions. β It reiterates that any change in the categorization of goods from βfreeβ to βrestrictedβ must be made through legislative amendments or statutory notifications, not through circulars. β
3. Clarity on Import Restrictions: β
The judgment provides clarity on the legal status of goods not covered under BIS standards or Quality Control Orders. β It establishes that such goods cannot be treated as restricted or prohibited unless explicitly stated in the law. β
Conclusion
The CESTATβs decision in this case is a landmark ruling that upholds the principles of procedural fairness and the rule of law in the realm of customs and trade regulations. It serves as a reminder to regulatory authorities to act within the bounds of their statutory powers and provides much-needed clarity to importers navigating complex regulatory frameworks.
