Case Law Details
In re Great Nuts Impex Private Limited (CAAR Delhi)
In this matter, the Customs Authority for Advance Rulings (CAAR), New Delhi, considered an application filed by Great Nuts Impex Private Limited. The applicant, a proprietorship firm, sought an advance ruling on the customs classification of a product they intended to import: “Processed Betel Nut Known as Roasted Supari.” The company proposed that the goods should be classified under Chapter 20, specifically Heading 20081920, of the Customs Tariff Act, 1975. The core of their argument on the merits was a prior favorable judgment from the Madras High Court and a similar ruling from the CAAR, Mumbai, in another case, both of which classified the same product under the desired heading.
The central issue, however, was not the classification itself but the maintainability of the application under Section 28-I(2)(b) of the Customs Act, 1962. This section bars the AAR from allowing an application where the question raised is “the same as in a matter already decided by the Appellate Tribunal or any Court.” The department argued that since the classification of roasted betel nuts had already been settled by a court judgment, the application should be dismissed.
Applicant’s Arguments
Great Nuts Impex Private Limited argued that the AAR should interpret Section 28-I(2)(b) as being applicable only when a judicial decision has been made in the applicant’s own case. The company’s counsel invoked the doctrine of harmonious construction, suggesting that this interpretation was necessary to prevent a conflict between Section 28-I(2)(b) and Section 28-J. The latter provision states that an advance ruling is binding in personam, meaning it only applies to the specific applicant and the jurisdictional customs authorities.
The applicant contended that if 28-I(2)(b) were to be read broadly, it would create an anomaly: a single judicial decision would preclude any future applicant from ever obtaining an advance ruling on the same product. They argued that this could not have been the legislature’s intent, as it would effectively make the advance ruling mechanism available to only the first person to get a favorable ruling, which is inconsistent with the purpose of a taxpayer-specific, in personam ruling.
The Authority’s Decision and Rationale
The Customs Authority for Advance Rulings (CAAR) meticulously examined the applicant’s submissions and the statutory provisions. It decided that the application was not maintainable and accordingly rejected it without ruling on the product’s classification. The Authority’s reasoning was based on a comprehensive analysis, which included a plain reading of the law, a review of judicial precedents, and an examination of the policy context.
Key points from the Authority’s holding:
1. Plain Reading of the Statute: The CAAR noted the significant difference in the language used in the two clauses of Section 28-I(2). Clause (a) explicitly refers to a matter “pending in the applicant’s case,” while clause (b) simply refers to a matter “already decided by the Appellate Tribunal or any Court,” without any mention of the applicant. The Authority reasoned that this conscious omission by the legislature was deliberate and intended to give clause (b) a broader, more general application.
2. Judicial Precedents on Statutory Interpretation: To support its reading of the law, the Authority cited several landmark Supreme Court judgments that reinforce the principle that courts cannot insert words into a statute that the legislature has consciously omitted.
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- Padma Sundara Rao v. State of TN (2002): The Supreme Court held that courts cannot supply words which the legislature has consciously omitted.
- Union of India v. Deoki Nandan Aggarwal (1992): The Court emphasized that words deliberately not used by Parliament cannot be read into the law.
- J.P. Bansal v. State of Rajasthan (2003): This ruling reiterated that when the language of a statute is clear, omissions cannot be judicially supplemented.
3. No Conflict with Section 28-J: The Authority dismissed the applicant’s argument of a conflict between Section 28-I(2)(b) and Section 28-J. It clarified that while an advance ruling’s binding nature is indeed limited to the specific applicant, judicial pronouncements from the Appellate Tribunal or a Court hold a binding force across the country. Section 28-I(2)(b) acts as a jurisdictional bar, preventing the AAR, a lower statutory authority, from issuing rulings that could potentially contradict or re-open issues already settled by a higher judicial body. This preserves the hierarchy of judicial discipline and prevents the creation of conflicting legal opinions.
