ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 15.11.2025
CESTAT Kolkata Overturns Rs. 56.7 Lakh Customs Duty Demand and Upholds Correct Classification β
This Article has been written by Shri Ravi Shekhar Jha, Advocate based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.
In a significant ruling, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Eastern Zonal Bench, Kolkata, has delivered a favorable judgment for M/s. B.M. Jain & Sons Pvt. β Ltd., a company engaged in the import of Dioctyl Phthalate (DOP). The case revolved around the classification of imported goods and the applicability of concessional duty rates under Notification No. β 152/2009-CUS dated 31.12.2009. β
Background of the Case
The dispute arose when the Directorate of Revenue Intelligence (DRI) alleged that the company had misdeclared Dioctyl Orthophthalate (Ortho DOP) as Dioctyl Phthalate (DOP) and classified it under Customs Tariff Heading (CTH) 29173920 to avail concessional duty benefits. β The DRI issued a Show Cause Notice (SCN) demanding differential duty of Rs. β 56,71,510/- along with interest and penalties, claiming that the goods should have been classified under CTH 29173200. β
The Commissioner of Customs (Port) upheld the DRI’s findings, confirming the demand and imposing penalties. Aggrieved by this decision, M/s. B.M. Jain & Sons Pvt. β Ltd. filed an appeal before the CESTAT.
Key Arguments by the Appellant β
- Historical Classification: The appellant argued that they had been importing the same goods for years under CTH 29173920 without any objections from the Customs Department. β They continued this classification even after the 2018 Budget, which deleted the specific tariff entry for Dioctyl Phthalate under CTH 29173920. β
- Scientific Classification: The appellant contended that the classification of goods should be based on their scientific and technical name, not commercial or market parlance. β They emphasized that no samples or tests were conducted by the department to substantiate the claim that the goods were Dioctyl Orthophthalate. β
- Tariff Changes Post-Budget 2018: The appellant highlighted that after the 2018 Budget, the goods should still be classified under the new entry for Dioctyl isophthalate and Dioctyl terephthalate under CTH 29173920, as they continued to import the same product from the same supplier. β
- Finality of Bills of Entry: The appellant argued that all Bills of Entry were self-assessed and cleared under customs supervision. β Since the department did not appeal against the final assessment of these Bills of Entry, the proceedings initiated through the SCN were invalid. β
CESTATβs Observations and Ruling
After hearing both sides, the Tribunal made the following observations:
- Classification of Goods: The Tribunal held that the goods imported by the appellant were rightly classifiable under CTH 29173920, as there was no evidence to prove that the goods were Dioctyl Orthophthalate. β The deletion of the tariff entry for Dioctyl Phthalate in the 2018 Budget did not imply that the goods should be reclassified under CTH 29173200. β
- Concessional Duty Benefits: The Tribunal confirmed that the appellant was eligible for the concessional duty benefits under Notification No. β 152/2009-CUS dated 31.12.2009. β
- Lack of Evidence: The department failed to conduct tests or provide evidence to support its claim that the goods were misdeclared. β The Tribunal emphasized that classification should be based on scientific and technical names, not market parlance. β
- Invalid Proceedings: The Tribunal referred to the Supreme Court judgment in ITC Limited v. CCE, Kolkata-IV [2019(368) E.L.T. β 216(SC)] and held that without filing an appeal against the final assessment of the Bills of Entry, the proceedings initiated through the SCN were non-est. β
Final Verdict
The Tribunal set aside the impugned order, ruling that the demand for differential duty, interest, and penalties was unsustainable. β The appeal filed by M/s. β B.M. Jain & Sons Pvt. β Ltd. was allowed with consequential relief as per law. β
Key Takeaways
This judgment underscores the importance of adhering to scientific and technical classifications in customs matters. β It also highlights the significance of finality in the assessment of Bills of Entry and the need for substantial evidence to support allegations of misdeclaration. The ruling is a major relief for M/s. B.M. Jain & Sons Pvt. β Ltd. and sets a precedent for similar cases in the future. It serves as a reminder to businesses and authorities alike to ensure proper procedures and evidence-based actions in customs disputes.
Source: CESTAT Kolkata
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