2026-VIL-1132-CESTAT-BLR-CU
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CUSTOMS CESTAT Cases

Customs - Misclassification of Aluminium Products – Reclassification from Profiles to Tubes - When imported goods are declared as aluminium profiles under CTH 7604 but examination reveals they are aluminium tubes mixed with profiles, reclassification to CTH 7608 for tubes is justified – HELD – The samples are drawn during examination and catalogues filed by the importer clearly indicate the presence of rectangular tubes with specific section numbers having hollow cross-sections with uniform dimensions, such goods are rightly classifiable as aluminium tubes and pipes under CTH 7608 2000 rather than aluminium profiles under CTH 7604 2990. The examination report and visual inspection conducted in the presence of witnesses and the importer's representative establish the true nature of the goods. Therefore, differential duty demand on account of reclassification for the consignment where detailed examination was conducted and samples were drawn stands upheld – Further, since the goods were mis-declared both on account of classification and valuation, the confiscation of goods is upheld though redemption fine is reduced to a reasonable amount under section 125 of the Customs Act, 1962 – The appeal is partly allowed - Undervaluation Based on Recovered Parallel Invoices – HELD - When investigations unearth parallel invoices for the same quantity and description of imported goods showing higher value than the declared value, the revenue authority is justified in rejecting the declared value and enhancing it based on recovered invoices - The difference between the declared value and the actual value as per recovered invoices constitutes sufficient evidence of misrepresentation, thereby justifying the differential duty demand on account of valuation along with interest - Invocation of Extended Period for Past Imports – Impermissibility of Multiple Show Cause Notices Based on Same Investigations – HELD - When show cause notices have already been issued invoking extended period of limitation based on investigations, the authority cannot issue another show cause notice based on the same investigations and documents recovered for a previous show cause notice without independent evidence proving that the past consignments were also misclassified or undervalued. Once the facts are known to the authorities at the time of first show cause notice, issuing subsequent show cause notices based on the same facts and documents cannot be justified as suppression of facts. Therefore, the demand of differential duty for past imports where extended period was invoked through an earlier show cause notice, cannot be sustained, and such demand is set aside except to the extent of duty payable on freight charges for the normal period - Reclassification Without Examination and Sampling in Subsequent Consignments – HELD - The subsequent consignments are sought to be reclassified on the same basis as an intercepted consignment without conducting detailed examination, drawing samples, or specifying which particular items are to be reclassified, the reclassification cannot be sustained. In the absence of physical examination, representative sampling, or documentary evidence specific to each consignment showing that the goods imported were tubes instead of profiles as declared, merely assuming similar misclassification based on the pattern found in one consignment is insufficient. Therefore, the demand for differential duty on account of reclassification for subsequent B/E is set aside along with redemption fine and all related penalties - Penalty on Third Party – HELD - A third party who is the General Manager of the foreign supplier cannot be held liable for penalty under the Customs Act for facilitating transfer of differential amounts between the importer and supplier, as such person is not engaged in violation of Customs Act provisions but merely acting in capacity of a representative of the supplier. The General Manager of the foreign supplier, though involved in collecting and forwarding differential amounts based on parallel invoices, cannot be construed as the person violating the provisions of the Customs Act, as the violation pertains to the importer's misclassification and undervaluation. Therefore, penalty imposed on such third party is set aside as there exists no justification for imposing customs penalties on a person who is not the party to the customs transaction or directly engaged in the import declaration.
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