4. Policy and International Practice: The CAAR’s interpretation was further supported by the policy context of the advance ruling mechanism, which aims to reduce litigation and provide legal certainty. It also noted that this approach aligns with international practices, such as those in the United States, where administrative rulings are not issued on matters pending before or decided by higher courts. The Authority also cited a CBEC Clarification (Instruction F. No. 275/83/2012-CX.8A) which explicitly states that Section 28-I(2)(b) is “applicant-agnostic,” meaning it applies regardless of which party was involved in the previous case.
Conclusion
In its final order, the CAAR concluded that since the applicant themselves had admitted that the question of classification of ‘Roasted Supari’ was “squarely covered” by a judgment of the Madras High Court, its application was barred by the clear and unambiguous language of Section 28-I(2)(b) of the Customs Act, 1962. Consequently, the application was not allowed and was disposed of without a ruling on the merits of the classification. This decision establishes a clear precedent that the AAR cannot adjudicate on matters already decided by a superior court, regardless of whether the applicant was a party to the original litigation.
FULL TEXT OF THE ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, DELHI
M/s Great Nuts Impex Private Limited, Shop No. RZF-34A, Ground Floor, B/Side, Khasra No. 84/6, Mahavir Enclave, Delhi 110 045, having IEC No. and PAN AA1CG5058K (the applicant, in short) filed an application in Form CAAR-1 before the Customs Authority for Advance Rulings, New Delhi (CAAR, in short) for seeking advance ruling. The complete applications were received in the Secretariat of the CAAR, New Delhi on 27.01.2025 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 “Processed Betel Nut Known as Roasted Supari” and requested for rulings for classification of .the goods in question under 20081920 of the Schedule to the Customs Tariff Act, 1975.
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 is currently not engaged in any activity. The applicant is in the process of setting up its business of import of a preparation of betel nuts commonly known as ROASTED SUPARI and marketing the same.
2.2. In furtherance to its business objects, the applicant proposes to procure and import into India, a preparation of Betel Nuts known as “Roasted Betel Nuts” packed in Consumer Packings and Bulk Packings. The principal Raw Material used by the foreign manufacturer for the proposed import goods is fresh raw betel nut covered under Chapter 8, specifically falling in Heading 08028000 of the Schedule to Customs Tariff Act, 1975 ( hereinafter called Customs Tariff).
2.3. Apart from various arguments on merit. the applicant mainly stressed on judgment of Hon’ble High Court of Madras in Civil Miscellaneous Appeal (CMA) No’s 600/2023, dated 01.08.2023 in case of M/s Shahnaz Commities International Pvt. Ltd. and ruling CAAR/Del/Lujee/41/2024 dated 19.08.2024 of CAAR, Mumbai in case of M/s Lujee International Company Ltd. , wherein the said product was held classifiable under CTI 20081920. They claimed that their case is covered by above judgement.
3. The application was sent to Customs Port Commissionerate, Tuticorin, Customs Port Commissionerate, Nhava Sheva-I , JNCH and Customs Port Commissionerate, Ludhiana for comments on the merit of the application. Apart from various arguments, the department contended that as case is covered by Court judgments, the application of ruling should not be entertained in light of provisions of sub-section (2)(b) of section 28-I of the Customs Act, 1962.
4. The personal hearing in the instant application was conducted on 11.07.2025. During the course of personal hearing, the Authorised Representative reiterated the averments made in their advance ruling application. During the course of personal hearing, it was brought to notice that matter has already been decided by the Appellate Tribunal/Court in case of other parties, hence, prima facia liable for rejection (under sub section 2(b) of Section 28-1 of the Customs Act, 1962). The A.R. argued against this and requested to provide opportunity to put forth their view point in terms of Section 28-I(2)(b). Accordingly, a notice in this regard was issued to the applicant vide Notice No 447 dated 14.07.2025. In response to the notice, the applicant submitted the reply of the notice vide e-mail dated 08.08.2025.
