Custom, Excise & Service Tax Tribunal
R.K.Jewels vs Principal Commissioner Of Customs (Acc ... on 7 January, 2026
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. I
CUSTOMS APPEAL NO. 51067 OF 2025
(Arising out of Order-in-Original No. 23/2024-25/D.R./Pr. Commr/ACC Import dated
23.12.2024 passed by the Principal Commissioner of Customs ACC (Import), New Customs
House, New Delhi)
M/s. R.K. Jewels, .....Appellant
Opp. Bata Boot House,
Railway Road, Rohtak - 124 001
VERSUS
Principal Commissioner of .....Respondent
Customs ACC (Import)
New Customs House,
Near IGI Airport,
New Delhi - 110 037
APPEARANCE:
Shri Kishore Kunal, Ms. Runjhun Pare and Shri Govind Gupta, Advocates for the
Appellant
Shri Ranjan Prakash and Shri Nikhil Mohan Goyal, Authorized Representatives for
the Department
CORAM:
HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT
HON'BLE MR. P.V. SUBBA RAO, MEMBER (TECHNICAL)
DATE OF HEARING: 30.07.2025
DATE OF DECISION: 07.01.2026
FINAL ORDER NO. 50021/2026
JUSTICE DILIP GUPTA:
This appeal seeks to assail the order dated 23.12.2024 passed by the
Principal Commissioner of Customs ACC (Import), New Customs House, New
Delhi 1 that confirms the customs duty on M/s. R.K. Jewels 2 in respect of
goods imported with interest under section 28AA of the Customs Act, 1962 3
and penalty under section 112(a)(ii) of the Customs Act. Redemption fine
1. the Principal Commissioner
2. the appellant
3. the Customs Act
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C/51067/2025
has also been imposed in lieu of confiscation under section 125 of the
Customs Act.
2. The issue that arises for consideration in this appeal is whether the
appellant is justified in availing exemption of customs duty under Notification
No. 96/2008-Cus dated 13.08.2008 4 on import of gold dore bars from
Tanzania in terms of the Import License dated 16.09.2021 issued by the
Directorate General of Foreign Trade 5 permitting imports subject to
Notification No. 12/2012-Cus dated 17.03.2012 6.
3. In the Doha Ministerial Order of the World Trade Conference held in
2001, the member countries, including India, committed to consider
providing duty free, quota free market access for Least Developed Countries
products and to consider additional measures to improve market excess to
such countries. In the Hong Kong Ministerial Declaration held in 2005, the
World Trade Organisation countries agreed to provide duty free and quota
free market access on a lasting basis on all products originating from Least
Developed Countries. The Government of India, in 2008, extended duty free
tariff preference scheme for the Least Developed Countries.
4. Accordingly, the 2008 Exemption Notification was issued on
13.08.2008 in exercise of the powers conferred by section 25(1) of the
Customs Act. It exempted goods falling under the First Schedule to the
Customs Tariff Act, 1975, other than those specified in Appendix I and
Appendix II, from the whole of duty of customs as specified in the First
Schedule to the Customs Tariff Act and from the whole of Agriculture
Infrastructure and Development Cess 7 leviable under section 124 of the
4. the 2008 Exemption Notification
5. DGFT
6. the 2012 Notification
7. AIDC
3
C/51067/2025
Finance Act, 2021 8 when imported to India from a country listed in the
Schedule to the Notification.
5. On 17.03.2012, the 2012 Notification was issued extending benefits of
concessional rate of basic customs duty as well as additional duty to certain
goods, including gold dore bars at Serial No. 318 having gold content not
exceeding 95% subject to Condition No's 5 and 34. Condition No's 5 and 34
are reproduced below:
Condition Conditions
No.
***** *****
5. If the importer, is registered with the Directorate of Vanaspati, Vegetable
Oils and Fats in the Department of Food and Public Distribution in the
Government of India.
