Issues: (i) Whether imported natural rubber latex balloons were classifiable as toy balloons under Customs Tariff Heading 9503 rather than as inflatable rubber articles under Customs Tariff Heading 4016 or festive or entertainment articles under Customs Tariff Heading 9505; (ii) Whether penalties for wilful misclassification and wrongful availment of customs-duty exemption were sustainable.

Issue (i): Whether imported natural rubber latex balloons were classifiable as toy balloons under Customs Tariff Heading 9503 rather than as inflatable rubber articles under Customs Tariff Heading 4016 or festive or entertainment articles under Customs Tariff Heading 9505.

Analysis: Heading 4016 is a residual, material-based heading for vulcanised-rubber articles not covered elsewhere, whereas Heading 9503 provides the specific functional classification for toys. The HSN Explanatory Notes expressly include toy balloons in Heading 9503 and are a safe guide to tariff interpretation. Under Rule 1 of the General Rules for Interpretation, the terms of the heading and applicable notes govern classification before recourse to general or residual entries. The explanation inserted by Notification No. 02/2021-Customs also clarifies that toy balloons made of natural rubber latex fall under Heading 9503. Heading 9505 covers festive and carnival articles but does not include latex toy balloons; prior classification of differently described decorative or foil balloons did not govern the classification of the goods in issue.

Conclusion: The balloons are classifiable under Customs Tariff Heading 9503 as toy balloons, against the assessee.

Issue (ii): Whether penalties for wilful misclassification and wrongful availment of customs-duty exemption were sustainable.

Analysis: The record showed that identical goods had initially been classified under Heading 9503, followed by changes to Headings 4016 and 9505. The proprietor admitted requesting suppliers to alter classification in shipping documents. The change from Heading 9503 to Heading 4016 was linked to avoiding BIS requirements, and the goods were described by a supplier as toy latex balloons. The inconsistent classifications and incorrect availment of exemption established malafide intent rather than a bona fide classification dispute.

Conclusion: The penalties are sustainable, against the assessee.

Final Conclusion: The reclassification, consequential differential-duty liability, and penal consequences remain enforceable.

Ratio Decidendi: Where goods are specifically covered by a functional tariff heading and the HSN Explanatory Notes, classification under that specific heading prevails over a general, material-based residual heading.

Issues: (i) Whether enhancement of the declared customs value of imported wall paper from USD 2.2 per kg to USD 3.5 per kg was lawful; (ii) Whether the assessment of a separate Bill of Entry could be quashed because no speaking order was issued following remand.

Issue (i): Whether enhancement of the declared customs value of imported wall paper from USD 2.2 per kg to USD 3.5 per kg was lawful.

Analysis: The declared transaction value was rejected under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 on the basis of higher values of comparable imports available in the National Import Database. The reassessment under Section 14 of the Customs Act, 1962 applied Rule 5 by relying on contemporaneous imports of wall paper at the same commercial level, quantity and country of origin. Of the comparable imports, USD 3.5 per kg was the lowest value. The prior self-assessed import relied upon was not comparable in time, and the available import documents did not establish a material difference in the description or specifications of the goods.

Conclusion: The enhancement of value to USD 3.5 per kg was valid, against the assessee.

Issue (ii): Whether the assessment of a separate Bill of Entry could be quashed because no speaking order was issued following remand.

Analysis: Section 17(5) of the Customs Act, 1962 requires issuance of a speaking order. The assessment had already been remanded with a direction to issue such order after affording a personal hearing. In those circumstances, the pending obligation to issue the directed speaking order did not justify quashing the assessment; recourse lay before the concerned customs authority for implementation of the remand direction.

Conclusion: Quashing of the assessment was not warranted, against the assessee.

Final Conclusion: The comparable-import valuation stands sustained, while the separate remanded assessment remains subject to issuance of the required speaking order by the competent customs authority.

Ratio Decidendi: Once a declared transaction value is validly rejected on reasonable doubt, customs value may be redetermined from the lowest reliable contemporaneous transaction value of comparable imports satisfying the prescribed criteria.

