TGI INTERNATIONAL vs COMMISSIONER OF CUSTOMS-NHAVA SHEVA - III
- Court
- Customs, Excise and Service Tax Appellate Tribunal
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
MUMBAI
REGIONAL BENCH - COURT NO. I
Customs Appeal No. 85502 of 2025
(Arising out of Order-in-Appeal No. 1281 to 1385 (Gr. III)/2024 (JNCH)/Appeals dated
22.10.2024 passed by Commissioner of Customs (Appeals), Mumbai-II)
M/s TGI International .… Appellant
145 B, Mittal Court, Nariman Point,
Mumbai, Maharashtra – 400 021.
Versus
Commissioner of Customs, Nhava Sheva-III …. Respondent
JNPT, Custom House, Nhava Sheva,
Raigad, Maharashtra – 400 707.
WITH
C/85503/2025 C/85504/2025 C/85505/2025 C/85506/2025
C/85507/2025 C/85508/2025 C/85509/2025 C/85510/2025
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C/85515/2025 C/85516/2025 C/85517/2025 C/85518/2025
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C/85591/2025 C/85592/2025 C/85593/2025 C/85594/2025
C/85595/2025 C/85596/2025 C/85597/2025 C/85598/2025
C/85599/2025 C/85600/2025 C/85601/2025 C/85602/2025
C/85603/2025 C/85604/2025 C/85605/2025 C/85606/2025
(Arising out of Order-in-Appeal No. 1281 to 1385 (Gr. III)/2024 (JNCH)/Appeals dated
22.10.2024 passed by Commissioner of Customs (Appeals), Mumbai-II)
M/s TGI International .… Appellant
145 B, Mittal Court, Nariman Point,
Mumbai, Maharashtra – 400 021.
Versus
Commissioner of Customs, Nhava Sheva-III …. Respondent
JNPT, Custom House, Nhava Sheva,
Raigad, Maharashtra – 400 707.
Appearance:
Shri Stebin Mathew a/w Ms. Dishya Pandey, Advocates for the Appellant
Shri Mahesh Patil, Authorized Representative for the Respondent
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CORAM:
HON’BLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)
HON’BLE MR. M.M. PARTHIBAN, MEMBER (JUDICIAL)
FINAL ORDER NO. A/86240-86344/2026
Date of Hearing: 07.10.2026
Date of Decision: 15.10.2026
Per: S.K. MOHANTY
Brief facts of the case, leading to these appeals, are summarized
herein below:
1.2 The appellant is engaged in the business of trading of fabrics,
which it used to import from outside the country. During the disputed
period, the appellant had filed 105 nos. of Bills of Entry (B/Es) for
importation of ‘polyester viscose fabrics’, by claiming the benefit of
exemption from payment of Basic Customs Duty (BCD) in terms of
Notification No. 19/2015-Customs dated 01.04.2015. The said
notification grants exemption in respect of the materials imported into
India against valid ‘Duty Free Import Authorisation’ (DFIA) issued by the
Regional Authority of the Directorate General of Foreign Trade (DGFT).
Availability of the exemption from payment of BCD as per the said
notification was subjected to the conditions that the said Authorisation is
produced before the proper officer of Customs at the time of clearance
for debit; and that Standard Input Output Norms (SION) number,
description, quantity and Free On Board (FOB) value of resultant product
exported and the shipping bill number(s) and date(s) are endorsed on
the said authorisation.
1.3 Though these B/Es were self-assessed by the appellant, in
claiming the benefit of exemption from payment of whole of the BCD as
per notification dated 01.04.2015, but while computing the Integrated
Goods and Services Tax (IGST) at @5% on the transaction value, the
Indian Customs EDI system (ICES) had captured the BCD amount at the
tariff rate, which was added to arrive at the IGST payable on the imported
goods. Since the BCD amount as per the said notification dated
01.04.2015 was ‘zero’, the appellant was of the view that it had paid
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excess IGST. Since the ICES did not permit any amendment/changes to
be made in the B/Es, the appellant had paid the full IGST as computed
by the system and filed the appeals against the assessed B/Es at the
higher rate of IGST, before the Commissioner (Appeals) in terms of
Section 128 of the Act of 1962.