***** *****
34. If,-
(a) the goods are directly shipped from the country in which they were
produced and each bar has a weight of 5 kg. or above;
(b) the goods are imported in accordance with the packing list issued by the
mining company by whom they were produced;
(c) the importer produces before the Deputy Commissioner of Customs or
the Assistant Commissioner of Customs, as the case may be, an assay
certificate issued by the mining company or the laboratory attached to it,
giving detailed precious metal content in the dore bar;
(d) the gold dore bars are imported by the actual user for the purpose of
refining and manufacture of standard gold bars of purity 99.5% and
above; and
(e) the silver dore bars are imported by the actual user for the purpose of
refining and manufacture of silver bars of purity 99.9% and above.
6. Customs Notification No. 50/2017 9 was issued on 30.06.2017
superseding the 2012 Notification. This Notification extended benefit of
concessional rate of basic customs duty to gold dore bars under Serial No.
354 subject to two Conditions at Serial No's. 9 and 40 which are identical to
Condition No's 5 and 34 of the 2012 Notification.
7. On 16.09.2021, the DGFT issued Import License to the appellant
permitting the appellant to import gold dore bars with purity upto 95%. The
Conditions contained in the License are as follows:
8. the 2021 Finance Act
9. the 2017 Notification
4
C/51067/2025
2. CONDITION SHEET
1 The licence is issued with Actual user conditions
besides other usual conditions of Import
Authorization
2 The import is subject to Custom Notification no.
12/2012 dated 17.03.2012 and RBI notifications
issued from time to time
3 The license is issued to the applicant as per the
minutes of the EFC meeting No. 04-AM22 dated
27.08.2021 uploaded on the DGFT website
8. The appellant filed Bills of Entry dated 12.09.2023 and 15.09.2023 for
import of gold dore bars from Tanzania and claimed exemption of duty under
the 2008 Exemption Notification. The appellant also filed the country of
origin certificate. Investigation was carried out and it was revealed that the
appellant had wrongly claimed exemption under the 2008 Exemption
Notification since the Condition of the Import License issued by the DGFT
specifically mentioned that the goods shall be cleared under the 2012
Notification later superseded by the 2017 Notification.
9. The appellant received a Pre-Notice Consultation Letter dated
09.04.2024 alleging violation of the Import License Conditions. The appellant
submitted a reply to this notice on 24.04.2024.
10. However, a show cause notice dated 24.04.2024 was issued to the
appellant alleging violation of the Import License Condition and raising a
demand under section 28(1) of the Customs Act. The show cause notice
alleged that gold dore bars are restricted items for import and import is
allowed only against a valid License issued by the DGFT. Thus, all the
Conditions mentioned in the License have to be fulfilled by the importer. The
show cause notice, therefore, alleged that the appellant had filed Bills of
Entry wrongly claiming exemption from whole of the customs duties and
AIDC under the 2008 Exemption Notification, though the Condition of the
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C/51067/2025
Import License issued by DGFT specifically mentioned that goods shall be
cleared subject to the 2012 Notification. Non-payment of duty as prescribed
in the said 2012 Notification, which is mentioned as a Condition for import in
the License, therefore, makes the goods ineligible to be imported against the
said License. Thus, the importer appeared to have wrongly used the 2008
Exemption Notification for the import of gold dore bars as the importer can
only claim one Exemption Notification at a time and availing 2012
Notification was a pre-condition in the License issued by the DGFT. The show
cause notice also alleged that violation of the License Condition rendered the
good liable to confiscation and the import of gold dore bars by claiming the
benefit of the 2008 Exemption Notification resulted in evasion of duty.
11. The appellant filed a reply dated 30.08.2024 and denied the
allegations made in the show cause notice and submitted that it had fulfilled
the Condition of the 2008 Exemption Notification.
12. The Principal Commissioner, however, confirmed the demand of duty
and ordered it to be recovered with interest and penalty under provisions of
section 28(1) of the Customs Act. The relevant portions of the order passed
by the Principal Commissioner are reproduced below:
"22. I find that the conditions of the Import license
shall be construed to be complied with by the importer,
if and only if, the importer- (i) follows the Notification
completely including the specified conditions of the said
Customs Notification as mentioned, in addition to other
limiting conditions mentioned on the face of the Import
License. Failure to meet any of the said conditions will
make the importer ineligible to import under the said
licenses, as the goods are in 'Restricted' category of
imports, and (ii) pays Customs Duties as mentioned in
the said Notification as mentioned in the license.
