Cold Heading Quality Alloy Steel Wire Can’t Be Classified As Wire Rod Merely Due To SCM435 Grade Mention In Mill Certificate: CESTAT

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that “Cold Heading Quality Alloy Steel Wire in Coils” imported is correctly classifiable as alloy steel wire under Customs Tariff Heading (CTH) 7229 and not as “wire rod” under CTH 7227 merely because the mill certificate referred to SCM435 grade and JIS G4053 specifications. The bench of P. Dinesha (Judicial Member) and Vasa Seshagiri Rao (Technical Member) set aside the customs duty demand of Rs. 11.53 crore along with confiscation and penalties imposed by the Principal Commissioner of Customs, Chennai. The dispute arose after the importer classified the goods as “Wire of other alloy steel – Cold Heading Quality Steel Wire” under CTH 7229 9090 while availing concessional Basic Customs Duty at 5% under Notification No. 152/2009-Cus. The Customs Department alleged that the imported product was actually “wire rod” classifiable under CTH 7227 9040 and consequently denied the exemption benefit. According to the Department, the imported goods were in irregularly wound coils and had not undergone substantial cold drawing. Relying heavily on the mill test certificate mentioning SCM435 grade and JIS G4053 standards, the Department contended that the goods were hot-rolled wire rods and not finished steel wire. Based on this allegation, a show cause notice was issued proposing reclassification, denial of exemption, recovery of differential customs duty with interest, confiscation under Section 111(m), and penalties under Sections 112(a) and 114AA of the Customs Act. The importer argued that the product was a specialized cold heading quality steel wire used in the manufacture of bolts, nuts and fasteners and that it had already undergone several metallurgical processes including pickling, coating, spheroidized annealing and cold drawing before import. The Tribunal examined the distinction between “wire rod” and “wire” under Chapter 72 of the Customs Tariff Act and referred to the HSN explanatory notes. It noted that wire rods are hot-rolled semi-finished products, whereas “wire” refers to cold-formed products obtained through wire drawing or other cold-forming processes. A crucial factor considered by the Tribunal was the manufacturing flow chart and catalogue of the supplier, Hyundai Special Steel, which showed that the starting material was wire rod that subsequently underwent pickling, wire drawing, annealing, skin pass and inspection before becoming cold heading quality wire. The Tribunal observed that the manufacturing process clearly demonstrated that the imported product had already been converted from wire rod into wire through cold drawing. Rejecting the Department’s argument based on SCM435 grade and JIS G4053 standards, the Tribunal held that these standards merely indicate the chemical composition and grade of chromium-molybdenum steel and do not determine whether the product is in the form of rod or wire. The Bench observed that the same grade can exist in multiple forms including bars, rods and wire depending upon the stage of manufacture. The Tribunal also rejected the Department’s reliance on the SAIP (Spheroidized Annealing in Process) notation in the mill certificate. It clarified that annealing is a heat treatment process intended to improve ductility and workability and cannot be equated with the absence of cold work. The Bench held that the annealing process was carried out after the wire drawing stage and therefore supported the importer’s case that the product had already become wire. The Department had additionally relied on an expert opinion from IIT Madras stating that only minimal reduction in diameter had occurred and that the goods could be considered “cold heading quality wire rod.” However, the Tribunal found that even the IIT opinion admitted the existence of a cold drawing process. It held that the degree of reduction in diameter was not decisive; rather, the relevant factor was whether the product had undergone wire drawing. The Bench further attached significance to the BIS certification issued to the foreign supplier, which specifically described the product as “wire” in drawn condition. The Tribunal considered this to be strong documentary evidence issued by a statutory quality control authority supporting the importer’s classification. Another important factual aspect noted by the Tribunal was that the importer did not possess any wire drawing facility at its factory. Evidence placed on record showed that when the appellant procured wire rods domestically, those rods were first sent to another unit for wire drawing and thereafter received as wire under HS Code 7229 before being used in fastener manufacturing. Relying on Supreme Court precedents including CCE v. Connaught Plaza Restaurant Pvt. Ltd. and HPL Chemicals Ltd. v. Commissioner of Central Excise, the Tribunal reiterated that classification must reflect common trade understanding and that the burden to disprove the importer’s classification lies on the Department. The Tribunal ultimately concluded that the imported goods possessed the essential characteristics of cold drawn alloy steel wire and were correctly classifiable under CTH 7229 9090. Consequently, the denial of exemption under Notification No. 152/2009-Cus, the demand of differential duty, confiscation of goods and penalties were all set aside. Allowing the appeal, the CESTAT quashed the Order-in-Original passed by the Principal Commissioner of Customs, Chennai and granted consequential relief to the importer in accordance with law. Case Details Case Title: Mr. Taeyang Metals India Pvt. Ltd. Versus Principal Commissioner of Customs Citation: JURISHOUR-1198-CES-2026(CHEN) Case No.: Customs Appeal No. 40482 of 2023 Date: 08.05.2026 Counsel For Appellant: E. Ramesh, Advocate Counsel For Respondent: Anoop Singh, Authorised Representative Click Here To Read Order Read More: Service Tax Appeal Abates on Death of Appellant: CESTAT

Cold Heading Quality Alloy Steel Wire Can’t Be Classified As Wire Rod Merely Due To SCM435 Grade Mention In Mill Certificate: CESTAT

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