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  • Supreme Court- No Central Excise Duty on Preloaded Software in Computers

    Supreme Court- No Central Excise Duty on Preloaded Software in Computers

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

    Date: 25.07.2026

    Supreme Court- No Central Excise Duty on Preloaded Software in Computers

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

    The intersection of technology and taxation often leads to complex legal questions. One such issue is whether central excise duty applies to software loaded onto computers at the time of manufacture. The Supreme Court of India addressed this in a landmark judgment involving ACER India Ltd., providing clarity on the classification and valuation of computers and software under excise laws.

    Background of the Case

    ACER India Ltd., a manufacturer of computers and related hardware, would load operational software (like Windows OS) onto computers as per customer orders. When calculating central excise duty, ACER deducted the value of the software from the total value of the computer. The Revenue authorities objected, arguing that excise duty should be levied on the entire value, including the software.

    Show cause notices were issued demanding differential duty, and the Commissioner of Central Excise confirmed these demands, holding that the value of operational software preloaded on computers must be included in the assessable value for excise purposes. ACER appealed, and the matter eventually reached the Supreme Court.

    Legal Arguments

    Revenue’s Position

    1. Software as Part of Hardware: The Revenue argued that once software is loaded onto hardware, it becomes an integral part of the computer, and thus, excise duty should be charged on the combined value.
    2. Transaction Value: Citing Section 4 of the Central Excise Act, 1944, the Revenue claimed that the transaction value includes all amounts the buyer is liable to pay in connection with the sale, including software.

    ACER India’s Position

    1. Separate Classification: ACER contended that hardware and software are classified under different headings in the Central Excise Tariff Actβ€”computers under 84.71 (16% duty) and software under 85.24 (nil duty).
    2. Marketability and Identity: Operational software, even when loaded onto a computer, retains its identity and is available separately in the market. Therefore, its value should not be included in the assessable value of the computer for excise purposes.

    Statutory and Interpretative Principles

    • Section 3 & 4 of the Central Excise Act: Excise duty is levied on ‘excisable goods’ as defined and classified in the Tariff Act. The value for duty is determined as per Section 4, but only for goods that are excisable.
    • Chapter Notes: Chapter Note 6 of Chapter 85 clarifies that software retains its classification even when supplied with hardware.
    • Strict Construction: Taxing statutes must be interpreted strictly, and only goods clearly falling within the scope of excisable goods can be taxed.

    Supreme Court’s Analysis and Findings

    1. Distinct Commodities: The Court held that computers and operational software are distinct, marketable commodities, classified separately under the Tariff Act.
    2. No Duty on Software: Since software (under heading 85.24) attracts nil duty, its value cannot be included in the assessable value of computers (under heading 84.71) for excise purposes, even if preloaded.
    3. Software Retains Identity: Loading software onto a computer does not transform it into hardware; it remains a separate commodity, both commercially and legally.
    4. Functional Test Rejected: The argument that a computer is a ‘dead box’ without software was rejected. The Court noted that while software enhances utility, it is not essential for the hardware to be considered complete for excise purposes.
    5. Precedents Upheld: The Court relied on earlier judgments (e.g., PSI Data Systems Ltd.) that drew a clear distinction between hardware and software for excise classification.

    Practical Implications

    • Manufacturers: When supplying computers with preloaded software, manufacturers can deduct the value of the software from the assessable value for excise duty calculation, provided the software is separately marketable and classified.
    • Tax Authorities: Cannot demand excise duty on the value of software loaded onto computers if the software is classified under a heading attracting nil duty.
    • Industry Practice: The judgment aligns with commercial reality, where hardware and software are often sold and valued separately.

    Conclusion

    The Supreme Court’s decision in the ACER India case establishes that computers and software are distinct for excise purposes. Excise duty is not payable on the value of operational software loaded onto computers, as long as the software retains its separate classification and marketability.

    This judgment provides much-needed clarity for manufacturers, tax authorities, and the IT industry regarding the excise treatment of bundled hardware and software.

    Connected Matter

    CESTAT Delhi Clarifies Customs Classification of Interactive Flat Panels

    Source: Supreme Court

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  • Delhi High Court on Anti-Arbitration Injunction in Maritime Dispute

    Delhi High Court on Anti-Arbitration Injunction in Maritime Dispute

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

    Date: 24.07.2026

    Delhi High Court on Anti-Arbitration Injunction in Maritime Dispute

    This Short Article has been prepared & written by Arbitrator Shobhit Mallik. The views expressed are based on his interpretation of the law. He can be reached at his email id shobhit.Ica23@gmail.com .

    A significant judgment was delivered by the High Court of Delhi on March 13, 2026, in the case of SARR Freights Corporation & SARR Freights Limited v. Argo Coral Maritime Ltd. (CS(OS) 868/2025 & I.A. 30141/2025).

    The dispute revolved around the continuation of two parallel arbitration proceedings in London under the London Maritime Arbitrators Association (LMAA), arising from a charterparty agreement for the shipment of military cargo to Sudan. The plaintiffs sought to restrain the defendant from pursuing these arbitrations, raising complex questions of contract law, arbitration, and jurisdiction.

