CESTAT Chennai Upholds Levy of Additional Customs Duty Equivalent to Rubber Cess on Imported Natural Rubber

March 30, 2026 : The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has upheld the levy of additional duty of customs equivalent to Rubber Cess on imported natural rubber, dismissing the appeal filed by M/s. MRF Limited.

The dispute arose from a demand of ₹46.94 lakh raised against MRF Limited for imports of natural rubber classified under CTH 40012200. The Department alleged that the company was liable to pay an additional duty under Section 3(1) of the Customs Tariff Act, 1975, equivalent to the Rubber Cess imposed under Section 12 of the Rubber Act, 1947. The adjudicating authority confirmed the demand, along with interest under Section 28AB of the Customs Act, and the Commissioner (Appeals) later upheld it.

Before the Tribunal, the appellant argued that Rubber Cess applies only to rubber produced within India and cannot extend to imported goods. It was further contended that additional customs duty under Section 3(1) can only mirror excise duty on domestically manufactured goods and cannot include a cess specific to domestic production.

MRF also relied on earlier Tribunal rulings in London Rubber Co. India Ltd., M.M. Rubber Company Ltd., and Vikrant Tyres Ltd., which the Supreme Court affirmed, to support its position that such a levy on imports is unsustainable.

On the other hand, the Revenue argued that the issue is no longer debatable and stands settled in favour of the Department. Reliance was placed on the Larger Bench decision in TTK-LIG Ltd. and subsequent rulings, including decisions in MRF’s own cases, where similar challenges had been rejected.

The Tribunal noted that both sides cited precedents claiming support for their respective positions. However, it observed that in MRF’s own case, the Bangalore Bench had recently dismissed a similar appeal by following earlier decisions and the Larger Bench ruling in TTK-LIG Ltd..

Importantly, the Bench recorded that although appeals on the issue are pending before the Supreme Court, there is currently no stay or interim relief granted. In such circumstances, the Tribunal held that it was bound to follow existing binding precedents.

Concluding that there were no distinguishing facts to justify a different view, the Tribunal held that the levy of additional duty of customs equivalent to Rubber Cess is legally sustainable and dismissed the appeal.

Cause Title: M/s. MRF Limited v. Commissioner of Customs, Chennai
Case No.: Customs Appeal No. 40936 of 2015
Coram: P. Dinesha (Member Judicial) and Vasa Seshagiri Rao (Member Technical)