Customs classification cannot be changed arbitrarily without notice, reasons, and natural justice where settled practice created legitimate expectation.

A settled customs classification practice affecting duty liability cannot be altered arbitrarily when the same goods have consistently been assessed under one tariff heading. Where authorities depart from that established practice, they must give prior notice, record adequate reasons, and act consistently with natural justice. A prior pattern of assessment, including contemporaneous imports, may also create a legitimate expectation of continued classification unless a proper basis for change is shown. On these facts, the reclassification was held unjustified and bad in law, and the order sustaining the new classification was set aside.

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Issues: Whether the customs authorities could change the classification of the imported goods from CTH 2942 0090 to CTH 3003 9090 without prior notice and adequate reasons, despite a consistent prior practice of classifying the same goods under CTH 2942 0090.

Analysis: The goods had been regularly assessed under CTH 2942 0090 in the appellant's own imports and in contemporaneous imports by other importers. The change was made only for the impugned consignments and without notice to the importer explaining why the established classification practice was being departed from. In matters affecting duty liability and landed cost, consistency and permanence in classification were relevant, and a departure from established practice had to be supported by reasons and preceded by notice in keeping with natural justice. The long-standing practice also gave rise to a legitimate expectation that the earlier classification would continue unless changed on proper grounds.

Conclusion: The change in classification was unjustified and bad in law. The order upholding classification under CTH 3003 9090 was set aside and the appeal was allowed.

Ratio Decidendi: A settled classification practice affecting duty liability cannot be arbitrarily altered without notice, reasons, and observance of natural justice, especially where the importer has a legitimate expectation of consistent treatment.

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