1.4 The appeals filed by the appellant were disposed of by the
learned Commissioner of Customs (Appeals), Mumbai-II vide the Order-
in-Appeal Nos. 1281 to 1385 (Gr. III)/2024(JNCH)/Appeals dated
22.10.2024 (for short, referred to, as “the impugned order”). In the said
order, the appeals of the appellant were rejected. In support of rejection
of the appeals, the impugned order has inter alia , held that any duty of
customs chargeable on the goods under Section 12 of the Act of 1962
has to be added to the transaction value for the purpose of computation
of IGST; and that as per the DFIA scheme read with notification dated
01.04.2015, the duty of customs leviable was debited by the department
in the Authorisation, instead of making payment in cash by the appellant.
1.5 Feeling aggrieved with the impugned order dated 22.10.2024,
the appellant has preferred these appeals before the Tribunal.
2. Learned Advocate appearing for the appellant submitted that the
computation of IGST leviable on the imported goods covered by the
disputed B/Es is not sustainable inasmuch as the BCD as per the
notification dated 01.04.2015 was not admittedly chargeable on the
imported goods and thus, adding the BCD amount notionally to the
assessable value for the purpose of computing IGST is contrary to the
statutory provisions. He further submitted that Section 3(8) of the
Customs Tariff Act, 1975 makes the position amply clear that while
arriving at the value of the imported goods for the purpose of computing
IGST, the duty of customs chargeable on the said goods is alone to be
applied and not the generally applicable duties/tariff rate for the purpose
of computation of IGST. Learned Advocate also submitted that the
finding recorded in the impugned order at paragraph 6.3 is factually
incorrect inasmuch as the BCD payable as per the DFIA license was ‘zero’
and as such, the appellant had never discharged any duty liability by
debiting such amount in the DFIA authorisation. To support his stand that
the issue arising out of the present dispute is no more res integra ,
learned Advocate has placed reliance on the orders passed by the Co-
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ordinate Benches of the Tribunal in the cases of Morarjee Brembana Ltd.
Vs. Commissioner of C. Ex., Nagpur – 2003 (154) E.L.T. 500 (Tri. –
Mumbai) and Parasrampuria International Vs. Commissioner of C.Ex.,
Indore – 2004 (173) E.L.T. 142 (Tri. – Del.).
3. On the other hand, learned AR appearing for the Revenue
reiterated the findings recorded in the impugned order and in support of
the findings recorded therein, has relied upon the order passed by the
Co-ordinate Bench of the Tribunal in the case of Poddar Pigments Ltd.
Vs. Commissioner of Central Excise & CGST, Jaipur – (2024) 25 Centax
194 (Tri. Del.).
4. Heard both sides and carefully perused the case records.
5. The provisions for levy of IGST on imported goods is contained
in Section 3 of the Customs Tariff Act, 1975. Sub-section (7) of Section
3 ibid provides the liability for payment of IGST at the specified rate, as
is leviable under Section 5 of IGST Act, 2017. The value for the purpose
of levy of IGST has been considered in the said sub-section, as the value
of imported goods to be determined as per the provisions contained in
sub-section (8) of Section 3 ibid . The said sub-section (8) provides that
the aggregate of (i) value of imported goods determined under sub-
section (1) of Section 14 ibid ; and (ii) any duty of customs ‘chargeable’
on such goods under Section 12 ibid ; shall be considered for arriving at
the value for computation of the IGST amount. The said provision under
the Customs statue for the purpose and manner of levy and collection of
IGST has also been considered in Section 5 of the IGST Act, 2017.
