CESTAT Kolkata Upholds Classification of Ice-Cream Making Machinery Under CTH 8438

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

Date: 28.10.2026

CESTAT Kolkata Upholds Classification of Ice-Cream Making Machinery Under CTH 8438

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata has dismissed six Revenue appeals against J.B. Pen Mart, holding that the disputed imported ice-cream making machinery should be classified under Customs Tariff Heading (CTH) 8438 rather than CTH 8418. The Tribunal also rejected Customs’ enhancement of the declared import value because the statutory reassessment procedure was not followed.

The dispute: classification and valuation of imported machinery

The case concerned six Bills of Entry filed by J.B. Pen Mart for imported ice-making and ice-cream making equipment during 2017 and 2018. The importer had sought classification under CTH 8438 80 90, covering machinery used in the industrial preparation or manufacture of food and drink.

Customs authorities reclassified the goods under CTH 8418 69 90, treating them as ice-cream machines or refrigeration-related equipment. They also enhanced the declared value of the imports, resulting in an aggregate differential duty demand of Rs. 12,27,374.98.

J.B. Pen Mart paid the additional duty to secure clearance of the goods and avoid demurrage, but did so under protest. The company challenged both the classification and the valuation before the Commissioner (Appeals), who ruled in its favour. The Revenue then appealed to CESTAT.

Tribunal’s finding: no valid reassessment without a speaking order

A central issue was the Customs department’s failure to issue a speaking order under Section 17(5) of the Customs Act, 1962.

Where Customs reassesses goods contrary to an importer’s self-assessment on classification or value, the proper officer must issue a reasoned order within 15 days unless the importer has expressly accepted the reassessment in writing. In this case, the Tribunal found that no such order had been issued.

The Tribunal rejected the Revenue’s argument that payment of the revised duty amounted to acceptance. It noted that J.B. Pen Mart had paid under protest, sought to avoid port-related charges, and subsequently challenged the reassessment. These facts showed that the importer had not accepted the revised classification or enhanced value.

As a result, the Tribunal held that the reassessment was unsustainable for breach of statutory procedure and principles of natural justice.

Why CTH 8438 was preferred over CTH 8418

The Tribunal also found that the Department’s own past treatment of comparable machinery supported classification under CTH 8438.

The record showed a consistent history of orders and assessments treating similar ice-cream making equipment as machinery for food preparation under CTH 8438, including:

• A 2008 departmental review stating that ice-cream candy making machinery was classifiable under CTH 8438.
• A 2012 Order-in-Appeal that classified an integrated ice-cream production system under CTH 8438 80 90.
• The 2018 appellate order in J.B. Pen Mart’s own matter.
• A 2025 Order-in-Appeal involving the same importer, which again held that complete ice-cream making and ice-cube machines belonged under CTH 8438 80 90.
• A subsequent October 2018 clearance of identical goods for J.B. Pen Mart under CTH 8438.

The Tribunal distinguished complete machinery used to prepare and dispense edible products from ordinary refrigeration equipment. While Heading 8418 covers refrigerators, freezers, and similar cooling equipment, the imported machines were designed for the production of ice cream and ice cubes as food products. Their principal function was food preparation, making CTH 8438 the more appropriate heading.

Inconsistent departmental practice benefited the importer

CESTAT observed that Customs had taken divergent positions over the years, classifying similar goods under CTH 8438 in 2008, 2012, 2018, and 2025, while seeking classification under CTH 8418 for the disputed 2017–2018 imports.

The Tribunal held that Revenue could not selectively classify identical or similar goods under different tariff headings without cogent reasoning. Because the Department itself had created uncertainty through inconsistent practice, the benefit of that confusion had to go to the importer.

The Tribunal also noted that prior appellate orders supporting CTH 8438 had not been effectively challenged or stayed by the Department. Those orders therefore continued to carry weight in determining the correct classification.

Value enhancement was set aside

The Tribunal upheld the Commissioner (Appeals)’ decision to reject the enhanced import values. Customs had not provided evidence showing why the transaction values declared by J.B. Pen Mart should be rejected, nor had it disclosed a lawful method for determining the enhanced values.

The order emphasizes that transaction value cannot be discarded merely on assumption or routine assessment practice. Customs must first establish legally valid grounds under the Customs Valuation Rules, 2007. Comparable-import data, if relied upon, must be supported by evidence regarding quality, quantity, country of origin, and timing of imports.

In this case, there was no evidence that the invoices were unreliable, that the buyer and seller were related, or that any amount over the invoice price had been paid. The failure to issue a Section 17(5) speaking order independently made the value enhancement invalid.

Key takeaways from the decision

• Classification must reflect the machine’s principal function. Complete machinery designed for making ice cream and ice cubes as edible products may fall under CTH 8438 as food-preparation machinery rather than under CTH 8418 as cooling equipment.
• A speaking order is mandatory for disputed reassessments. Customs must issue a reasoned order under Section 17(5) when it changes declared classification or value without the importer’s written acceptance.
• Payment to avoid demurrage is not acceptance. An importer’s payment of additional duty, particularly under protest, does not eliminate its right to challenge reassessment.
• Declared value needs evidence to be rejected. Customs cannot enhance value without lawful reasons, supporting evidence, and compliance with the Customs Valuation Rules.
• Consistency in assessments matters. When the Department has repeatedly accepted a particular classification for similar goods, it must provide strong reasons and follow due process before departing from that position.

CESTAT Kolkata therefore dismissed the Revenue’s appeals and confirmed the relief granted to J.B. Pen Mart: classification under CTH 8438 and assessment at the importer’s declared values.

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Source: CESTAT Kolkata

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Ravi Shekhar Jha – Advocate, Bar Council of Delhi