2026-VIL-1588-CESTAT-CHE-CU
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CUSTOMS CESTAT Cases

Customs - Classification of Sensors - Specific Tariff Entry Prevails Over Residuary Entry – Appellant manufactures passenger and multi-utility vehicles and imported various sensors from group companies; identical components bearing the same part numbers were classified under different Customs Tariff Headings at different points of time - Show Cause Notice issued proposing reclassification and recovery of alleged short-paid duty – Whether temperature sensors, gas analysis sensors and other sensors should be classified under specific tariff headings such as Heading 8533 (thermistors), Heading 9027 (gas analysis apparatus), Heading 8543 (electrical apparatus) and Heading 8708 (motor vehicle parts) or under the residuary Heading 9031 (measuring or checking instruments) – HELD – Where a specific tariff heading applies, the residuary heading cannot be preferred; a thermistor-based temperature sensor whose primary function is to sense temperature through resistance change and transmit the signal to the Engine Control Unit, without performing temperature conversion or calibration itself, is classifiable under Heading 8533 as a thermistor and not under the residuary Heading 9031; gas analysis sensors using electrochemical cells to determine the concentration of constituents in exhaust gas are specifically covered by Heading 9027 and not under Heading 9031; the Sensor Speed which merely detects magnetic field changes and generates electrical signals without performing measurement is classifiable under Heading 8543 as an electrical apparatus; the Retainer Ultrasonic Sensor, being specially designed for use solely with motor vehicles, is classifiable under Heading 8708 and not under the general plastic articles heading – Appeals allowed with modification; classification of specific sensors set aside and appellant's declared classification upheld - Customs Duty - Extended Period of Limitation - Burden on Revenue to Establish Wilful Misstatement – Whether the extended period under Section 28(4) of the Customs Act can be invoked merely on the basis of repeated adoption of different classifications for identical goods without evidence of deliberate suppression or wilful misstatement with intent to evade duty – HELD – The extended period requires a positive act indicating wilful default; mere wrong classification or breach of the self-assessment obligation is insufficient; the Revenue must establish by cogent evidence, either direct or circumstantial, raising adverse inference, collusion, wilful misstatement or suppression of facts with intent to evade duty - The changing pattern of classification adopted by an importer, without more, does not establish deliberate suppression or wilful misstatement; the Bills of Entry contained the relevant particulars and were self-assessed under the statutory scheme; the subsequent adoption of a different classification cannot by itself, without sufficient evidence, establish a charge of suppression or wilful misstatement - The presumption of innocence is a background assumption of the legal system. Therefore in the absence of sufficient evidence, the extended period is not invocable – Demand raised by invoking extended period set aside as barred by limitation - Customs Duty - Section 28 - Reclassification Without Duty Demand Not Permissible – Appellant imported sensors which were classified under specific tariff headings at the time of import; Show Cause Notice proposed reclassification of thirty-six sensors under Section 28 but did not raise any demand of differential duty in respect of them; appellant contended that Section 28 cannot be invoked merely to reclassify goods where no duty demand has been raised – Whether the proper officer can invoke Section 28 merely to alter the classification of goods already assessed under a completed assessment, where no duty or other liability is proposed to be recovered and no short-levy, non-levy or erroneous refund is alleged – HELD – Once the assessment under Section 17 is completed and goods are cleared from Customs control, the proper officer becomes functus officio and cannot review or alter the assessment except under a specific statutory provision empowering such action; Section 28 is a specific provision for recovery of duty not levied, not paid, short-levied, short-paid or erroneously refunded; where no duty is sought to be recovered, a distinction has to be made between re-assessment undertaken to determine and recover duty under a statutory provision and a mere change in classification of goods already assessed - Reclassification of goods in respect of which no differential duty is demanded is beyond the scope of Section 28 proceedings; this finding does not preclude the Department from examining the correct classification at the stage of assessment of any subsequent Bill of Entry as each Bill of Entry constitutes a fresh assessment – Proposed reclassification of thirty-six sensors set aside.
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