TaxTMI 
TaxTMI 
2026 (8) TMI 1324
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....substantial further processing before being incorporated into the finished product; the Appellant availed benefit of Serial No. 39 of Notification No. 24/2005-Cus dated 01.03.2005 as the final product manufactured by them was covered by Sl. No. 23 Ibid; imported goods were being cleared under continuity bonds with surety; end-use certificates were being issued by the Assistant Commissioner, Export Promotion Circle, Panchkula. 2.1. On conduct of an audit, revenue entertained an opinion that the impugned goods were classifiable under CTH 76169990. A Show Cause Notice, dated 08.08.2024, was issued proposing to reclassify the goods and seeking to demand differential duty of Rs. 5,94,84,778 (as applicable to 112 Bills of Entry on a total assessable value Rs. 80,11,42,808) along with interest, penalties and fine. Commissioner, vide impugned order: (i). held that the impugned goods are liable for confiscation under Sections 111(o) and 111(m) of the Customs Act, 1962; imposed a redemption fine of Rs. 5,00,00,000 under Section 125 of the Customs Act, 1962; denied the benefit of Notification No. 24/2005-Cus dated 01.03.2005. (ii). Confirmed the demand of duty of Rs 5,94,....
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....the submissions. 5. Learned Counsel for the appellants submits also that Explanatory Notes to Heading 74.07 apply mutatis mutandis to Heading 76.04; the notes provide that profiles which have been cold-finished or otherwise worked ("drilled, punched, twisted, or crimped") remain within the heading "provided that they do not thereby assume the character of articles or of products of other headings,; it means the imported profiles, though cut to size and worked to a finish of higher precision, have not assumed the character of any article of another heading, and therefore remain in Heading 76.04. He submits that the impugned order records no finding that the goods had assumed the character of an article of CTH 7616; commissioner does not rely on any technical foundation, physical examination, test, or expert opinion to establish that the goods were anything other than the hollow profiles declared. 6. Learned Counsel for the appellants submits in addition that department's reliance upon U.S. Customs Ruling NY N139353 dated 13.06.2011 by the is misplaced; the said ruling concerned aluminum frames "punched and notched with the ends of the extrusion being mitered," requiring nothin....
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....ded period of limitation is not applicable in a case involving dispute of classification i.e. a pure question of interpretation. He relies on Tribunal decision M/s Midas Fertchem Impex Pvt. Ltd (Customs Appeal No. 52239 of 2021) and submits that claiming a classification for imported goods is not a mis-declaration but merely an exercise of self-assessment, subject to re-assessment by the officer; a difference of opinion on classification is not suppression or willful mis-statement. He submits that the Appellant made a full and true declaration of description, value, quantity, supplier and the intended end-use in every Bill of Entry; the goods were assessed and cleared by the proper officers over a period of years under bonds and enduse certificates; of which the Department was fully aware; no material fact was withheld and nothing was suppressed. He submits that the impugned order infers willful mis-statement as the Appellant had classified similar goods under CTH 76109090 /76169990in some Bills of Entry and that the change in classification was a deliberate move to pay lower rate of Basic Customs Duty; the inference is untenable and the importer is not bound by a classification ad....
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....7 feet and 3.7 feet, each cut from the standard 20-foot extrusion.; Cutting a profile to a shorter length is the paradigm of "working" that the Explanatory Note to Heading 74.07 (applicable to Heading 76.04) expressly permits without change of classification: a profile cut to size remains a profile. (ii). Department relies on heading CTI 76169990, which is a residuary entry; resort to a residuary entry is taken only when no specific heading covers them; impugned goods are covered specific heading i.e. CTI 76042100, i.e. "hollow profiles"; also, heading 76.16 is confined to finished, distinct "articles" of aluminium; the imported goods are not such articles and are only semi-finished part/article; these cannot be covered under a heading meant for "articles of aluminium"; goods are not yet articles at all but remain profiles; thus, the impugned goods fit the description under Heading 76.04 and fall outside the description under Heading 76.16. (iii). Hon'ble Supreme Court has reaffirmed in Welkin Foods (2026) 38 Centax 104 (S.C.) that classification to be governed by the tariff headings, the Explanatory Notes and the General Rules of Interpretation; the descripti....
