2026 (1) TMI 1094 - AT - Customs

Classification of imported Lauric Acid: tariff subheading interpretation rejected importers concessional duty claim; appeals dismissed affirming differential duty.

Classification dispute over imported lauric acid turned on tariff subheading interpretation and entitlement to concessional import duty. The article ... Classification of goods - imported Lauric Acid (claimed under CTH 29157090 with exemption under Notification No.12/2012-Cus, Sl. No.230A) - demanding differential duties - General Rules of Interpretation (GRI 1) - burden of proof on the assessee - self-assessment and review u/s 17 - reassessment/review u/s 28(1) - Notification No.12/2012-Cus (Sl. No.230A) - Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 - Circular No.17/2011-Cus - HELD THAT:- In Commissioner of Customs v Canon India Pvt Ltd, [2024 (11) TMI 391 - SUPREME COURT (LB)], wherein, after examining the changes introduced in Section 17 as amended vide the Finance Act 2011 vis -a-vis the unamended provisions of Section 17. Therefore, as held by the Apex court, when the ambit of Section 28 allows for review of assessments and reassessments under Section 17, Revenue is not precluded from resorting to Section 28(1) to review the assessment for ascertaining if there has been a short levy, and such review would also take in its fold the aspect of the correctness of the classification claimed by the appellant. Concededly, the appellant classified the “Lauric Acid” imported under tariff item 29157090 as ‘other palmitic acid stearic acid, their salts and esters” and self-assessed the goods to the concessional rate of duty claiming that the goods are covered under Sl.No.230(A) of Notification No.12/2012-Cus. The description of the goods against the said Sl.No.230A no doubt is “All goods for use in the manufacture of soaps and oleochemicals”, but the appellant’s entitlement to the same hinges on the Lauric Acid imported being covered under the said chapter sub heading 291570, the sub heading referred to in the said Sl.No.230 (A). We find that the chapter sub-heading from 2915.11 to 2915.70 specifically cover certain saturated acyclic monocarboxylic acid and their derivatives, and lauric acid is not covered thereunder. We find that the Ld. A.R has rightly placed reliance on the decision of a coordinate bench of this Tribunal as reported in M/s. Hindustan Unilever Ltd v. The Commissioner of Custom [2025 (2) TMI 111 - CESTAT CHENNAI]. It is seen that in this case, where revenue classified Lauric Acid under Tariff Item 29159090 as against the appellant’s claimed classification of 29157090, similar to the instant case; this Tribunal had come to the conclusion that the claim of classification of Lauric Acid imported under Tariff Item 29157090 as claimed by the appellant therein, cannot be countenanced and had rejected the appeals. Thus, we are of the considered view that the impugned orders do not warrant any interference and uphold the same. Resultantly, the Appeals are dismissed. Issues: Whether the rejection of the appellants' declared classification of imported Lauric Acid (claimed under CTH 29157090 with exemption under Notification No.12/2012-Cus, Sl. No.230A) and consequent denial of the exemption and confirmation of differential duty under proceedings initiated under Section 28(1) of the Customs Act, 1962 is tenable.Analysis: The Court examined the scope of review under Section 28(1) in light of the amended Section 17 and authoritative precedent holding that review under Section 28 may follow self-assessment and includes verification of classification. The legal framework requires strict interpretation of exemption notifications and places the burden on the claimant to establish that the imported goods fall within the claimed tariff sub-heading. The Court considered the General Rules of Interpretation (GRI 1) for tariff classification and noted that chapter and subheading notes govern classification. The Adjudicating Authority and the Appellate Authority found that the appellant failed to produce cogent documentary or test evidence (such as analysis/composition certificates or test reports) to substantiate that the imported Lauric Acid falls under the claimed sub-heading, and that the product is not covered within the specified sub-headings of Chapter 29. The Tribunal placed weight on coordinate authority and Supreme Court decisions applying GRI and requiring strict proof for exemption claims, and found the appellant's reliance on third-party import classifications and general encyclopedia extracts insufficient to satisfy the burden of proof.Conclusion: The rejection of the declared classification and denial of the exemption is upheld; the appeal is dismissed (decision is adverse to the assessee and in favour of Revenue).