Issues: (i) Whether the corporate debtor's application for initiation of CIRP under Section 10 was liable to be rejected as a malicious use of the insolvency process; (ii) Whether the monetary penalty imposed upon the corporate debtor required interference on proportionality grounds.

Issue (i): Whether the corporate debtor's application for initiation of CIRP under Section 10 was liable to be rejected as a malicious use of the insolvency process.

Analysis: Section 10 permits a corporate debtor to seek insolvency resolution, but the Adjudicating Authority must assess whether the application is a bona fide attempt at resolution and is not being used to frustrate creditor recovery. The filing followed commencement of recovery measures, while substantial hypothecated plant and machinery was found missing, no satisfactory explanation or supporting fixed-asset records were furnished, and the corporate debtor had no meaningful receivables or immovable assets. These circumstances supported the finding that the application sought a moratorium to obstruct recovery proceedings rather than to achieve genuine resolution.

Conclusion: The rejection of the Section 10 application was justified; the application was initiated with malicious intent and amounted to abuse of the insolvency process. This issue was decided against the appellant.

Issue (ii): Whether the monetary penalty imposed upon the corporate debtor required interference on proportionality grounds.

Analysis: A penalty for fraudulent conduct must be supported by reasons demonstrating the nature and magnitude of the conduct and must conform to the principle of proportionality. The record did not disclose reasons justifying the quantum of Rs. 10 lakh, notwithstanding the finding of malicious intent.

Conclusion: The penalty was excessive and was reduced from Rs. 10 lakh to Rs. 5 lakh. This issue was decided in favour of the appellant.

Final Conclusion: The finding that the insolvency application was a mala fide attempt to secure protection from creditor recovery remains operative, while the financial sanction is recalibrated to a proportionate amount.

Ratio Decidendi: An application for corporate insolvency resolution may be rejected where the surrounding conduct establishes that it is a fraudulent or malicious device to defeat creditor recovery, and any resulting penalty must be reasoned and proportionate.

Issues: Whether admission of an application for initiation of corporate insolvency resolution process could be sustained when the outstanding financial debt on the date of the admission order was below the statutory default threshold.

Analysis: The admitted payment records showed that the corporate debtor had repaid Rs. 2.25 crore of the principal debt before the admission order. The remaining amount of Rs. 93,88,310 was below the threshold of Rs. 1 crore. The financial creditors had received those payments but had not placed that material fact before the Adjudicating Authority before the order was made. Consequently, the prerequisite default amount for admission under Section 7 was not present on the relevant date.

Conclusion: The admission of the insolvency application was legally unsustainable and was set aside, in favour of the appellant.

Issues: (i) Whether detention of imported goods through a panchnama, without a contemporaneous statutory seizure or restraint order, permits the customs authorities to defer the limitation period for issuing confiscation notice; (ii) Whether the conditions imposed for provisional release on the basis of the circular were valid.

Issue (i): Whether detention of imported goods through a panchnama, without a contemporaneous statutory seizure or restraint order, permits the customs authorities to defer the limitation period for issuing confiscation notice.

Analysis: Section 110(1) of the Customs Act, 1962 requires the proper officer to record reasons to believe that goods are liable to confiscation. Where physical seizure is impracticable, the provisos require a statutory order governing custody or restraining dealings with the goods. Instruction No. 01/2017-Cus. dated 08.02.2017 likewise requires an appropriate seizure order, in addition to a panchnama, recording such reasons. A panchnama directing the importer not to deal with the vehicle was only detention and could not substitute the required statutory order.

Analysis: The seizure memo was issued more than a year after detention, followed by the confiscation notice. The authorities could not retain the vehicle indefinitely under the label of detention and then restart the limitation period by issuing a delayed seizure memo. The six-month period, with only the permissible further extension contemplated by Section 110(2), stood exhausted from the detention.

Conclusion: The delayed seizure memo and consequential confiscation notice could not sustain continued retention of the vehicle, which was required to be released.

Issue (ii): Whether the conditions imposed for provisional release on the basis of the circular were valid.

