Scope of Section 28KA: A case for restoring appellate substance to Customs Advance Rulings

The Advance Ruling framework provided under Chapter VB of the Customs Act, 1962 (‘Customs Act’), serves as an instrument of trade facilitation. As per the framework, an applicant can seek a ruling from Customs Authority for Advance Rulings (‘Authority’) on issues such as classification, valuation, rules of origin, etc, which will be binding on the applicant and the customs department (in respect of such applicant).

Thus, with the aim of providing a definitive stance on issues relating to customs law, the regime seeks to substitute litigative uncertainty with administrative clarity.

However, recognising that no one is infallible, the Advance Ruling framework[1] also provides a right of appeal to the High Court against rulings of the Authority within a specified period of time. Section 28KA empowers the High Courts to entertain appeal against Advance Ruling without any limitations. 

High Courts have also been entertaining appeals filed challenging Advance Rulings and have decided the correctness of the Advance Ruling[2] exercising the appellate power under Section 28KA.

However, recently, the Hon’ble Gujarat High Court in Commissioner of Customs, Kandla v. Devam Impex[3], has rendered a fateful decision restricting the scope of appellate power of the High Court under Section 28KA of the Customs Act. As per the decision, the appeal under Section 28KA shall lie only against an Advance Ruling issued by the Authority which is (i) profoundly illegal, (ii) arbitrary, (iii) unreasonable or (iv) bereft of proper reasoning.

At this point, it is important to note that a similar view was also taken by the Hon’ble Madras High Court in Inalfa Gabriel Sunroof Systems Pvt. Ltd. v. Customs Authority for Advance Ruling[4].

Even though a plain reading of Section 28KA of the Act suggests a wider scope of appeal, the decision of Hon’ble Gujarat High Court in Devam Impex (supra) has interpreted the same restrictively. 

Correctness of the ratio laid in Devam Impex

According to the authors, the scope of appellate power of the High Courts under Section 28KA is wide and unfettered and cannot be restricted to the circumstances enumerated in Devam Impex (supra) case.

Scope of appellate jurisdiction of high courts cannot be restricted unless expressly provided under the statute 

It is settled law that appeal is a continuation of an original proceeding, and the power of the appellate court is coextensive with that of the trial court. Appellate jurisdiction involves rehearing on facts and law, and such jurisdiction can be limited only by the statute that provides for appeal.[5] 

Section 28KA, besides prescribing a period of limitation to file appeal, does not provide for any express restriction or limitation on the circumstances in which an appeal can be filed or the nature of questions which can be raised in the appeal under Section 28KA of the Customs Act, 1962. 

The wide scope of appellate jurisdiction of high courts would be clear when compared with another provision of the Customs Act which provides for appeal to High Court against decisions of the Customs Excise and Service Tax Appellate Tribunal (‘CESTAT’), viz., Section 130 of the Customs Act. Section 130 provides that appeal would lie to the High Court against orders passed by CESTAT only if the High Court is satisfied that the case involves a substantial question of law. Section 130 further restricts the scope of appeal by excluding order having a relation to the rate of duty of customs or to the value of goods, from its ambit.

In contradistinction with Section 130, no such restrictions have been imposed on the High Court under Section 28KA of the Customs Act, 1962 for hearing appeals against advance rulings. Section 28KA remains unencumbered by any such fetters. Therefore, no artificial restrictions/limitation over scope of appellate jurisdiction of High Courts should be read into the said provision. 

The appeal to High Court under Section 28KA is similar to ‘first appeal’ under Section 96 of the CPC:

Besides the above, one must also note that the provisions for appeal to High Court under Section 28KA of the Customs Act are similar to provisions relating to first appeal under Section 96 of the Civil Procedure Code, 1908 (‘CPC’)

Section 96 of the CPC confers a right of appeal from every decree passed by a court exercising original jurisdiction. Depending on the monetary value and other factors, first appeals under Section 96 also lie to the High Court. 