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....cation No. 24/2005-Cus dated 01.03.2005 as the final product manufactured by them was covered by Sl. No. 23 ibid, on the strength of the said classification up to 01.04,2022. The Revenue seeks to re-classify the imported goods under residual Heading 7616 99 covering "other articles of aluminium" on the ground that the goods are not mere profiles of aluminium, but are finished articles, specifically - frames for solar panels, and consequently seeks to deny the exemption. The appellant submits that the classification arrived at by the Revenue is based on the description of the goods given in the commercial invoice, classification claimed by the appellant himself in some bills of entry previously, the possible use of the product and not on the actual nature of the goods when imported. 16. We find that the following questions or issues that require our consideration in the case are as follows. (i) whether the imported "Aluminum Hollow Profiles", as presented, are classifiable under CTI 76042100 as declared, or as "Aluminum Solar Frames" under CTH 76169990; (ii) whether, in any event, the benefit of Serial No. 39 of Notification No. 24/2005-Cus is available to goods....
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....that the said aluminium frames for solar panels is classifiable under Chapter tariff item: 76169990 which is meant for other articles of aluminium, other...other. ...... 4.4. Further, the Noticee has already imported and cleared the subject goods under the classification of 76109090 under 38 nos. Bills of Entry (80-line items) during the years from 2023 to 2024 and under the correct classification of 76169990 under 29 nos Bills of Entry during the years 2024. Hence, the 'Aluminium Solar Frame' is correctly classifiable under CTH 76169990. It is further observed that CTH 76042100 is eligible for less BCD i.e. (a:7.5% but BCD rate under CTII 76169990 is @10%. Hence, it appears that the Noticee has changed the classification for availing the benefit of BCD. ......... 18. It is clear from the above that the Show Cause Notice that the Show Cause Notice alleges that the impugned goods are frames for the reasons that the appellant self-declared the items as solar frame; they are not in running length but are cut pieces and US Customs Rulings No. NY N139353 dated 13.06.2011 and N 305694 dated 30-08-2019 hold that aluminium frames for solar panels are c....
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....mmissioner finds as follows as regards the classification is concerned. 4.6. The RULE-1 of the "General Rules for the interpretation of the Harmonized System (GIR)" states as under: "The titles of Sections, Chapters and subChapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the heading and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions. It is argued by the Noticee that "Aluminium Solar Frame" falls under CTH 76042100 undergo significant assembly and integration processes to become part of the finished Solar Photovoltaic Modules. The hollow profiles of CTH 7604, does not attain the character of any article i.e. frame under CTH 7616. .......... 4.6.2 I find that chapter 7604 covers aluminium Bars, Rods and profiles. It is observed that the goods covered under CTH 76042100 are "Hollow profile" which comes in running length and is not cut to size. However, I find that in this case, the imported goods are cut to sizes profiles of Aluminium, which are assembled in tailor-made....
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.... find that the commissioner's findings are cryptic and not reasoned. His reliance on the classification made by assessee themselves in the past and on the point that the impugned profiles are cut to size do not seem to have a legal backing. It is a settled position of law that each bill of entry/ each assessment is a separate proceeding in itself. The principle of Res judicata is not applicable to matters involving taxation. Classification of goods cannot be based on the previous classification made by the appellant. It cannot be expected that the appellants continue to commit same error indefinitely. If the classification made by the appellant is accepted for the past period, it can as well be accepted for present period. Further, Learned Commissioner's findings are not based on any Test report or expert opinion. Though the learned Commissioner begins proceed to classify the goods in terms of Rule- 1 of the "General Rules for the interpretation of the Harmonized System (GIR), he does not discuss the principles and apply the same to the facts of the case and jumps to the conclusion that the impugned goods are articles of aluminium. He does not refer to any Section/ Chapter notes an....