Analysis: The provisional-release conditions requiring a bond and bank guarantee were founded on paragraph 2 of Circular No. 35/2017-Customs dated 16.08.2017. That paragraph had been set aside to the extent it curtailed the adjudicating authority's discretion. Reliance on the invalidated paragraph rendered the conditions unsustainable.

Conclusion: The provisional-release order and its conditions were illegal.

Final Conclusion: Customs authorities must exercise seizure powers through the statutory procedure and cannot use prolonged detention without a valid order to defeat the prescribed time limits; the vehicle must be released within two weeks, with costs imposed on the authorities.

Ratio Decidendi: A panchnama-based detention cannot replace a reasoned statutory seizure or restraint order under Section 110 of the Customs Act, 1962, and the authorities cannot defer the statutory limitation for confiscation proceedings by subsequently issuing a seizure memo after prolonged detention.

Outcome: Delay condoned, exemption application allowed, and Special Leave Petition dismissed.

Issues: Whether a two-day delay in filing Form No. 10B for claiming exemption should be condoned under Section 119(2)(b) of the Income-tax Act, 1961.

Analysis: Section 119(2)(b) permits condonation where refusal would cause genuine hardship. The delay was only two days and was attributable to portal-related technical difficulty and/or inadvertent error. Refusal of condonation would deny the trust its claimed exemption under Section 11 and result in substantial tax demand. A justice-oriented exercise of the condonation power requires reasonable cause and genuine hardship to be assessed liberally, with substantive justice preferred over technical limitation.

Conclusion: The two-day delay in filing Form No. 10B was condoned, and the rejection of the condonation application was set aside. The return must be processed on the basis that Form No. 10B was filed within time.

Issues: (i) Whether the exclusivity payment could be re-characterised as an interest-free loan and subjected to notional interest; (ii) Whether the transition fee could be determined at nil and re-characterised as a loan for imputing notional interest; (iii) Whether notional interest could be charged on the upfront discount paid in the preceding assessment year by treating it as a continuing loan; (iv) Whether arm's length interest on a foreign-currency loan to an associated enterprise was to be benchmarked at LIBOR plus 80 basis points; (v) Whether disallowance relating to exempt income required recomputation under section 14A read with Rule 8D; (vi) Whether telecommunication charges and foreign-currency expenditure not included in export turnover could be reduced while computing deduction under section 10A; (vii) Whether the claimed tax deducted at source credit was allowable on verification of the certificates; (viii) Whether education cess was deductible under section 37(1).

Issue (i): Whether the exclusivity payment could be re-characterised as an interest-free loan and subjected to notional interest.

Analysis: The exclusivity payment secured a defined and non-refundable exclusive negotiation period for a substantial contract. Its unconventional form did not negate its commercial rationale, particularly where the Revenue produced no material establishing that it was sham or lacked commercial substance, and the contract subsequently generated taxable revenue. The principal transfer-pricing adjustment had not survived in the final assessment. Further, a consequential or secondary adjustment was unavailable for an assessment year commencing before 1 April 2016 under proviso (ii) to section 92CE(1).

Conclusion: Re-characterisation of the exclusivity payment as a loan and the consequential notional-interest adjustment were unsustainable and were deleted in favour of the assessee.

Issue (ii): Whether the transition fee could be determined at nil and re-characterised as a loan for imputing notional interest.

Analysis: The transition fee represented cost-to-cost reimbursement for transferring IT-service contracts and related transition activities to the assessee. Documentary material supported the commercial benefit and the absence of a profit element. An arm's length price could not be fixed at nil merely on a subjective view that an independent enterprise would not incur the payment; section 92C(1) read with Rule 10B required benchmarking through a prescribed method. The consequent loan characterisation and interest adjustment were also impermissible for the pre-1 April 2016 period.

Conclusion: The nil-price adjustment for transition fee and the consequential notional-interest adjustment were deleted in favour of the assessee.

Issue (iii): Whether notional interest could be charged on the upfront discount paid in the preceding assessment year by treating it as a continuing loan.

