TaxTMI 
TaxTMI 
2026 (7) TMI 664
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..... The said benefit is available in respect of imports made under the Free Trade Agreement (FTA) notifications specified in the Annexure to the notification, subject to the condition that the importer claims and is granted a concessional rate of Basic Customs Duty (BCD) under the relevant FTA notification. 3. Submission by Applicant- 3.1. M/s Metro Brands Limited is one of India's largest and oldest footwear and accessories speciality retailers, headquartered in Mumbai, having commenced operations in 1955 and currently operating an extensive network of 928 retail stores across 206 cities in 31 States and Union Territories and is therefore a well-established importer of footwear products sourced from multiple international manufacturing hubs such as Vietnam, Bangladesh, Brazil, Cambodia and China. As part of their operations, the Company imports specified footwears from Vietnam, Bangladesh, Brazil, Cambodia and China. 3.2. The Applicant is engaged in importing under various categories of footwear falling under HSN 6402, 6403 and 6404. The Applicant is engaged in the import of footwear under these Headings from Vietnam, Bangladesh, Brazil, Bangladesh and Cambodia. 3.3.....
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....ation vis-à-vis the details as mentioned in the background earlier, the following can be summarized vis-à-vis eligibility of exemption from AIDC in relation to goods imported by the Company. Countries Coverage FTA AIDC Exemption Notification (Annexure Reference) Bangladesh Yes SAFTA Notification No. 99/2011-Customs dated 9 November 2011 at Serial No 9 Vietnam Yes ASEAN Notification No. 46/2011-Customs dated 1 June 2011 at Serial No 4 3.10. To explain further, the preferential duty benefit under the AIFTA is affected vide Notification No. 46/2011 - Customs dated 01.06.2011 issued by the Central Government under Section 25 (1) of the Customs Act, 1962 (Customs Act). Serial number 904, 905, 906, 909 and 910 exempts goods falling under Customs Tariff Sub-heading 64029990, 64031990, 6403990 and 64041990 respectively. 3.11. In respect of the above listed classification, Sr. No. 903, 904, 905, 906, 907, 908, 909 and 910 of the said notification provides for complete as well as partial exemption from payment of duty with respect to goods covered under Tariff heading 6402 to 6404. The relevant portion of the Notification has been extra....
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....rementioned exemption notifications are covered and eligible for exemption from AIDC. 3.17. In view of the above, the Applicant seeks an Advance Ruling from the Hon'ble Authority to confirm the eligibility to claim the nil AIDC benefit under Serial No. 19 for such FTA-based imports. 3.18. The Advance Ruling application at Serial No. 11 seeks the following information from the application "Whether the question(s) raised is pending in the applicant's case before any officer of Customs, Appellate Tribunal or any Court of Law? If so, provide relevant details." 3.19 The Applicant in response to above submitted that the question of appropriate classification of the Subject Goods under Customs Tariff and the applicability of a notification issued under sub- section (1) of section 25 of the Customs Act is not pending in the Applicant's case before any officer of Customs, Appellate Tribunal or any Court of Law. 3.20. In October 2025, Applicant was issued a letter by Directorate of Revenue Intelligence (DRI) seeking information on imports made from February 2025 till date. Further, there was a consultative letter issued by Commissioner, Customs (Audit), Mumba....
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....ts and fraud. The Hon'ble Delhi High Court held that the DRI had not issued any pre-consultation notice or show cause notice which would indicate that the question regarding classification of any goods was pending. In order for a question to be considered as pending before any officer of customs, it would be necessary for the question to be raised in any notice enabling the assessee to respond to the said issue. It is only after this stage that it would be necessary for the officer of customs to render its decision on the question. Merely because an officer of customs contemplates that a question may arise, does not mean that the question is pending consideration. For a question to be stated to be pending, the concerned officer must formally set forth the same for the assessee to contest the same. 3.24. Further, in re: HQ Lamps Manufacturing Co. Pvt Ltd, the Hon'ble Customs Authority for Advance Rulings (CAAR) has examined the ambit of the expression "where the question raised in the application is already pending in the Applicant's case before any officer of customs., " in detail. It was held that the said proviso gets attracted only in certain scenarios. An illustr....
