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Informist, Monday, Jan. 5, 2026

 

--SC: No customs duty on Adani Power selling power from SEZ to domestic area

 

NEW DELHI – The Supreme Court on Monday held that Adani Power Ltd. was not liable to pay customs duty on sale of electricity from its thermal power plant in the special economic zone in Mundra to domestic tariff areas or non-processing areas of the special economic zone. Setting aside a 2019 order by the Gujarat High Court, the apex court said the high court should have followed the apex court's 2015 order on a similar issue and granted relief to Adani Power beyond 2010 for no levy of customs duty. 

 

Once it was held by the Supreme Court in 2015 that the levy of customs duty itself was without any authority, the customs department couldn't retain the amount collected, the top court said. It added that subsequent levies of customs duty by the department after 2010 by notifications were without authority of law. Verification of the customs duty to be refunded to Adani Power should be undertaken and completed by the customs department within a period of eight weeks, the court said.

 

In 2002, electrical energy imported into India was exempted from customs duty. However, in 2010, the central government said customs duty at the rate of 16% should be levied on electricity sold from a special economic zone to domestic tariff areas or non-processing areas of special economic zones. However, electricity imported from foreign countries continued to be fully exempted from customs duty. In 2012, the government came up with a new rate wherein INR 30 was to be paid as duty on 1,000 kilowatt hours for electricity sold from a special economic zone.

 

In 2015, the Gujarat High Court and the Supreme Court rejected the customs department's levy of duty for being against Article 14 and Article 265 of the Constitution of India. Both the courts held that Adani Power was entitled to exemption from payment of customs duty for the period of Jun. 26, 2009 to Sept. 15, 2010 on the electricity sold from the special economic zone. Since the relief was only restricted to 2010, Adani Power moved the high court to stop the customs department from collecting duty after 2010, refund the amount already collected, and follow the previous orders of the high court and Supreme Court. Adani Power argued that since the initial action of levying customs duty on selling electricity from the special economic zone came to be held as invalid, the subsequent proceedings would not sanctify the same.

 

At 1153 IST, shares of Adani Power Ltd. were down 1.4% at INR 146.16 on the National Stock Exchange.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Surya Tripathi

Edited by Avishek Dutta

 

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