Case Law Details
In re Goyal Industries (CAAR Delhi)
M/s Goyal Industries, a proprietorship firm holding a valid Importer-Exporter Code, filed an application in Form CAAR-1 before the Customs Authority for Advance Rulings (CAAR), New Delhi, seeking an advance ruling on the correct Customs Tariff classification of imported roasted areca nuts in whole and cut/split forms. The application, received on 22.04.2026 under Section 28H(1) of the Customs Act, 1962, proposed imports from Myanmar, Bangladesh, Thailand, Indonesia, and Burma through ICD Tughlakabad, New Delhi, for subsequent sale in the domestic market. The applicant described the manufacturing process, including de-husking, drying, repeated roasting at temperatures between 130°C and 150°C over two to three days, and cooling cycles, stating that these processes significantly altered the physical and chemical characteristics of the areca nuts.
Upon scrutiny, CAAR observed that the issue raised in the application had already been conclusively decided by the Madras High Court in M/s Shahnaz International Pvt. Ltd. Consequently, the Authority formed a prima facie view that the application was barred under Section 28-I(2)(b) of the Customs Act, 1962, and issued a notice dated 29.04.2026 calling for the applicant’s response.
In reply, the applicant submitted that the facts of its case were similar to those decided by the Madras High Court in Commissioner of Customs, Chennai-II v. Shahnaz Commodities International Pvt. Ltd. The applicant further stated that the Supreme Court, by order dated 25.07.2025, had dismissed Special Leave Petition Nos. 17655-17656/2025, thereby confirming the same issue involved in its application. On this basis, the applicant requested that its advance ruling application be allowed. During the virtual personal hearing held on 17.06.2026, the authorised representative reiterated the submissions made in the application. No authorised representative appeared on behalf of the Department.
CAAR first examined the maintainability of the application before considering its merits. It referred to Section 28-I(2) of the Customs Act, 1962, which governs the admissibility of advance ruling applications. The provision states that the Authority may allow or reject an application but shall not allow it where the question raised is already pending in the applicant’s case before any customs authority, appellate tribunal or court, or where the same question has already been decided by the Appellate Tribunal or any Court.
The Authority observed that the advance ruling mechanism is intended as a trade facilitation measure to reduce litigation and provide certainty. It noted that the statutory bar distinguishes between issues pending in an applicant’s own case and issues already decided by appellate tribunals or courts. CAAR further stated that departmental authorities implementing advance rulings are required to follow binding judicial precedents. Referring to Union of India v. Kamalakshi Finance Corporation Ltd., the Authority observed that rulings of tribunals and courts are binding on subordinate authorities. It stated that permitting fresh applications on questions already adjudicated by higher judicial forums could create conflicting rulings and uncertainty, contrary to the object of the advance ruling mechanism.
Applying these principles, CAAR found that the question raised by the applicant regarding the classification of roasted areca nuts was squarely covered by the judgment of the Madras High Court in M/s Shahnaz International Pvt. Ltd., where the classification issue had already been examined and decided. The Authority concluded that, in adherence to judicial discipline and binding precedent, it should refrain from pronouncing any ruling on the classification issue. Accordingly, in terms of Section 28-I(2) and proviso (b) of the Customs Act, 1962, it decided not to allow the application. The application was consequently disposed of without an advance ruling being pronounced.
Cases Discussed:
- Commissioner of Customs, Chennai-II v. Shahnaz Commodities International Pvt. Ltd. (Supreme Court order dated 25.07.2025 dismissing Special Leave Petition Nos. 17655-17656/2025).
- M/s Shahnaz International Pvt. Ltd., 2023 (386) E.L.T. 214 (Mad.).
- Union of India v. Kamalakshi Finance Corporation Ltd., 1991 (55) ELT 433 (SC).
FULL TEXT OF THE ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, DELHI
M/s Goyal Industries, Behind Vardhan Nursing Home, 9, Pradeep Kapoor Park, Lajpat Nagar, Moradabad, Uttarpardesh-244001 having IEC No. ALBPG9467H and PAN ALBPG9467H (the applicant, in short) filed applications in Form CAAR-1 before the Customs Authority for Advance Rulings, New Delhi (CAAR, in short) for seeking advance ruling. The complete application was received in the Secretariat of the CAAR, New Delhi on 22.04.2026 along with their enclosures in terms of Section 28H (1) of the Customs Act, 1962 (hereinafter referred to as the ‘Act’). The applicant proposed to import of “Roasted Areca Nuts, both in “whole” and “cut/split” forms. The applicant has requested for ruling for “correct Customs Tariff classification of the imported “areca nut/betel nut” imported by the applicant”.