In the context of Section 96, the Apex Court on numerous occasions has held that the jurisdiction of the first appellate court while hearing the first appeal is very wide like that of the trial court and it is open to the appellant to challenge all findings of fact or/and of law in first appeal. The Apex Court has also held that it is the duty of the first appellate court to appreciate the entire evidence decide the questions of fact and law. The court can also come to a conclusion different from that of the trial court.[6]

Similar view has been held by the Court in Shasidhar v. Ashwini Uma Mathad[7], Shiv Shakti Coop Housing Society, Nagpur v. Swaraj Developers[8], Vinod Kumar v. Gangadhar[9]and Hari Singh v. Kanhaiya Lal[10].

The position of law as propounded by the Hon’ble Supreme Court is that High Courts, while acting as first appellate authority, are not only empowered but also duty bound to independently consider the evidence and submissions put forth by the litigant and arrive at its own conclusion. 

Therefore, in the absence of any statutory restrictions, Section 28KA should not be given a narrow interpretation to restrict the powers and duty of High Court while acting as the first appellate authority. 

Implications of restrictive view adopted by the Hon’ble Gujarat High Court in Devam Impex:

While the above legal discussion revolves around scope of appellate jurisdiction of the high courts to entertain appeals against advance rulings issued by the Authority, another equally significant facet is one of appeal remedy available to the applicants of the advance rulings thereunder.  By tethering the scope of appeal under Section 28KA of the Customs Act only to cases where the orders are patently illegal, arbitrary etc., the Court in Devam Impex (Supra) has arguably transformed a substantive statutory right to appeal available to the applicants, into a supervisory review. 

The restrictive path taken by recent judicial interpretations raises a fundamental question about the future of the advance ruling regime: if a ruling is technically legal and is arrived at in accordance with law but is substantively incorrect, where does an applicant go? If the High Court refuses to look at the correctness of the Advance Ruling in appeal under Section 28KA because a ruling is not ‘patently illegal’ or ‘absurd’, an applicant is left bound by an incorrect classification or a denied exemption with no further door to knock on. This creates a dangerous paradox where a mechanism designed to facilitate trade becomes a trap for the diligent taxpayer.

If the ‘right to appeal’ is reduced to a mere formality, businesses may well decide that the risks of being saddled with an uncorrectable, incorrect ruling outweigh the benefits of seeking clarity in the first place. The real danger is that this judicial restraint, however well-intentioned in its pursuit of certainty and reduced litigation, could inadvertently render the entire CAAR framework less attractive. Will the advance ruling system remain a cornerstone of trade facilitation, or will it become a cautionary tale of a remedy that looked good on paper but offered no real protection in practice? The answer will depend on whether our courts are willing to restore the appellate substance that Section 28KA plainly demands.

[The authors are Associate Partner, Principal Associate and Associate, respectively, in Customs practice at Lakshmikumaran & Sridharan Attorneys, Chennai]

[1] Section 28KA of the Customs Act, 1962.

[2] Vivo Mobile India Private Limited v. Customs Authority for Advance Rulings & Anr [2024 (11) TMI 1056 - DELHI HIGH COURT] and Amazon Wholesale India Private Limited v. Customs Authority for Advance Rulings, New Delhi & Anr [2024 (8) TMI 1068 – DELHI HIGH COURT]

[3] 2025 (12) TMI 1571 - GUJARAT HIGH COURT.

[4] 2025 (9) TMI 1549 - MADRAS HIGH COURT.

[5] Hindustan Petroleum Corporation Ltd. v. Dilbahar Singh [(2014) 9 SCC 78]

[6] Union of India v. K.V. Lakshman and others, (2016) 13 SCC 124 

[7] (2015) 11 SCC 269.

[8] (2003) 6 SCC 659 

[9] (2015) 1 SCC 391.

[10] (1999) 7 SCC 288.