• Dated 24^th September, 2026

CUSTOMS CANNOT OVERRIDE FTA BENEFITS THROUGH PUBLIC NOTICES: BOMBAY HC

BRIEF FACTS:

The petitioner, imported goods originating from Thailand and claimed preferential rate of customs duty under the ASEAN-India Free Trade Agreement (AIFTA) in terms of Notification No. 46/2011-Customs. The imports involved third-party invoicing, where the goods originated from Thailand but the supplier/invoice was from a third country. The Customs authorities denied the preferential duty benefit, mainly on the ground that the FOB value mentioned in the Certificate of Origin could not be verified from the third-party invoices and the petitioner had not provided the manufacturer's invoice/break-up as required under Public Notice No. 33/2024. The petitioner challenged the rejection before the Bombay High Court, contending that third-party invoicing was permissible under AIFTA and that the requirements imposed through the Public Notice were contrary to the applicable legal framework.

Subsequently, CBIC Instruction No. 23/2024-Customs dated 21.10.2024 clarified the position regarding third-party invoicing and preferential FTA claims. The petitioner therefore argued that the very basis of the Customs order had ceased to exist.

ASSESSEE'S CONTENTION:

The petitioner contended that the goods imported from Thailand were eligible for the preferential rate of customs duty under the ASEAN-India Free Trade Agreement (AIFTA) and Notification No. 46/2011-Customs. It was submitted that third-party invoicing is permissible under AIFTA and, therefore, the preferential benefit could not be denied merely because the commercial invoice was issued by an entity located in a third country. The petitioner further contended that the Customs authorities had imposed additional requirements, particularly regarding the manufacturer's invoice and FOB value, based on Public Notice No. 33/2024, which could not override or dilute the provisions of the applicable FTA. The petitioner had submitted the relevant documents, including the Certificate of Origin, commercial invoice, packing list, inspection certificate, seaway bill and end-user letter. It was also contended that the manufacturer's invoice could not be obtained due to commercial confidentiality and the urgency of clearance of the goods. Subsequently, CBIC Instruction No. 23/2024-Customs dated 21.10.2024 clarified the position regarding third-party invoicing, pursuant to which the petitioner argued that the very basis on which the preferential duty benefit had been denied no longer survived and the matter required reconsideration in accordance with the applicable legal provisions.

DEPARTMENT'S CONTENTION:

The Department contended that the preferential rate of duty claimed by the petitioner was not admissible as the FOB value mentioned in the Certificate of Origin could not be verified from the third-party invoices, which reflected the CIF value. The Customs authorities relied upon Public Notice No. 33/2024 and sought the manufacturer's invoice and the requisite break-up of the third-party invoice to verify the actual FOB value. Since the petitioner failed to furnish the required documents, the Department concluded that the FOB value could not be properly ascertained and that the Certificates of Origin had been obtained by misrepresentation of the actual FOB value. Accordingly, the preferential rate of duty under Notification No. 46/2011 was rejected under Section 28DA(4) of the Customs Act, 1962 read with Rule 5(5) of CAROTAR, 2020.

DECISION:

The Hon'ble Bombay High Court held that the entire basis on which the preferential rate of duty had been denied to the petitioner stood extinguished in view of the subsequent CBIC Instruction No. 23/2024-Customs dated 21.10.2024 and Public Notice No. 10/2025, which clarified the position regarding third-party invoicing under the AIFTA. The Court observed that the Customs authorities could not rely upon a departmental public notice to dilute the benefits available under a Free Trade Agreement or to override the provisions of law and binding CBIC instructions. Accordingly, the Court quashed and set aside the impugned order dated 12.06.2024 and restored the assessment proceedings to the Assistant Commissioner of Customs for fresh assessment of the petitioner's claim for preferential duty in accordance with law. All contentions of the parties were kept open.

BTA's COMMENT:

The judgment reaffirms that preferential duty benefits available under a Free Trade Agreement cannot be denied merely on the basis of additional requirements imposed through a departmental public notice, particularly when such requirements are inconsistent with the applicable FTA provisions and subsequent CBIC instructions. The Customs authorities are required to follow the statutory framework under the Customs Act, CAROTAR, and the relevant FTA while examining claims involving third-party invoicing.

Case Reference- Covestro India Pvt. Ltd. Vs Assistant Commissioner of Customs, Nhava Sheva [Writ Petition No. 11540 of 2024 with W.P. Nos. 12428, 12432, 12470, and 12430 of 2024, decided on 16-4-2026]

Athor: Madhurima Bose