    Case Background

    • Parties:
      • Plaintiffs: SARR Freights Corporation & SARR Freights Limited (Indian logistics companies)
      • Defendant: Argo Coral Maritime Ltd. (Owner of vessel MV Panthera J)
    • Contract: Charterparty Agreement (Booking Note dated April 4, 2023) for transporting military equipment for the UN Peacekeeping Force in Sudan.
    • Dispute: Due to war in Sudan and a force majeure event, the UN terminated the purchase order, and the plaintiffs cancelled the Booking Note. The defendant claimed damages for ‘dead freight’ and initiated two arbitrations in London.
    • Relief Sought: Plaintiffs requested an injunction to restrain the defendant from continuing the London arbitrations, arguing lack of a valid arbitration agreement and privity of contract.

    Key Legal Issues and Principles

    1. Jurisdiction of Indian Civil Courts

    • Section 9, CPC: Civil courts have jurisdiction over all civil matters unless expressly or impliedly barred.
    • The court held that the choice of a foreign seat for arbitration does not automatically oust Indian courts’ jurisdiction, especially for anti-arbitration injunctions in exceptional cases (e.g., vexatious or oppressive proceedings).
    • Section 20(c), CPC: The court found that part of the cause of action arose in New Delhi, giving it territorial jurisdiction.

    2. Existence of a Binding Contract and Arbitration Clause

    • The court examined the Booking Note, Fixture Recap, and correspondence, concluding:
      • There was a valid contract between the parties, with the defendant as the owner of the performing vessel.
      • The arbitration clause, though not expressly included in the Special Terms of the Booking Note, was present in the Fixture Recap and incorporated by conduct and mutual intention.
      • The omission of the arbitration clause in the Booking Note was deemed an inadvertent error, not a deliberate exclusion.
      • Commercial contracts should be interpreted to give effect to the parties’ intentions and business efficacy.

    3. Principle of Kompetenz-Kompetenz

    • The court reaffirmed that questions regarding the validity or scope of the arbitration agreement are primarily for the arbitral tribunal to decide (Section 16, Arbitration Act).

    4. Anti-Arbitration Injunctions

    • Such injunctions are exceptional remedies, granted only if the arbitration agreement is null, void, inoperative, or incapable of being performed (Section 45, Arbitration Act).
    • The court found no evidence that the London arbitrations were vexatious, oppressive, or unconscionable.
    • The plaintiffs failed to establish exceptional circumstances warranting judicial intervention.

    5. Comity of Courts and Minimal Judicial Interference

    • The court emphasized respect for the agreed arbitral process and the principle of minimal judicial interference, especially in international commercial arbitration.

    Court’s Analysis and Findings

    • Jurisdiction: The court had territorial jurisdiction as substantial parts of the cause of action arose in New Delhi.
    • Contractual Relationship: There was privity of contract between the plaintiffs and the defendant, with the defendant being the owner of the performing vessel.
    • Arbitration Agreement: The arbitration clause was valid and binding, incorporated through the Fixture Recap and the parties’ conduct.
    • No Exceptional Circumstances: The plaintiffs could not prove that the arbitration proceedings were vexatious or oppressive. The court noted that the defendant’s initiation of two arbitrations was due to confusion over the correct contracting party, not procedural abuse.
    • Respect for Arbitral Process: The court reiterated that the arbitral tribunal is the proper forum to decide on its own jurisdiction and the validity of the arbitration agreement.

    Conclusion and Order

    • The Delhi High Court dismissed the plaintiffs’ application for an anti-arbitration injunction.
    • The court held that:
      • There is a valid arbitration agreement between the parties.
      • The court has jurisdiction but finds no exceptional grounds to restrain the London arbitration.
      • The merits of the underlying commercial dispute remain to be adjudicated in the appropriate forum.

    Legal Significance

    This judgment reinforces several key principles in Indian arbitration law:

    1. Autonomy of Arbitration Agreements: Courts will uphold the parties’ choice to arbitrate, especially in international commercial contracts.
    2. Limited Grounds for Judicial Intervention: Anti-arbitration injunctions are rare and require clear evidence of nullity, inoperability, or incapacity of the arbitration agreement.
    3. Business Efficacy and Intent: Commercial contracts are interpreted to give effect to the parties’ intentions, even if there are drafting errors.
    4. Respect for Arbitral Tribunals: The principle of Kompetenz-Kompetenz ensures that arbitral tribunals have the first say on their own jurisdiction.

    Case Details at a Glance

    • Court: High Court of Delhi at New Delhi
    • Case Number: CS(OS) 868/2025 & I.A. 30141/2025
    • Order Date: March 13, 2026
    • Parties: SARR Freights Corporation & SARR Freights Limited (Plaintiffs) vs. Argo Coral Maritime Ltd. (Defendant)
    • Presiding Judge: Hon’ble Ms. Justice Mini Pushkarna

    This decision is a notable precedent for parties involved in international commercial arbitration, especially in the shipping and logistics sector, and clarifies the Indian judiciary’s approach to anti-arbitration injunctions.

    Source: Delhi High Court

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  • CESTAT Delhi Clarifies Customs Classification of Interactive Flat Panels

    CESTAT Delhi Clarifies Customs Classification of Interactive Flat Panels

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

    Date: 24.07.2026

    CESTAT Delhi Clarifies Customs Classification of Interactive Flat Panels

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

    A recent decision by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), New Delhi, has set a significant precedent regarding the classification and duty assessment of imported interactive flat panels. The case involved M/s. Promark Techsolutions Private Limited, which challenged the customs department’s classification of their imported goods, resulting in a substantial customs duty demand and penalties.

