Tag: #KECInternationalLimited

ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 23.01.2026

CESTAT Kolkata Ruling: Clarity on OPGW Cable Classification Dispute

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Kolkata, recently delivered a landmark judgment in the case of M/s. KEC International Limited vs. Commissioner of Customs (Port), Kolkata. ​ This case revolved around the classification of Optical Ground Wire (OPGW) Fiber Optic Cable under the Customs Tariff Heading (CTH). ​ The decision, pronounced on January 20, 2026, has brought clarity to a long-standing dispute regarding the classification of OPGW cables and the associated customs duty.

Background of the Case

M/s. KEC International Limited imported OPGW Fiber Optic Cables between June 16, 2016, and June 11, 2021, classifying them under CTH 8544 70 90. ​ This classification was based on a Test Report issued by the Electronics Regional Test Laboratory (EAST) in 2014, which was accepted by the Customs Department in 2015. ​ However, the Department of Revenue later alleged that the correct classification should be under CTH 9001 00 00, which would attract a higher customs duty. ​

On June 11, 2021, the Department issued a Show Cause Notice (SCN) demanding a differential duty of Rs. ​ 2,38,07,593/- along with interest and penalties. ​ The SCN also sought penalties against the DGM Taxation and Senior Manager Taxation of KEC International. ​ The appellant contested the SCN, arguing that their classification was consistent with the earlier accepted Test Report and that the goods were identical to those previously imported. ​

Adjudicating Authority’s Decision ​

The Adjudicating Authority reviewed the case and made the following decisions:

1. Dropped Demand for Extended Period: The demand of Rs. ​ 2,23,22,087/- for imports made between June 16, 2016, and June 10, 2019, was dropped due to the absence of suppression and the expiration of the limitation period. ​
2. Confirmed Demand for Normal Period: The demand of Rs. ​ 14,85,505/- for imports made between June 11, 2019, and June 11, 2021, was confirmed under the normal period. ​
3. No Penalties on Individuals: The proposed penalties against the DGM Taxation and Senior Manager Taxation were dropped. ​

Appeals Filed by Both Parties ​

Both parties filed appeals before the Tribunal:

• KEC International: Challenged the confirmed demand of Rs. ​ 14,85,505/-.
• Revenue: Appealed against the dropped demand of Rs. ​ 2,23,22,087/- and sought penalties against the DGM Taxation and Senior Manager Taxation. ​ However, the Tribunal clarified that the Revenue’s appeal against the individuals could not be considered as no specific appeal was filed against them. ​

Tribunal’s Observations and Final Decision ​

The Tribunal carefully analyzed the arguments and evidence presented by both parties. ​ Below are the key observations and findings:

1. Classification Dispute

The classification of OPGW Fiber Optic Cable under CTH 8544 70 90 or CTH 9001 00 00 has been a contentious issue for years. The Larger Bench of the Tribunal had previously ruled in 2017 that the cables should be classified under CTH 9001 00 00. ​ However, this decision was stayed by the Supreme Court in 2020, and the matter remains unresolved. ​

2. Lack of Evidence from Revenue ​

The Tribunal noted that the Revenue failed to provide concrete evidence, such as test reports, to support their claim that the goods imported between June 2019 and June 2021 should be classified under CTH 9001 00 00. The Revenue relied on assumptions and partial readings of letters from the Department of Telecommunication, which were insufficient to substantiate their case. ​

3. Importance of Sample Testing ​

The Tribunal emphasized the necessity of sample testing for determining the classification of goods. ​ It cited several case laws, including Stonex India Pvt Ltd vs Mundra Customs and Shalimar Paints Ltd. v. Commissioner, which established that test reports from one consignment cannot be applied to another and that each consignment must be assessed separately. ​

4. No Suppression Found ​

The Tribunal agreed with the Adjudicating Authority that the issue was one of interpretation rather than suppression. ​ The appellant had disclosed all relevant facts and had acted in accordance with the Test Report accepted by the Customs Department in 2015.

5. Final Decision

The Tribunal dismissed the Revenue’s appeal against the dropped demand of Rs. ​ 2,23,22,087/- and upheld the Adjudicating Authority’s decision. Additionally, the Tribunal set aside the confirmed demand of Rs. ​ 14,85,505/- against M/s. ​ KEC International, allowing their appeal with consequential relief. ​

Key Takeaways

This judgment is a significant milestone in the ongoing debate over the classification of OPGW Fiber Optic Cables. It highlights several important principles:

• Evidence-Based Classification: The importance of sample testing and concrete evidence in determining the classification of goods. ​
• Consistency in Decision-Making: The binding nature of previously accepted test reports and finalized assessments. ​
• Interpretation vs. Suppression: The suppression clause cannot be applied in cases involving disputes over interpretation. ​
• Adherence to CBEC Instructions: The necessity of following CBEC guidelines for verification and classification. ​

Conclusion

The CESTAT Kolkata’s decision in this case is a testament to the importance of evidence-based decision-making in customs classification disputes. By dismissing the Revenue’s appeal and allowing the importer’s appeal, the Tribunal has reinforced the need for consistency, transparency, and adherence to established procedures. ​ As the matter of classification remains sub judice before the Supreme Court, this judgment serves as a reminder of the complexities involved in customs classification and the critical role of due process in resolving such disputes.

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Source: CESTAT Kolkata

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