Double Levy of Education Cess on DTA Clearances by EOUs Set Aside: CESTAT Chandigarh Aligns with Supreme Court Ruling - In light of the settled legal position, as affirmed by both the CESTAT and the Supreme Court, the practice of calculating Education Cess and Secondary & Higher Education Cess twice on DTA clearances by EOUs is not sustainable. EOUs are required to compute the aggregate of all applicable customs duties, including cesses, in a single instance before applying them to DTA clearances. Any deviation from this calculation method is impermissible unless the aggregate computation itself is specifically challenged.
CESTAT Allahabad Upholds Classification of 'Paper Biri' as Bidi under Sub-heading 24031929 Despite Revenue's Plea for Cigarette Classification - The CESTAT, Allahabad, conclusively determined that the appellantās product is rightly classifiable as 'paper biri' under Sub-heading 24031929 of the Central Excise Tariff Act, 1985. The appeal by the Revenue, which sought to classify the product as a cigarette based solely on the chemical report, was rejected due to lack of corroborative market evidence. This decision underscores the primacy of market perception and actual branding over mere chemical analysis in determining excise classification.
CESTAT Hyderabad Rules Revenue Bears Onus in Foreign Currency Seizure: Jurisdictional Lapse and Lack of Evidence Nullify Confiscation - The CESTAT Hyderabad held that the confiscation of the foreign currency was without legal foundation. The Revenue failed to discharge the burden of proof required under Section 123 of the Customs Act, given that foreign currency is not a notified item. Moreover, the Department did not present any evidence to contradict the appellantās explanation of lawful source. The investigation, having been conducted by an officer lacking proper jurisdiction, was held to be void ab initio. Accordingly, the order of confiscation and penalty could not be sustained.
CESTAT Chennai Remands Coal Classification Dispute Back to Commissioner (Appeals) for Fresh Consideration - In summary, the CESTAT, Chennai has allowed the appeal by remand, setting aside the previous appellate order and directing the Jurisdictional Commissioner (Appeals) to reconsider all issues, including the core dispute on coal classification and the resultant eligibility for concessional duty under Notification No. 46/2011-Cus. The Tribunalās order ensures that the appellantās submissions are fully and fairly adjudicated.
CESTAT Mumbai Rules on Scope of āImporterā Under Customs Act in Gold Seizure Case; Absolute Confiscation Set Aside - The CESTAT Mumbai decision establishes that liability as an āimporterā under Section 2(26) of the Customs Act, 1962, is confined strictly to persons having control, ownership, or interest in goods during the importation period up to clearance for home consumption. Post-clearance dealings do not attract the importerās statutory obligations or liabilities. Further, absolute confiscation of restricted goods like gold is not permissible in the absence of statutory prohibition or clear evidence of culpability, and penalties require demonstrable knowledge or involvement in the infraction.
CESTAT Allahabad Affirms Denial of CENVAT Credit on Customs Education Cess and Destroyed EPCG Capital Goods; Upholds Extended Limitation and Penalty for Suppression - The CESTAT Allahabad has categorically denied CENVAT Credit on Customs Education Cess, Customs Secondary & Higher Education Cess, and SAD on imported capital goods, reaffirming that only specified duties as defined in Rule 3(1) of the CENVAT Credit Rules, 2004 are eligible for credit. The failure to fulfill export obligations under the EPCG scheme, coupled with the absence of installation evidence and suppression of material facts, has resulted in the upholding of extended limitation and penalty. Taxpayers must ensure strict compliance with procedural and substantive requirements for availing CENVAT Credit, including proper disclosure and evidence of eligibility.
CESTAT Chennai Rules Extended Limitation Unsustainable When Retrospective Exemption Notification Applies: āNILā Duty Rate Held Retrospective - On the basis of the above judicial analysis and the nature of Notification No. 12/2013-C.E., CESTAT Chennai determined that the benefit of the exemption at the āNILā rate of duty must be extended retrospectively. As a result, the invocation of the extended period of limitation for the recovery of duty was rendered unsustainable. Assessees faced with similar facts should ensure that any exemption notification that is clarificatory or curative in nature is applied retrospectively in their cases, thereby negating the basis for demand of duty for the intervening period.