23. I find that the importer has filed bill of entry
claiming wrong exemption from whole of the
Customs Duties and Agriculture Infrastructure
6
C/51067/2025
and Development Cess (AIDC) under Notification
No. 96/2008-Cus dt 13.08.2008, though the
conditions of their Import license issued by DGFT
specifically mentioned that goods shall be cleared
under Notification No. 12/2012-Cus dated
17.03.2012 (later superseded by the Notification
No 50/2017 - Cus dated 30.06.2017). Non-
payment of duty as prescribed in the said notification
which is mentioned as a condition for import in the
license makes the goods ineligible to be imported
against the said license. Thus, the importer has wrongly
used the notification no. 96/2008-Cus dt 13.08.2008
for the import of impugned goods as the importer can
only claim exemption notification at a time in respect of
a component of Customs Duty in consonance with the
license and availing notification No. 12/2012-Cus dated
17.03.2012 (later superseded by the notification no
50/2017 - Cus dated 30.06.2017) was a precondition
as per license issued by DGFT.
24. ***** As already observed, the import license in
the present case explicitly stipulates that it is subject to
the provisions of Notification No. 12/2012-Cus, with a
specific rider. Therefore, I am of the view that the
Noticee has to fulfill all the conditions of
Notification No. 12/2012-Cus including the tax
payment at the rate specified in the Notification
and hence is not entitled to avail the benefit of
tax payment under another Notification, namely
No. 96/2008-Cus (LDC exemption notification).
The Noticee's claim to such benefits is not permissible
under the terms of the import license, as then it would
lead to situation where finally applied tax rate is
different from the one specified under Notification No.
12/2012-Cus, as amended.
*****
25. In view of discussions held above, I hold that Noticee has wrongly availed notification No. Notification No. 96/2008-Cus dt 13.08.2008, as the import of Gold Dore Bars were under restricted category and the conditions of their Import license issued by DGFT specifically mentioned that goods shall be cleared under Notification No. 12/2012-Cus dated 17.03.2012 (later 7 C/51067/2025 superseded by the notification no 50/2017-Cus dated 30.06.2017). Import of goods by claiming benefit of Notification No. 96/2008-Cus dated 13.08.2008 has resulted in sort levy/evasion of duty amounting to Rs. 50,92,209/- as per Annexure-A to the SCN. Thus, the Noticee is liable to pay impugned short payment of Customs Duties under Section 28(1) of the Customs Act, 1962.
26. ***** In this case since import of Gold Dore Bars were under restricted category, the Notification No. 96/2008-Cus is of no use until there exists an unconditional Import License or an import license allowing the clearance subject to the notification 96/2008, taking care of importability aspect. However, the Import license issued by DGFT issued in the instant case specifically mentioned that goods shall be imported and cleared following the conditions and procedure under Notification No. 12/2012-Cus dated 17.03.2012. Thus, the Notfn. No. 96/2008-Cus can't be availed independently as it falls short on the importability aspect and the Noticee has to apply only mandatorily prescribed Notfn. No. 50/2017-Cus (superseded) at the time of import of "Gold Dore Bars" even if the goods imported from these least developed countries.
*****
28. Further, I find that the import has short paid duty on the impugned goods imported by them by taking recourse to wrong availment of Notification No. 96/2008-Cus dated 13.08.2008 and violating conditions laid down under license, resulting into short payment of the legitimate duty payable in respect of the subject goods. In view of the above, I hold that this violation of the license condition has rendered the goods liable for confiscation under section 111(d) and 111(o) of the Customs Act, 1962.
*****
32. I find that in the regime of self-assessment it is the assessee himself who has to ensure correct computation of duty of imported goods and as per 8 C/51067/2025 Section 17 of the Act, an importer is himself required to determine duty liability on the goods imported by him and discharge the same in the authorised manner. The importer is a regular importer and hence the plea that he did not know the provisions also does not come to his rescue. The importer by the act of misdeclaration of value has rendered themselves liable to penalty under section 114A of the Act. I further, note that Section 114A & Section 112 of Custom Act, 1962 are mutually exclusive, therefore, no penalty is warranted under section 114A of Custom Act, 1962 on the Noticee."
