Introduction
In Commissioner of Customs, Ludhiana v. Hightop Trading Pvt. Ltd.in Review Petition (Civil) Diary No. 15131 of 2026 in Civil Appeal No. 12918 of 2025, decided on 22.07.2026, the Hon’ble Supreme Court has dismissed a review petition filed by the Revenue against its own earlier order, which affirmed a decision of the Hon’ble CESTAT, Chandigarh Bench. Across all three stages of this litigation, the question was the same: whether an exporter of basmati rice must additionally satisfy the compositional standards prescribed by the Food Safety and Standards Authority of India (‘FSSAI’), over and above the export conditions specifically set out in the Foreign Trade Policy (‘FTP’). Since the Hon’ble Supreme Court’s orders at both the appeal stage and the review stage were brief and confined to whether the CESTAT’s order warranted interference, the substantive reasoning is best understood by going back to the Tribunal’s decision itself.
Background
Hightop Trading, an APEDA-registered exporter holding a valid IEC, exported 587.50 MT of ‘brown basmati rice’ under CTH 1006 3020 to a UK buyer, pursuant to a contract registered with APEDA. On testing by the Central Revenue Chemical Laboratory (‘CRCL’), the sample was found to meet six of eight parameters associated with basmati rice under FSSAI standards, falling short only on average cooked rice length and elongation ratio after cooking. On this basis, the Revenue issued a show cause notice alleging that the goods were in fact non-basmati rice, whose export was prohibited under a DGFT notification, and sought confiscation, duty recovery and penalties under Sections 113(d), 114A and 114AA of the Customs Act, 1962. The adjudicating authority confirmed duty of over Rs. 1 crore, an equivalent penalty under Section 114A, a further penalty of Rs. 20 lakh under Section 114AA, and a redemption fine of Rs. 1 crore.
The CESTAT’s Reasoning on Merits
The Tribunal framed the issue narrowly: whether an exporter of de-husked brown basmati rice is required to satisfy only the conditions specified at Serial No. 57 of Schedule-II of the ITC (HS) Export Policy, or is additionally bound by FSSAI’s compositional standards. The Hon’ble CESTAT found that Hightop Trading had satisfied every condition actually prescribed under Serial No. 57, including APEDA contract registration, the grain length and length-to-breadth ratio thresholds, export through an EDI port, and the requisite Export Inspection Agency certificate, none of which the Revenue disputed.
On the FSSAI question, the Hon’ble Tribunal noted that the Food Safety and Standards Act, 2006 empowers FSSAI to regulate the manufacture, processing, distribution, sale and import of food, but does not mention export, and that Para 2.03 of the FTP allows export goods to be exempted from domestic quality standards, with no condition referencing FSSAI standards having been prescribed for this tariff item under the Export Policy. The Hon’ble Tribunal also observed that the Revenue had not pointed to any statutory provision, notification or circular making FSSAI standards applicable to export goods, that food safety standards vary by importing country in any event, and that there was no evidence the UK buyer had rejected the consignment or that the goods had been diverted or paid for outside normal banking channels. The Hon’ble Tribunal further noted that the Revenue’s own reliance was placed on the CRCL, which it did not consider a specialised food-testing laboratory, without any effort to seek FSSAI’s own opinion on the point. On this basis, it held that the Revenue had failed to establish misdeclaration, and set aside the confiscation, duty demand, redemption fine and penalties in their entirety.
Confirmation at the Supreme Court, and the Review Petition
The Revenue’s civil appeal against the CESTAT’s order was dismissed by the Hon’ble Supreme Court, which found no good reason to interfere with the Tribunal’s order. The Revenue subsequently filed a review petition against this dismissal, which the Hon’ble Supreme Court has now disposed of as well. Applying the settled, narrow standard for review, namely whether there is an error apparent on the face of the record, the Hon’ble Court found none, and dismissed the review petition, thereby bringing finality to the CESTAT’s reasoning on the merits.
What the Litigation Means for Exporters
Although the case turns on the export of basmati rice specifically, the underlying principle has broader relevance for exporters of any product where a domestic regulatory standard exists alongside export-specific conditions under the FTP. The CESTAT’s approach, since affirmed and left undisturbed through two rounds at the Supreme Court, is that a domestic regulator’s standards do not automatically extend to export consignments merely because the same authority also regulates domestic sale of the same product; such standards apply to exports only where the FTP or a specific notification says so. Where Customs seeks to rely on a domestic standard to allege misdeclaration, exporters may find it useful to examine, as the CESTAT did here, whether that standard is actually incorporated into the applicable Export Policy entry for the relevant tariff item, and whether the department has identified any statutory basis for applying it to exports rather than relying solely on a testing report.
AMLEGALS Remarks
Exporters of regulated agricultural and food products would do well to map, tariff item by tariff item, exactly which conditions are prescribed under the applicable Export Policy entry, and to treat compliance with those conditions, rather than with the full range of domestic regulatory standards that may apply to the same product for domestic sale, as the relevant benchmark for export eligibility, unless the FTP itself incorporates the domestic standard.
Where a show cause notice on misdeclaration relies on a laboratory report or a domestic regulator’s parameters, it would be prudent to examine whether the department has identified a specific statutory basis for applying those parameters to export goods, and whether the testing agency relied upon has the relevant specialised competence, since, as this litigation illustrates, the absence of either can be decisive to the outcome.
For any queries or feedback, feel free to connect with Dhwani.tandon@amlegals