    Background of the Dispute

    Promark Techsolutions imported 264 units of 75-inch Display Assemblies, described as parts of interactive flat panels, and declared them under Customs Tariff Heading (CTH) 84733099, which attracts a nil rate of Basic Customs Duty (BCD).

    However, customs authorities argued that the goods should be classified under CTH 8528, attracting a 10% BCD, and seized the goods, later releasing them provisionally. A show cause notice was issued, demanding differential duty of Rs. 32,10,922 for the consignment and Rs. 12,96,49,240 for past imports, along with proposals for confiscation and penalties.

    Key Arguments

    Promark Techsolutions (Appellant)

    1. Nature of Goods: The imported panels were fully functional interactive flat panels with pre-installed Android OS, RAM, CPU, GPU, and OPS slots, capable of independent operation, data processing, and internet connectivity.
    2. Correct Classification: The goods should be classified as Automatic Data Processing Machines (ADPM) under CTH 8471, not as monitors under CTH 8528, since they can function independently, process and store data, and meet all criteria for ADPM.
    3. Legal Precedents: The appellant cited several tribunal and Supreme Court decisions confirming similar products as ADPM under CTH 8471 41 90.
    4. Procedural Lapse: The show cause notice was issued without mandatory pre-notice consultation, violating Section 28(1)(A) of the Customs Act, 1962.

    Customs Department (Respondent)

    1. Department’s Stand: The department maintained that the goods were monitors under CTH 8528, relying on a Board Circular dated 07.04.2025 and the adjudicating authority’s findings.
    2. Rebuttal of Precedents: The department argued that earlier decisions did not apply due to the new CBIC clarification.

    Tribunal’s Analysis and Findings

    1. Technical Features: The tribunal noted that the panels had pre-installed operating systems, significant RAM and storage, CPU, GPU, OPS slots, and could run various programs independently, distinguishing them from simple monitors.
    2. Tariff Interpretation: The tribunal compared the relevant tariff entries and HSN Explanatory Notes, emphasizing that:
      • Monitors under CTH 8528 are generally under 30 inches, lack independent processing capability, and cannot be operated by remote control.
      • The imported panels were 65 and 86 inches, had remote controls, and could function as standalone computers.
    3. Legal Criteria: The goods satisfied all four conditions of Chapter Note 5(A) to Chapter 84, qualifying them as ADPM under CTH 8471.
    4. Precedent and Circular Validity: The tribunal held that the Board Circular relied upon by the department was not legally binding and could not be applied retrospectively to past imports.
    5. Procedural Justice: The tribunal found that the show cause notice was issued in violation of natural justice principles and statutory requirements.

    Final Order and Implications

    The tribunal set aside the customs department’s order, holding that:

    • The goods were correctly classified under CTH 8471 41 90 as ADPM.
    • No misdeclaration or evasion of duty occurred.
    • The demand for differential duty, confiscation, and penalties was unjustified.
    • The appeal by Promark Techsolutions was allowed in full.

    Conclusion

    This ruling clarifies the classification of advanced interactive flat panels as Automatic Data Processing Machines, not mere monitors, for customs purposes. It underscores the importance of technical features, legal interpretation, and procedural fairness in customs disputes. Importers of similar products can rely on this precedent for correct tariff classification and duty assessment.

    Connected Matter

    Supreme Court- No Central Excise Duty on Preloaded Software in Computers

    Source: CESTAT Delhi

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  • Enforcement of Foreign Arbitral Awards under the Arbitration & Conciliation Act, 1996

    Enforcement of Foreign Arbitral Awards under the Arbitration & Conciliation Act, 1996

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

    Date: 23.07.2026

    Enforcement of Foreign Arbitral Awards under the Arbitration & Conciliation Act, 1996

    This Short Article has been prepared & written by Arbitrator Shobhit Mallik. The views expressed are based on his interpretation of the law. He can be reached at his email id shobhit.Ica23@gmail.com .

    This case is a significant milestone in the Indian legal landscape regarding the enforcement of foreign arbitral awards under the Arbitration & Conciliation Act, 1996. The judgment clarifies the obligations of Indian courts when faced with objections to the enforcement of such awards and reinforces India’s pro-enforcement stance in line with international conventions.

    Factual Background

    Naval Gent Maritime Limited, the Decree Holder, sought enforcement of a foreign arbitral award dated 22 January 2001 against Shivnath Rai Harnarain (I) Ltd. The award was made in England under a Charter Party Agreement containing an arbitration clause. The Decree Holder submitted all required documents, including a certified copy of the award, the arbitration agreement, and proof that no appeal was filed in England.

    The Judgment Debtor appeared in court but failed to file a formal response or objections under Section 48 of the Arbitration & Conciliation Act, 1996, despite multiple opportunities. The matter proceeded to arguments on enforceability.

    Key Legal Issues Raised

    1. Binding Nature of the Award: The Judgment Debtor argued that the award was not binding under English law (Section 66 of the English Arbitration Act, 1996) and thus not enforceable in India.
    2. Public Policy Objection: It was contended that the award was contrary to Indian public policy, as the contract was allegedly executed under duress.
    3. Stamping and Registration: The Judgment Debtor claimed the award was not stamped as per Indian law and thus unenforceable.

