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Dated: 11.02.2025

CESTAT Ahmedabad clears Adani Enterprises of DFCE misuse allegations, dismisses customs appeal

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Ahmedabad, dismissed appeals by the Customs Department against Adani Enterprises Ltd., ruling that there was no fraudulent misuse of the DFCE scheme or circular trading of diamonds. The tribunal upheld previous Supreme Court and CESTAT rulings, citing lack of evidence against Adani Enterprises.

Key Issues:

1. Appeals Filed by Customs Department:

• The Commissioner of Customs, Ahmedabad challenged an order favoring Adani Enterprises Ltd. (AEL) and its executives, Rajesh Adani and Samir Vora.
• The case involved alleged fraudulent misuse of DFCE licenses under the Incremental Export Promotion Scheme (IEPS).

2. Allegations by the Revenue (Customs Department):

• AEL overvalued exports of cut and polished diamonds (CPD) to fraudulently claim Duty-Free Credit Entitlement (DFCE) Certificates.
• These certificates were used to import gold and silver without duty, allegedly causing a revenue loss of ₹49.77 crores (2008-2010).
• AEL engaged in circular trading, re-exporting the same CPDs without genuine value addition.
• Supreme Court’s 2015 Kanak Exports judgment ruled that re-exports do not qualify for export incentives, supporting the department’s claim.

3. Defense by Adani Enterprises Ltd.:

• Argued that all transactions were genuine and approved by customs officers at every stage.
• The imported and exported CPDs were not the same; processing like boiling, sieving, and sorting constituted value addition.
• The Customs Department failed to provide any new evidence to prove fraud or circular trading.
• Past show cause notices (2007) had been dismissed by the CESTAT and Supreme Court, setting a precedent in AEL’s favor.

4. Tribunal’s Findings & Ruling:

• Relied on previous CESTAT and Supreme Court decisions, which had already ruled in favor of AEL.
• No substantial proof was presented by the revenue department to overturn earlier decisions.
• Upheld the Principal Commissioner’s order, dismissing the appeals by the Customs Department.

5. Final Outcome: CESTAT ruled in favor of Adani Enterprises Ltd., rejecting claims of DFCE fraud and circular trading, citing lack of evidence and past Supreme Court judgments.

In case you face any issues related to Indirect Tax-Customs, GST, Foreign Trade Policy (FTP), Arbitration matters and Central Licensing and related advisory matters in India then please feel free to get in touch with SJ EXIM Services.

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Source: CESTAT Ahmedabad

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