LegalAware
LegalAware.ai
EMPOWERING LEGAL AWARENESS

Commissioner of Central Excise, Nagpur v. M/s Universal Ferro & Allied Chemicals Ltd. & Anr.

Civil Appeal · 2020 INSC 285Decided 6 Mar 2020
Civil Appeal Nos. 848-852 of 2009
Chief Justice S.A. Bobde · Justice B.R. Gavai · Justice Surya Kant

Background

Universal Ferro & Allied Chemicals Ltd. (UFAC), a 100% Export Oriented Unit, had an arrangement with Tata Iron & Steel Company (TISCO) to convert raw Manganese Ore supplied by TISCO into Silicon Manganese for a job-work fee, after which the finished goods were sold in the domestic market with the Central Government's permission and on payment of concessional excise duty. The tax authorities issued show-cause notices alleging this arrangement violated the EOU policy (since the goods were not exported) and demanded full duty as if the goods had been imported, along with penalties and threatened confiscation. The Customs, Excise and Service Tax Appellate Tribunal ruled in UFAC's favour, and the Revenue appealed to the Supreme Court.

Decision Breakdown

The Supreme Court held that the term "sale" under the Central Excise Act has a wider meaning than under the Sale of Goods Act, and the transfer of goods between UFAC and TISCO for consideration qualified as a sale for excise purposes. It further held that the tax authorities had overlooked a later government circular (dated 22.5.2000) that extended job-work permission to EOUs in all sectors, not just the originally listed ones, and that UFAC's arrangement had the Development Commissioner's express approval throughout. Since the goods were sold domestically in accordance with the applicable EXIM Policy provision and government circulars, the concessional duty exemption notification validly applied, and the Revenue's demand for full import-equivalent duty was unsustainable. The Revenue's appeal was accordingly dismissed.

Lesson Learnt

When a business has acted throughout with the express written clearance of the competent regulatory authority (here, the Development Commissioner), tax authorities cannot retroactively penalise that conduct by relying on an outdated or superseded circular while ignoring a later one that specifically permits the activity.

Official source (sci.gov.in)View Judgment (PDF)

More rulings in Tax & Customs Law

Tax & Customs LawSupreme Court of India

Mepco Industries Ltd. v. Commissioner of Income Tax, Madurai

The Supreme Court dismissed the appeal and upheld treatment of this subsidy as a taxable revenue receipt. It applied the purpose test: the scheme had to be read as a whole to determine whether the assistance supported capital investment or the running of an established business. Here, payment tracked actual electricity charges incurred in production and was not earmarked for plant, machinery, factory construction or repayment of capital borrowing. The scheme's broad aim of industrial development did not override those operative features, and payment after production began was relevant to the overall scheme rather than decisive by itself.

Decided 7 Oct 2026Read case
Tax & Customs LawDelhi High Court

M/S Kuku Overseas vs. Commissioner of Customs & Anr.

The Court found the petitioner's non-disclosure of the earlier adjudication order was material, since the core premise of the petition (indefinite non-finalisation) no longer held true once formal orders existed. It held the petitioner now had an effective alternate remedy, a statutory appeal under Section 128(1) of the Customs Act, to raise all its arguments, including about delay, and declined to keep the writ petition pending just because a related Supreme Court case on delay in adjudication was ongoing. The writ petition was dismissed as not maintainable in its present form, with liberty to appeal.

Decided 6 Oct 2026Read case
Tax & Customs LawDelhi High Court

M/s Aparna Collection vs. Union of India & Ors. and connected matters

The Court rejected the argument that limitation under Section 74(2) must be measured from the date on Form GST DRC-01, because DRC-01 is only a summary of the show cause notice. On Section 74(10), the Court held that the statute requires the order, not the DRC-07, to be issued within the prescribed period, and that DRC-07 is a summary uploaded later under Rule 142. Because the petitioner had a statutory alternative remedy of appeal under Section 107, and the questions raised needed factual findings, the Court declined to decide the merits in writ jurisdiction. The petitions were disposed of, with liberty to appeal under Section 107 and to raise all contentions there, including limitation and exclusion of the time spent in these proceedings.

Decided 5 Oct 2026Read case
Tax & Customs LawSupreme Court of India

Additional Commissioner, Commercial Tax & Others v. Cadila Health Care Ltd. & Another

The Supreme Court dismissed the authorities' appeals and upheld the classification accepted by the High Court. It held that, under the statutory entries at issue, classification depended on the goods' form when sold, rather than what customers might later prepare with them. The beverage entry grouped beverages with syrups, cordials, juices and other liquid preparations, and did not expressly include powders used to make drinks. Packaging instructions and general tests of popular meaning or function could not expand that clear statutory description. Because the products did not fit the specific beverage entry, they belonged in the residual category; precedents involving differently worded entries or liquid products did not change that result.

Decided 5 Oct 2026Read case
Tax & Customs LawDelhi High Court

Zoom Insurance Brokers Pvt. Ltd. vs. Assistant Commissioner of Income Tax, Circle 25(1) & Anr.

The Court dismissed the writ petition. Except for the assessment year, the facts were identical to the earlier case, and the Court held that judicial discipline required it to follow the Coordinate Bench's decision in the petitioner's own case. The Court did not accept the petitioner's reliance on an interim order in another company's case, and noted that the earlier judgment in the petitioner's own case was final. The earlier judgment also left it to the Assessing Officer to examine, after the notice is answered, whether the Rs 82 lakh amount is a spurious transaction.

Decided 1 Oct 2026Read case
Tax & Customs LawDelhi High Court

Ms Devi Electronics Pvt. Ltd. vs. Commissioner CGST Delhi South & Ors.

The High Court dismissed the petition. It held that the Commissioner could validly invoke Section 54(11), because an anti-evasion investigation was already underway when the impugned order was passed and the Commissioner had formed an opinion of fraud or malfeasance based on contemporaneous material. The Court held that the power to withhold refund is distinct from the adjudication and appellate scheme under Sections 73, 74 and 107, and that the absence of a statutory appeal does not bar judicial review. However, an appeal had already been filed before the GST Appellate Tribunal (GSTAT), so the Court declined to decide disputed factual questions and left all issues open before the GSTAT.

Decided 1 Oct 2026Read case