Analysis: The upfront discount was a commercial payment contemplated by the tender terms for securing a multi-year contract, and its non-conventional character did not establish that it was non-genuine or a device. The primary adjustment for that payment in the preceding year had already been deleted, while no independent primary adjustment existed in the relevant year. Secondary adjustment provisions were inapplicable because the relevant assessment year commenced before 1 April 2016.

Conclusion: The notional-interest adjustment on the upfront discount was deleted in favour of the assessee.

Issue (iv): Whether arm's length interest on a foreign-currency loan to an associated enterprise was to be benchmarked at LIBOR plus 80 basis points.

Analysis: The same United States dollar loan had been benchmarked in earlier years by reference to LIBOR, and no distinguishing facts were shown. For a loan denominated in foreign currency, the currency-specific benchmark was appropriate rather than the domestic borrowing rate, subject to the relevant risk adjustment.

Conclusion: LIBOR plus 80 basis points was directed to be adopted for recomputing the arm's length interest and resultant adjustment, in favour of the assessee.

Issue (v): Whether disallowance relating to exempt income required recomputation under section 14A read with Rule 8D.

Analysis: Invocation of Rule 8D required objective satisfaction with reference to the accounts. For Rule 8D(2)(iii), only investments that actually yielded exempt income during the relevant year could be considered. Where such investments were made from sufficient interest-free own funds, the presumption was that they were so financed and no interest disallowance under Rule 8D(2)(ii) was warranted.

Conclusion: The disallowance was restored for recomputation under these parameters, in favour of the assessee.

Issue (vi): Whether telecommunication charges and foreign-currency expenditure not included in export turnover could be reduced while computing deduction under section 10A.

Analysis: The impugned expenditure had neither been billed to nor recovered from customers and was not included in export turnover. Expenditure absent from export turnover could not again be excluded for computing the section 10A deduction.

Conclusion: Deduction under section 10A was directed to be computed without reducing the telecommunication charges and foreign-currency expenditure from export turnover, in favour of the assessee.

Issue (vii): Whether the claimed tax deducted at source credit was allowable on verification of the certificates.

Analysis: The tax deducted at source certificates were the relevant evidence for the year, when Form 26AS was not in existence. The claimed credit required verification of the certificates and of deduction and deposit of the corresponding tax into the Central Government account.

Conclusion: The claimed tax deducted at source credit was directed to be granted after verification, in favour of the assessee.

Issue (viii): Whether education cess was deductible under section 37(1).

Analysis: The issue was governed by the earlier decision in the assessee's case and by the interpretation that the Finance Act, 2022 amendment operates retrospectively.

Conclusion: The claim for deduction of education cess was rejected against the assessee.

Final Conclusion: The assessment requires modification by deleting the transfer-pricing interest adjustments, applying the prescribed foreign-currency loan benchmark, recomputing the exempt-income disallowance, allowing the section 10A computation without the disputed exclusions, and verifying the tax deducted at source credit; the education-cess claim remains disallowed.

Issues: Whether the Revenue could challenge the Tribunal's closure of its appeal under the National Litigation Policy by relying on exceptions for classification issues after having elected not to contest the policy's application.

Analysis: The Tribunal had specifically sought the Revenue's confirmation on the applicability of the National Litigation Policy before closing the appeal, and the Departmental Representative did not oppose its application. The subsequent restoration application was rejected, and that rejection was never challenged. The monetary-limit instructions permit, but do not automatically compel, the Revenue to pursue matters falling within specified exceptions, including classification issues of legal or recurring nature.

Conclusion: The exceptions to the monetary-limit policy did not automatically require the Revenue to contest the appeal on merits; the substantial question of law was answered against the Revenue.

Issues: Whether the petitioner was entitled to regular bail in proceedings alleging fraudulent issuance of invoices, wrongful availment of input tax credit, falsification of records, and operation of shell entities under the Central Goods and Services Tax Act, 2017.

Analysis: The allegations concerned alleged tax evasion through invoices without actual supply of goods, fraudulent input tax credit, falsified financial records, and shell entities, with a stated revenue implication of approximately Rs. 73.75 crore. The request for bail referred to completion of investigation, filing of the charge sheet, absence of a likelihood of evidence tampering, and the period of judicial custody.