5. The applicant through e-mail dated 08.08.2025 submitted reply to the notice and stated as under:
5.1 “Personal hearing in the said application for advance ruling was granted on 11.07.2025. During the course of personal hearing, it appeared to the Hon’ble Authority for Advance Ruling that the matter has already been decided by the Appellate Tribunal in case of other parties. Hence, prima facia liable for rejection under sub section 2 of Section 28 I of the Customs Act, 1962. Counsel for the applicants argued against this and requested to submit their views before disallowing the application and also providing opportunity to be heard on this point as per legal procedure. Accordingly, submissions are made in the following paragraphs.
5.2 That it appears to the Ld. Authority for Advance Ruling (hereinafter referred to as “the Ld. AA”) that the matter has already been decided by the Appellate Tribunal in case of other parties. Hence, prima facia liable for rejection under sub section 2 of Section 28 1 of the Customs Act, 1962. Section 28 I of the Customs Act, 1962 is reproduced below for ease of reference:
28-1. Procedure on receipt of application.—
(1) On receipt of an application, the Authority shall cause a copy thereof to be forwarded to the 6[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 6[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 7*** 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;
(b) the same as in a matter already decided by the Appellate Tribunal or any Court:
Provided further that no application shall be rejected under this sub-section unless an opportunity has been given to the applicant of being heard:
Provided also that where the application is rejected, reasons for such rejection shall be given in the order.
(3) A copy of every order made under sub-section (2) shall be sent to the applicant and to the [Principal Commissioner of Customs or Commissioner of Customs].
(4) Where an application is allowed under sub-section (2), the Authority shall, after examining such further material as may be placed before it by the applicant or obtained by the Authority, pronounce its advance ruling on the question specified in the application.
(5) On a request received from the applicant, the Authority shall, before pronouncing its advance ruling, provide an opportunity to the applicant of being heard, either in person or through a duly authorised representative.
Explanation.—For the purposes of this sub-section, —authorised representative! shall have the meaning assigned to it in sub-section (2) of section 146A.
(6) The Authority shall pronounce its advance ruling in writing within [three months] of the receipt of application.
(7) A copy of the advance ruling pronounced by the Authority, duly signed by the Members and certified in the prescribed manner shall be sent to the applicant and to the 1[Principal Commissioner of Customs or Commissioner of Customs], as soon as may be, after such pronouncement.
5.3 That the proviso (b) under sub-section (2) of the procedure on receipt of an application for advance ruling as set out under Section 28 I of the Customs Act, 1962 provides that the Authority, after examining the application and the records called for…. shall not allow the application where the question raised in the application is — (b) the same as in a matter already decided by the Appellate Tribunal or any Court.
That it appears to the Ld. AA that since the matter is already decided by the Appellate Tribunal / Court in the case of other parties, the instant application/s are liable for rejection.
5.4 It is humbly submitted that if the provisions of Section 28 I were to be interpreted in the manner as above, it would be in conflict with the provisions of Section 28 J of the Act. Section 28 J is reproduced below for ease of reference:
28J Applicability of advance ruling.—(1) The advance ruling pronounced by the Authority under section 28-I shall be binding only—
(a) on the applicant who had sought it;
(b) in respect of any matter referred to in sub-section (2) of section 28H;
(c) on the 1[Principal Commissioner of Customs or Commissioner of Customs], and the customs authorities subordinate to him, in respect of the applicant.
(2) The advance ruling referred to in sub-section (1) shall be binding as aforesaid unless there is a change in law or facts on the basis of which the advance ruling has been pronounced.
5.5 It may be seen that Section 28 J provides for the Applicability of the Advance Ruling which is binding only (a) on the applicant who had sought it; (b) in respect of any matter referred to in subsection (2) of section 28H; and (c) on the Principal Commissioner of Customs or Commissioner of Customs, and the customs authorities subordinate to him, in respect of the applicant.
5.6 Thus, if the proviso (b) to Section 28 I (2) were to be given the interpretation as per the Ld. AA, it would lead to the situation that once an advance ruling was given to any applicant in respect of a specific matter / product, no other applicant would be able to obtain that ruling in respect of the same matter / product. However, this would create an anomaly because the applicability of the advance ruling is limited under the provisions of Section 28 J to the specific applicant and the matter / goods for which the application was made. This could not possibly be the intention of the legislation in this regard.
