CBIC Appoints Common Adjudication Authority for EOUs: What Exporters Must Know

Introduction

On May 22, 2025, the Central Board of Indirect Taxes and Customs (CBIC) issued a key notification concerning 100% Export Oriented Units (EOUs). The circular appoints a "Common Adjudication Authority" for de-novo adjudication in cases involving both customs and central excise duties. While this might sound technical, it has direct, practical implications for exporters, logistics companies, and manufacturers operating under the EOU scheme.

In this article, we break down what this change means, why it was introduced, and how it affects businesses.

What Are EOUs and Why Are They Important?

Export Oriented Units (EOUs) are businesses that receive duty-free benefits on imports provided they manufacture goods meant exclusively for export. These businesses play a critical role in boosting India's foreign trade by increasing exports and reducing tax burdens on inputs.

However, EOUs are also subject to strict compliance requirements. Failure to meet export obligations or misuse of duty exemptions can result in demand notices under the Customs Act and Central Excise Act.

The Problem So Far: Jurisdictional Confusion

In many cases involving EOUs, tax authorities issued show cause notices (SCNs) invoking provisions of both Customs and Central Excise laws. These were often adjudicated by officers from the Central Excise department.

Appellate tribunals such as CESTAT (Customs, Excise and Service Tax Appellate Tribunal) frequently remanded such cases, stating that the officer lacked jurisdiction to decide matters involving customs law. This caused significant delays and legal uncertainty.

CBIC’s Solution: Common Adjudication Authority

To resolve this issue, CBIC has designated specific officers as the Common Adjudication Authority for such remanded cases. This ensures:

1. Jurisdictionally appropriate officers handle the cases

2. Fresh (de-novo) adjudication is carried out under the correct legal framework

3. Faster and more consistent resolution of legacy disputes

These common authorities are empowered under the Customs Act, 1962, even if excise elements are involved, ensuring the adjudication process follows the right procedure.

What Is De-Novo Adjudication?

"De-novo" means "from the beginning." In practical terms, the entire adjudication process will be restarted. Businesses involved in such cases must now:

• Re-file replies or submissions

• Appear before the newly appointed authority

• Re-argue their case with supporting evidence

This presents both a challenge and an opportunity. If the earlier decision was unfavorable due to a procedural error, the company now has a fair chance to rectify its position.

Example Scenarios

1. Case Remanded Due to Jurisdiction Error

Startech Components Pvt. Ltd. received a notice for non-fulfillment of export obligation. The original order was passed by an excise officer, but it involved customs duty. The company appealed, and CESTAT remanded the case. Now, under the new rule, the case will be re-heard by a customs officer who has the correct jurisdiction.

2. Dual Duty Demands (Excise + Customs)

Global Fashion Exporters LLP was accused of diverting duty-free inputs for local sale. Duty was demanded under both customs and excise. The original order was passed without proper authority. Under CBIC’s new direction, the matter will be freshly decided by the right officer.

3. SEZ-Based EOU Facing Valuation Dispute

BioMed India Ltd. had its case quashed due to valuation issues and incorrect forum. The notification allows it to now re-present its case, ensuring SEZ documentation is rightly considered.

Who Should Take Note?

• 100% EOUs facing ongoing or remanded adjudication matters

• Companies with cases involving both customs and excise elements

• Legal teams representing exporters

• Compliance officers handling trade and customs litigation

What Should You Do Now?

1. Review your pending or remanded adjudication matters

2. Identify whether they involve dual provisions (customs + excise)

3. Engage with legal counsel to prepare fresh submissions

4. Ensure your case is presented thoroughly before the designated authority

CBIC’s move to appoint a Common Adjudication Authority is a long-overdue correction aimed at ensuring procedural fairness and legal clarity. For many exporters, this is a second chance to present their case correctly and possibly avoid penalties or reduce liabilities.

At LawCite Advocates, we assist clients in navigating such complex customs adjudications. If your business is impacted by this notification or has a case pending, contact our team for a strategic legal review.