(emphasis supplied)
13. Shri Kishore Kunal, learned counsel for the appellant assisted by Ms. Runjhun Pare and Shri Govind Gupta made the following submissions:
(i) The demand has been raised on the ground of violation of Import License Conditions issued by the DGFT. However, the said License is valid and subsisting as on date. In the absence of any allegation of violation by the DGFT, the demand raised in without jurisdiction. In support of this contention, reliance has been placed on the judgment of the Supreme Court in Titan Medical Systems Pvt. Ltd. vs. Collector of Customs, New Delhi 10;
(ii) A bare perusal of the Import License Conditions discloses that there is no Condition requiring the Licensee to mandatorily pay customs duty. Therefore, the finding of the impugned order that the License Conditions are fulfilled "if and only if" customs duty in terms of the 2017 Notification dated is paid is erroneous;
(iii) There is no Condition that the importer is required to opt for duty payment under the 2012 Notification. The interpretation adopted in the impugned order by reading such a Condition
10. 2003 (151) E.L.T. 254 (S.C.) 9 C/51067/2025 would amount to adding a Condition in the Notification, which is not permissible. In this connection, reliance has been placed upon the following judgments of the Supreme Court:
(a) Union of India vs. Inter Continental (India) 11;
(b) Tata Teleservices Ltd. vs. Commissioner of Customs 12;
(c) Hind Plastics vs. Collector of Customs, Bombay 13;
(iv) Once the appellant fulfilled the eligibility of Least Developed Countries 2008 Exemption Notification, denying benefit to the appellant by reading the Conditions of the Import License to exclude the availiability of the 2008 Exemption Notification to gold dore bars will render the exemption redundant;
(v) License has to be interpreted in a manner consistent with the Foreign Trade Policy. DGFT cannot impose terms in the License that go beyond or are conflict with the scheme of the Foreign Trade Policy. The interpretation adopted in the impugned order is inconsistent with the governing policy framework;
(vi) There is no express bar in the law preventing simultaneous availment of benefits under two Exemption Notifications. Denial of such benefit is contrary to the settled law. In the absence of any specific Conditions restricting applicability of another exemption, simultaneous benefits available cannot be denied;
(vii) Denying the benefit of the 2008 Exemption Notification violates article 51(c) of the Constitution and International obligations of India, including under GATT 1994 and the DFTP Scheme. Tariff and non-tariff barriers inconsistent with international treaties cannot be imposed;
11. 2008 (226) E.L.T. 16 (S.C.)
12. 2006 (194) E.L.T. 11 (S.C.)
13. 1994 (71) E.L.T. 325 (S.C.) 10 C/51067/2025
(viii) Interest under section 28AA of the Customs Act is not liable to be paid; and
(ix) Penalty under section 112 is liable to be set aside.
14. Shri Ranjan Prakash and Shri Nikhil Mohan Goyal learned authorized representatives appearing for the department, however, supported the impugned order and made the following submissions:
(i) The DGFT issued the Import License to the appellant for importing gold dore bars with explicit Condition that imports must comply with the 2012 Notification which was superseded by the 2017 Notification. This Condition is non-negotiable, as gold dore bars are classified as "restricted" under the Foreign Trade Policy 2015-2020 and 2023-2028, requiring strict adherence to License terms;
(ii) The claim of the appellant for NIL duty rate under the 2008 Exemption Notification which provides exemptions for goods from Least Developed Countries like Tanzania, violates the License Condition mandating compliance with the 2012 Notification and its successor. This contravention rendered the import ineligible under the License, as the License explicitly restricted the importer to the specified Notification;
(iii) The Delhi High Court in M/s Tasha Gold Pvt. Ltd. vs. Union of India & ors 14 unequivocally held that an importer is "mandatorily required" to comply with the Conditions of the Notification specified in the Import License. The Delhi High Court rejected the argument that reliance could be placed on the 2008 Exemption Notification for imports from Least Developed Countries, emphasizing that the reference to the 2012 Notification overrides any other exemption;
14. W.P. (C) 1137/2023 decided on 06.07.2023 11 C/51067/2025
(iv) By claiming exemption under 2008 Exemption Notification, the appellant bypassed the applicable duty under the 2017 Notification, resulting in a short levy. This recovery could be made under section 28(1) of the Customs Act;
(v) Non-compliance with the License Conditions rendered the goods liable to confiscation under section 111(d) and 111(o) of the Customs Act;
(vi) The act of claiming an incorrect exemption rendered the goods liable to confiscation, justifying penalty under section 112(a) of the Customs Act; and
(vii) The short levy of duty would result in mandatory interest under section 28AA of the Customs Act.
