The 1962 Customs Act’s Section 130 Punjab High Court dismissed the appeal for lack of merit.

TITLE: Commissioner of Customs, Ludhiana v M/s Jindal Drugs Ltd.

Decided On-: 24.05.2023

CUSAP No.5 of 2019 (O&M)

CORAM: Hon’ble Justice Ms. Ritu Bahri and Mrs. Manisha Batra  

INTRODUCTION –  The current appeal was filed in accordance with Section 130 of the Customs Act of 1962 in response to the final order made by the Customs, Excise & Service Tax Appellate Tribunal on March 16, 2018


The facts of the case are that the respondent-company manufactures excisable goods, specifically coco butter, and that its factory is located in the state of Jammu & Kashmir. On January 24, 2007, the Joint Director of the DGFT issued an advance authorization for the duty-free clearance of cocoa paste. It was necessary to export a total of one lakh MT of cocoa butter. In accordance with the notification from October 10, 2004, the respondent imported 100 MT of cocoa paste via two bills of entry against the aforementioned advance authorization. due to a circumstance beyond your control plaintiff, 50 MT Due to melting in transit, some cocoa paste imported under one bill of entry dated 26.04.2007 was lost. Carton leaks rendered them useless. The balance of the imported cocoa paste stock record was adjusted to reflect the reduced amount. The surveyor provided an explanation for the lost cocoa paste. The respondent-company informed the department that 50 MT of imported cocoa paste had been damaged in transit, and the amount lost stood written off and removed from the material import record. This information was provided during the audit. In order to fulfil its export obligation, the respondent purchased lost quantities of coco butter on the open market and exported them. The appellant did not make use of any rebates or duty drawbacks while exporting coco butter that was purchased locally. The aforementioned advance licence was redeemed in accordance with Paragraph 4.26 of the HBP, and the respondent received a redemption letter dated June 24, 2011, but no bond certificate. In response, the respondent requested that the bond be cancelled from the Deputy Commissioner of Customs in Ludhiana. A show-cause notice was sent to the respondent asking them to explain why bond No. 41, which they provided on April 23, 2007, should not be enforced for breaching condition 5 of the bond, why duty and interest should not be demanded, why one lakh kilogrammes of cocoa paste should not be confiscated, and why no penalty should be imposed on the grounds that 50 MT of cocoa paste imported under a bill of entry dated April 26, 2007, was lost. By way of the contested order, the duty demand was upheld on the grounds that imported goods were not used in the production of export-bound goods.


The knowledgeable attorney for the respondent has cited prior rulings made by this hon’ble court.Whereas Learned legal representation for the appellant-Revenue has not been able to cite any rulings supporting the idea that after the assessee redeems its bond issued in conjunction with the export obligation.

 The Hon’ble court declared that 50 MT of coco butter were lost while being transported from the port to the factory, and the department had been informed of this. However, in order to fulfil its export obligation, the respondent had replaced the lost quantity by acquiring Cocoa Paste from the neighbourhood market. Regarding the locally purchased coco butter, the respondent-assessee made no claims for a discount or drawback. As the respondent has met its export obligations, the DGFT (licencing authority) has released the advance authorization. It was not possible for the Revenue to file a lawsuit against the respondent-assessee because it had not complied with the export obligation because the export obligation had been fulfilled.No illegality, much less perversity, has been discovered after reviewing the contested order, necessitating this Court’s intervention. After carefully considering all of the available evidence, the contested order was made. There is no significant legal issue that requires consideration.

As a result, the current appeal is dismissed because it has no merit. The Customs Authorities have the authority to begin legal action against such an assessee as the licensing authority, DGFT.

“PRIME LEGAL is a full-service law firm that has won a National Award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal fall into a category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.”

Written by-  Steffi Desousa

Click here to view judgement

Leave a Reply

Your email address will not be published. Required fields are marked *