2026-VIL-440-DEL-CU
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CUSTOMS High Court Cases

Customs – Maintainability of writ petition challenging show cause notices for denial of preferential tariff benefits under AIFTA - Territorial jurisdiction of High Court - Part of cause of action – HELD - The territorial jurisdiction would exist where any material part of the cause of action arose within Delhi, including cases where the goods were received at ICDs in Delhi, the petitioner was situated in Delhi, or the show cause notice had been issued from the Customs office at Delhi. Except of one petition the territorial jurisdiction is held to exist in the petitions having a Delhi nexus. Even so, the writ petitions are not maintainable at the stage of show cause notice as the Customs authorities have the jurisdiction to investigate and adjudicate the claims of preferential tariff treatment under the AIFTA. The AIFTA does not divest the sovereign right of the importing country to protect its revenue by investigating and rejecting unjustified claims of preference - The AIFTA establishes a framework for lawful rejection of such claims, which includes the issuance of show cause notices. The Courts have consistently held that a writ petition should normally not be entertained against the mere issuance of a show cause notice, and the petitioners must first raise all objections before the adjudicating authority and exhaust the statutory remedy before approaching the High Court. The petitioners are relegated to the adjudicating authority to raise all defences, including those based on the AIFTA, and the High Court shall not interfere at this stage - The writ petitions are dismissed - Dispute settlement mechanism under AIFTA – HELD - The dispute settlement mechanism under Article 24 of the AIFTA is between the contracting states and not available to private entities like the petitioners to challenge the actions of the State. The provisions of the AIFTA must be incorporated into the municipal law to be enforceable, and the substantive provisions have been incorporated through the Rules of Origin, but the dispute settlement mechanism has not been. Therefore, the petitioners cannot rely on Article 24 to challenge the actions of the Customs authorities - Verification of Certificate of Origin (COO) under AIFTA – HELD - The AIFTA and the domestic laws, including Section 28DA of the Customs Act, 1962 and the CAROTAR, empower the Customs authorities to verify the authenticity and accuracy of the COOs and the origin criteria, including the Regional Value Content (RVC). The Customs authorities are not bound to grant preferential treatment merely because a valid COO has been produced, as the COO is only a prima facie evidence of origin, and the authorities can investigate the substantive compliance with the Rules of Origin. The burden to establish eligibility for preferential treatment lies on the importer, and the Customs authorities are empowered to deny the preference if the importer fails to discharge this burden.
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