15. The submissions advanced by the learned counsel for the appellant and the learned authorized representatives appearing for the department have been considered.
16. The issue that arises for consideration is whether the appellant could claim the benefit of the 2008 Exemption Notification for import of gold dore bars when the Import License issued to the appellant mentioned that the import of gold dore bars is subject to the 2012 Notification.
17. It needs to be noted that the appellant was required to pay concessional basic customs duty under the 2012 Notification as superseded by the 2017 Notification, but under the 2008 Exemption Notification the appellant was required to pay NIL basic customs duty and AIDC.
18. Gold dore bards are restricted items under the Foreign Trade Policy and can be imported under a License issued by the DGFT. The appellant was issued a License by the DGFT on 16.09.2021 permitting the appellant to import gold dore bars. The License contained a Condition that the import of gold dore bars is subject to the 2012 Notification. 12
C/51067/2025
19. The impugned order passed by the Principal Commissioner holds that it was obligatory on the part of the appellant to have paid customs duty contemplated under the 2012 Notification and it was not open to the appellant to pay NIL customs duty by taking resort to the 2008 Exemption Notification. It is for this reason that the customs duty in terms of the 2012 Notification, as superseded by the 2017 Notification, has been demanded from the appellant and penalty has been imposed under section 112(a)(i) of the Customs Act as the gold dore bars were found to be liable to confiscation.
20. The issue, therefore, that arises for consideration is whether the appellant could have taken benefit of the 2008 Exemption Notification when the Condition of the License issued to the appellant provided that the import of gold dore bars is subject to the 2012 Notification.
21. A perusal of the said Condition shows that the import has been made subject to the 2012 Notification. It does not provide that the benefit of any other Notification, which otherwise would be available to the appellant, cannot be availed of by the appellant. The appellant may have had to discharge customs duty provided under the 2012 Notification, but if there is a Notification which exempts payment of customs duty than there is no bar in the appellant availing the benefit of the said Notification. The finding recorded by the Principal Commissioner that the Conditions of License can be fulfilled "if and only if" customs duty is paid in terms of the 2012 Notification is, therefore, not borne out from the Conditions of License.
22. It is not the case of the department nor is there any finding recorded by the Principal Commissioner that the appellant was not entitled to take the benefit of the 2008 Exemption Notification since the only reason assigned by the Principal Commissioner is that the benefit of 2008 Exemption Notification 13 C/51067/2025 could not have been taken by the appellant as the import was made subject to the 2012 Notification.
23. The Condition of License does not also bar the appellant from simultaneously availing the benefits of two Exemption Notifications. In JSW Energy Ltd. vs. Union of India 15, the Bombay High Court held:
"Further, we find that the Customs, Excise and Service Tax Tribunal has consistently taken a stand that in the absence of any bar in the notification itself, it is open to an assessee to take benefit of more than one notification. This is so held in the matters of Hindustan Lever Ltd. v. Collector
- 1989 (40) E.L.T. 388 and Commissioner of Central Excise v. Premier Mashurm Farms - 2005 (190) E.L.T.
511. Similarly as submitted by the petitioner the Apex Court in the matter of Super Cassettes Industries Ltd. - 2006 (202) E.L.T. 739 (S.C.) benefit of more than one exemption notification was extended."
(emphasis supplied)
24. Of course, in the absence of any other Notification granting benefit to the appellant on the import of gold dore bars, the appellant would have had to pay duty under the 2012 Notification.
