CESTAT Chennai Denies Customs Exemption on Sausage Imports, Upholds Strict Interpretation of Notification Conditions

March 30, 2026 : The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled that exemption under a customs notification cannot be claimed where the imported goods are expressly excluded and statutory conditions remain unfulfilled. The Tribunal dismissed the appeal filed by M/s Western Farm Fresh (P) Ltd., affirming the denial of concessional duty on imported sausages.

Background of the Dispute

The appellant imported “D&W Chicken Spicy Sausages” under a Bill of Entry dated 19 April 2012, classifying the goods under CTH 16010000. Initially, the imports were assessed at a concessional basic customs duty of 8% under Notification No.125/2011-Cus.

However, the Department objected to the claim, noting that the notification specifically excluded goods falling under sub-heading 160100 through Note 2 read with Sl. No.233 of the Annexure. Consequently, the Department issued a demand notice under Section 28 of the Customs Act, 1962, followed by adjudication confirming differential duty, rejecting the declared retail sale price (RSP), and imposing penalty and confiscation.

The first appellate authority upheld the adjudication order, prompting the appeal before the Tribunal.

Tribunal’s Findings

The Bench comprising P. Dinesha (Member Judicial) and Vasa Seshagiri Rao (Member Technical) held that the exemption under Notification No.125/2011-Cus. was clearly unavailable.

The Tribunal noted that while the notification granted concessional duty for Chapter 16 goods, Note 2 expressly excluded items listed in the Annexure. Since Sl. No.233 covered goods under heading 160100, the appellant’s imports were outside the scope of the exemption.

It further observed that there was no real dispute regarding such exclusion, and the appellant’s claim was therefore untenable.

Alternate Exemption Claim Rejected

The appellant argued, in the alternative, that it was eligible for benefit under Notification No.26/2000-Cus. and that the earlier claim was inadvertent.

Rejecting this contention, the Tribunal emphasized that exemption notifications must be strictly complied with. Since the alternate notification was conditional and required supporting documentation, failure to produce such evidence before the lower authorities was fatal to the claim.

The Bench relied on the Supreme Court ruling in Commissioner of Customs (Import), Mumbai v. Dilip Kumar & Company, reiterating that exemption provisions must be construed strictly and the burden lies on the claimant.

Additional Evidence Not Entertained

The Tribunal also refused to accept additional documents, including a country of origin certificate, produced for the first time at the appellate stage.

Referring to Rule 23 of the CESTAT (Procedure) Rules, 1982, it held that additional evidence cannot be admitted without sufficient cause. The appellant failed to explain why such documents were not submitted earlier, leading to rejection of the miscellaneous application.

Limitation Issue Decided Against Appellant

On the question of limitation, the Tribunal rejected the plea that the demand notice was time-barred. It clarified that the one-year limitation under Section 28 is computed from the end of the relevant month. Calculated accordingly, the demand notice dated 25 April 2013 was held to be within time.

Conclusion

Finding no infirmity in the impugned order, the Tribunal dismissed the appeal and upheld the denial of exemption, differential duty demand, and consequential penalties.

Cause Title: M/s Western Farm Fresh (P) Ltd. v. Commissioner of Customs, Chennai-II
Case No.: Customs Appeal No. 40283 of 2016 [with Customs/Misc/40030/2026]
Coram: P. Dinesha (Member Judicial) and Vasa Seshagiri Rao (Member Technical)