Case Law Details
National Fregrance Vs Union of India & Ors. (Delhi High Court)
The Delhi High Court considered two writ petitions filed under Article 226 of the Constitution concerning denial of IGST refunds and non-finalisation of shipping bills relating to exports described as mouth fresheners, pan masala RG, and tobacco products. The petitioners, exporters registered under GST, the Tobacco Board, and holding valid FSSAI licences, had filed shipping bills in October 2024 for export of the said goods. Though the goods were exported, an alert led to their provisional release against furnishing of bank guarantees and bonds.
Samples were sent to the Central Revenues Control Laboratory (CRCL), which issued test reports dated 24 and 27 December 2024. These first CRCL reports described the samples as light brown granules having characteristics of tobacco, composed of betel nut, nicotine, catechu, lime, and flavouring substances, with recorded parameters such as moisture, ash, nicotine content, and pH. No objection was recorded in these reports. On this basis, the petitioners sought finalisation of shipping bills and release of the bank guarantees.
Subsequently, without any fresh samples being drawn, CRCL issued further reports dated 10 November 2025 in the nature of clarifications. These second CRCL reports stated that the samples had the characteristics of gutka, a chewing tobacco product under IS 10335:2016, and were neither pan masala nor food preparations under the relevant Food Safety Regulations. Based on these clarifications, the Commissioner of Customs issued letters dated 5 February 2025 to the GST Department requesting that IGST refunds to the petitioners not be processed.
Aggrieved, the petitioners challenged the validity of the second CRCL reports, contending that the first reports were binding and that the subsequent clarification was untenable since no fresh samples were drawn and no reasoning was provided for reclassification of the goods as gutka. They also sought release of the bank guarantees and withdrawal of the letters sent to the GST Department.
The Court noted that multiple representations made by the petitioners seeking release of bank guarantees had neither been replied to nor decided by the Commissioner of Customs. It further observed that the circumstances leading to the issuance of the second CRCL reports were unclear, except for a reference to an email from the Customs Department dated 7 November 2025. The Court also recorded that no show cause notice had been issued to the petitioners till date.
Without examining the merits of the dispute, the Court held that the matter required holistic consideration by the Commissioner of Customs. It directed that all representations seeking release of bank guarantees be considered and decided by 28 February 2026. The Court further directed that if any show cause notice was proposed to be issued, it should be issued by 10 January 2026 and decided simultaneously with the representations, so that the petitioners’ future exports were not unnecessarily impeded. All rights and contentions of the parties were left open, and the petitions were disposed of with these directions.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. This hearing has been done through hybrid mode.
2. The present petitions have been filed by the Petitioners under Article 226 of the Constitution of India, inter alia, seeking the following prayers:
(i) In W.P.(C) 18744/2025:
“i) issue a writ of Mandamus thereby directing the Respondent no. 2 to finalize the shipping bill no. 5253762 and 5253855 both dated 29.10.2024 on the basis of the first test report dated 24.12.2024 and 27.12.2024 (Annexure – 6) instead of the second test report dated 10.11.2025 (Annexure – 8) issued by the respondent no. 3.
ii. Issue a writ of Mandamus thereby directing the respondent no. 2 to release the bank guarantee bearing no. 4615IGP251079769 dated 16.01.2025 and bond furnished at the time of releasing of the goods covered under shipping bill no. 5253762 and 5253855 dated 29.10.2024 on provisional basis.
iii Issue a writ of Mandamus thereby directing the respondent no. 2 to issue NOC to the GST department and withdraw their letter dated 05.02.2025 whereby it was requested that the IGST refund of the petitioner may not be processed/sanctioned.
iv. pass any such other orders as it may deem fit to this Hon’ble Court in the facts and circumstances of the case.”
(ii) In W.P.(C) 18728/2025:
“i) issue a writ of Mandamus thereby directing the Respondent no. 2 to finalize the shipping bill no. 5202192 and 5201743 both dated 28.10.2024 on the basis of the first test report dated 24.12.2024 and 27.12.2024 (Annexure – 6) instead of second test report dated 10.11.2025 (Annexure – 8) issued by the respondent no. 3.
ii) Issue a writ of Mandamus thereby directing the respondent no. 2 to release the bank guarantee bearing no. 4615IGP251079767 dated 16.01.2025 and bond furnished at the time of releasing of the goods covered under shipping bill no. 5202192 and 5201743 both dated 28.10.2024 on provisional basis.
iii. Issue a writ of Mandamus thereby directing the respondent no. 2 to issue NOC to the GST department and withdraw their letter dated 05.02.2025 whereby it was requested that the IGST refund of the petitioner may not be processed/sanctioned.
iv. pass any such other orders as it may deem fit to this Hon’ble Court in the facts and circumstances of the case.”