25. Learned authorized representative appearing for the department has placed reliance upon the judgment of the Delhi High Court in Tasha Gold. In the said case, it was found as a fact that the gold dore bars that had been imported did not meet the weight specification as required under the 2012 Notification as the gold dore bars had gold content of more than 95%. It is in this context that the Delhi High Court observed that the benefit of the 2008 Exemption Notification could not have been availed of since the description of goods in the 2012 Notification was gold dore bar having gold content not exceeding 95%.
15. 2015 (321) E.L.T. 664 (Bom.) 14 C/51067/2025
26. It is, therefore, not possible to accept the contention advanced by the learned authorized representative appearing for the department that since gold dore bars were restricted items under the Foreign Trade Policy and could be imported only under a License issued by the DGFT, the appellant had necessarily to pay customs duty under the 2012 Notification.
27. Learned counsel for the appellant also submitted that that as the Import License issued to the appellant by the DGFT is valid and subsisting and the DGFT had not raised any allegation of violation of the Condition of the Import License, the customs authority cannot exercise power under section 28(1) of the Customs Act to determine violation of Conditions of License. According to the learned counsel for the appellant, it is the DGFT which has been conferred the power of the Central Government under section 3 of the Foreign Trade (Development and Regulation) Act, 1992 16 to make provisions for the development and regulation of Foreign Trade by facilitating imports and exports. In support of this contention, learned counsel has placed reliance upon certain decisions.
28. In M/s. Designco and others vs. Union of India 17, the Delhi High Court examined the provisions of the FTDR Act alongside the Foreign Trade Policy as well as the Foreign Trade (Regulation) Rules, 1993 and made the following observations:
"104. As we read the various provisions enshrined in the FTDR Act alongside the FTP as well as the FTDR Rules, we find ourselves unable to recognize a right that may be said to inhere in the customs authorities to doubt the issuance of an instrument. We, in the preceding parts of this decision, had an occasion to notice the relevant provisions contained in the FTDR Act and which anoint the DGFT as the central authority for the purposes of administering the provisions of that
16. the FTDR Act
17. W.P. (C) 14477/2022 decided on 22.11.2024 15 C/51067/2025 statute and regulating the subject of import and exports. The FTP 2015-20 in unequivocal terms provides in para 2.57 that it would be the decision of the DGFT on all matters pertaining to interpretation of policy, provisions in the Handbook of Procedures, Appendices, and more importantly, classification of any item for import/export in the ITC (HS) which would be final and binding. The FTP undoubtedly stands imbued with statutory authority by virtue of Section 5 of the FTDR Act.
105. Of equal importance are the FTDR Rules and which too incorporate provisions conferring an authority on the Director General or the licensing authority to suspend or cancel a license, certificate, scrip or any instrument bestowing financial or fiscal benefits. Once it is held that the MEIS would clearly qualify as an instrument bestowing financial or fiscal benefits, the power to cancel or suspend would be liable to be recognized as being exercisable by the Director General on the licensing authority alone. It would thus be wholly impermissible for the customs authorities to either ignore the MEIS certificate or deprive a holder thereof of benefits that could be claimed under that scheme absent any adjudication or declaration of invalidity being rendered by the DGFT in exercise of powers conferred by either Rules 8, 9 or 10 of the FTDR Rules. The customs authorities cannot be recognised to have the power or the authority to either question or go behind an instrument issued under the FTDR in law.
106. Taking any other view would result in us recognizing a parallel or a contemporaneous power inhering in two separate sets of authorities with respect to the same subject. That clearly is not the position which emerges from a reading of Section 28AAA. Quite apart from the deleterious effect which may ensue if such a position were countenanced, in our considered opinion, if the validity of an instrument issued under the FTDR Act were to be doubted on the basis of it having been obtained by collusion, wilful misstatement or concealment of facts, any action under Section 28AAA would have to be preceded by the 16 C/51067/2025 competent authority under the FTDR Act having come to the conclusion that the instrument had come to be incorrectly issued or illegally obtained. The procedure for recovery of duties and interest would have to be preceded by the competent authority under the FTDR Act having so found and the power to recover duty being liable to be exercised only thereafter.
