Reclassification Of Imported PVC Suspension Resin Based On Third-Party Test Report, Without Furnishing It To Importer Is Principles Of Natural Justice Violation: CESTAT

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai Bench, has set aside a customs demand raised against M/s Krishna Marketing, holding that the reclassification of imported PVC Suspension Resin based on a third-party test report, without furnishing it to the importer, was in violation of principles of natural justice. The Bench of P. Dinesha (Judicial Member) and Vasa Seshagiri Rao (Technical Member) has observed that no person can be condemned unheard and that mere reproduction of extracts from a document cannot substitute the obligation to provide the complete material relied upon for effective rebuttal. It noted that natural justice is a minimum safeguard against arbitrary exercise of quasi-judicial power. The case concerned the classification of “Polyvinyl Chloride (PVC) Suspension Resin SP 660” imported by the appellant from Thailand. The importer had classified the goods under Customs Tariff Heading (CTH) 39042110/39042190 as “Other Poly (Vinyl Chloride); Non-Plasticised: Poly (Vinyl Chloride) Resins.” Based on this classification, the importer availed concessional Basic Customs Duty (BCD) at 2% under the ASEAN-India Free Trade Area Preferential Trade Agreement in terms of Notification No. 046/2011-Customs dated June 1, 2011. The importer paid BCD at 2%, CVD at 12%, Education Cess at 3%, and Special Additional Duty (SAD) at 4% at the time of clearance. However, the Revenue authorities sought to reclassify the goods under CTH 39041090, relying on a test report issued by the Central Institute of Plastics Engineering & Technology (CIPET) in respect of another importer. A show cause notice was issued proposing denial of the concessional duty benefit and demanding differential duty. The Adjudicating Authority confirmed the reclassification and denied the benefit of the exemption notification. The Commissioner (Appeals) upheld this decision, observing that reproduction of relevant portions of the CIPET report in the show cause notice was sufficient and that non-supply of the full report did not prejudice the importer. At the outset, the Tribunal found the approach of the Commissioner (Appeals) to be contrary to settled principles of natural justice. The Tribunal held that failure to furnish the CIPET report, which formed the very basis of reclassification, deprived the appellant of a fair opportunity to contest the findings. Such procedural lapses, it observed, render the order unsustainable. On merits, the Tribunal framed the core issue as whether the importer’s classification under CTH 39042110/39042190 was correct or whether the Revenue’s reclassification under CTH 39041090 was justified. The Bench noted that an identical issue had already been decided by it in the case of Arun Industries v. Commissioner of Customs, where reclassification based on the same CIPET report was set aside. In that case, the Tribunal had followed earlier decisions, including Ram Nath Co. Pvt. Ltd. and Arun Polymers, holding that PVC resin suspension grade, being non-plasticised, was specifically classifiable under sub-heading 3904.21 during the relevant period. The Tribunal reiterated the principle that a specific tariff entry prevails over a general or residuary entry, in accordance with Rule 3(a) of the General Rules for the Interpretation of the Import Tariff Schedule. Since “Poly (vinyl chloride) resins” had a specific entry under 3904.21 during the relevant period, the residuary heading 39041090 could not be preferred. It also observed that the issue was no longer res integra in light of earlier consistent rulings. Holding that the order was flawed both on account of violation of natural justice and on merits, the Tribunal set aside the Order-in-Appeal dated December 11, 2015. The appeal was allowed with consequential benefits, if any, in accordance with law. Case Details Case Title: M/s.Krishna Marketing Versus The Commissioner of Customs Citation: JURISHOUR-37-CESTAT-2026(Che) Case No.: Customs Appeal No. 40336 of 2016 Date: 19.02.2026 Counsel For Appellant: Ajay Kumar Gupta, Advocate Counsel For Respondent: Rajni Menon, Authorized Representative Click Here To Read Order Read More: Admission of S. 7 IBC Plea Is Mandatory Once Debt and Default Are Proven: Supreme Court

Reclassification Of Imported PVC Suspension Resin Based On Third-Party Test Report, Without Furnishing It To Importer Is Principles Of Natural Justice Violation: CESTAT

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