3. A brief background of the Petitioners case is that, the Petitioners are exporters engaged in the export of various Tobacco products including Pan Masala, etc. According to the Petitioners, they have a Good and Service Tax registration (hereinafter, ‘GST registration’) and are also registered with the Tobacco Board. The Petitioners also possess Food Safety and Standards Authority of India license (hereinafter, ‘FSSAI license’). The GST registration and FSSAI license of the Petitioners are as follows:
| Case No. | GST Registration No. | FSSAI License No. |
| W.P.(C) 18728/2025 | 07AAWFN4255AIZ6 | 12724999000601 |
| W.P.(C) 18744/2025 | 06AAKCD7898N1ZM | 10824999000495 |
4. The case of the Petitioners is that they have filed shipping bills for the purpose of export of goods described as Mouth Fresheners, Pan Masala RG and Tobacco T. The details of the shipping bills filed by the Petitioners is as follows:
- Bill Nos. 5202192 and 5201743 both dated 28th October, 2024 in W. P.(C) 18728/2025.
- Bill Nos. 5253762 and 5253855 both dated 29th October, 2024 in W.P.(C) 18744/2025
5. The said goods were exported through the said shipping bills. Thereafter, an alert was issued, due to which the goods of the Petitioners were only released on a provisional basis.
6. Pursuant there to, samples of Petitioner’s goods were sent to the Central Revenues Control Laboratory, Government of India, Ministry of Finance, Department of Revenue (hereinafter, ‘CRCL’) which gave test reports dated 24th December, 2024 and 27th December, 2024 (hereinafter, ‘first CRCL reports’) to the following effect:
i. In W. P.(C) 18744/2025 CRCL report dated 24th December, 2024 :
- In W. P.(C) 18744/2025 the CRCL report dated 27th December, 2024 :
“ TEST REPORT
1. Lab No: CRCL/Food/21/1947(E)/03.12.2024
Reported Date:27.12.2024
2. Test Memo No: 11/CUS/ECF/MISC/393/2024-Docks
3. S/B No: 5253855 Dated: 29.10.2024
4. Name Contact information of customer: Custom House Chennai
5. Description of Sample: Mouth Freshners Pan Masala RG
6. Sample Plan: Sample Not Drawn By this Laboratory.
Report: The sample as received is in the form of light brown irregular granules having characteristic odor, The sumple u/r has the characteristics of tobacco. It is composed of betel nut, nicotine, catechu, added lime and flavouring substances. It is having
| Sr. No. | Parameters | Test method | Result |
| 1. | Moisture (% by mass) | IS 5643:2019 | 3.92 |
| 2. | Total Ash On dry basis (% by mass) | IS 5643:2019 | 5.91 |
| 3. | Total alkailoids as Nicotine On dry basis (% by mass) | AOAC 960.08 | 0.12 |
| 4. | Silicated residues insolable in Hydrochloric acid On dry basis (% by mass) | IS 5643:2019 | 2.73 |
| 5. | pH of the sample | …… | 9.9 |
(iii) In W.P.(C) 18728/2025 CRCL report dated 24th December, 2024 :
