The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Bangalore Regional Bench, has set aside a customs duty demand of ₹15,24,30,536 against Mukka Proteins Limited , ruling that the Customs Department failed to establish undervaluation with cogent evidence. The final orders, numbered 20934–20937/2026 and dated June 24, 2026, allow all four appeals filed by the company and three other appellants, dismissing the differential customs duty, interest, redemption fines, and penalties imposed by the Commissioner of Customs, Mangalore. This decision resolves a long-standing litigation concerning the valuation of imported fish meal, removing a significant contingent liability from the company’s balance sheet and potentially unlocking cash reserves previously held against the order.

The dispute originated from imports of fish meal undertaken by the company between September 2014 and October 2015 under the Advance Authorisation Scheme. The Customs Department alleged misdeclaration and undervaluation, issuing a Show Cause Notice on December 19, 2017. An initial adjudication order dated July 24, 2019, confirmed the demand for duty, confiscation, redemption fines, and penalties. However, CESTAT set aside this initial order on March 3, 2022, remanding the matter for fresh adjudication. Following the remand, the Commissioner of Customs, Mangalore, issued an Order-in-Original on April 30, 2024, reaffirming the proposals from the original Show Cause Notice, which prompted the current round of appeals.

In its latest ruling, the tribunal held that the demand was not sustainable due to lack of evidence. The order explicitly states that the quantified claim of ₹15,24,30,536, along with unquantified interest and the corresponding interest-linked Section 114A penalty, no longer subsists. The company is entitled to consequential relief in accordance with law. Additionally, the filing notes that the company may be eligible to seek a refund of ₹75,00,000 that had been appropriated under the previous Order-in-Original, subject to applicable statutory procedures.

Key Details of the Litigation Resolution

Mukka Proteins Limited disclosed the receipt of the order to the stock exchanges on August 6, 2026, in compliance with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The disclosure was made pursuant to SEBI Circular No. SEBI/HO/CFD/CFD-PoD-1/P/CIR/2023/123 dated July 13, 2023. The company’s Board of Directors will likely monitor the implementation of the tribunal’s order to ensure the release of appropriated funds and the cessation of any further demands related to this specific period of import.

What the Numbers Show

The resolution of this case eliminates a fixed liability of ₹15.24 crore, which represents a material reduction in the company’s potential outflows. The tribunal’s finding that the department lacked "cogent evidence" suggests a strong legal precedent for the company’s valuation methodology under the Advance Authorisation Scheme. While the primary benefit is the avoidance of the ₹15.24 crore payment, the potential refund of ₹75 lakh provides an immediate, albeit smaller, cash inflow opportunity. The dismissal of the Section 114A penalty is particularly significant, as such penalties are often discretionary and severe; their removal indicates a complete vindication of the company’s position on the merits of the valuation dispute rather than a procedural compromise.

Mukka Proteins shareholders have approved the issuance of 2,00,00,000 convertible warrants, aggregating up to ₹470 crore, through a postal ballot. The special resolution was passed with 99.96% of the valid votes cast in favour, deemed approved on July 12, 2026. The approval follows a corrigendum issued on July 06, 2026, which clarified the utilization of proceeds and pricing basis following observations from the National Stock Exchange of India Limited and BSE Limited.

The preferential issue involves the issuance of warrants at a price of ₹23.50 per warrant. The proceeds are proposed to be allocated across working capital requirements, business expansion, and general corporate purposes. The company stated that the allocation provides flexibility to support long-term growth and operational scale.

Voting Results

The remote e-voting process commenced on June 13, 2026, and concluded on July 12, 2026. A total of 22,01,79,675 votes were cast in favour of the resolution, while 82,433 votes were cast against it. The scrutinizer's report, dated July 13, 2026, confirmed that no requests were received from members seeking modification of their votes following the corrigendum.

Pricing and Valuation

The issue price of ₹23.50 per warrant was determined based on the higher of the floor price calculated under Regulation 164(1) of the SEBI ICDR Regulations and the fair value determined by an independent registered valuer. The floor price was calculated at ₹23.18 per equity share, derived from the 90-day volume weighted average price (VWAP) on the NSE. The fair value, assessed by Ms. Kavita Joshi, Chartered Accountant and Registered Valuer, was determined at ₹18.14 per share.