Tugboats Denied Machinery Status: CESTAT Ahmedabad Upholds Classification under Chapter 89, Limits Penalties, and Clarifies Drawback Eligibility - The CESTAT Ahmedabad has conclusively held that tugboats do not qualify as āmachinery, equipment or toolsā for the purposes of Notification No. 72/2017-Cus. They are classifiable under Chapter Heading 89.04 as vessels, and thus the exemption is not available. The Tribunal has also provided clarity on the sequence of calculations to be made for determining the duty, interest, and penalties, emphasizing the importance of allowing legitimate drawback before imposing financial liabilities. For importers, this decision mandates strict adherence to tariff classifications and denies the possibility of reclassifying vessels as machinery for the purpose of availing exemptions.
CESTAT Delhi Rules Prospective Application of Exemption Notification Amendment; Customs Duty Exemption Restored for Microphones and Receivers Imported Prior to 06.07.2019 - The CESTAT decision is actionable in affirming that amendments to exemption notifications under the Customs Act will operate only prospectively unless the notification clearly specifies otherwise. Any attempt by authorities to recover duties based on retrospective interpretation of such amendments is without legal foundation. Assessees in similar circumstances should ensure the temporal application of exemption notifications is carefully scrutinized and assert their entitlement where retrospective application is not explicitly provided.
CESTAT Upholds Penalty under Section 114(iii) against CHA for Benami Shipping Bills: DRI Officerās Authority Affirmed Despite Canon India Judgment - On the facts and law, the CESTAT has upheld the imposition of penalty under section 114(iii) of the Customs Act, 1962, on the appellant for their role in facilitating export through benami shipping bills and mis-declaration of goods. The Tribunal has clarified that the authority of the DRI officer to issue SCN for confiscation and penalty is distinct from the authority under section 28 for duty demands, and remains valid in the present context. Moreover, the imposition of penalty under the CBLR does not preclude or bar penalties under section 114 for acts leading to confiscation.
CESTAT Hyderabad Directs Refund Authority to Base Export Duty Refunds on Final Invoice and BRC, Not Provisional Assessment Metrics - The CESTAT Hyderabad has categorically held that, for the purposes of refund under provisional assessment, the final commercial invoice and the BRC should be the exclusive basis for determining the export value and the refund amount. The department cannot insist on recalculating values based on provisional parameters or laboratory reports if these do not align with the final realisation as per contractual terms. The refund sanctioning authority is mandated to adhere to this principle and grant refunds accordingly, including applicable interest as per section 18(4) of the Customs Act, 1962.
CESTAT Chennai Rules Average Transportation Cost Excludable from Excise Assessable ValueāEmphasizes Actual Cost and Separate Invoice Disclosure - The CESTAT Chennai set aside the impugned appellate order and reinstated the Order-in-Original, holding that the average cost of transportation, when shown separately in invoices and supported by appropriate cost certifications, is excludable from the assessable value for excise purposes. The Tribunal allowed the appellantās appeal, thereby upholding the exclusion of average transportation cost from the excisable value.
CESTAT Chandigarh Quashes Denial of Area-Based Exemption: Insufficient Evidence of Bogus Manufacturing and Violation of Natural Justice - The CESTAT, following the logic of its earlier decision in M/s Swati Methol & Allied Chemicals Ltd, held that the evidence provided by the appellants was sufficient to undermine the departmentās allegations. In the absence of conclusive proof of bogus transactions, the denial of exemption/refund under Notification No. 56/2002-CE could not be justified. The Tribunal set aside the impugned order, emphasizing the need for objective analysis of all available evidence and adherence to the principles of natural justice.
CESTAT Kolkata Upholds Denial of Concessional Customs Duty on Optical Line Protection Equipment: Optical Switches Classified as ROADM Under Exclusion Clause - The CESTAT Kolkata concluded that Optical Switch Units/OLP equipment imported by the appellant are correctly classified as ROADMs and fall within the exclusion clause for concessional BCD under Notification No. 57/2017-Cus, in light of Circular No. 08/2023-Cus and Notification No. 02/2019-Cus. The appeal was dismissed on merits, confirming the denial of concessional BCD.
CESTAT Hyderabad Sets Aside Duty Demand and Penalties for Unaccounted SEZ Imports, Orders Remand for Proper Reconciliation of Warehouse Movements - The CESTAT Hyderabadās decision mandates that customs duty demands and penalties for unaccounted warehoused goods by SEZ units must be grounded in a thorough reconciliation of records. Where losses are supported by credible evidence (such as natural disasters) or where goods have been accounted for via proper documentation for SEZ clearances or exports, duty demands and penal actions cannot be sustained. The Tribunalās remand requires the adjudicating authority to meticulously verify explanations and documentary evidence before making any fresh demand or imposing penalties.
