Customs Confiscation Order Quashed For Not Considering Importer’s Claim Of Customs Duty Exemption: Madras HC

The Madras High Court has set aside a customs order confiscating imported goods and imposing penalty on M/s Arasu Texports, holding that the order was non-speaking and passed without properly considering the importer’s claim of duty exemption under the Special Advance Authorisation scheme. The bench of Justice Abdul Quddhose remanded the matter to the customs authorities for fresh adjudication within a fixed timeline. The writ petition was filed by M/s Arasu Texports, a Tiruppur-based exporter, challenging an Order-in-Original dated 30 October 2024 passed by the Additional Commissioner of Customs, Chennai. Under the impugned order, the imported goods were confiscated and a penalty of ₹50,000 was imposed on the petitioner under the Customs Act The petitioner contended that the imports were made under a Special Advance Authorisation issued by the Assistant Director General of Foreign Trade (DGFT), Coimbatore, which entitled them to exemption from customs duty. It was argued that the customs authorities wrongly relied on DGFT Notification No. 77/2023 dated 16 March 2024 relating to Minimum Import Price (MIP), even though the concept of MIP had no application to imports made under the Advance Authorisation scheme. The petitioner further submitted that the Bills of Entry were filed on 23 September 2024, at a time when the said notification was not in force, rendering the reliance on the notification legally untenable It was also highlighted that due to the confiscation order, the petitioner was unable to secure release of the goods, carry out necessary improvements, and re-export them to a wholesale buyer in the United States. The petitioner pointed out that such re-export had to be completed within 18 months from the date of issuance of the advance authorisation, dated 9 September 2024, and that the delay caused by the impugned order was resulting in serious commercial prejudice. The customs department, in its counter affidavit, defended the impugned order and maintained that differential duty was payable based on the Minimum Import Price notification. The respondents also raised a preliminary objection on maintainability, arguing that the petitioner ought to have availed the statutory appellate remedy instead of approaching the High Court under Article 226 of the Constitution. After examining the records, Justice Abdul Quddhose noted that the primary contention of the petitioner—that imports made under a Special Advance Authorisation are exempt from customs duty—had not been considered at all in the Order-in-Original. The Court observed that the petitioner had submitted a detailed explanation to the adjudicating authority, supported by relevant customs notifications and provisions of the Foreign Trade Policy, particularly paragraph 4.04A, but the same found no discussion or reasoning in the impugned order. The Court held that an adjudicating authority is duty-bound to deal with the core submissions raised by an assessee, especially when such submissions, if accepted, could entirely negate the demand of duty and penalty. Failure to do so rendered the order a non-speaking one and violative of principles of natural justice. The Court further observed that if the petitioner’s claim regarding duty exemption under the Special Advance Authorisation was correct, continued detention of the goods would cause irreparable loss and hardship. The High Court quashed the Order and remanded the matter to the same adjudicating authority for fresh consideration on merits. The petitioner was directed to submit a detailed explanation within three days, and the customs authority was directed to grant one opportunity of personal hearing and pass a reasoned order within four weeks thereafter. The Court also directed that if the petitioner ultimately succeeds, the authorities shall consider the request for waiver of detention and demurrage charges in accordance with law. Case Details Case Title: M/s.Arasu Texports Versus The Addl.Commissioner Of Customs(gr.3) Case No.: W.P. No. 34096 of 2024 Date: 19-01-2026 Counsel For Petitioner: S.Baskaran Counsel For Respondent: J. Vasu Click Here To Read Order Read More: Madras High Court Directs Provisional Release of Detained Second-Hand Digital Printing Machines Despite BIS, DGFT Issues

Customs Confiscation Order Quashed For Not Considering Importer’s Claim Of Customs Duty Exemption: Madras HC

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