Conclusion: The petitioner was entitled to regular bail on furnishing the prescribed bail bond and sureties.

Issues: (i) Whether rejection of the revision application for want of proof of the petitioner's status as legal heir was sustainable without considering the documents furnished by her; (ii) Whether the ex parte reassessment order and consequential penalty actions should remain operative pending fresh consideration of the revision application.

Issue (i): Whether rejection of the revision application for want of proof of the petitioner's status as legal heir was sustainable without considering the documents furnished by her.

Analysis: Section 264 of the Income-tax Act, 1961 permits revision of an assessment. The documents supporting the petitioner's status as legal representative were supplied to the Assessing Officer shortly before the revision order was made, but were not considered while the revision application was rejected as not maintainable. Recognition of the petitioner as legal heir was necessary for effective consideration of the revision application, and a personal hearing was directed before its fresh determination.

Conclusion: The rejection of the revision application was unsustainable and was set aside in favour of the assessee.

Issue (ii): Whether the ex parte reassessment order and consequential penalty actions should remain operative pending fresh consideration of the revision application.

Analysis: The reassessment order under Sections 147 and 144 of the Income-tax Act, 1961 was passed ex parte because notices issued to the deceased's email address remained unanswered before the petitioner became aware of the proceedings. In the bona fide circumstances, preservation of the subject matter pending revision was warranted.

Conclusion: Operation, implementation and execution of the assessment order and consequential penalty actions were stayed until disposal of the revision application and for four weeks thereafter, in favour of the assessee.

Final Conclusion: The petitioner must first be brought on record as legal heir, following which the revision application must be decided afresh on merits and in accordance with law after a personal hearing.

Ratio Decidendi: A revision application cannot be rejected for want of proof of legal-heir status where material furnished for that purpose was not considered; the legal representative must be recognised and afforded an effective opportunity before a fresh merits determination.

Issues: (i) Whether the final assessment order was barred by limitation following retrospective insertion of section 144C(13A); (ii) Whether cost-to-cost recovery of tax paid on employee stock options should be included in the assessee's operating margin; (iii) Whether the disputed ITeS comparables were functionally comparable to the assessee; (iv) Whether delayed trade receivables warranted a separate notional-interest adjustment.

Issue (i): Whether the final assessment order was barred by limitation following retrospective insertion of section 144C(13A).

Analysis: Section 144C(13A), inserted retrospectively from 01.04.2009 by the Finance Act, 2026, governed the limitation computation. Under that provision, the final assessment order fell within the prescribed period.

Conclusion: The assessment order was not barred by limitation. Against the assessee.

Issue (ii): Whether cost-to-cost recovery of tax paid on employee stock options should be included in the assessee's operating margin.

Analysis: The recovered amount represented withholding tax payable by the associated enterprises in relation to employee stock options, paid by the assessee and recovered on a cost-to-cost basis. It had no connection with the ITeS rendered and was therefore non-operating for computation of the operating profit-to-operating cost margin.

Conclusion: The tax recovery must be excluded from operating income while computing the operating margin. In favour of the assessee.

Issue (iii): Whether the disputed ITeS comparables were functionally comparable to the assessee.

Analysis: Functional comparability was determined from the actual service profiles. Voice-based call-centre, routine BPO, information-technology service, and intellectual-property consultancy functions were materially different from the assessee's technical documentation, statistical analysis, regulatory, analytics, and reporting services. A knowledge-processing concern engaged in patent analysis, technical editing, and indexing was, however, functionally similar to the assessee's technical ITeS functions.

Conclusion: Four functionally dissimilar comparables must be excluded, while the functionally similar knowledge-processing comparable must be retained. Partly in favour of the assessee.

Issue (iv): Whether delayed trade receivables warranted a separate notional-interest adjustment.

Analysis: Deferred payment or receivables fall within the definition of an international transaction. However, the outstanding receivables arose solely from the ITeS transaction and were closely linked to it. Rules 10B(3)(ii) and 10B(1)(e) require reasonably accurate adjustments for material differences in applying the Transactional Net Margin Method. A working capital adjustment captures the profitability impact of such receivables.