5.7 It is submitted that applying the doctrine of harmonious construction would enable the correct interpretation of this perceived ambiguity in the law. The fundamental principle behind this doctrine is that a statute has a legal purpose and should be read in its totality and after that, the interpretation that is consistent with all the provisions of that statute should be used. This doctrine encourages the authority to interpret laws in a manner that avoids clashes and contradictions between them, thereby seeking a balanced interpretation that respects the legislative intent behind each provision.
5.8 It could not have been the intention of the legislature to grant the advance ruling in respect of any matter to any one applicant solely. The advance ruling is given in personam with respect to the person who applies for the ruling. It is not given in rem with respect to the application itself.
5.9 Thus, it is submitted that since the provisions of Section 28 J limit the applicability of the advance ruling to the applicant who had sought it, in respect of any matter referred to in sub-section (2) of section 28H, and on the Principal Commissioner of Customs or Commissioner of Customs, and the customs authorities subordinate to him, in respect of the applicant; and there is no ambiguity regarding this provision, the provisions of Section 28 I (2) proviso (b) ought to be read harmoniously with the proviso (a) to Section 28 I (2) with the result 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; (b) the same as in a matter already decided by the Appellate Tribunal or any Court in the applicant’s case.
5.10 It is humbly submitted that the above interpretation to Section 28 I read with Section 28 J gives effect to the entire scheme of the advance ruling.”
6. Findings, Discussion & Conclusion:
6.1. I have gone through the application of advance ruling, comments of department and the applicant arguments about 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.
Issue of Maintainability under Section 28-I(2)(b):
6.2. I have gone through the submissions made by the applicant regarding the issue of maintainability of application. The contention of the applicant is that looking into overall provisions of Advance ruling is applicant centric; the word ‘any party ‘appearing in provision (b) of 28-I (2) should be read as the `applicant’ and should not be costrued as other party.
6.3. The applicant has not disputed to the fact that their case is covered by Tribunal or Court Judgment; however, their limited submission is that since judgment is not in their case; their application is not barred by provision of Section 28-I(2)(b). The applicant has claimed that the provision of 281(2)(b) is not applicable as the matter has not been decided by the Tribunal or Court specifically in the applicant’s case. On the other hand, department has clearly argued that this case should not entertained by Authority as matter has already been decided by Tribunal/ Court and hence application is clearly barred by provisions of Section 28-1 (2) (b).
6.4. On careful examination I find that Section 28-1(2) of the Customs Act, 1962 governs the admissibility of applications before the Authority for Advance Rulings (AAR). 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. A plain reading of clause (b) reveals that it is worded in general and unqualified terms. Unlike clause (a), it does not restrict its operation to matters “in the applicant’s own case.” The legislature could easily have introduced limiting words such as “in the case of the applicant” had it intended to confine the bar to applicant-specific proceedings. The conscious omission of such words demonstrates a legislative intent to give clause (b) a wider field of operation. The effect of this is that once a question of law or fact has been settled by the Tribunal or by a Court, the AAR is statutorily barred from entertaining fresh applications on the same question, regardless of whether the earlier ruling involved the same applicant or a different assessee. I find that this is settled legal principle that omissions in a statute cannot be judicially supplied. In Padma Sundara Rao v. State of TN., (2002) 3 SCC 533, the Supreme Court held that courts cannot supply words which the legislature has consciously omitted. Similarly. in Union of India v. Deoki Nandan Aggarwal, 1992 Supp (1) SCC 323, the Court stressed that words deliberately not used by Parliament cannot be read into the law. In .I.P Bansal v. State of Rajasthan, (2003) 5 SCC 134, the Court reiterated that when language is clear. omissions cannot be judicially supplemented. The omission of the phrase “in the applicant’s case” in clause (b) must therefore be given full effect. Apart from above, following points also support the reading of thr above said provisions:
6.4.1. Contrast with Clause (a): Clause (a) of Section 28-1 (2) is expressly party-specific, dealing with situations where the question is “already pending in the applicant’s case” and thereby preventing duplication of proceedings in respect of the same assessee. Clause (b) of Section 28-I (2). however. is framed more broadly and refers to “a matter already decided by the Tribunal or any Court.” without tying it to the applicant’s own case. This deliberate variation in language reflects a conscious legislative choice and shows that clause (b) operates in rem, covering questions already settled by binding judicial precedent.
