CESTAT New Delhi Rules Against Retroactive Exemption for Vardhman Textiles 

March 27, 2026 : The New Delhi Principal Bench of the Customs, Excise and Service Tax Appellate Tribunal has held that exemption under Notification No. 21/2022-Cus granting nil customs duty on cotton imports cannot be extended to Bills of Entry filed prior to the notification coming into force. The Tribunal dismissed the appeal filed by M/s Vardhman Textiles Ltd. and affirmed the order of the Commissioner (Appeals) rejecting the request for reassessment and substitution of Bills of Entry. The appellant had filed five self-assessed Bills of Entry between April 5, 2022, and April 13, 2022, for the clearance of imported “Raw Cotton” classified under Chapter Heading 5201 0020, claiming exemption under Notification No. 18/2015 against valid advance authorisation licenses. On April 13, 2022, the same day the last of the impugned Bills of Entry were filed, a new Notification No. 21/2022-Cus was issued, exempting Basic Customs Duty and Additional Duty of Customs on the import of cotton with effect from April 14, 2022. The appellant subsequently sought reassessment of two Bills of Entry and cancellation or substitution of the remaining three to avail the benefit of the new “nil” rate, but the request was rejected by the Deputy Commissioner and later by the Commissioner (Appeals).

Before the Tribunal, the appellant argued that the goods remain imported goods subject to the prevailing rate of duty until an out-of-charge order under Section 47 is issued. They contended that since the out-of-charge orders were issued after April 22, 2022 well after the new notification took effect the exemption should apply. The appellant further argued that the taxable event occurs when goods cross the customs barrier and that an assessee has the option to choose a more beneficial exemption. Conversely, the Revenue contended that the relevant date for determination of duty under Section 15(1)(a) is the date of filing the Bill of Entry. Because Notification No. 21/2022 was not in existence when the Bills of Entry were filed, the Revenue maintained that the benefit could not be extended to the appellant.

The Tribunal, comprising Binu Tamta (Member Judicial) and Hemambika R. Priya (Member Technical), noted that the five Bills of Entry were filed and assessed prior to the notification’s effective date. The Bench observed that the relevant date for determining the rate of duty is the date of filing the Bill of Entry as per Section 15(1)(a), and since the notification was non-existent at that time, no benefit could be claimed. Regarding the request for substitution from home consumption to warehousing under Section 46(5), the Tribunal noted that the provision grants the proper officer discretion, indicated by the word “may,” and requires satisfaction that the interests of revenue are not prejudiced. The Tribunal found that the sole intention of the appellant was to avail an exemption that did not exist at the time of filing, which was a valid cause for the Revenue to reject the substitution. Finally, the Tribunal rejected the plea to choose a more beneficial exemption, stating such an option only applies to notifications in existence on the date of filing. As the Bills of Entry were filed after the “entry inwards” of the vessels, the proviso to Section 15 regarding advance filings did not apply.

Case Reference : M/s Vardhman Textiles Ltd. v. Commissioner of Customs Case No: Customs Appeal No. 55845 of 2023 Coram: Binu Tamta (Member Judicial) and Hemambika R. Priya (Member Technical)