2. The applicant is a proprietorship firm holding a valid Importer-Exporter Certificate and eligible to file the present application by virtue of Section 28E (c) (i) of the Customs Act, 1962, which states as below:
Section 28E – Definitions.-
(c) “applicant” means any person,-
(i) holding a valid Importer-exporter Code Number granted under section 7 of the Foreign Trade (Development and Regulation) Act, 1992; or
(ii) exporting any goods to India; or
(iii) with a justifiable cause to the satisfaction of the Authority, who makes an application for advance ruling under section 28H;
2.1. The Applicant intend to import of “Roasted Areca Nut (Whole/Cut/split)” from Myanmar, Bangladesh, Thailand, Indonesia, Burma in to India. As per submission of the applicant, the subject product is proposed to be imported in to India through ICD Tughlakabad, New Delhi for the purpose of further sale to customers with in the domestic market.
2.2. The applicant further submitted that the subject product is obtained from the fruit of the areca nut palm, the kernel of which is commercially known as areca nut. The process carried out on the subject product is as under:
- De-husking the raw betel/ areca nut and drying the same before being fed into the roasting oven
- Feeding the fresh areca nuts into a seed roasting oven where they are heated at temperatures ranging between I30°C and 1 50°C and roasted under controlled conditions
- Upon completion of each roasting cycle, the areca nuts are removed from the oven, allowed to cool at room temperature, and subsequently reintroduced into the oven for further heating and roasting.
- The repeated cycles of heating, roasting, and cooling facilitate rapid cooling and shrinkage of the areca nuts after thermal expansion, thereby improving the quality of the roasted areca nuts. The overall roasting process typically spans a period of approximately 2 to 3 days.
2.3. The processes described hereinabove result in significant changes in the physical as well as chemical characteristics of the areca nuts. The roasting process leads to the deposition of an ash-like residue on the outer surface of the betel nut, imparting a distinctly charred appearance. Further, roasting causes substantial alterations in the chemical composition of the areca nut. The roasted areca nuts are commercially consumed either directly for chewing or in conjunction with betel leaf.
2.4. Post importation into India, the applicant will sell this product to its various customers in India. The overseas suppliers are presently supplying the subject product under Customs Tariff Item (CTI)2008 1 9 91. This entry has been introduced pursuant to the Finance Act, 2025, effective from 01.05.2025. Prior to the said amendment, the subject product was classified under the equivalent entry CTI 2008 19 20.
3. Upon a careful scrutiny of the applications, it was observed that the issue arising for consideration therein stands conclusively decided by the Hon’ble Madras High Court case of in case of M/s Shahnaz International Pvt. Ltd. [2023/386) E.L.T 214(Mad.)]. In view of the said binding judicial pronouncement, the present applications appeared, prima facie, to be hit by the bar under Section 28-I(2)(b) of the Customs Act, 1962 and are, therefore, liable for rejection. Consequently, a notice dated 29.04.2026 was issued to the applicant calling upon them to submit their response in the matter.
4. The applicant, vide letter dated 28.02.2026, submitted their written reply in response to the aforesaid notice. The contents of the said reply are reproduced hereunder:
4.1. The Applicant is the owner of firm M/s Goyal Industries and has filed the application of Advance Ruling on 22.04.2026 and which is on the record.
4.2. The similar facts has been decided by the Honorable Madras High Court in Case-Commissioner Of Customs, CHENNAI-II V/S Shahnaz Commodities International Pvt. Ltd. The copy of Judgment of the Honorable Madras High Court is attached with this petition. Moreover the Honorable Supreme Court vide its judgment dated 25.07.2025 has also confirmed the same fact involved in my petition.
4.3. It is pertinent to note that the Honorable Supreme Court has dismissed the special leave Petition No 17655-17656/2025 vide order dated 25.07.2025.
