Bombay Metal Exchange to move court over retrospective customs duty demand on copper imports: Sources

BME represents a broad swathe of non-ferrous metal traders

India’s metal trade sector is bracing for a legal showdown as Bombay Metal Exchange Ltd (BME), a key industry body representing non-ferrous metal traders, is set to challenge retrospective customs duty demand notices served on importers of copper tubes and pipes. The petition, expected to be filed by the end of June, will contest show-cause notices issued under the ASEAN-India Free Trade Agreement (AIFTA) for copper imports routed through Vietnam between 2019 and 2023, a person aware of the matter said.

The petition, which could be filed in Mumbai or Delhi, may also have individual companies as co-petitioners to represent wider industry interests.

“The copper importers want to file a writ petition. It will only be possible towards the end of the month...as drafting will take time. BME will file individually or along with one or two companies. Most likely it will be filed at Bombay or Delhi High Court,” the person told Moneycontrol.

Legal grounds for challenge

The petition is expected to raise three primary issues. First, that the customs department’s reliance on third-party trade flow data—rather than bilateral government verification or established dispute mechanisms—violates procedural fairness. Second, that importers have no practical means to independently verify the 35 percent ASEAN (Association of Southeast Asian Nations) value content requirement, especially when goods are supplied via intermediary countries like Vietnam with copper sourced from multiple origins. And third, that the retrospective nature of the duty and penalty demands undermines policy predictability and places an unreasonable burden on businesses that had complied in good faith using certificates of origin vetted at the time of clearance.

With trade flows often managed by intermediary countries and documentation vetted by government-certified agencies, importers argue that they cannot be expected to trace the origin of raw materials in the supplier’s jurisdiction.

Industry pushback

Thousands of importers have received show-cause notices alleging misuse of duty exemptions under AIFTA, with the customs department claiming that the 35 percent ASEAN value content requirement was not met. The notices argue that copper tubes and pipes were declared as originating from Vietnam, with suppliers claiming compliance by sourcing copper from Indonesia and other ASEAN nations. However, customs officials allege that Vietnam, not being a major copper producer, could not have fulfilled the origin rules—especially since trade data suggests a mismatch between Vietnam’s imports of copper cathodes and its volume of copper tube exports to India.

BME, which represents a broad swathe of non-ferrous metal traders, had also submitted a representation to the Ministry of Finance, contesting both the retrospective nature of the penalty and the feasibility of compliance verification from the importer’s side.

“The retrospective demand for customs duty along with penalties has created significant uncertainty among industry participants. Importers have been relying on declarations made by suppliers and it is practically difficult for them to independently verify the 35 percent value-addition requirement under AIFTA,” BME said in its representation to the authorities.

“We urge the government to take a pragmatic view, considering the past practices followed in good faith under the FTA (free trade agreement) framework. The industry is willing to cooperate on ensuring compliance going forward, but sudden liabilities for previous years could severely impact MSMEs (micro, small and medium enterprises) and traders,” the BME statement added.

Red flags
Legal experts said the basis of the enforcement—which leans heavily on third-party trade flow analysis—calls into question the sanctity of certificates of origin, which were accepted by the Indian customs department during clearance.

“This sudden wave of retrospective enforcement under AIFTA strikes at the root of predictability and trust in India’s trade policy framework. For over a decade, Indian importers have relied on certificates of origin duly issued and verified through official channels. Now, based on unverified third-party data, importers are being burdened with massive financial liabilities. This not only undermines the sanctity of internationally accepted trade documentation but also violates fundamental principles of natural justice,” said Abhishek A Rastogi, founder of the eponymous law firm Rastogi Chambers.

“Any such retroactive tax or duty imposition must pass the test of judicial review. The appropriate constitutional remedy in such cases would be to challenge these actions through a writ petition, seeking judicial protection against arbitrary and excessive use of power,” he added.