Customs Classification of Imported Polyester Knitted Fabrics

Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 31.08.2026

Customs Classification of Imported Polyester Knitted Fabrics

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata, recently delivered a significant judgment in the case of M/s. Elvance Overseas LLP regarding the customs classification and duty assessment of imported polyester knitted fabrics. This article provides a detailed overview of the dispute, the legal arguments, and the Tribunal’s final decision, offering valuable insights for importers, customs professionals, and legal practitioners.

Background of the Case

Elvance Overseas LLP, a Delhi-based importer, brought in consignments described as “Mixed Lot of Polyester Knitted Fabrics” from Chinese suppliers. The company filed six Bills of Entry, classifying the goods under Customs Tariff Item (CTI) 6006 9000 and claimed a concessional Basic Customs Duty (BCD) rate of 10% under Notification No. 82/2017-Customs. The total assessable value of the imports was over Rs. 2.17 crore, and the declared customs duty paid was Rs. 36 lakh.

Table: Summary of Bills of Entry

Sl. No.	Bill of Entry No.	Date	Supplier	Description	Assessable Value (Rs.)
1	8229928	27.09.2018	Dauer International Ltd., U.K.	Mixed lot of Polyester Knitted Fabric	28,42,278.51
2	8056261	15.09.2018	Dauer International Ltd., U.K.	Mixed lot of Polyester Knitted Fabric	49,21,368.00
3	8445114	13.10.2018	LCL Group Co. Ltd., H.K.	Mixed lot of Polyester Knitted Fabric (non printed)	28,21,408.00
4	8444937	13.10.2018	LCL Group Co. Ltd., H.K.	Mixed lot of Polyester Knitted Fabric (non printed)	28,51,792.00
5	7939366	06.09.2018	Dauer International Ltd., U.K.	Mixed lot of Polyester Knitted Fabric	54,67,566.00
6	8338285	05.10.2018	Dauer International Ltd., U.K.	Mixed lot of Polyester Knitted Fabric (non printed)	28,53,163.00
Total					2,17,57,575.51

The Department’s Stand

The Customs Department challenged the classification, arguing that the imported goods should be classified under CTI 6006 3200 (knitted fabrics of synthetic fibres), attracting a higher BCD of 20%. The Department alleged that Elvance Overseas LLP misclassified the goods to avail a lower duty rate, and issued a Show Cause Notice demanding differential duty of Rs. 25.13 lakh, along with interest and penalty under Section 114A of the Customs Act, 1962.

Legal Arguments

Appellant’s Contentions

1. Burden of Proof: The importer argued that the burden to prove misclassification lies with the Revenue, which must provide technical or scientific evidence.
2. Need for Laboratory Testing: Classification depends on fiber composition and other technical parameters, which require laboratory analysis. No such testing was conducted by the Department.
3. Interpretation of Chapter 60: The chapter requires careful analysis, and mixed lots cannot be presumed to be 100% synthetic without scientific proof.
4. Contemporaneous Assessment: Other customs ports had accepted similar goods under the same classification, and any deviation must be justified.
5. Finality of Assessment: The original assessment was completed and accepted by the proper officer; changing it without new evidence is not permissible.
6. Lack of Evidence: The Department failed to provide any laboratory reports, technical literature, or expert opinions to support reclassification.

Department’s Arguments

• The Department maintained that the goods were polyester knitted fabrics, which are synthetic by definition, and thus should be classified under CTI 6006 3200.
• They argued that the importer’s own description supported this classification and that the lower duty rate was wrongly claimed.

Tribunal’s Analysis and Findings

The Tribunal examined the facts and legal submissions in detail:

1. Original Assessment Holds Weight: The goods were assessed and cleared under the declared classification, and the Department did not challenge this at the time.
2. No Laboratory Evidence: The Department did not conduct any laboratory testing to establish the actual composition of the imported fabrics.
3. Mixed Lot Description: The term “Mixed Lot” indicates a variety of fabrics, not necessarily homogeneous synthetic fibre content. Without testing, the Department could not conclusively prove the goods were synthetic.
4. Contemporaneous Practice: Other importers had similar goods classified under CTI 6006 9000, and the Department had accepted this practice elsewhere.
5. No Evidence of Suppression or Malafide: There was no proof of deliberate misstatement or intent to evade duty by the importer.

Final Order and Impact

The CESTAT Kolkata ruled in favor of Elvance Overseas LLP, holding:

• The goods are correctly classifiable under CTI 6006 9000.
• The demand for differential duty and penalty is set aside.
• The appeal is allowed with consequential relief.

Key Takeaways for Importers

1. Importance of Evidence: Customs authorities must provide concrete evidence, such as laboratory reports, to challenge an importer’s declared classification.
2. Finality of Assessment: Once an assessment is completed and accepted, it cannot be changed without new, substantive evidence.
3. Consistency in Classification: Uniformity in classification across ports is crucial; arbitrary changes can be challenged.
4. Interpretational Disputes: Penalties should not be imposed in cases involving genuine interpretational differences without evidence of malafide intent.

Conclusion

This ruling reinforces the principle that customs classification disputes must be resolved based on evidence and established legal standards, not assumptions or administrative convenience. Importers should ensure accurate documentation and be prepared to defend their classification with technical data, while authorities must adhere to due process and evidentiary requirements.

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Source: CESTAT Kolkata

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Ravi Shekhar Jha – Advocate, Bar Council of Delhi