Conclusion: Delayed receivables are an international transaction, but a working capital adjustment must be granted under the combined-transaction approach and no separate notional-interest adjustment is warranted thereafter. In favour of the assessee.

Final Conclusion: The ITeS transfer-pricing computation must be revised by excluding the non-operating tax recovery, applying the directed comparable set, and granting working capital adjustment, while the assessment remains within limitation.

Issues: Whether abnormal idle costs arising from COVID-19-induced underutilisation of a captive service provider's manpower and infrastructure required a capacity-utilisation adjustment while determining its arm's length margin under TNMM.

Analysis: Rule 10B(3) of the Income-tax Rules, 1962 permits reasonably accurate adjustments to eliminate material differences affecting profits; it does not require identical capacity-utilisation or idle-cost data of comparable companies to be publicly available. Transfer-pricing analysis permits reasonable economic estimation rather than mathematical precision. Extraordinary underutilisation materially depressed the assessee's operating margin because fixed employee and infrastructure costs continued despite reduced activity. The abnormal idle costs, their business nexus, and the methodology for their computation were not found to be fictitious, non-business, unreliable, or incorrect. The absence of confidential internal data of independent comparables could not by itself justify rejecting a demonstrated and reasonably quantified adjustment.

Conclusion: The COVID-19-related abnormal idle costs had to be neutralised through an appropriate capacity-utilisation adjustment. The adjusted operating margin of 14.25% exceeded the comparable median margin of 11.84%; therefore, the international transactions were at arm's length and no transfer-pricing adjustment was warranted.

Issues: (i) Whether inclusion of comparables failing the related-party-transaction filter was valid; (ii) Whether a wholly Government-owned company could be retained as a comparable for sourcing support services; (iii) Whether a company operating on a commission-based revenue model was comparable to a cost-plus service provider; (iv) Whether entities rendering infrastructure project-management services and sectoral consultancy services were functionally comparable to sourcing support services.

Issue (i): Whether inclusion of comparables failing the related-party-transaction filter was valid.

Analysis: The directions required exclusion of entities failing the related-party-transaction filter. Despite this, Mudra Online Technologies Private Limited was retained although it failed that filter. The final restoration direction also sets aside inclusion of ERM India Private Limited.

Conclusion: Inclusion of the entities failing the related-party-transaction filter was invalid, in favour of the assessee.

Issue (ii): Whether a wholly Government-owned company could be retained as a comparable for sourcing support services.

Analysis: EdCIL (India) Limited was under the control of the Ministry of Education and was wholly Government-owned. Its Government undertaking status rendered it unsuitable for the comparable set.

Conclusion: EdCIL (India) Limited must be excluded from the comparable set, in favour of the assessee.

Issue (iii): Whether a company operating on a commission-based revenue model was comparable to a cost-plus service provider.

Analysis: Adbur Private Limited earned revenue from purchase or sale of advertising space or time on a commission basis, whereas the tested services were compensated on a cost-plus basis. The differing revenue models produced materially different profit profiles and impaired comparability.

Conclusion: Adbur Private Limited must be excluded as a comparable, in favour of the assessee.

Issue (iv): Whether entities rendering infrastructure project-management services and sectoral consultancy services were functionally comparable to sourcing support services.

Analysis: Artefact Projects Limited derived its revenue from project-management and consultancy services for infrastructure projects, including engineering and architectural services. Infollion Research Services Private Limited provided consultancy across distinct industry sectors. Their functions were dissimilar to sourcing support services.

Conclusion: Artefact Projects Limited and Infollion Research Services Private Limited must be excluded as comparables, in favour of the assessee.

Final Conclusion: The transfer-pricing benchmarking is to be redetermined by the Transfer Pricing Officer after exclusion of the invalid comparables and after affording the assessee an opportunity of hearing.

Ratio Decidendi: Comparable entities must satisfy applicable related-party-transaction filters and functional comparability; entities with materially different ownership characteristics, functions, or revenue models cannot be retained in the comparable set.