6. The imported goods in question, though attract BCD as per the
tariff rate of 20%, but the same are exempted from payment of duty in
terms of notification dated 01.04.2015, when imported against a valid
DFIA issued by the competent authority under the Foreign Trade Policy.
In the case in hand, the fact is not under dispute that the appellant had
not complied with the conditions itemized in the said notification dated
01.04.2015. We find that DFIA license issued by the competent authority
in this case, had only captured the CIF value and quantity of ‘Dyed
Polyester Fabrics’, which was permitted for import under the said license.
Such aspect has also been considered in Paragraphs 4.25 and 4.27 in the
Foreign Trade Policy. Debit of the duty amount in the said DFIA license
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is not the condition precedent as per the FTP read with the notification
dated 01.04.2015. On perusal of the B/Es available in the case file, we
find that the system had considered for addition of the notional BCD
amount in the assessable value, and the actual amount claimed by the
appellant as per the said notification was not considered by the ICES.
Further, it is not the case of Revenue that the appellant had debited the
duty amount in the license, which would be evident from the B/Es,
wherein against the column ‘duty debit’, it has been specifically
mentioned as ‘zero’. Rather, as per the requirement of the DFIA license,
the appellant had only disclosed the value and quantity of the imported
goods. Therefore, we are not in agreement with the findings recorded by
the learned Commissioner (Appeals) in the impugned order that the duty
of customs leviable is debited by the appellant in the authorisation,
instead of making payment of duty amount in cash.
7. The charging provision for levy of duties of customs on the imported
goods is contained in Section 12 of the Act of 1962. It has been provided
that the duties of customs shall be leviable at such rates as may be
specified under the Customs Tariff Act, 1975. Powers to grant exemption
from payment of such duty as per the Tariff Act of 1975 has been
provided to the Central Government under Section 25 of the Act of 1962.
Under the said statutory provisions, the Central Government is
empowered to issue any notification in the public interest, by exempting
generally, either absolutely or subject to such conditions, with regard to
the goods of any specified description, from the whole or any part of
customs duty leviable thereon. On reading of the above said statutory
provisions together, it would transpire that even though the duties of
customs are leviable as per the prescribed tariff rate, but the same can
be exempted by the Central Government by deriving the powers under
Section 25 of the Act of 1962. In the present case, the notification dated
01.04.2015 was issued by the Central Government in the Gazette of
India, by exempting the goods imported under DFIA from payment of
duties of customs leviable thereon at the rate prescribed in the Customs
Tariff Act, 1975. The lower authority in the impugned order has not
specifically objected to the fact that the appellant did not comply to the
conditions mentioned in the said notification dated 01.04.2015. Since the
appellant had complied with the requirements contained in the FTP read
with the notification dated 01.04.2015, the exemption claimed towards
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payment of BCD is in consonance with such statutory provisions. In view
of the fact that the BCD amount claimed as ‘zero’ in the B/Es filed for
assessment, such rate of duty claimed should alone be considered for
calculation of the IGST amount payable into the Government exchequer.
Therefore, we are not in agreement with the findings recorded in the
impugned order that ignoring the benefit of notification dated
01.04.2015, the tariff rate should be considered for computation of the
IGST amount.
8.1 We also find support from the orders (supra) referred to by the
learned Advocate for the appellant that in the presence of a notification
in granting exemption from payment of BCD, the tariff rate cannot be
considered for determining the amount of duties of customs leviable
under Section 3 of the Customs Tariff Act, 1975 including IGST. The
relevant paragraph in the case of Morarjee Brembana Ltd. (supra) is
quoted below:
“17. Effective rate of duty to be added and not tariff rate :- The next
point of dispute is that in computing the countervailing duty, effective
rate of duty should be added and not the tariff rate. In the present case,
the appellants are entitled to the benefit of Notification No. 2/95-C.E.
which provides for payment of 50% of each of the duties of Customs thus
if the tariff rate is 40%, the effective rate will be 20% i.e. 50% of 40%.