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....ks, staples (other than those of heading 8305), screws, bolts, nuts, screw hooks, rivets, cotters, cotter-pins, washers and similar articles - Other : 7616 91 00 -- Cloth, grill, netting and fencing, of aluminium wire 7616 99 -- Other : 7616 99 10 --- Expanded metal of aluminium and aluminium alloys 7616 99 20 --- Chains 7616 99 30 --- Bobbins 7616 99 90 --- Other 26. We find that one of the reasons argued by the revenue for classification under 7616 is that the appellant themselves declared the goods as "Aluminum Solar Frame". To our understanding the words do not convey any meaning as there cannot exist any thing called solar frame. It can be a frame for solar energy panels, solar batteries etc. We find that description appearing in the commercial invoice, packing list or even the Bill of Entry is not conclusive for the purpose of determining the correct classification of the goods. Classification is required to be determined on the basis of the objective characteristics, nature and physical attributes of the goods as presented for assessment, by applying the General Rules for Interpretation of the Import....
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....ge the classification of goods under a statutory heading if those goods retain the essential characteristics defined by that heading, even if they have a unique or specialised trade name. In other words, the character and nature of the product cannot be veiled behind a charade of terminology which is used to market the product or refer to it in common or commercial circles." ....... 72. In Dunlop India (supra), this Court had declined to deny the classification of Vinyl Pyridine Latex as 'raw rubber' solely based on end use, as the same was irrelevant in the context of the tariff entry concerning 'raw rubber', i.e., the entry didn't refer to use or adaptation. Therefore, the Court held that the use of an article for classification under customs law is only relevant if the entry referred to the "use or adaptation". If such a reference is absent from the entry, use cannot be regarded as a relevant factor for the purposes of classification. The Court also acknowledged that the 'taxable event' occurs when the goods are imported into the country, and consequently, what matters is the condition of the goods at the time of import. (Emphasis....
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....(199) E.L.T. 577 (S.C.)]. In C.C.E. v. Carrier Aircon, 2006 (5) SCC 596 = 2006 (199) E.L.T. 577 (S.C.), this Court held: "14....There are a number of factors which have to be taken into consideration for determining the classification of a product. For the purposes of classification, the relevant factors inter alia are statutory fiscal entry, the basis character, function and use of the goods. When a commodity fall within a tariff entry by virtue of the purpose for which it is put to (sic. produced), the end use to which the product is put to, cannot determine the classification of that product." 34. In our view, as we have already stated, the combined factor that requires to be taken note of for the purpose of the classification of the goods are the composition, the product literature, the label, the character of the product and the user to which the product is put......" (Emphasis Supplied) 29. The jurisprudence that evolved on the issue of classification prescribes the following principles. * Classification is required to be determined on the basis of the condition in which the goods are presented for assessment; the objective, characterist....
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....ributors often supply pre-cut lengths for convenience: 500 mm 1,000 mm 1,500 mm 2,000 mm 3,000 mm Shorter lengths simplify handling and reduce shipping costs, while longer bars are preferred for machining and bulk assembly lines. It is seen that profiles are known as profiles even if they are cut to smaller sizes in trade parlance. We find that the appellant imports the impugned goods not in running lengths but cut to three shorter lengths, namely 7.8 feet, 7.47 feet and 3.7 feet, each cut from the standard 20-foot extrusion. Now the question arises as to whether the profiles cut in to shorter length would cease to be profiles. It is pertinent to note that there is no reference to the length of the profile in Tariff and HSN explanatory Notes. It is only the trade parlance that says profiles are generally of running lengths of 20 feet. However, as seen above, cut lengths of profiles are also considered as profiles. Therefore, the reasoning given by commissioner that as the profiles are cut, they become articles. 31. Section Note 9(b) to Section 15 (which includes chapter 74 &76) defines "profiles" as follows: (b) P....
