The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the Customs Department cannot alter the tariff classification of imported goods in the absence of any factual distinction or change in law from an earlier binding decision involving the same importer.
The bench of P. Dinesha (Judicial Member) and M. Ajit Kumar (Technical Member) set aside the reclassification of imported Nikrothal wire and found that there was no material difference in facts, the imported products were identical, and the department failed to demonstrate any change in law that would justify taking a contrary view.
The dispute arose after Alleima India imported various products, including Kanthal wire, Nikrothal wire, and Kanthal APM tubes, through a Bill of Entry. During self-assessment, the importer classified the Nikrothal wire under Customs Tariff Heading (CTH) 75052200.
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Initially, the Bill of Entry was facilitated without assessment or examination. However, while processing a request relating to amendment of bond details, the assessing officer questioned the declared classification. The officer was of the view that the goods did not contain cobalt and therefore could not be classified under Chapter 75. Consequently, samples were drawn for laboratory testing.
The departmental laboratory analysed multiple samples of the imported wire and found that the composition consistently contained: Nickel: approximately 79.7% to 80.8%, Chromium: approximately 18.5% to 20.2% and Other elements: less than 1%.
The laboratory findings themselves were not disputed by either side during the proceedings. The composition table formed part of the Tribunal’s record.
Despite the importer relying on an earlier Commissioner (Appeals) order supporting its classification, the adjudicating authority rejected the declared tariff heading and reclassified the imported Nikrothal wire under CTH 72230091.
The Commissioner (Appeals) subsequently upheld the reclassification, prompting Alleima India to challenge the order before the Chennai Bench of CESTAT.
The principal question before the Tribunal was whether the Customs Department was justified in disturbing the tariff classification declared by the importer when the same issue had already been decided in the importer’s favour for an earlier period.
The Tribunal observed that an earlier decision of the Ahmedabad Bench of CESTAT in the appellant’s own case had already examined the classification of the very same goods.
That earlier Bench had analysed the mill test certificates, the relevant Chapter Notes, sub-heading notes, and the applicable tariff entries, before concluding that the Department’s attempt to reclassify the imported goods could not be sustained.
After examining the record, the Tribunal held that the present dispute was squarely covered by the earlier decision in the appellant’s own case.
Accordingly, it held that the adjudicating authority was not justified in disturbing the classification declared by the importer merely by adopting a different interpretation without any distinguishing circumstances.
The Bench therefore set aside the impugned appellate order confirming the reclassification.
Allowing the appeal, the Tribunal ruled that the reclassification of the imported Nikrothal wire could not be sustained in law. It also directed that the appellant would be entitled to all consequential benefits available under the Customs Act. The miscellaneous application filed by the appellant was also disposed of.
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