Importer Who Voluntarily Pays Differential Customs Duty, Seeks DRI Probe Closure Cannot Claim Refund: Madras High Court

The Madras High Court on Wednesday held that differential customs duty voluntarily paid during a Directorate of Revenue Intelligence (DRI) investigation cannot be claimed as a refund.

The Court further held that Notification No. 25/2019-Customs amended the applicable customs duty rate by treating shrimp larvae feed in both pellet and non-pellet form as attracting 5% basic customs duty. The notification cannot be applied retrospectively to imports made prior to its issuance.

The judgment was delivered by Justice Abdul Quddhose on 25 February 2026, dismissing a writ petition filed by Virbac Animal Health India Pvt., Ltd. (petitioner) seeking a refund of Rs. 3.01 crore paid as differential customs duty during a DRI investigation.

The petitioner had imported shrimp larvae feed during the period 2014-2017 under 11 Bills of Entry and paid basic customs duty at 5% by classifying the goods as feed in pellet form.

The DRI subsequently initiated an investigation alleging that the imports were not in pellet form and were therefore liable to duty at 30%, resulting in a demand for differential customs duty and interest.

During the investigation, the petitioner paid the differential duty amounting to over Rs. 3.16 crore, and by a letter dated 5 March 2019, expressly requested the DRI to conclude the investigation.

The DRI accepted the request and closed the proceedings under Section 28(2) of the Customs Act, 1962, which was communicated to the petitioner in July 2019.

After the issuance of Notification No. 25/2019-Customs and relying on a proposal contained in the Finance Bill, 2019, the petitioner sought a refund, contending that shrimp larvae feed, whether in pellet or non-pellet form, attracted only 5% customs duty. The refund claim was rejected by customs authorities, leading to the writ petition.

Rejecting the challenge, the High Court held that the payment of differential duty was voluntary and not made under protest, as the petitioner neither recorded any protest at the time of payment nor raised any objection before requesting closure of the investigation.

The Court applied the doctrine of 'estoppel by conduct', holding that once the petitioner sought and obtained closure of the DRI investigation, it could not reopen the issue by claiming a refund.

The bench stated that,

"the petitioner having not raised any protest for collection of the differential customs duty and interest from the petitioner between 05.03.2019, when the petitioner had addressed a letter to DRI to close DRI investigation upon payment of the differential customs duty, and 03.07.2019, when DRI addressed a letter to the petitioner accepting the request of the petitioner for closure of DRI investigation, the question of the petitioner raising the issue of refund after DRI accepted their request for closure of DRI investigation, does not arise, as such a request is hit by the doctrine of “estoppel by conduct”."

The High Court noted that the differential customs duty collected from the petitioner during the DRI investigation was not paid under protest by the petitioner, but was paid voluntarily.

The Court further held that Notification No. 25/2019-Customs is an amendment and not a clarificatory notification, and therefore operates only prospectovely. Since the imports in question were made between 2014 and 2017, the benefit of the 2019 notification was held to be unavailable.

The bench held that,

"The collection of the differential customs duty from the petitioner was made only based on the voluntary request of the petitioner to pay the differential customs duty and interest, as demanded by DRI, and therefore, there was no necessity for DRI to issue show cause notice under Section 28 of the Customs Act, 1962."

The bench further opined that "since the petitioner themselves requested for closure of DRI investigation upon payment of the differential customs duty, they are not entitled to seek for refund as well as to re-agitate the issue once again."

Accordingly, the High Court dismissed the writ petition, holding that customs duty voluntarily paid during a DRI investigation, followed by a request for closure, cannot later be reclaimed by way of refund.

For Petitioner: Prakash Shah, SC for A.K.Rajaraman

For Respondent: K.Umesh Rao, SSC