CESTAT Chennai Rules in Favour of EOU: No Customs or Excise Duty on Vinegar Consumed in Excess of SION for Gherkins in Brine; HDPE Barrels Demand Upheld - The Tribunalās decision sets aside the demand for Customs and Central Excise duty, interest, and penalty relating to the alleged excess consumption of vinegar, holding that the consumption was within SION limits when all exports (both gherkins in vinegar and in brine) were considered. The demand on HDPE barrels was upheld in the absence of any challenge by the appellant. This actionable outcome mandates that EOUs must ensure accurate and comprehensive calculation of input usage for SION compliance, and authorities must provide explicit reasoning when excluding any category of exports from such computations.
CESTAT Allahabad Holds Cost Recovery Charges Ultra Vires, Orders Full Refund to Custodian for Lack of Statutory Authority - Based on the binding judicial precedents and the absence of statutory authorization for CRC under the Customs Act, the CESTAT Allahabad has conclusively held that all cost recovery charges recovered by the department from custodians are illegal. The impugned order denying refund is set aside, and the appellant is entitled to full refund of all CRC paid for the relevant period. The decision is actionable for similarly situated custodians to seek refund of CRC paid in the absence of statutory authority.
CESTAT Hyderabad Confirms Classification of Micronutrient Fertilizers under CETH 3105; Rejects Departmentās PGR Classification - The Tribunal conclusively held that micronutrient fertilizers containing nitrogen, phosphorous, or potassium as essential constituents are to be classified under CETH 3105 and not as Plant Growth Regulators under CETH 3808. The decision underscores the importance of relying on statutory chapter notes, scientific evidence, and interpretative circulars for classification disputes.
Bombay High Court Quashes Order for Denial of In-Person Hearing: Violation of Natural Justice Despite Alternate Appellate Remedy - The Bombay High Court has reaffirmed that even in the presence of an alternate statutory appellate remedy, writ jurisdiction may be exercised where a gross violation of natural justice is demonstrated. In this case, the failure to provide a clear and reasonable opportunity for a personal hearingādespite specific requestsāconstituted such a violation. Accordingly, the impugned order dated 28 February 2025 is quashed and the writ petition is allowed. The authorities are directed to provide a fresh opportunity for a personal hearing to the Petitioner, ensuring strict adherence to procedural fairness.
Bombay High Court Sets Aside Rebate Denial: Orders Fresh Consideration on Export Duty Refunds Paid Under Protest and SVLDRS Impact - The Bombay High Court set aside the impugned order dated 17 January 2022, remanding the petitionerās Revision Application for de novo adjudication by the 2nd Respondent. The authority is directed to examine all critical aspectsāparity, interest on NCCD, payment under protest, statutory provisions, SVLDRS settlement, and unjust enrichmentāon merits and in accordance with law. The decision underscores the necessity for detailed reasoning in quasi-judicial orders and affording parties an opportunity to meet every ground of rejection.
CESTAT Delhi: Confiscation and Penalty Set AsideāFailure to Examine Witnesses and Rejecting Bills of Entry Without Proper Grounds Vitiates Smuggling Allegation - Given that the evidentiary burden was not correctly discharged by the department and that procedural lapses in admitting evidence occurred, CESTAT set aside the confiscation of the goods and the penalties imposed. Actionable takeaway: In any proceedings involving alleged smuggling, authorities must follow due process in admitting evidence and cannot reject documentary proof of legal import on mere technicalities.
CESTAT Delhi Quashes Customs Duty Reassessment: Absence of Evidence for Enhanced Valuation under Section 28 - In summary, the CESTAT ruled that in the absence of clear and cogent evidence demonstrating why the values determined by the proper officer were incorrect, and lacking proof of collusion, wilful misstatement, or suppression of facts by the appellant, the demand for redetermination of assessable value and differential duty under Section 28(1) could not be sustained. Actionable takeaway: Revenue authorities must provide specific reasons and evidence when rejecting transaction values and invoking the extended period for demand; mere reference to higher prices in other imports is insufficient.