4.4. The facts mentioned in the petition of the applicant firm M/S Goyal Industries is similar and as such the Law laid down by the Honorable High Court and Supreme Court is binding. It is therefore respectfully prayed that the application for Advance Ruling dated 22.04.2026 be allowed.
5. The authorized representative of the applicant appeared for the personal hearing conducted through virtual mode on 17.06.2026 and reiterated the facts already mentioned in the application in support why their product should be considered for said classification. No Authorized Representative appeared on behalf of the Department at the time of the personal hearing.
6. Findings, Discussion & Conclusion:
6.1. I have gone through the application of advance ruling and the additional submission of the applicant regarding maintainability of the application. As issue of maintainability has to be decided first before proceeding to examine the matter on merit; I have decided to examine the matter of maintainability first.
6.2. Before I procced, I would like to refer to Section 28-I (2) of the Customs Act, 1962, which governs the admissibility of applications before the Custom Authority for Advance Rulings (CAAR). The relevant portions of the provisions of Section 28-I (2) of the Customs Act, 1962 reads as under:
28-I. Procedure on receipt of application: (1) On receipt of an application, the Authority shall cause copy thereof to be forwarded to the [Principal Commissioner of Customs or Commissioner of Customs) and, if necessary, call upon him to furnish the relevant records: Provided that where any records have been called for by the Authority in any case, such records shall, as soon as possible, be returned to the Principal Commissioner of Customs or Commissioner of Customs)
(2) 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 question raised in the application is, where the
(a) already pending in the applicant’s case before any officer of customs, the Appellate Tribunal or any Court,
(b) the same as in a matter already decided by the Appellate Tribunal or any Court.
6.3. From the above, I find that Section 28-I (2) of the Customs Act, 1962 governs the admissibility of applications before the Custom Authority for Advance Rulings (CAAR). The first proviso to sub-section (2) stipulates 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.
6.4. Further, I understand that the entire mechanism of advance rulings is a trade facilitation measure introduced with the aim of reducing litigation and providing certainty to assessees, consistent with Article 3 of the WTO Trade Facilitation Agreement. The WTO framework itself recognizes two distinct situations where advance rulings may be declined: (a) when the issue is pending in the applicant’s own case, and (b) when the issue has already been decided by an appellate tribunal or court. The first is applicant-specific, whereas the second is applicant-agnostic. This distinction is necessary because advance rulings are implemented by Departmental officers who are duty bound to apply the law as settled in their jurisdiction. In India, this position is fortified by the ruling of the Hon’ble Supreme Court in Union of India v. Kamalakshi Finance Corporation Ltd., 1991 (55) ELT 433 (SC), which underscores the binding nature of precedent and the obligation of lower authorities to follow higher judicial pronouncements.
6.5. It is a settled principle of law that rulings of the Tribunal and Courts are binding on subordinate authorities. The AAR, being a statutory authority under the Customs Act, is equally bound by such precedents. To allow fresh applications on questions already adjudicated by higher judicial fora would risk the creation of conflicting rulings and introduce uncertainty, an outcome contrary to the very object of the advance ruling mechanism. Clause (b) therefore operates as a statutory reinforcement of judicial discipline, making it explicit that once a question has been conclusively determined by the Tribunal or Courts, the Authority cannot re-adjudicate the same issue at the behest of another party.
6.6. In the instant case, I observed that the question raised in the present applications is squarely covered by the judgment of the Hon’ble Madras High Court in the case of M/s Shahnaz International Pvt. Ltd. [2023 (386) E.L.T. 214 (Mad.)], wherein the issue relating to the classification of Roasted Areca Nuts has already been examined and decided
7. In view of the forgoing facts and records of the case, I am of the view that the issue raised in the instant application is squarely covered by the judgement of Hon’ble Madras High Court in the case of M/s Shahnaz International Pvt. Ltd. [2023/386) E.L.T 214(Mad.)]. In terms of Section 28 I (2)(a) of the Customs Act, 1962 and in adherence to the principles of judicial discipline and binding precedent, I deem it appropriate to refrain from pronouncing any ruling on the question raised in the instant application regarding classification of the subject goods; therefore, in accordance with the provisions of Section 28-1, sub section (2); and proviso (b) of the Customs Act, 1962, I decide ‘not to allow’ the application.
8. The application is not allowed and disposed of accordingly.
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