    Court’s Analysis and Findings

    1. Binding Nature of the Award

    The court held that the enforceability of a foreign award in India is governed by Indian law, not the procedural requirements of the country where the award was made. Since the award was not challenged in England and the limitation period for appeal had expired, the award was deemed binding. Section 66 of the English Arbitration Act was found irrelevant for enforcement proceedings in India.

    2. Public Policy Exception

    The court examined the arbitrator’s findings on the alleged duress. The arbitrator had considered the evidence and concluded that while there was commercial pressure, it did not amount to legal duress sufficient to void the contract. The court emphasized that it cannot re-examine the arbitrator’s factual findings and that the public policy exception under Section 48(2) is to be narrowly construed.

    3. Stamping and Registration

    Relying on Supreme Court precedents, the court clarified that foreign awards do not require stamping or registration under Indian law for enforcement. The objections based on non-stamping were rejected.

    Legal Principles Established

    • Enforcement of Foreign Awards: Indian courts must enforce foreign arbitral awards if the requirements of Sections 47 and 48 of the Arbitration & Conciliation Act, 1996 are met.
    • Limited Grounds for Refusal: Refusal to enforce can only be based on specific grounds enumerated in Section 48, such as incapacity, invalid agreement, lack of proper notice, or violation of public policy.
    • No Re-examination of Merits: Courts cannot sit in appeal over the arbitrator’s findings on facts or law, especially on mixed questions like duress.
    • No Requirement for Stamping/Registration: Foreign awards are not subject to Indian stamp or registration laws for enforcement purposes.

    Outcome

    The High Court of Delhi held the foreign award executable in India. The Decree Holder was permitted to encash the bank guarantee and pursue further execution if necessary.

    Significance

    This judgment strengthens India’s reputation as an arbitration-friendly jurisdiction and provides clarity on the enforcement of foreign arbitral awards. It limits the scope for challenging such awards, ensuring that India remains compliant with its international obligations under the New York Convention.

    This case serves as a reference point for parties seeking to enforce foreign arbitral awards in India, highlighting the limited and well-defined grounds on which enforcement can be resisted.

    Source: Delhi High Court

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  • CESTAT Kolkata Orders 12% Interest to Berger Paints on Customs Refund

    CESTAT Kolkata Orders 12% Interest to Berger Paints on Customs Refund

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

    Date: 23.07.2026

    CESTAT Kolkata Orders 12% Interest to Berger Paints on Customs Refund

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

    A recent order by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata, has set a significant precedent in customs refund jurisprudence. The case involved M/s. Berger Paints India Limited and the Department of Customs, focusing on the rate of interest applicable to refunds of amounts deposited during investigations.

    Background of the Case

    Berger Paints India Limited imported mixed xylene isomers between 2011 and 2014, classifying them under Customs Tariff Heading 2902.44.00. The goods were warehoused and later cleared for home consumption after duty payment. Subsequently, the Directorate of Revenue Intelligence (DRI) initiated an investigation, contending that the goods should be classified under a different heading (2707), resulting in a duty difference of Rs. 7,44,493. Berger Paints deposited this amount ‘under protest’ in 2014.

    In 2017, the adjudicating authority confirmed the demand and appropriated the deposit as duty. Berger Paints appealed to CESTAT, which ruled in their favor in January 2025, setting aside the demand. The Department’s appeal to the Supreme Court was dismissed in September 2025.

    The Refund Dispute

    Following the Supreme Court’s dismissal, Berger Paints sought a refund of the deposited amount, along with interest at 12% per annum. The authorities refunded the principal with 6% interest, prompting Berger Paints to appeal for the higher rate.

    Legal Arguments

    • Appellant’s Position: Berger Paints cited several precedents, including the Supreme Court’s decision in ITC Ltd. and the Calcutta High Court’s rulings in Madura Coats Private Limited and Rajendra Kumar Jain, which directed payment of 12% interest on delayed refunds of investigation deposits.
    • Department’s Position: The Department argued that 6% interest was appropriate, referencing various High Court decisions and a 2014 government notification fixing the rate at 6% for certain refunds.

    Tribunal’s Analysis and Decision

    The Tribunal examined the legal landscape and emphasized the binding nature of the jurisdictional High Court’s decisions. It noted:

    1. The Calcutta High Court, in Rajendra Kumar Jain (2024), held that in the absence of a statutory provision fixing the interest rate for investigation deposit refunds, 12% interest is payable.
    2. The 6% rate notification applies only from its date of effect and does not cover periods prior to its issuance.
    3. The Tribunal is bound to follow the jurisdictional High Court’s interpretation when there is a conflict among High Courts.

    Accordingly, the Tribunal set aside the order granting only 6% interest and directed that Berger Paints be paid interest at 12% per annum on the refunded amount.

    Key Takeaways for Importers and Legal Practitioners

    1. Jurisdictional High Court Rulings Prevail: When conflicting High Court decisions exist, the Tribunal must follow the ruling of the High Court with jurisdiction over the case.
    2. Interest on Investigation Deposits: In the absence of a statutory provision, higher interest (12%) may be awarded on refunds of amounts deposited during investigations, as per prevailing High Court judgments.
    3. Notification Applicability: Government notifications fixing interest rates apply prospectively and do not affect periods before their issuance.