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....y reading together all the relevant legal provisions, namely Section 25 of the Customs Act, the policy explanation contained in Annexure C of the Union Budget 2021, the structure and wording of AIDC Exemption Notification and the FTA notifications listed in its Annexure. When these provisions are seen together, and when they are applied to the Applicant's actual manner of import under AIFTA and SAFTA, it becomes clear that the Applicant's goods fully meet the conditions for exemption from AIDC under Serial No. 19 of AIDC Exemption Notification. 4.2 AIDC Exemption Notification forms the basis for the levy and exemption of the AIDC on imported goods, and its language is central to the present application. 4.3 The said Notification contains a schedule in which various tariff items attract AIDC at prescribed rates. Footwear falling under CTH 6402 to 6405 is covered under Serial No. 14A of this schedule and is ordinarily subject to AIDC at the rate of 18.5 percent. However, it also contains Serial No. 19, which provides that AIDC shall be levied at the rate of NIL on goods for which exemption from BCD is "claimed and allowed" under the notifications listed in the Annexure ....
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....overnment may exempt goods "from the whole or any part of the duty of customs leviable thereon," and this formulation is unambiguously deliberate, because it not only recognizes but legally equates partial duty relief with full duty relief. 4.10 In other words, the statute itself instructs that any reduction in the quantum of duty whether the rate is reduced by 5%, 50% or 100% is nonetheless an "exemption." It follows necessarily that whenever a subsequent notification, such as Notification No. 11/2021-Customs, predicates a benefit upon the presence of an "exemption from BCD," that phrase, being used in delegated legislation issued under Section 25, must inherit the full statutory meaning conferred by the parent statute. 4.11 Any narrower interpretation would effectively read down the statutory language of Section 25 and impose an artificial and unwarranted distinction that the Legislature itself did not intend. 4.12 The Applicant would like to bring to your attention that the intention of the legislature regarding AIDC and its interaction with concessional duty schemes becomes clearer when we refer to Annexure C of the Union Budget 2021 discussed in detail below. 4.13 ....
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.... were envisaged to remain outside the burden of AIDC, which supports a reading of Serial No. 19 that is consistent with this framework. Since Seria! No. 19 exempts goods on which "exemption from BCD is claimed and allowed" under the notifications listed in its Annexure and since the AIFTA and SAFTA notifications applicable to the Applicant's imports are included in that list, the Applicant's interpretation that AIDC should not apply once such concessional BCD is allowed is aligned with the policy position reflected in Annexure C. 4.18 Further, nothing in Annexure C suggests that the exemption from AIDC was intended to apply only where the BCD becomes zero. Instead, the Annexure refers in general terms to goods imported "under customs duty exemptions available under FTA ... schemes." In the context of Section 25 of the Customs Act, which treats both full and partial duty relief as "exemption", this language reasonably supports the view that any concessional BCD granted under FTA notifications, once allowed by the proper officer, should attract the nil AIDC treatment under Serial No. 19. Thus, the Budget Annexure reinforces the broader understanding that AIDC was not craft....
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.... have been issued, the meaning of the word "exemption" contained in Section 25 applies to all notifications issued under it, unless the notification itself contains language that alters or restricts the meaning for the purpose of that particular notification. AIDC Exemption Notification, and specifically Serial No. 19 therein, uses the phrase "exemption from BCD is claimed and allowed" without adding any further qualifier regarding the extent or quantum of the exemption. The notification does not specify that the exemption must reduce the BCD to nil, nor does it distinguish between a complete exemption and a concessional rate. Therefore, when Serial No. 19 refers to an exemption from BCD, it must be understood in the same manner that Section 25 uses the term: an exemption may relate to the whole of the duty or any part of it. 4.23 Thus, the Applicant states that Section 25 provides the foundation for interpreting Serial No. 19 of the AIDC Exemption Notification. It confirms that the term "exemption from BCD," as used in the Notification, naturally includes both full and partial exemptions granted under notifications issued under the same provision. Accordingly, where an importer....