Issues: Whether Bulk Drugs/Active Pharmaceutical Ingredients imported for manufacture of pharmaceutical formulations or for testing, clinical research, bioavailability or bioequivalence studies qualify for the 5% IGST rate under Sl. No. 226 of Schedule I to Notification No. 9/2025-Integrated Tax (Rate) dated 17.09.2025.

Analysis: IGST on imported articles is governed by Section 3(7) of the Customs Tariff Act, 1975, read with the applicable IGST rate notification. The expression "drug" is not defined in the rate notification; its meaning was therefore determined with reference to Section 3(b) of the Drugs and Cosmetics Act, 1940, which inclusively covers substances intended for use as components of a drug. The definition of active pharmaceutical ingredient or bulk drug under the Drugs (Price Control) Order, 2013 also covers pharmaceutical substances used as such or as ingredients in formulations. APIs regulated and licensed as pharmaceutical substances consequently fall within the expression "drugs and medicines".

Analysis: Sl. No. 226 is a description-based entry applicable to goods under Chapter 30 or any Chapter. Its reference to "all drugs and medicines" and separately to "formulations manufactured from bulk drugs" cannot be confined to finished dosage forms, as that would render part of the entry redundant. The specific entry for drugs and medicines prevails over the general chemical entries for Chapters 28 and 29. The notification is a taxing rate notification, and any ambiguity in its scope is resolved in favour of the taxpayer. The nil-rate exclusion under Sl. No. 113 of Notification No. 10/2025-Integrated Tax (Rate) dated 17.09.2025 remains subject to verification for each individual API at import.

Conclusion: Bulk Drugs/APIs described in the application qualify as "All Drugs and medicines" under Sl. No. 226 of Schedule I to Notification No. 9/2025-Integrated Tax (Rate) dated 17.09.2025 and attract IGST at 5%, provided the particular API is not covered by the stated nil-rate exclusion.

Ratio Decidendi: A pharmaceutical API that is a component of a drug and satisfies the regulatory requirements for drugs falls within a description-based entry for "all drugs and medicines", notwithstanding its tariff classification under a general chemical chapter.

Issues: Whether bulk drugs or active pharmaceutical ingredients, classifiable under Chapters 28 or 29 and imported for pharmaceutical formulations, testing, clinical research, bioavailability or bioequivalence studies, qualify for IGST at 5% under Sl. No. 226 of Schedule I to Notification No. 9/2025-Integrated Tax (Rate) dated 17.09.2025.

Analysis: IGST on imports is chargeable under Section 3(7) of the Customs Tariff Act, 1975 at the rate applicable to like domestic supplies. The expression "drugs" in the rate notification was interpreted with reference to Section 3(b) of the Drugs and Cosmetics Act, 1940, which inclusively covers substances intended for use as components of a drug. The definition of active pharmaceutical ingredients or bulk drugs in the Drugs (Price Control) Order, 2013 confirms their pharmaceutical character and use as ingredients in formulations. APIs imported for testing, clinical trials, bioavailability or bioequivalence studies are not excluded merely because they are not directly used as finished therapeutic formulations.

Analysis: Sl. No. 226 is a description-based entry covering drugs and medicines falling under Chapter 30 or any Chapter. Its reference to formulations manufactured from bulk drugs does not confine "all drugs and medicines" to finished dosage forms; such a construction would render parts of the entry redundant. The specific entry for drugs and medicines prevails over the general Chapter 28 and Chapter 29 entries for inorganic and organic chemicals. As the notification is a taxing rate notification rather than an exemption notification, any ambiguity is to be resolved in favour of the taxpayer. The applicability of the nil-rate exclusion under Sl. No. 113 must be verified for the particular API at import.

Conclusion: Yes. Bulk drugs/APIs qualifying as drugs or medicines are eligible for IGST at 5% under Sl. No. 226 of Schedule I to Notification No. 9/2025-Integrated Tax (Rate) dated 17.09.2025, provided the particular API is not covered by the exclusion under Sl. No. 113 of Notification No. 10/2025-Integrated Tax (Rate) dated 17.09.2025. The ruling is in favour of the assessee.

