2026-VIL-1659-CESTAT-CHE-CU
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CUSTOMS CESTAT Cases

Customs - Classification of imported parts and accessories of motor vehicles - Burden of proof in reclassification - Customs Tariff Item 87089900 vis-a-vis 87082900 - Appellant cleared the goods under a residuary Customs Tariff Item availing concessional duty under an exemption Notification on the strength of certificates of origin whose genuineness was never questioned - Department proposed reclassification of certain articles as parts and accessories of bodies under another Customs Tariff Item and other headings, relying upon technical write-ups furnished by the appellant and material said to be on the appellant's own website - Whether Revenue discharged the burden of establishing the proposed classification - HELD - The burden of establishing a reclassification lies upon Revenue, and classification must proceed under the General Rules of Interpretation read with the Section and Chapter Notes and Explanatory Notes, applying the cumulative conditions for parts and accessories, not by assertion drawn from a website never placed on record - Examination of a small sample cannot be extended to the whole disputed list without a finding matching each article's characteristics against the tariff entry, and a quasi-judicial authority cannot treat non-appearance at investigation or an unrebutted assertion as proof, since that inverts the burden on Revenue - Foreign customs rulings, though only persuasive, cannot be brushed aside without reasons, and absent material or trade evidence to redetermine classification for the first time at the appellate stage, a new case cannot be laid then - Revenue having failed to discharge its burden, the declared classification holds the field, and denial of exemption, being consequential upon the reclassification, collapses with it - The demand of differential duty referable to the reclassification is set aside, and no classification dispute arises for articles where the appellant itself proposed and Revenue accepted a revised classification – The appeal is allowed - Customs - Invocation of extended period of limitation - Section 28(4) of the Customs Act, 1962 - Effect of a corrigendum introducing fresh articles into a show cause notice - Demand was confirmed invoking the extended period on the ground of knowing misdeclaration with intent to evade duty, and a corrigendum revising the computation and introducing fresh articles across bills of entry not earlier in issue was treated as not affecting limitation so long as the demand on those articles fell within five years of the corrigendum - Whether the extended period was available, and the effect of the corrigendum on limitation - HELD - The extended period is available only where short levy is by collusion, wilful misstatement or suppression, the foundation for which must be laid in the notice and established on evidence, not by mechanical recital of statutory expressions - The charge being built on material the appellant itself furnished and published, such material cannot be said to have been suppressed - Claim of classification with the description correctly declared is neither misdeclaration nor suppression, particularly where the appellant had itself proposed and voluntarily paid differential duty for certain articles before the notice, conduct antithetical to intent to evade - A corrigendum is a device for correcting a clerical or arithmetical slip and cannot enlarge a notice to a noticee's disadvantage; where it so alters the notice that a fresh case must be met, limitation runs from the corrigendum date, and a demand relatable to articles it introduced for clearances beyond the resulting five-year limit is without jurisdiction - The extended period was not available, and the demand referable to articles introduced by the corrigendum beyond the resulting limit is void, while the demand within the normal period cannot survive either for want of reconciliation and credit for payments already made - Customs - Confiscation and redemption fine - Sections 111(m), 111(o) and 125 of the Customs Act, 1962 - Whether the goods were liable to confiscation and a redemption fine could be imposed - HELD - Confiscation under Section 111(m) requires goods not corresponding in value or other particular with the entry made, and an incorrect choice of tariff item, description and value undisputed, is not a misdeclaration; Section 111(o) is equally inapplicable since the exemption was claimed on certificates of origin never questioned and no condition is shown breached, ineligibility for a notification being a matter of eligibility, not breach of condition - Invoking both clauses without a finding on which particular was false or condition infringed cannot be sustained. Once the foundation for confiscation disappears, a fine in lieu thereof cannot survive - The confiscation and redemption fine are set aside - Customs - Penalty and interest - Sections 114A and 28AA of the Customs Act, 1962 - Penalty equal to the duty determined together with interest was imposed, consequent upon the demand and findings on suppression - Whether the penalty and interest are sustainable - HELD - Penalty under Section 114A is exigible only where duty is short levied by collusion, wilful misstatement or suppression and follows the demand, and is not to be imposed for a technical or venial breach or where conduct flows from a bona fide belief - The demand having been set aside and the ingredients for the extended period found wanting, no penalty survives, and interest, being consequential, cannot stand alone - The penalty and interest are set aside, and the impugned order is set aside in its entirety, without prejudice to such course as may lawfully be open to Revenue under the law of limitation and after affording proper opportunity to the appellant - The appeal is allowed.
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GST & Customs updates: Sep'26
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