6.4.2. Comparative and Policy Context: 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.
6.4.3. I have also examined the International practice and find that this interpretation is further consistent with international practice. In the United States, Binding Administrative Rulings (CROSS Rulings) are governed by Part 177, Chapter 1 of Title 19 of the Code of Federal Regulations. Section 177.7 expressly provides that no ruling letter will be issued in respect of any issue which is pending before the U.S. Court of International Trade, the Court of Appeals for the Federal Circuit, or any appellate court therefrom. This reinforces the universal principle that advance rulings cannot be issued on questions already before or decided by higher judicial fora.
6.4.4. CBEC Clarification: I find that the issue has been examined by the Board also and the interpretation of clause (b) has also been expressly clarified by CBEC vide Instruction F. No. 275/83/2012-CX.8A dated 29-11-2013. It is clear from the instructions that clause (b) of the first proviso to Section 284 (2) is applicant-agnostic. It states that once a question has been decided by the Tribunal or a Court in the case of any party, the AAR cannot entertain the same question again, even at the instance of a different applicant. However, the Authority must ensure that the earlier judicial decision fully and squarely covers the issue raised before it. Therefore, once the issue is covered; the authority should not entertain the application. In this case, the applicant itself has claimed that their case is squarely covered by judgement of Hon’ble Madras High Court in Civil Miscellaneous Appeal (CMA) No’s 600/2023, No. 1206/2023 and No. 1750/2023, dated 01.08.2023, wherein subject product was held to be classifiable under 20081920.
6.4.5. Harmonious Reading with Section 28J: Though the applicant in present case has cited the conflict of interpretation specially with refrence to section 28(J). On careful examination I find that Section 28J provides that advance rulings are binding only on the applicant, the jurisdictional Commissioner and his officers, thereby giving AAR rulings a localized and taxpayer-specific binding effect. By contrast, decisions of the Tribunal and Courts have binding force across the country. Section 28-I(2)(b), therefore, serves as a jurisdictional bar to prevent the Authority from re-opening issues already decided by judicial fora of higher standing, even if the applicant before the AAR was not a party to those proceedings. This ensures judicial discipline and prevents the AAR from issuing rulings inconsistent with settled precedent. So there is no conflict in operation between section 28 (J) and Section 28-I (2)(b). Hence, I reject contention of the applicant.
6.4.6. Support from Principles of Precedent and Judicial Discipline: 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.
6.5. In view of the above discussion & findings, it is evident that Clause (b) of the first proviso to Section 28-1(2) of the Customs Act, 1962 is not applicant-specific. It establishes a jurisdictional bar that prevents the AAR from entertaining an application if the same question has already been decided by the Appellate Tribunal or any Court, irrespective of whether such decision was in the case of the same or a different assessee. This construction gives full effect to the legislative intent, preserves consistency with Section 28J, accords with international practice and CBEC’s own clarification, and upholds the principle of judicial discipline by ensuring that the AAR does not re-litigate issues conclusively settled by higher judicial authorities.
7. In view of the forgoing facts and records of the case. I am of the view that since the applicant has admitted that the question of classification of product raised in this very application is squarely covered by the judgement of Hon’ble High Court of Madras in Civil Miscellaneous Appeal (CMA) No’s 600/2023, No. 1206/2023 and No. 1750/2023, dated 01.08.2023 in case of M/s Shahnaz Commities International Pvt. Ltd., M/s Neena Enterprises and M/s Universal Impex respectively, considering the provisions of Section 28-I, sub-section (2)(b) of Customs Act, 1962 and binding judicial discipline, I decide to refrain from passing any ruling.
8. The application is not allowed and disposed of accordingly.