    Conclusion

    The CESTAT Kolkata’s order in favor of Berger Paints India Limited reinforces the importance of jurisdictional High Court decisions in customs matters and clarifies the applicable interest rate on refunds of investigation deposits. This ruling provides valuable guidance for importers and legal professionals dealing with similar disputes.

    Source: CESTAT Kolkata

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  • Supreme Court Clarifies Scope of ‘Change in Law’ Clauses in Arbitration

    Supreme Court Clarifies Scope of ‘Change in Law’ Clauses in Arbitration

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

    Date: 22.07.2026

    Supreme Court Clarifies Scope of ‘Change in Law’ Clauses in Arbitration

    This Short Article has been prepared & written by Arbitrator Shobhit Mallik. The views expressed are based on his interpretation of the law. He can be reached at his email id shobhit.Ica23@gmail.com .

    This article provides a comprehensive analysis of the Supreme Court of India’s judgment in the contractual dispute between South East Asia Marine Engineering and Constructions Ltd. (SEAMEC Ltd.) and Oil India Limited. The case is significant for its interpretation of arbitration awards, contract clauses, and the scope of judicial review under Indian arbitration law.

    Background of the Dispute

    1. Contract Overview
      • SEAMEC Ltd. was awarded a contract by Oil India Limited in 1995 for well drilling and auxiliary operations in Assam.
      • The contract, initially for two years, was extended twice and expired in October 2000.
    2. Trigger for Dispute
      • During the contract, the price of High-Speed Diesel (HSD), essential for drilling, increased.
      • SEAMEC Ltd. claimed that this price hike triggered the “change in law” clause (Clause 23) of the contract, seeking reimbursement from Oil India Limited.
      • Oil India Limited rejected the claim, leading SEAMEC Ltd. to invoke arbitration.

    Arbitration and Legal Proceedings

    1. Arbitral Tribunal Award
      • The Tribunal, by majority, awarded SEAMEC Ltd. compensation for the increased HSD cost, interpreting government price circulars as having the “force of law” under Clause 23.
      • The minority disagreed, stating executive orders do not qualify as a change in law under the contract.
    2. Judicial Challenges
      • Oil India Limited challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996.
      • The District Judge upheld the award, but the Gauhati High Court set it aside, holding the Tribunal’s interpretation was against public policy and the contract’s terms.
      • SEAMEC Ltd. appealed to the Supreme Court.

    Key Legal Issues Examined

    1. Scope of Judicial Review under Section 34

    • The Supreme Court reiterated that courts can set aside arbitral awards only on specific grounds under Section 34, such as violation of public policy or patent illegality.
    • Courts should not interfere with an arbitrator’s plausible interpretation unless it is perverse or unreasonable.

    2. Interpretation of Clause 23 – Change in Law

    • Clause 23: Provided for reimbursement if a change in law after bid opening resulted in additional costs.
    • The Tribunal adopted a liberal interpretation, including government circulars as “law.”
    • The High Court viewed Clause 23 as akin to a force majeure clause, meant for unforeseen legal changes, not price revisions.
    • The Supreme Court found neither interpretation fully satisfactory but emphasized that contract clauses must be read as a whole and in context.

    3. Fixed-Rate Contract and Risk Allocation

    • The contract was based on fixed rates, with the contractor responsible for fuel costs.
    • The Court held that normal price fluctuations, unless specifically covered, are not grounds for reimbursement under Clause 23.
    • The Tribunal’s broad interpretation was found unsustainable as it would defeat the contract’s risk allocation.

    Supreme Court’s Decision and Reasoning

    • The Supreme Court upheld the High Court’s decision to set aside the arbitral award.
    • It clarified that:
      1. The Tribunal failed to interpret Clause 23 in harmony with the contract’s overall structure and intent.
      2. The contract’s fixed-rate nature and explicit clauses on fuel costs indicated that price increases were not meant to be reimbursed under “change in law.”
      3. Liberal interpretation cannot override clear contractual terms and risk allocation.

    Implications of the Judgment

    1. Contract Interpretation
      • Courts and tribunals must interpret contract clauses in context, respecting the parties’ risk allocation and commercial intent.
    2. Arbitration Awards
      • Judicial interference is limited, but awards that ignore clear contract terms or public policy can be set aside.
    3. Risk Management in Contracts
      • Parties should clearly define risk-sharing mechanisms and the scope of “change in law” clauses to avoid disputes.

    Conclusion

    The SEAMEC Ltd. vs. Oil India Limited judgment reinforces the importance of precise contract drafting and the limited scope of judicial review in arbitration. It serves as a guide for businesses and legal professionals on interpreting change in law clauses and managing contractual risks in India.

    Source: Supreme Court

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  • Supreme Court on Extension of Anti-Dumping Duty for Acrylonitrile Butadiene Rubber Imports from Korea RP

    Supreme Court on Extension of Anti-Dumping Duty for Acrylonitrile Butadiene Rubber Imports from Korea RP

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

    Date: 22.07.2026

    Supreme Court on Extension of Anti-Dumping Duty for Acrylonitrile Butadiene Rubber Imports from Korea RP

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

    The Supreme Court of India delivered a landmark judgment addressing the legality of extending anti-dumping duties on imports of Acrylonitrile Butadiene Rubber (NBR) from Korea RP. This article provides a detailed overview of the case, the legal framework, the issues considered, and the implications of the Court’s decision.