CESTAT Mumbai Upholds Prohibition Against Customs Broker as Registration Expires; No Relief Granted in Absence of Renewal Post-Enquiry - In summary, where a Customs Brokerās registration has expired and no steps have been taken by the Broker to seek renewal or restoration, any pending prohibition order under Regulation 23 of CBLR, 2013, becomes infructuous. The CESTAT Mumbai rightly refrained from interfering with the Commissionerās order, as the Appellant failed to pursue available remedies or maintain valid registration. Customs Brokers must proactively engage with the competent authority for restoration of rights post-enquiry or expiry of prohibitory orders, failing which legal remedies may become otiose.
Customs Tribunal Orders Reconsideration of Water Meter Classification: Reliance on NIDB and Tribunal Precedents Under Scrutiny - The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai, has remanded the case concerning the classification of the Ipearl DN 15 Water meter for fresh consideration. The lower adjudicating authority is directed to comprehensively examine the nature of the imported goods in light of the specific product descriptions and legal reasoning provided in the Tribunal's earlier decisions, ensuring that the correct tariff heading is applied in accordance with statutory and judicial guidance.
Gujarat High Court Quashes Rejection of Rebate: Excise Duty Refund on ATF Supplies to International Flights Recognized as Export - Given the respondentās concession and the prevailing legal framework, the Gujarat High Court directed that the petitionerās rebate claim under Rule 18 for supplies of ATF to international flights must be allowed. The orders denying the rebate were quashed. Petitioners in similar circumstances should ensure that their claims are supported by adequate evidence of the quantity of goods remaining on board and falling within the scope of āexportā as per Rule 18.
CESTAT Kolkata Affirms CENVAT Credit Eligibility for Inputs Used in Capital Goods Foundations and Support Structures - In light of the consistent judicial view, as reaffirmed by the CESTAT Kolkata, assessees are entitled to claim CENVAT Credit on inputs and capital goods used in constructing foundations and support structures that are essential for the operation of capital goods in the manufacturing process. Orders disallowing such credit, even when accompanied by interest and penalty, are liable to be overturned if challenged in light of these precedents. Assessees should ensure proper documentation to substantiate the use of such goods for fabrication and erection of capital goods to withstand departmental scrutiny.
CESTAT Chandigarh Quashes Confiscation and Penalty under Section 111(d) of Customs Act in Re-Assessment Case Involving Challenge to DGFT Notification - Based on the Tribunalās decision, in cases where the importer demonstrates bona fide compliance, files the required documents, responds to departmental queries, and pays the assessed duty (even if under protest or subject to legal challenge), the invocation of Section 111(d) for confiscation, along with imposition of redemption fine and penalty, is not legally sustainable. The Tribunal, therefore, set aside the confiscation, redemption fine, and penalty, recognizing the absence of any malafide intent or attempt at evasion.
Delhi High Court Denies Fifth Anticipatory Bail: Successive Applications Without Changed Circumstances and Non-Cooperation Prove Fatal - In view of the applicantās repeated attempts to secure anticipatory bail without any substantive change in circumstances and his deliberate non-cooperation with the investigation, the Delhi High Court rightly denied relief. The judgment underscores that successive bail applications cannot serve as a tool for circumventing judicial orders and bail conditions, especially where the accused is absconding and facing serious allegations. The actionable takeaway is that applicants must present a genuine, material change in circumstances to justify any subsequent bail application; mere dissatisfaction with prior bail conditions or attempts to evade investigation are insufficient.
Apex Courtās āMost Akinā Test Mandates Expert Opinion on Petroleum Hydrocarbon Solvent Classification Disputes; CESTAT Ahmedabad Remands Case for Fresh Consideration - The CESTAT Ahmedabadās remand order mandates that customs classification of petroleum hydrocarbon solvents must strictly adhere to the Supreme Courtās guidelines in Gastrade International. When complete test data is unavailable, authorities are required to seek expert input and focus on essential parameters to apply the āmost akinā test properly. The case will be reconsidered by the Commissioner (Appeals) to ensure compliance with these legal standards, with the potential for a different outcome based on expert analysis.
CESTAT Delhi Clarifies Penalty Computation under Rule 8(3A) of Central Excise RulesāProhibits Full-Month Penalty for Partial-Month Delay - The CESTAT, New Delhiās decision reinforces that penalty under Rule 8(3A) of the Central Excise Rules, 2002 must correspond strictly to the actual period of default, calculated at 1% per month or part thereof. Authorities cannot impose penalty for the entire month in cases where the delay is only for a portion of the month. Adjudicating officers must be vigilant in calculating penalties strictly as per the letter of law and binding judicial precedents.