The Chennai Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has quashed the customs duty demand and held that beneficial circular on marble slabs classification to apply retrospectively.
The bench of Ajayan T.V. (Judicial Member) and M. Ajit Kumar (Technical Member) has observed that a beneficial circular has to be applied retrospectively while oppressive circular has to be applied prospectively. Thus, when the circular is against the assessee, they have the right to claim enforcement of the same prospectively.
The dispute arose after the Directorate of Revenue Intelligence (DRI), Mumbai Zonal Unit alleged that the appellants misclassified polished (honed) marble slabs under CTH 6802 2110 to avail the concessional countervailing duty (CVD) of ₹30 per square metre, instead of classifying them under CTH 6802 2190, which attracts 16% CVD. Based on these findings, the Commissioner of Customs (Seaport–Import), Chennai, in Order-in-Original No. 19996/2012 dated 31.12.2012, reclassified the goods, denied exemption, and raised differential duty demands of ₹58,03,339 against Akash Stone Industries and ₹6,71,121 against Aashiva Contractors, along with equivalent penalties under Section 112(a) of the Customs Act, 1962. A personal penalty of ₹6,50,000 was also imposed on Shri Jajodia.
The appellant/assessee argued that the Tax Research Unit (TRU) of CBEChad already clarified that polished marble slabs falling under CTH 6802 2190 were also eligible for the concessional rate. There was genuine confusion regarding classification due to the wording of the notification, which mentioned the description “marble slabs and tiles” but omitted CTH 6802 2190. The Commissioner himself refrained from invoking the mandatory penalty under Section 114A, indicating that the extended limitation period under Section 28 was wrongly applied. In the absence of mens rea (guilty intent), the imposition of penalties under Section 112(a) was unsustainable.
The CESTAT hled that TRU’s clarification was binding on departmental authorities and was not contrary to statutory provisions or any judicial interpretation. The Tribunal relied on earlier decisions, including its own ruling in Akash Stone Industries Ltd. v. Commissioner of Customs (2014) and Oriental Trimex Ltd. v. CCE, Noida (2018), which held that the benefit of Notification No. 04/2006-CE extended to polished marble slabs under CTH 6802 2190.
The Tribunal also cited Supreme Court precedents on the binding nature of beneficial circulars, such as Suchitra Components Ltd. v. Commissioner (2007), affirming that beneficial circulars apply retrospectively.
Concluding that the goods were eligible for exemption, the CESTAT set aside the Commissioner’s order, quashed the duty demands and penalties, and allowed the appeals with consequential reliefs.
Case Details
Case Title: M/s. Akash stone Industries Ltd. Versus Commissioner of customs (Import)
Case No.: Customs Appeal No. 40620 of 2013
Date: 04.07.2025
Counsel For Appellant: Stebin Mathew, Advocate
Counsel For Respondent: Anoop Singh, Authorized Representative