    Background: Anti-Dumping Duty on NBR Imports

    1. Initial Imposition: In 1997, following concerns from the domestic industry, India imposed anti-dumping duties on NBR imports from Korea RP and Germany to counteract unfair pricing that harmed local manufacturers.
    2. Sunset Reviews: Anti-dumping duties are typically valid for five years. Before expiry, the government can initiate a ‘sunset review’ to determine if the duty should continue. Reviews were conducted in 2002 and 2007, each time extending the duty for another five years.
    3. Third Sunset Review: As the 2009 notification was set to expire on January 1, 2014, a third sunset review was initiated on December 31, 2013. However, the public notification was only made available on January 6, 2014, after the original duty had lapsed.
    4. Extension Notification: On January 23, 2014, the government issued a notification extending the anti-dumping duty by one year, pending the outcome of the review.

    Legal Framework

    • Section 9A of the Customs Tariff Act, 1975: Governs the imposition, review, and extension of anti-dumping duties.
      • Duties are valid for up to five years unless revoked earlier.
      • The government may extend the duty for another five years after a review.
      • If a review is initiated before expiry but not concluded, the duty may continue for up to one additional year pending the review outcome.

    Key Legal Questions Considered

    1. Relevant Date for Initiation of Sunset Review: Is the date of the government’s decision (December 31, 2013) or the date of public notification (January 6, 2014) the relevant date for determining if the review was timely?
    2. Validity of Extension Notification: Can the government validly extend the anti-dumping duty after the original notification has expired?

    Supreme Court’s Analysis and Findings

    1. Date of Initiation of Sunset Review

    • The Court held that the relevant date is when the government decides to initiate the review, not when the notification is made public. There is no statutory requirement for public notice or gazette publication before the expiry of the original duty for the review to be valid.
    • The decision to initiate the review on December 31, 2013, was therefore timely, even though the public became aware later.

    2. Validity of Extension After Expiry

    • The Court found that the power to extend the anti-dumping duty for up to one year pending review is an enabling provision, not an automatic one.
    • A valid notification must be issued before the expiry of the original duty. Once the original notification lapses, the government cannot extend it retroactively.
    • The January 23, 2014 notification, issued after the original duty expired, was held to be without legal authority and thus invalid.

    Implications of the Judgment

    • Strict Adherence to Timelines: The government must issue extension notifications before the expiry of the original anti-dumping duty period. Delays or retroactive extensions are not permitted.
    • Clarity for Stakeholders: Importers, exporters, and domestic industries now have clear guidance on the procedural requirements for anti-dumping duty reviews and extensions.
    • Legal Certainty: The judgment reinforces the principle that duties and taxes must be imposed strictly in accordance with the law and proper notifications.

    Conclusion

    The Supreme Court’s decision in the Kumho Petrochemicals case clarifies the legal process for extending anti-dumping duties in India. It underscores the importance of timely government action and adherence to statutory procedures, ensuring fairness and predictability in trade remedy measures.

    Connected Matter

    Madras HC Quashes Anti-Dumping Duty Demand on Huawei: Expiry of ADD Notifications for SEZ Units

    Source: Supreme Court

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  • CESTAT Chandigarh Sets Aside Penalties for Alleged Illegal Import of Chinese Fire Crackers

    CESTAT Chandigarh Sets Aside Penalties for Alleged Illegal Import of Chinese Fire Crackers

    Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

    Date: 21.07.2026

    CESTAT Chandigarh Sets Aside Penalties for Alleged Illegal Import of Chinese Fire Crackers

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

    A significant legal development unfolded at the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chandigarh, where M/s Amit Kumar Bansal, proprietor of M/s AR Trading Co., successfully appealed against heavy penalties imposed for the alleged illegal import of Chinese fire crackers. This article provides a detailed overview of the case, the arguments presented, and the Tribunal’s final decision.

    Background of the Case

    On September 9, 2015, officers from the Directorate of Revenue Intelligence (DRI), Ludhiana, conducted a search at the business premises of M/s Amit Kumar Bansal. During the search, a stock of fire crackers and various imported goods such as toy guns, PVC film, mosquito killer packets, and kite balloons were found. The DRI alleged that the fire crackers were of Chinese originβ€”a banned import item in India.

    The DRI recorded a statement from Mr. Amit Kumar Bansal, which, according to the appellant, was obtained under coercion and threat. Mr. Bansal asserted that no Chinese fire crackers were present on the premises and that all fire crackers were of Indian origin, purchased from M/s Naresh Trading Co., Delhi. He provided purchase bills and supporting documents to substantiate his claim.

    Proceedings and Penalties

    Despite the evidence provided, the original adjudicating authority imposed penalties under Section 112(a) and 112(b) (Rs. 2,00,000) and Section 114AA (Rs. 10,00,000) of the Customs Act. The Commissioner (Appeals), Jammu, upheld these penalties, leading to the present appeal before CESTAT Chandigarh.