“ TEST REPORT
Reported Date:24.12.2024
1. Lab No: CRCL/Food/21/1944(E)/03.12.2024
2. Test Memo No: 11/CUS/ECF/MISC/393/2024-Docks
3. S/B No: 5201743 Dated: 28.10.2024
4. Name Contact information of customer: Custom House Chennai
5. Description of Sample: Mouth Freshners Pan Masala RG
6. Sample Plan: Sample was not Drawn By this Laboratory.
Report: The sample as received is in the form of light brown irregular granules having characteristic odor, The sample u/r has the characteristics of tobacco. It is composed of betel nut, nicotine, catechu, added lime and flavouring substances. It is having
| Sr. No. | Parameters | Test method | Result |
| 1. | Moisture (% by mass) | IS 5643:2019 | 4.69 |
| 2. | Total Ash On dry basis (% by mass) | IS 5643:2019 | 6.27 |
| 3. | Total alkailoids as Nicotine On dry basis (% by mass) | AOAC 960.08 | 0.06 |
| 4. | Silicated residues insolable in Hydrochloric acid On dry basis (% by mass) | IS 5643:2019 | 1.43 |
| 5. | pH of the sample | …… | 9.38 |
(iii) In W.P.(C) 18728/2025 CRCL report dated 27th December, 2024 :
“TEST REPORT
Report dated 27.12.2024
i. Lab No: CRCL/Food/21/19__(E)/
ii. Test Memo No: __/CUS/ECFS/MISC/393/2024-Docks
iii. S/B No: Dated: 28.10.2024
iv. Name Contact information of customer: Custom House Chennai
v. Description of Sample: Mouth Freshners Pan Masala RG
vi. Sample Plan: Sample was not Drawn By this Laboratory.
Report: The sample as received is in the form of light brown irregular granules having characteristic odor, The sample u/r has the characteristics of tobacco. It is composed of betel nut, nicotine, catechu, added lime and flavouring substances. It is having fo
| Sr. No. | Parameters | Test method | Result |
| 1. | Moisture (% by mass) | IS 5643:2019 | |
| 2. | Total Ash On dry basis (% by mass) | IS 5643:2019 | |
| 3. | Total alkailoids as Nicotine On dry basis (% by mass) | AOAC 960.08 | |
| 4. | Silicated residues insolable in Hydrochloric acid On dry basis (% by mass) | IS 5643:2019 | |
| 5. | pH of the sample | …… |
7. At the time of provisional release of the goods, certain bank guarantees were furnished by the Petitioners. Since there was no objection in the first CRCL reports, the Petitioners sought finalisation of the shipping bills and release of the bank guarantees.
8. According to the Petitioners, surprisingly, without drawing any further samples, new CRCL reports dated 10th November, 2025 (hereinafter, ‘second CRCL reports’) were issued in the form of clarification wherein it was observed as under:
“The tested samples u/r were found to contain betelnut, nicotine (ingredient of tobacco), catechu, lime and flavouring substances. Based on the test findings each sample u/r has the characteristics of Gutka, which is chewing tobacco product as per IS 10335; 2016.
Each sample is other than Pan masala, Khaini and Surti. Each sample is other than food preparation as per Section 2.3.4 of Food Safety and Standards (Prohibition and Restrictions on Sales) Regulations, 2011.”
9. Pursuant to the second CRCL reports, letters dated 5th February, 2025 (hereinafter, ‘letters’) have been sent by the Commissioner of Customs to the GST Department, to not issue the refunds to the Petitioners.
10. Aggrieved by the clarification in the second CRCL reports, the Petitioners have preferred the present petitions.
11. Issue Notice in P.(C) 18728/2025. Mr Sai Manik Sud is requested to accept notice on behalf of the Respondents in W.P.(C) 18728/2025.
12. The case of the Petitioners is that the first CRCL reports would be binding on the Petitioners and the clarification in the form of second CRCL reports would be completely non-tenable as no fresh samples of the goods were drawn and no reasoning has been given as to why such a finding has been arrived at, that the products of the Petitioners were Gutka.
13. Additionally, Petitioners also seek release of the bank guarantees and withdrawal of the letters issued to the GST Department.
14. In the opinion of this Court, for the release of the bank guarantees, the Petitioners have made several representations to the Commissioner of Customs. These representations have neither been replied to nor decided till date.
15. Moreover, the circumstances which warranted the issuance of second CRCL reports are completely unknown and it does not specify as to why the same were issued. The second CRCL reports refer to an email of the Customs Department dated 07th November, 2025.
16. The matter deserves to be considered by the Commissioner of the Customs in a holistic manner and the representations for release of the bank guarantees deserve to be decided on an early date.
17. Further, it is also noticed that no Show Cause Notice (hereinafter, ‘SCN’) has been issued to the Petitioners. If any SCN is to be issued to the Petitioners, the same ought to be done expeditiously so that further shipments of the Petitioners are not unnecessarily put on hold.
18. Accordingly, the following directions are issued:
i. All the representations of the Petitioners shall now be considered and the decision on the release of bank guarantees shall be taken by 28th February, 2026 by the Commissioner of Customs.
ii. If any SCN is to be issued, the same shall be issued by 10th January, 2026 and the same shall also be decided simultaneously with the representations of the Petitioner.
19. Needless to add, this Court has not gone into the merits of the matter.
20. All the rights and contentions of the parties are left open.
21. The petitions are disposed of in these terms. All pending applications, if any, are also disposed of.
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