Crude Palm Oil Import by Patanjali: Bombay HC quashes Differential Customs Duty Demand [Read Order]

The Bombay High Court has quashed the differential customs duty demand imposed on Patanjali Foods Limited for importing crude palm oil, bringing significant relief to the company.

Patanjali Foods Limited, a major company in the edible oil market, imports crude palm oil for refining and subsequent sale. The classification of this crude palm oil under the correct tariff heading is crucial for determining the applicable customs duty rate.

The case arose when the Commissioner of Customs, Nhava Sheva, issued a demand for differential customs duty on Patanjali Foods Limited. The issue revolved around the classification of the imported goods. Patanjali contended that the imported crude palm oil should be classified under a specific heading that attracts a lower customs duty of 7.5%. However, the customs authorities classified the oil under a different heading, leading to a higher duty rate of 12.5%.

The petitioner, Patanjali Foods Ltd., represented by Mr. Rajesh Rawal, Mr. H. R. Shetty and H. R. Shetty contended that the imported crude palm oil should be classified under Tariff Heading 1511.10.00, which attracts a lower customs duty rate of 7.5%.

The respondent revenue, the Union of India and others represented by Mr. Jitendra B Mishra and Mr. Ram Ochani classified the imported crude palm oil under the tariff heading 1511 90 90, which attracted a higher duty rate of 12.5%.

The petitioner argued that the classification adopted by the customs authorities was incorrect and that it was liable to pay a lower duty than what was demanded.

The court observed that the key issue was the interpretation of the tariff headings under the Customs Tariff Act. It noted that the classification of goods under customs law is a complex exercise that requires a thorough understanding of the product’s nature, its use and the legislative intent behind the tariff headings.

The bench, referring to precedents and international guidelines on the classification of goods, stressed the importance of consistency and adherence to established principles in customs classification to avoid arbitrary decisions that could adversely affect businesses.

The division bench comprising Justice K. R. Shriram and Jitendra Jain ruled in favour of Patanjali Foods Limited. It held that the crude palm oil imported by the company was correctly classifiable under the tariff heading 1511.10.00 proposed by Patanjali, which attracts a lower customs duty rate of 7.5%. Consequently, the court allowed the petition filed by the petitioner and quashed the differential customs duty demand raised by the customs authorities.

To Read the full text of the Order CLICK HERE

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