    Key Arguments by the Appellant

    1. Coerced Statement: The appellant argued that the only evidence against him was a statement obtained under duress, which he later retracted.
    2. No Physical Evidence: No Chinese fire crackers were actually recovered from the premises.
    3. Legitimate Purchases: All fire crackers were purchased from a legitimate Indian supplier, with invoices and verification from the Excise and Taxation Department.
    4. Lack of Proper Investigation: The authorities did not conduct any further investigation beyond the coerced statement.

    Tribunal’s Observations and Decision

    After hearing both parties and reviewing the evidence, the Tribunal made several critical observations:

    • The entire case was built solely on the appellant’s statement, which was later retracted and not corroborated by any physical evidence.
    • The authorities failed to consider the retraction and the supporting purchase documents provided by the appellant.
    • There was a complete lack of investigation beyond the initial statement.

    Final Order: The Tribunal concluded that the penalties imposed under Sections 112(a), 112(b), and 114AA were unsustainable in law. The appeal was allowed, and all penalties were set aside, granting consequential relief to the appellant.

    Implications of the Judgment

    This case underscores the importance of thorough investigation and the need for corroborative evidence in customs-related offenses. It also highlights the legal safeguards available to individuals against coerced confessions and arbitrary penalties.

    Conclusion

    The CESTAT Chandigarh’s decision in favor of M/s Amit Kumar Bansal sets a precedent for similar cases where penalties are imposed without substantial evidence. It reinforces the principle that justice must be based on facts and due process, not on uncorroborated statements or procedural lapses.

    This outcome not only brings relief to the appellant but also serves as a reminder to enforcement agencies to adhere strictly to legal standards in their investigations and adjudications.

    Source: CESTAT Chandigarh

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  • CESTAT Kolkata: No Interest Payable on Deferred Customs Duty for Capital Goods under MOOWR Scheme

    CESTAT Kolkata: No Interest Payable on Deferred Customs Duty for Capital Goods under MOOWR Scheme

    Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

    Date: 21.07.2026

    CESTAT Kolkata: No Interest Payable on Deferred Customs Duty for Capital Goods under MOOWR Scheme

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

    The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Kolkata, recently delivered a significant judgment in the case of Dalmia Cement (Bharat) Limited. The case revolved around the levy of interest on customs duty for capital goods imported under the Manufacture and Other Operations in Warehouse Regulations, 2019 (MOOWR Scheme). This article provides a detailed analysis of the case, its legal context, and its implications for manufacturers utilizing the MOOWR scheme.

    Background: The MOOWR Scheme and Dalmia Cement’s Import

    The MOOWR Scheme, introduced by the Central Board of Indirect Taxes and Customs (CBIC), allows manufacturers to import capital goods into bonded warehouses without immediate payment of customs duty. Duty is deferred until the goods are cleared for domestic use. Dalmia Cement, a major cement manufacturer, imported a Cooler (gearbox) from Germany under this scheme, intending to use it in their manufacturing process.

    Upon import, the goods were warehoused without payment of duty. Later, due to operational reasons, Dalmia Cement cleared the goods for home consumption and paid the deferred customs duty. However, the Customs authorities also levied interest under Section 61(2) of the Customs Act, which Dalmia Cement contested.

    Legal Dispute: Is Interest Payable on Deferred Duty?

    The core legal issue was whether interest under Section 61(2) is payable when capital goods, imported under the MOOWR scheme and intended for use in manufacturing, are cleared for home consumption.

    Dalmia Cement’s Arguments

    1. Intention to Use vs. Actual Use: Dalmia Cement argued that the law requires only an “intention to use” the capital goods in manufacturing, not actual usage, to qualify for duty deferment without interest.
    2. Supporting Precedents: The company cited Supreme Court judgments (e.g., State of Haryana vs. Dalmia Dadri Cement Ltd., Steel Authority of India Ltd. vs. Collector of Central Excise, and BPL Display Devices Ltd. vs. Commissioner of Central Excise) that interpreted “for use” as “intended for use,” not actual use.
    3. CBIC Clarifications: Dalmia Cement referred to CBIC’s 2020 FAQ and public notices, which clarified that no interest is payable on capital goods cleared from a Section 65 warehouse for home consumption.

    Customs Department’s Position

    The Customs authorities relied on Paragraph 12 of CBIC Circular No. 34/2019, which states that interest is payable when goods are cleared for home consumption from a bonded warehouse, arguing that the benefit of interest-free deferment applies only if the goods are actually used in manufacturing.

    Tribunal’s Analysis and Decision

    The Tribunal examined:

    • The language of Section 61(1)(a) of the Customs Act, which allows capital goods intended for use in manufacturing to remain in the warehouse until clearance.
    • The distinction between “intended for use” and “actual use,” as established by Supreme Court precedents.
    • Conflicting CBIC clarifications: the 2019 Circular vs. the 2020 FAQ.

    The Tribunal concluded:

    1. Intention Suffices: The law requires only an intention to use the goods in manufacturing, not actual usage, to avail the benefit of deferred duty without interest.
    2. Precedent Applies: Supreme Court and Tribunal decisions support this interpretation.
    3. Interest Not Payable: Since Dalmia Cement imported the goods with the intention to use them in manufacturing (as documented in their MOOWR license application), no interest was payable on the deferred duty when the goods were cleared for home consumption.