107. Section 28AAA would thus have to be interpreted as contemplating a prior determination on the issue of collusion, wilful misstatement or suppression of facts tainting an instrument issued under the FTDR Act before action relating to recovery of duty could be possibly initiated. A harmonious interpretation of the two statutes, namely, the Customs and the FTDR Acts leads us to the inescapable conclusion that the law neither envisages nor sanctions a duality of authority inhering in a separate set of officers and agents simultaneously evaluating and adjudging the validity of an instrument which owes its origin to the FTDR Act alone. It is these factors, as well as the role assigned to the DGFT which perhaps weighed upon courts to acknowledge its position of primacy when it come to the interpretation of policy measures referable to the FTDR Act as well as issues of classification emanating therefrom."
(emphasis supplied)
29. The Delhi High Court referred to the views earlier expressed by the Delhi High court in Simplex Infrastructure Ltd. vs. Union of India and others 18 and noticed that the views expressed by the Gujarat High Court in Alstom India Ltd. vs. Union of India and another (No. 2) 19 had been approved. The Delhi High Court also referred to the judgment of the Allahabad High Court in PTC Industries Ltd. vs. Union of India and others 20 and the judgments of the Bombay High Court in Pradip Polyfils
18. 2014 SCC Online Del 7747
19. 2014 SCC Online Guj 15952
20. 2009 SCC Online All 2138 17 C/51067/2025 Pvt. Ltd. vs. Union of India 21, Autolite (India) Ltd. vs. Union of India 22 and Commissioner of Customs (E.P.) vs. Jupiter Exports & Ors. 23. Ultimately, the Delhi High Court held:
"108. ***** We are thus of the firm opinion that it would be impermissible for the customs authorities to either doubt the validity of an instrument issued under the FTDR Act or go behind benefits availed pursuant thereto absent any adjudication having been undertaken by the DGFT. An action for recovery of benefits claimed and availed would have to necessarily be preceded by the competent authority under the FTDR Act having found that the certificate or scrip had been illegally obtained. We have already held that the reference to a proper officer in Section 28AAA is for the limited purpose of ensuring that a certificate wrongly obtained under the Customs Act could also be evaluated on parameters specified in that provision. However, the said stipulation cannot be construed as conferring authority on the proper officer to question the validity of a certificate or scrip referable to the FTDR Act."
(emphasis supplied)
30. It needs to be noted that in Titan Medical, which was considered by the Delhi High Court in Designco, the Supreme Court observed as follows:
"13. As regards the contention that the appellants were not entitled to the benefit of the exemption notification as they had misrepresented to the licensing authority, it was fairly admitted that there was no requirement for issuance of a licence that an applicant set out the quantity or value of the indigenous components which would be used in the manufacture. Undoubtedly, while applying for a licence, the appellants set out the components they would use and their value. However, the value was only an estimate. It is not the respondents' case that the components were not used.
21. (2004) 173 E.L.T. 3 (Bom)
22. 2003 SCC Online Bom 1313
23. 2007 SCC Online Bom 467 18 C/51067/2025 The only case is that the value which had been indicated in the application was very large whereas what was actually spent was a paltry amount. To be, noted that the licensing authority has taken no steps to cancel the licence. The licensing authority has not claimed that there was any misrepresentation. Once an advance licence was issued and not questioned by the licensing authority, the Customs Authorities cannot refuse exemption on an allegation that there was misrepresentation. If there was any misrepresentation, it was for the licensing authority to take steps in that behalf."
(emphasis supplied)
31. Thus, it is only if the Import License issued by the DGFT was cancelled by the DGFT that the customs could have decided to recover the duty under section 28(1) of the Customs Act.
32. In this view of the matter, the demand of customs duty from the appellant cannot be sustained nor can the imposition of penalty under section 112(a)(ii) of the Customs Act or imposition of redemption fine in lieu of confiscation be maintained. The impugned order is, accordingly, set aside and the appeal is allowed.
(Order Pronounced on 07.01.2026) (JUSTICE DILIP GUPTA) PRESIDENT (P.V. SUBBA RAO) MEMBER (TECHNICAL) Shreya