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VA Tech Wabag Hit with Massive Customs Penalty; Legal Battle Looms on Duty Drawback Allegation

Swarnadwip Nath Published Aug 25, 2025, 09:25 PM Updated Sep 16, 2026, 12:07 PM

VA Tech Wabag Ltd has recently been served an Order-in-Original by the Commissioner of Customs – NS-II, Nhava Sheva, Maharashtra, dated August 25, 2025. The order alleges incorrect availment of duty drawback under the Customs Act, 1962 concerning the export of goods. The customs authority has demanded recovery that includes excess duty drawback, a penalty, and a redemption fine, cumulatively amounting to a significant financial outlay for the company. The company, however, has asserted that it will pursue appropriate legal remedies to contest the allegations.

Key Highlights of the Customs Authority Action:

Authority involved: Commissioner of Customs – NS-II, Nhava Sheva, Maharashtra.
Date of order received: August 25, 2025.
Allegation: Incorrect availment of duty drawbacks related to export activities under the Customs Act, 1962.

Financial demands:

Excess Duty Drawback demanded: INR 6,92,28,696 (with INR 60,00,000 already paid in FY 2022-23).
Penalty imposed: INR 20,12,00,000.
Redemption fine levied: INR 60,12,00,000.

The cumulative financial demand stands at INR 87,16,28,696 against the company from the customs authority, a substantial amount reflecting the seriousness of the alleged infraction.

Company's Position and Impact:

VA Tech Wabag Ltd has officially stated that while it has received this order, the demand does not have any material impact on its financial, operational, or other business activities. The company has indicated its intention to challenge the order through appropriate legal channels, underscoring that the matter is under active dispute and resolution processes.

Context and Further Information:

VA Tech Wabag Ltd is a leading player in the water and wastewater treatment sector, with a strong reputation for executing large-scale projects both domestically and internationally. The company has recently been active with contracts, such as securing a repeat order worth approximately INR 118 crore from the Kingdom of Bahrain for sewage treatment plant operation and maintenance. It also bagged projects in sectors including solar cell manufacturing water management solutions, showing its diversified industrial presence.

Though the customs order alleging duty drawback irregularities is a significant regulatory challenge, the company's ongoing project wins and steady financial performance indicate resilience amid this legal challenge. The demand by customs authority highlights the regulatory scrutiny that export-related duty benefits face under the customs laws in India.

In conclusion, while VA Tech Wabag Ltd confronts a major customs duty drawback allegation involving penalties and fines exceeding INR 87 crore, it remains confident in its legal stance and operational strength. Investors and stakeholders will keenly await further updates on this matter as it unfolds in the legal arena.

Source: VA Tech Wabag Ltd company disclosure to the company

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