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....to use. Consequently, the mere fact that the invoice describes the goods as "Aluminium solar Frames" is not relevant. What is material is whether the goods, as imported, answer the definition of "aluminium profiles" under Chapter 76. Heading 7604 read with the Section Note 9 (b) extracted above, is a specific heading covering aluminium profiles of uniform cross-section that have not assumed the character of articles or products of other headings. 34. We find that Heading 7616 is a residual heading covering other articles of aluminium that are not more specifically covered elsewhere in Chapter 76. The decisive test is therefore whether the imported aluminium profiles or frames have, by reason of further working, assumed the character of finished articles or parts that fall outside the scope of "profiles". It is not the case of the department that (i). goods imported by the appellant have lost the characteristics of profiles of aluminium (ii). They have not retained a uniform cross-section along their whole length (iii). The working like cutting and notching converted them into identifiable finished articles of another heading and that profiles are not t....
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....said pipes, tubes and profiles in manufacturing parts of automobiles, it cannot be concluded that the tubes, pipes and profiles are for sole or principal use with motor vehicles." (Emphasis Supplied) 36. In the present case, the impugned goods are aluminium extrusions or profiles of uniform cross-section that have not been converted into finished, ready-to-use frames having the essential character of articles which necessitates the classification under Heading 7616, classification under CTH 7604 will be more appropriate. Furthermore, Rule 3(a) of the General Rules of Interpretation, mandates that the heading which provides the most specific description shall be preferred to headings providing a more general description. Heading 7604 specifically covers aluminium bars, rods and profiles and is therefore a specific description. In contrast, heading 7616, which deals with "other articles of aluminium", is a residual and general heading intended to cover only those aluminium products that do not fall under any of the more specific headings of Chapter 76. It is established that the goods retain the character of profiles within the meaning of CTH 7604 and have not assumed the chara....
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....in the facts and circumstances of the case. Moreover, we find that we are not bound by US Customs Rulings. We find that reliance by the appellants on the Order-in-Original No. MUN-CUSTM-OOO-COM-045-24-25, dated 28.02.2025, passed by Mundra Customs and the reliance placed by the revenue, on the Final Order No 20497-20499/2019, dated 28.06.2019, passed by Bangalore Bench of CESTAT, in the case of D&M Building Product Pvt Ltd, are not relevant in the facts and circumstances of the case before us. 39. Having decided the issue of classification in favour of the appellants; we now turn our attention to the availability of exemption under Serial No. 39 of Notification No. 24/2005-Cus dated 01.03.2005, under the claim that the final product manufactured by them was covered by Sl. No. 23 ibid. We find that Learned Commissioner finds in this regard as follows. 4.9 I find that the exemption given under S. No. 23 of the notification, supra provides exemption from duty to the goods falling under heading 8541 and goods used for manufacture thereof. However, in the present case. I have already determined that the product imported by the Noticee are Aluminium frames falling under CTH 7....
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....her goods and therefore, are not exclusively covered under the S. No. 23 of the Notification. We find that the argument is neither legal nor logical. Legally speaking the exemption is available if the goods are intended to be used in the manufacture of goods listed under the said Notification. The exemption cannot be denied on the basis of possible use of the impugned goods. Moreover, the goods have been imported following the procedure laid down under Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 and the appellant has been submitting the end-use certificates issued by jurisdictional GST authorities. It is not the case of the Commissioner that such certificates have not been issued by the authorities or have been obtained by fraud etc. Revenue cannot disbelieve and discard the certificate given by the other wing of their own department. No reasons have been adduced to say as to why the said certificates are not reliable. Under such circumstances, denial of benefit is not tenable. Further, we find that for determining the classification, learned commissioner avers that the frames are used in Solar PV module and when it comes to exemption, commissioner finds that....