Supreme Court Dismisses Patanjali Foods' Appeal Against Kerala High Court's “Out of Charge” Order

The Supreme Court on Monday dismissed a special leave petition filed by Patanjali Foods Ltd, refusing to interfere with the Kerala High Court's judgment which held that customs duty is to be determined based on the date of issuance of the “out of charge” order.

A Division Bench of Justices J.B. Pardiwala and K.V. Viswanathan found no valid grounds to challenge the High Court's decision.

The Kerala High Court had allowed Patanjali Foods' appeal, holding that the relevant date for calculating customs duty is the issuance of the “out of charge” order for home consumption, not the date when goods are physically cleared from the warehouse.

Background

The dispute arose from Patanjali Foods Ltd's import of RBD Palmolein during June-July 2001. The goods were warehoused and later cleared through Ex-Bond Bills of Entry dated 4 July, 20 July, 23 July, and 3 August 2001. Duty was initially assessed at US$ 234 per metric tonne and paid between 6 July and 4 August 2001.

A notification dated 3 August 2001 raised the tariff value to US$ 372 per metric tonne, prompting customs authorities to demand differential duty on goods cleared after that date. The company challenged the demand, contending that the “out of charge” orders had already been issued before 6 August 2001.

The Kerala High Court, in its order of 18 July 2025, upheld this contention, holding that the relevant date for determining customs duty is the date of the “out of charge” order, not the date of physical clearance. It declared the differential duty demand unsustainable and set aside the contrary findings.

Today, the Supreme Court, refusing to interfere, dismissed Patanjali Foods' petition.