#VeetechInfolinePrivateLimited – 𝐀𝐚𝐝𝐫𝐢𝐤𝐚𝐚 𝐋𝐞𝐠𝐚𝐥 𝐒𝐞𝐫𝐯𝐢𝐜𝐞𝐬 (𝐀𝐋𝐒)

ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 05.01.2026

High Court of Karnataka Sets Aside Cryptic Customs Order for Violating Principles of Natural Justice

This Article has been written by Shri Ravi Shekhar Jha, Advocate 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.

On November 24, 2025, the High Court of Karnataka delivered a significant judgment in the case of Veetech Infoline Private Limited & Anr. vs. The Additional Commissioner of Customs & Ors. . The case revolved around allegations of improper removal of warehoused goods and violations of the Customs Act, 1962, and Central Excise Rules, 2002. The court, presided over by Hon’ble Justice, ruled in favor of the petitioners, setting aside the impugned Order-in-Original dated July 10, 2025, and remitting the matter back to the adjudicating authority for reconsideration.

Background of the Case

Veetech Infoline Private Limited (VIPL), a 100% Export Oriented Unit (EOU) under the Software Technology Parks of India (STPI) scheme, had been operating under a Private Bonded Warehouse License since November 14, 2000. The company imported duty-free capital goods and procured goods locally without payment of duty under the EOU scheme. These goods were bonded at their licensed premises in Bengaluru for the purpose of developing computer software for export.

The controversy began when customs officials conducted a verification of VIPL’s premises on July 8, 2010, and alleged that the company had improperly removed duty-free goods by renting out its bonded premises to other entities without payment of customs duty. The officials claimed that VIPL had failed to apply for de-bonding of the premises after the expiration of its warehousing license on March 31, 2007, and had not sought further extension of the warehousing period. Consequently, a Show Cause Notice was issued on May 25, 2011, demanding customs duty of Rs. 36,88,280/- along with penalties and interest.

The adjudicating authority passed an Order-in-Original on February 21, 2012, confirming the demand and imposing penalties on VIPL and its Managing Director. Aggrieved by this order, VIPL filed an appeal before the Commissioner of Customs (Appeals), which was dismissed on October 30, 2014. Subsequently, VIPL approached the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), which set aside the order of the Appellate Authority and remitted the matter back to the Additional Commissioner of Customs for fresh adjudication.

The Impugned Order 

In the de novo proceedings, VIPL submitted detailed replies and evidence, including documentation from the STPI confirming that the company had fulfilled its Net Foreign Exchange (NFE) obligations during its operational period. Despite these submissions, the Additional Commissioner of Customs passed the impugned Order-in-Original on July 10, 2025, reiterating the earlier order without addressing the petitioner’s claims or providing adequate reasoning. The order was deemed cryptic, laconic, and violative of the principles of natural justice.

Key Issues in the Case

The High Court was tasked with addressing the following key issues:

Whether the warehoused goods valued at Rs. 2,19,94,694/- were liable to confiscation under Sections 111(j) and 111(o) of the Customs Act, 1962.
Whether the demand of Rs. 36,88,280/- along with interest and penalties was valid under Section 72(1)(a) of the Customs Act, 1962.
Whether the Managing Director of VIPL, was liable for penalties under Section 112(a) and (b) of the Customs Act, 1962.

High Court’s Observations

Justice noted that the impugned order was a non-speaking and unreasoned order that failed to address the petitioner’s submissions and evidence. The court emphasized that the principles of natural justice had been violated, as the adjudicating authority did not provide cogent reasons for reiterating its earlier order.

The court also rejected the respondents’ argument that the petition was not maintainable due to the availability of an alternative remedy by way of an appeal. It held that the violation of natural justice warranted the exercise of its jurisdiction under Article 226 of the Constitution of India.

The Judgment

In its oral order, the High Court allowed the writ petition and set aside the impugned Order-in-Original dated July 10, 2025. The matter was remitted back to the Additional Commissioner of Customs for reconsideration afresh, directing the authority to pass a reasoned and speaking order in accordance with the law.

Implications of the Judgment

This judgment is a significant win for Veetech Infoline Private Limited and highlights the importance of adhering to the principles of natural justice in adjudication proceedings. It serves as a reminder to authorities that orders must be reasoned and address the submissions and evidence presented by the parties involved.

The case also underscores the role of the judiciary in ensuring fairness and accountability in administrative actions. By exercising its writ jurisdiction, the High Court has reinforced the principle that mere availability of an alternative remedy does not preclude judicial intervention in cases where natural justice is violated.

Conclusion

The Karnataka High Court’s decision in this case is a testament to the importance of transparency and reasoned decision-making in administrative proceedings. For businesses operating under schemes like the EOU/STPI, this judgment provides reassurance that the judiciary will intervene to protect their rights when procedural lapses occur. As the matter is now remitted back for fresh adjudication, it remains to be seen how the Additional Commissioner of Customs will address the petitioner’s claims and evidence in accordance with the law.

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