2026-VIL-1874-CESTAT-CHD-CU
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CUSTOMS CESTAT Cases

Customs - Exemption under Notification No. 26/2023-Cus. for capital goods imported under EPCG Authorization - Eligibility irrespective of classification under Customs Tariff - Appellant imported spools for rolling mill under EPCG Authorization, classifying them under CTH 8455 9000 and claiming the exemption. Revenue held that the spools, being made of steel, were classifiable under CTH 7326 9099, which was not mentioned in the Authorization, and alleged misdeclaration. The Adjudicating Authority denied the exemption, confirmed differential duty, and imposed penalty under Section 114A and redemption fine - Whether the difference between the tariff heading in the EPCG Authorization and the Customs Tariff disentitles the Appellant to the exemption, and whether duty, penalty and redemption fine can be sustained - HELD - The goods are described as spools for rolling mill both in the Authorization issued by DGFT and in the Bill of Entry. Explanation (A) to the notification adopts the definition of capital goods in paragraph 11.08 of the Foreign Trade Policy, which turns on the requirement for manufacture or production and not on tariff classification, and Revenue did not allege that the spools fall in the negative list. When the authority issuing the Authorization has treated the goods as capital goods, Customs cannot take a different view merely because of a different classification. If Customs wished to deny the exemption, it had to seek clarification from DGFT or get the Authorization modified, rectified or annulled, which it did not do. Since the exemption is available irrespective of classification, the classification of the spools need not be decided, the allegation of misdeclaration with intent to evade duty is nullified, and the demand, penalty and redemption fine are not warranted - The impugned order is set aside and the appeal is allowed
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