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....raph stating that its exemption shall not apply to goods in respect of which duty exemption is claimed based on country of origin. This explicit exclusion is extremely significant for interpretative purposes because it demonstrates that when the Central Government intends to prevent the concurrent enjoyment of two benefits particularly in situations involving origin-based exemptions, it uses clear, firm and unmistakable exclusionary words. The restriction is explicit, unambiguous, and forms an integral part of the notification. This drafting approach demonstrates that such limitations, when intended, are expressly set out in the text of the notification. 4.26 Notification No. 12/2012-Customs, also issued under Section 25(1) of the Customs Act, is a general exemption notification covering a broad range of goods and prescribing reduced or nil rates of BCD for the goods listed in its table. 4.27 Unlike Notification No. 12/2012, AIDC Exemption Notification (Notification No. 11/2021- Customs) does not contain any clause that denies, curtails or limits the availability of its exemptions when an importer simultaneously claims benefits under a country-of-origin-based concessional dut....
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.... extends to all forms of duty relief, whether full or partial granted under the FTA notifications issued under the same enabling power. The absence of any exclusionary clause in AIDC Exemption Notification, especially when contrasted with the deliberate restrictive drafting adopted in Notification No. 21/2012-Customs, confirms that the Legislature did not intend to curtail the concurrent operation of AIDC exemption with preferential BCD schemes. This interpretation is further fortified by Annexure C, which expressly records that imports under FTAs were envisaged to remain outside the incidence of AIDC. Accordingly, once the concessional BCD claim under AIFTA SAFTA is verified and allowed, the conditions prescribed in Serial No. 19 stand fully satisfied, and the Applicant's imports are, by operation of law, entitled to the NIL rate of AIDC. 5. The applicant submitted details of all the pending matters before any officer of Customs, CESTAT, High Court, or Supreme Court regarding the "eligibility for exemption from AIDC on specified footwear imported under FTAs" vide letter dated 30.03.2026. The said details submitted by the applicant are in table below: S.NO Issue 1nvolv....
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....ed 64029 990, 64039 990, 64031 990, 64641 990 Footwear with upper straps or thongs assemble d to the sole by means of plugs: Other& Footwear With Outer Soles Of Rubber, Plastics, Leather Or Composition Leather And Uppers Of Leather: Other. ... Other& Footwear With Outer Soles Of Rubber, Plastics. Leather Or Composition Leather And Uppers Of Leather Other Footwear :Other & Footwear With Outer Soles of Rubber, Plastics, Leather Or Composition Leather And Uppers Of Textile Materials : Other: Other 4 Consultative letter issued for BOE No. 2788417 alleging short payment due to incorrect serial number post submission of the application 46/2011- Customs dated 1 June 2011 as amended from time to time 904 Notification No. 11/2021 dated 1 February20 21 as amended by Notification No. 06/2025 Customs dated 01.02.2025 Sr. No. 14A &19 NA No Response submitted to Customs Audit 64029 990 Footwear with upper straps or thongs assemble d to the sole by means of plugs: Other 5.1 Further, the applicant, in the above table at Sr. No. 4, has stated that the issue raised in the consultative letter issued for BOE No. 2788417 by JNCH Audit AIDC pertains to Sr. Nos. 14A....
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....rnment may, if it considers it necessary or expedient so to do for the purpose of clarifying the scope or applicability of any notification issued under sub-section (1) or order issued under sub-section (2), insert an explanation in such notification or order, as the case may be, by notification in the Official Gazette, at any time within one year of issue of the notification under sub-section (1) or order under sub-section (2), and every such explanation shall have effect as if it had always been the part of the first such notification or order, as the case may be.] (3) An exemption under sub-section (1) or sub-section (2) in respect of any goods from any part of the duty of customs leviable thereon (the duty of customs leviable thereon being hereinafter referred to as the statutory duty) may be granted by providing for the levy of a duty on such goods at a rate expressed in a form or method different from the form or method in which the statutory duty is leviable and any exemption granted in relation to any goods in the manner provided in this sub-section shall have effect subject to the condition that the duty of customs chargeable on such goods shall in no case exceed ....