    The Tribunal set aside the order upholding the interest demand and allowed Dalmia Cement’s appeal, entitling them to a refund of the interest paid.

    Implications for Industry

    This decision provides clarity and relief for manufacturers using the MOOWR scheme:

    • Certainty in Duty Deferment: Manufacturers can import capital goods under MOOWR and clear them for home consumption without the risk of interest liability, provided the intention to use is documented.
    • Legal Precedent: The judgment reinforces the interpretation of “intended for use” in customs law, aligning with Supreme Court jurisprudence.
    • Operational Flexibility: Companies can adapt to operational changes without fear of retrospective interest demands, as long as their original intent to use the goods in manufacturing is clear.

    Conclusion

    The CESTAT Kolkata’s decision in favor of Dalmia Cement sets an important precedent for the application of the MOOWR scheme and the interpretation of interest liability under the Customs Act. It underscores the importance of legislative intent and provides much-needed clarity for businesses investing in India’s manufacturing sector.

    Source: CESTAT Kolkata

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  • Madras HC Quashes Anti-Dumping Duty Demand on Huawei: Expiry of ADD Notifications for SEZ Units

    Madras HC Quashes Anti-Dumping Duty Demand on Huawei: Expiry of ADD Notifications for SEZ Units

    Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

    Date: 21.07.2026

    Madras HC Quashes Anti-Dumping Duty Demand on Huawei: Expiry of ADD Notifications for SEZ Units

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

    The Madras High Court recently delivered a significant judgment in the case involving Huawei Telecommunications (India) Company Private Limited and the Indian customs authorities, addressing the levy and refund of Anti-Dumping Duty (ADD) on telecom equipment. This article provides a detailed overview of the case, the legal arguments, and the implications for businesses operating in Special Economic Zones (SEZs) in India.

    Background: The Dispute Over Anti-Dumping Duty

    Huawei Telecommunications (India) operates a manufacturing unit in a Special Economic Zone (SEZ) in Chennai. The dispute arose when Indian customs authorities sought to levy ADD on the company’s clearances of Populated Circuit Board Assemblies (PCBAs) from the Flextronics SEZ Unit into the Domestic Tariff Area (DTA) for specific periods, even after the expiry of the relevant notification authorizing such duty.

    Key Notifications Involved

    1. Notification 125/2010 – Cus. dated 16.12.2010: Imposed ADD for five years (08.12.2009 to 07.12.2014).
    2. Notification No.1/2015 – Cus. (ADD) dated 05.01.2015: Amended the earlier notification, but was issued after the original notification had lapsed.
    3. Notification No.15/2016 – Cus. (ADD) dated 26.04.2016: Imposed ADD for a new five-year period (26.04.2016 to 25.04.2021).

    Legal Proceedings and Arguments

    Huawei filed two writ petitions:

    • W.P.No.22770 of 2017: Challenged the show cause notice seeking to levy ADD for the period after the expiry of Notification 125/2010.
    • W.P.No.22771 of 2017: Sought a refund of ADD collected and the return of bank guarantees and personal bonds for the period after the notification’s lapse.

    The company argued that, based on the Supreme Court’s decision in Union of India & Others vs. Kumho Petrochemicals Pvt. Ltd., ADD cannot be levied or extended through an amendment after the original notification has expired.

    The continuation of ADD must be imposed before the expiry of the notification, and any amendment after expiry is legally unsustainable.

    Court’s Analysis and Decision

    Key Issues Considered

    1. Maintainability of Writ Petition Against Show Cause Notice: The court recognized exceptions to the general rule against entertaining writ petitions at the show cause notice stage, especially when the law is settled by the Supreme Court.
    2. Validity of ADD Levy Based on Lapsed Notification: The court held that the amendment notification issued after the expiry of the principal notification was invalid. The demand for ADD for the period after 07.12.2014 was unsustainable.

    Rationale

    • The Supreme Court in Kumho Petrochemicals held that ADD notifications are temporary legislation and cannot be amended after expiry.
    • The continuation of ADD during a review period must occur before the original notification lapses.
    • The Delhi High Court’s decision, which was upheld by the Supreme Court, applied to Huawei’s case, binding all relevant authorities.

    Final Orders

    • The show cause notice seeking ADD for the period after 07.12.2014 was set aside.
    • The demand for ADD in the earlier show cause notice for the period from 08.12.2014 to 26.04.2016 was also set aside.
    • Huawei was granted liberty to pursue its refund application before the appropriate authority.

    Implications for Businesses

    1. Legal Certainty: The judgment reinforces that ADD cannot be retrospectively extended or levied after the expiry of the original notification.
    2. Refund Rights: Companies that paid ADD after the lapse of the relevant notification may be entitled to refunds, provided they follow due process.
    3. Precedent for SEZ Units: The decision provides clarity for SEZ units facing similar disputes with customs authorities.

    Conclusion

    The Madras High Court’s order in favor of Huawei Telecommunications sets a clear precedent on the temporal limits of anti-dumping duty notifications and the rights of businesses to challenge unlawful levies. Companies operating in SEZs should review their ADD payments and consider seeking refunds where duties were collected beyond the life of the relevant notification.

    Connected Matter

    CESTAT Chennai Clarifies Customs Classification for Ophthalmic Instruments

    Source: Madras High Court

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