On the assumption that the assessable value is Rs. 100/-, the effective
rate of basic customs duty would be Rs. 20%. In the show cause notice
for the purpose of calculation of CVD, the assessable value was
determined as 100 + 20% and no corrigendum would subsequently
issued so as to amend the method of determination of assessable value
so as to increase the demand amount. However in the impugned order
the adjudicating authority has observed that the assessable value for the
purpose of countervailing duty should be computed by addition of the
basic customs duty without extending the benefit of the notification. Thus
as per the Commissioner, the assessable value for the purpose of levy of
CVD is to be determined as Rs. 100/- + Rs. 40/- for the month of
February, 2000. Similarly for calculating special additional duty the full
rate of CVD has been computed without giving effect to Notification No.
2/95. Sub-section (2) of the Section 3 lays down the manner of
determination of value for the purpose of computing CVD leviable under
Section 3 the same reads as follows :-
For the purpose of calculating under this section, the additional duty on any
imported article, where such duty is leviable at any percentage of its value,
the value of the imported article shall, notwithstanding anything contained
in Section 14 of the Customs Act, 1962 (52 of 1962) be the aggregate of -
(i) The value of the imported article determined under sub-section (1)
of the said Section 14 or the tariff value of such article fixed under sub-
section (2) of that section, as the case may be; and
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(ii) Any duty of customs chargeable on that article under Section 12 of
the Customs Act, 1962 (52 of 1962), and any sum chargeable on that article
under any law for the time being in force as an addition to and in the same
manner as, a duty of customs, but not including the duty referred to in sub-
section.
It will be evident from the above that only the duties that are chargeable
on that article under Section 12 of the Customs Act are required to be
added to the assessable value determined under Section 14 of the
Customs Act. In the present case the appellants are required to pay 50%
of the duty of the basic custom duty under Notification No. 2/95.
Therefore only 50% of the basic custom duty is required to be added to
the assessable value under Section 14 for the purpose of qualification of
CVD. Therefore the method of computation by assessable value for the
purpose of computing CVD adopted by Commissioner of Central Excise
for February, 2000 is not correct. Only the effective duty i.e. the duty
applicable after giving effect to the notification should only be added to
the assessable value under Section 14 for determining the assessable
value for computing the CVD.”
8.2 Further, an identical issue involving the exemption benefit
provided under Notification No.82/92-C.E. dated 27.08.1992, granting
exemption in the case of clearance of goods at ‘Nil’ rate of BCD by an
EOU, was also considered by the Tribunal in the case of Parasrampuria
International (supra), holding as under:
“4. ……. Once the basic Customs duty is exempted in respect of levying
and collecting of Additional Customs duty, the assessable value will be
value of the goods plus Basic Customs duty (which is nil in the present
case). The contention of the Revenue is that the Basic Customs duty
which is chargeable as prescribed in the Tariff has to be added is not
sustainable as sub-section (2) of Section 3 of the Customs Tariff Act
provides for addition of “any duty of Customs chargeable on that article.”
As in this case the duty of Customs chargeable is nil, the question of
adding any Basic Customs duty in assessable value does not arise….”
8.3 The issue involved in the order passed by the Co-ordinate Bench
of the Tribunal in the case of Poddar Pigments Ltd. (supra), cited by the
learned AR for revenue, is distinguishable from the facts of the present
case, inasmuch as interest liability on delayed payment of IGST was the
subject matter of dispute in the said referred case; whereas, in the
present case, the issue for consideration by this Bench is confined to
addition of correct applicable BCD for calculation of the IGST amount.
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9. In view of the above discussions and analysis, we do not find
any merits in the impugned order, insofar as it has rejected the appeals
filed by the appellant. Therefore, the same is set aside and the appeals
are allowed in favour of the appellant.
(Order pronounced in the Open court on 15.10.2026 )
(S.K. Mohanty)
Member (Judicial)
(M.M. Parthiban)
Member (Technical)
Sm