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....Act, 2021 (13 of 2021)], the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts goods of the description specified in column (3) of the Table below and falling within the Chapter, heading or sub-heading or tariff item of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) as specified in column (2) of the said Table, from so much of the Agriculture Infrastructure and Development Cess leviable thereon under the 5[said section of the Finance Act, 2021 (13 of 2021)], as is in excess of the amount calculated at the rate specified in column (4) of the said Table. SI. No. Chapter or heading or subheading or tariff item of the First Schedule Description of goods Rate 14A 6401, 6402, 6403, 6404 or 6405 All goods 18.5% 19 Any Chapter All goods on which exemption from basic customs duty is claimed and allowed under the notifications, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), mentioned in the ANNEXURE. NIL ANNEXURE S. No. Details of the Notifications 4. Notification No. 46/2011-Customs, dated the 1st June, 2011 vide number G....
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....8.01.2026. 7.1 The said jurisdictional authority vide letter dated 30.01.2026 forwarded comments in the said matter and submitted that the issue relating to alleged evasion of Agriculture Infrastructure and Development Cess (AIDC) on the goods imported by M/s Metro Brands Limited is presently under investigation by the Directorate of Revenue Intelligence (DRI), Lucknow. They further submitted that in terms of Section 28-I(2)(a) of the Customs Act, 1962, the Authority shall not allow an application where the question raised therein is already pending in the applicant's case before any officer of customs, the Appellate Tribunal, or any court i.e. any case pending with any officer of customs has been specifically excluded from the scope of advance ruling in terms of Section 28I clause (a) to 1st proviso. 7.2 In view of the change in the CAAR Authority, a personal hearing (PH) was held again on 03.06.2026 at 11:30 AM, in accordance with the principles of natural justice. The authorized representative of the applicant attended the PH in the matter and reiterated the arguments mentioned in the written submissions. He submitted copies of few Bills of Entry stating the that Custo....
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....BCD) are claimed and allowed. 10. Admissibility of the Application under Section 28I of the Customs Act, 1962 10.1 At the outset, it is necessary to examine the admissibility of the present application in terms of Section 28I of the Customs Act, 1962. The jurisdictional Commissionerate has contended that the issue relating to alleged non-payment of AIDC is presently under investigation by the Directorate of Revenue Intelligence (DRI), and therefore, the application ought not to be entertained. 10.2 In this regard, reference is made to the provisions of Section 28I(2) of the Customs Act, 1962, which reads as under: "The Authority may, after examining the application and the records called for, by order, either allow or reject the application: Provided that the Authority shall not allow the application where the question raised in the application is- (a) already pending in the applicant's case before any officer of customs, the Appellate Tribunal or any Court; or (b) the same as in a matter already decided by the Appellate Tribunal or any Court." 10.3 A plain reading of the above provision makes it clear that an application is liabl....
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....quiry does not render a question as "pending" for the purposes of bar on advance ruling. It was clarified that pendency can be said to arise only when the issue is formally articulated in a notice-such as a pre-consultation notice or show cause notice -thereby enabling the assessee to respond and contest the same. The Court further observed that a question attains the status of "pending" only when it stands crystallised into a proceeding capable of adjudication, and not merely when it is under contemplation by the Department. 10.7 Further, in Re: HQ Lamps Manufacturing Co. Pvt. Ltd., the Authority for Advance Rulings has clarified that the bar under Section 28I is attracted only in situations where formal proceedings have been initiated, such as issuance of a show cause notice, provisional assessment, or commencement of pre-notice consultation(CL). it was specifically observed that general correspondence, audit scrutiny, or information gathering would not amount to pendency of a question. 10.8 Applying the above legal position to the present facts, it is evident that the actions relied upon by the Department regarding pending DRI investigation, do not amount to "pendency" wit....
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....02, 6403 and 6404 from Vietnam, Bangladesh, Brazil and Cambodia. 11.3.1 The relevant entries of Notification No. 11/2021-Customs are reproduced below: "In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962) read with 4[section 124 of the Finance Act, 2021 (13 of 2021)], the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts goods of the description specified in column (3) of the Table below and failing within the Chapter, heading or sub- heading or tariff item of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) as specified in column (2) of the said Table, from so much of the Agriculture Infrastructure and Development Cess leviable thereon under the 5[said section of the Finance Act, 2021 (13 of 2021)], as is in excess of the amount calculated at the rate specified in column (4) of the said Table. SI. No. Chapter or heading or subheading or tariff item of the First Schedule Description of goods Rate 14A 6401, 6402, 6403, 6404 or 6405 All goods 18.5% 19 Any Chapter All goods on which exemption from basic customs duty....
