The Hon’ble Supreme Court of India in the case of Commissioner Customs v. Ms High-top Trading Private Limited [Civil Appeal No. 12918/2025, order dated October 17, 2025] upheld the decision of the Customs, Excise and Service Tax Appellate Tribunal (the CESTAT) holding that export of goods are governed by the conditions prescribed under the Foreign Trade Policy (FTP), not by the Food Safety and Standards Authority of India (FSSAI) standards, unless explicitly mentioned in the FTP. The Court dismissed the appeal against CESTAT, which had set aside confiscation, duty demand, redemption fine, and penalties imposed on the exporter for alleged misclassification of exported rice.
Facts:
Ms High-top Trading Private Limited (“the Appellant”) is engaged in the export of rice and registered with Agricultural and Processed Foods Products Export Development Authority (“APEDA”). The Appellant entered into a contract dated July 11, 2023, for export of 587.50 MT brown basmati rice to an overseas buyer.
The Commissioner of Customs, Ludhiana (“the Respondent”) issued a Show Cause Notice for confiscation of the goods, demand of Customs duty, and imposition of penalties on the Appellant contending that the rice exported did not meet the prescribed FSSAI standards for brown basmati rice and that the exporter deliberately misclassified non-basmati rice as basmati rice to evade duty and circumvent export restrictions.
The Appellant contended that the export of rice was regulated by the conditions laid down in the Schedule-II of the Foreign Trade Policy, not by FSSAI standards which are applicable domestically and only applicable to export goods if specifically provided under the FTP.
The Respondent contended that FSSAI standards are mandatory for export to ensure food safety and wholesome food, and the exported rice did not conform to the FSSAI prescribed parameters for basmati rice under the 2023 regulations.
The Appellant’s grievance was that the Respondent wrongly applied FSSAI standards for export goods which were not incorporated in the FTP, leading to an arbitrary confiscation order and penalties. The Appellant approached the CESTAT by way of appeal against the original order of confiscation, penalty, and duty demand.
Issue:
Whether the exporter is required to comply with the Food Safety and Standards Authority of India (FSSAI) standards for brown basmati rice exports or only the conditions prescribed in the Foreign Trade Policy (FTP)?
Held:
The Hon’ble Supreme Court in Civil Appeal No. 12918/2025 upheld the CESTAT Chandigarh’s order in Customs Appeal No. 60660 of 2024 order dated July 4, 2024 which held as under:
- Noted that, according to Paragraph 2.03 of the Foreign Trade Policy, domestic laws, rules, orders, regulations, technical specifications, environmental, safety, and health norms applicable to domestically produced goods shall apply mutatis mutandis to imports, unless specifically exempted.
- Observed that, in respect of the impugned goods, no condition has been prescribed with reference to FSSAI standards in the FTP; whatever conditions are prescribed have been satisfied by the appellant.
- Observed that, the FSSAI Act and regulations govern the safety and standards of food products manufactured, processed, distributed, and sold in India but do not expressly regulate exports under the Act.
- Noted that, the test reports by the Central Revenue Chemical Laboratory (CRCL) that the rice conformed to 6 of the 8 parameters under the FSSAI regulations but deviated in two parameters; however, the grain met the criterion under the FTP for export.
- Observed that, the Revenue failed to produce statutory provisions, notifications, or circulars mandating exporters to comply with FSSAI standards for export of basmati rice.
- Held that, since the Appellant complied with FTP registration, contractual, and other conditions for basmati rice export under ITC HS Schedule-II Sl. No. 57, export was lawful.
- Held that, the confiscation under Customs Act provisions, duty demand, and penalties were without basis.
The Supreme Court dismissed the appeal of the Revenue and upheld the CESTAT order setting aside confiscation, penalties, and duty demand.
Our Comments:
The judgment emphasizes the principle that exports are primarily regulated by the Foreign Trade Policy and the applicable customs and export control regulations. The Food Safety and Standards Act, 2006 and associated FSSAI Regulations primarily apply to goods manufactured, sold, or distributed within India unless export requirements are specifically incorporated in trade policy notifications. In the case of Veetee Fine Foods Ltd. v. Commissioner of Central Excise [2017 ELT TRI DEL 357 1133], the CESTAT had enquired into the compliance of FTP for export of Basmati rice, in order to hold whether confiscation under Section 113 of the Customs Act was legally tenable.
Relevant Provisions:
Section 113 of the Customs Act, 1962
“113. Confiscation of goods attempted to be improperly exported, etc.
d) any goods attempted to be exported or brought within the limits of any customs area for the purpose of being exported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force;”
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