Issues: Whether threshing, cleaning, sieving and sizing dried broken raw tobacco leaves, followed by bulk packing, amounts to manufacture or deemed manufacture attracting Central Excise duty.

Analysis: Central Excise duty under Section 3 applies only to goods produced or manufactured in India. Under Section 2(f), manufacture ordinarily requires emergence of a new commodity with a distinct name, character and use; it also includes processes specifically deemed to be manufacture. Chapter Note 3 of Chapter 24 treats labelling or relabelling, repacking from bulk packs to retail packs, or other treatment undertaken to render tobacco marketable to the consumer as manufacture. The mechanical processes involved no addition, chemical treatment, flavouring, blending, branding or retail packing. The tobacco retained its essential identity, and the incoming dried broken tobacco was already capable of being bought and sold. Bulk-to-bulk packing was not repacking into retail packs, and the processing did not confer marketability on an otherwise unmarketable product.

Conclusion: The stated activities do not amount to manufacture or deemed manufacture under Section 2(f) of the Central Excise Act, 1944; consequently, no Central Excise duty is payable merely for undertaking them.

Issues: Whether the assessment complied with the faceless assessment procedure and principles of natural justice where additions were made without prior specific enquiries, without proper consideration of the assessee's replies, and without an effective personal hearing.

Analysis: The prescribed procedure required the show-cause notice to be issued only after necessary enquiries, verification and collection of relevant information. The assessment was preceded by only one notice under Section 142(1), while material particulars concerning bank receipts, the alleged capital nature of partnership-firm receipts, Category III AIF redemption proceeds, and the sale of unlisted shares had either not been specifically sought or were not properly addressed after the replies were furnished. The addition concerning AIF redemption was made on a basis not raised in the show-cause notice, and the addition of sale proceeds as unexplained credits relied on the purchaser's source of funds although that information had not been sought. The hearing notice allowed only a few hours for appearance, and no fresh hearing was provided after the video-conference link failed. These defects demonstrated arbitrariness, non-application of mind, and denial of a meaningful opportunity to respond.

Conclusion: The assessment order, consequential demand notice, and penalty show-cause notices could not be sustained for breach of the prescribed procedure and principles of natural justice. The assessment proceedings are to recommence from the show-cause-notice stage, with specific further queries where required, proper consideration of the assessee's submissions, and an effective personal hearing before any adverse decision.

Issues: (i) Whether the additional legal ground challenging extended search-assessment jurisdiction was admissible; (ii) Whether notices and assessments for years beyond six assessment years were valid where the alleged escaped income was not represented in the form of an asset.

Issue (i): Whether the additional legal ground challenging extended search-assessment jurisdiction was admissible.

Analysis: The ground was purely legal, went to the root of the assessment, required no fresh facts, and could be determined from the assessment record. A general challenge to the validity of the search assessment had also been raised earlier.

Conclusion: The additional ground was admitted in favour of the assessee.

Issue (ii): Whether notices and assessments for years beyond six assessment years were valid where the alleged escaped income was not represented in the form of an asset.

Analysis: The fourth proviso to Section 153A(1) permits action beyond six assessment years only where material in the Assessing Officer's possession reveals escaped income represented in the form of an asset and meeting the prescribed monetary threshold. The additions were based solely on alleged on-money receipts. The assessment orders did not identify any escaped income represented by an asset of the specified nature.

Conclusion: The extended-period notices and consequent assessments were invalid and void ab initio, in favour of the assessee.

Final Conclusion: The assessments for all relevant years stood quashed; the remaining grounds became academic.

Issues: Whether a reassessment is valid where the recorded reasons for reopening were not supplied to the assessee despite a request.

Analysis: The legal framework governing reopening requires that, upon request, the recorded reasons be furnished to enable the assessee to raise objections. The assessment records and the factual report confirmed that no evidence existed of the recorded reasons having been communicated or supplied during the reassessment proceedings.

Conclusion: The reassessment was invalid and was quashed, in favour of the assessee.