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....4039190 Specified footwear NIL 908 640399 All goods (other than specified footwear) 5% 909 64039990 Specified footwear NIL 910 6404 All goods 5% * Thus, under the AIFTA notification, the applicable rate of BCD ranges from NIL to 5%, depending upon the specific tariff classification of the imported footwear. * Similarly, preferential duty benefit under SAFTA is extended vide Notification No. 99/2011- Customs dated 09.11.2011, issued under Section 25(1) of the Customs Act, 1962. The said notification provides that all goods, other than those specified in the Annexure thereto (i.e., goods falling under tariff items 2203 to 2206, 220710, 2208 and Chapter 24), when imported into India from countries listed in the Appendix (including the People's Republic of Bangladesh), are exempt from the whole of the Basic Customs Duty leviable thereon. * Accordingly, goods imported from Bangladesh, being covered under the said notification and not falling within the excluded categories, are eligible for full exemption from BCD. 11.6 Conclusion Thus, it is evident that the subject goods imported by the applicant are clearly....
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....ework unequivocally establishes that exemption from duty includes both full exemption and partial (concessional) exemption, without drawing any distinction in their legal character. The phrase "whole or any part of duty" used in Section 25(1) clearly reinforces this position. 13. Application of the Above Principle to Serial No. 19 of Notification No. 11/2021-Customs 13.1 "The description of goods specified at Serial No. 19 of the relevant notification reads as follows: "All goods on which exemption from basic customs duty is claimed and allowed under the notifications, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), mentioned in the ANNEXURE .. " 13.2 A plain reading of the above description indicates that the scope of the entry is broadly worded and covers all goods in respect of which exemption from Basic Customs Duty (BCD) is both claimed by the importer and allowed by the proper officer under any of the notifications specified in the Annexure. 13.3 A careful reading of the above entry indicates that the expression "exemption from basic customs duty is claimed and allowed" has been used in a broad and unqualified manner....
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.... do not cover the subject goods. 14.3 It is further noted that the availment of such exemption is subject to production of a valid Certificate of Origin (COO) and fulfilment of all prescribed conditions under the respective FTA notifications, including compliance with the Rules of Origin under CAROTAR, 2020, to the satisfaction of the proper officer at the time of import. Upon such verification, the applicable BCD, whether concessional or NIL, is duly allowed by the proper officer. 14.4 In view of the above, it is evident that the requirement of "exemption from BCD being claimed and allowed" stands fully satisfied in the present case. The applicability of Serial No. 19 is not dependent upon the exemption resulting in a NIL rate of BCD alone, but extends equally to cases where concessional rates are applied. Consequently, the benefit of NIL AIDC under Serial No. 19 is attracted once the prescribed conditions are fulfilled. 15. Legislative Intent and Policy Context 15.1 The Applicant has placed reliance upon Annexure C to the Union Budget, 2021 in support of the interpretation adopted above. The said Annexure constitutes a contemporaneous exposition of legislative intent ....
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.... significant that Notification No. 11/2021-Customs does not contain any provision restricting the simultaneous availment of concessional Basic Customs Duty (BCD) under Free Trade Agreements (FTAs) and exemption from AIDC under Serial No. 19. 16.2 It is a settled principle that where the legislature intends to impose conditions or restrictions on the availment of exemptions, it does so through clear and express terms in the notification itself. 16.3 In the present case, the absence of any such restrictive provision clearly indicates that no limitation was intended on the concurrent availment of FTA-based BCD concession and AIDC exemption. 17. To sum up: 17.1 In view of the foregoing discussion and findings, it is concluded that the present application is admissible under Section 28I of the Customs Act, 1962, as no formal proceedings on the question raised are pending before any adjudicating authority, Tribunal, or Court. 17.2 On merits, it is established that the expression "exemption from Basic Customs Duty (BCD) is claimed and allowed" appearing in Serial No. 19 of Notification No. 11/2021-Customs is to be interpreted in its statutory sense under Section 25(1) of th....