CESTAT Chennai : The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside a customs duty demand against M/s Krishna Marketing, holding that reclassification of imported goods based solely on a third-party test report, without supplying the report to the importer, violates the principles of natural justice.
The order was passed by a Bench comprising Hon’ble Mr. P. Dinesha (Judicial Member) and Hon’ble Mr. Vasa Seshagiri Rao (Technical Member) in Final Order No. 40253/2026 dated 19.02.2026
Background of the Dispute
The appeal arose from Order-in-Appeal No. C.Cus. II No.1131/2015 dated 11.12.2015, which had upheld the Order-in-Original confirming reclassification of “Polyvinyl Chloride (PVC) Suspension Resin SP 660” imported from Thailand.
The importer had classified the goods under Customs Tariff Heading (CTH) 39042110/39042190 as “Other Poly (Vinyl Chloride); Non-Plasticised: Poly (Vinyl Chloride) Resins” and availed concessional Basic Customs Duty at 2% under Notification No. 046/2011-Customs dated 01.06.2011 issued pursuant to the ASEAN-India Free Trade Area Preferential Trade Agreement.
However, the Revenue sought to reclassify the goods under CTH 39041090 based on a test report issued by the Central Institute of Plastics Engineering & Technology (CIPET) in respect of goods imported by another importer. A show cause notice was issued, and the adjudicating authority confirmed the reclassification and denied the benefit of the exemption notification.
Tribunal on Natural Justice
At the outset, the Tribunal held that the approach adopted by the lower authorities was contrary to settled principles of natural justice. The Bench observed that the CIPET test report formed the very foundation of the proposed reclassification. Yet, the complete report was not furnished to the appellant, and only extracts were reproduced in the show cause notice.
The Tribunal emphasized that no person can be condemned unheard and that mere reproduction of portions of a document cannot substitute the obligation to provide the full material relied upon. Denial of the report deprived the importer of a meaningful opportunity to rebut the findings. On this ground alone, the impugned order was held to be flawed and liable to be set aside.
Findings on Merits
Even on merits, the Tribunal found the Revenue’s case unsustainable.
The core issue before the Bench was whether the goods were correctly classifiable under CTH 39042110/39042190 as claimed by the importer, or under CTH 39041090 as contended by the Department.
The Tribunal noted that an identical issue had already been decided in earlier cases including Arun Industries, Arun Polymers and Ram Nath Co. Pvt. Ltd., where reliance on the same CIPET report had been rejected. It reiterated the settled principle that a specific tariff entry prevails over a general or residuary entry.
Referring to Rule 3(a) of the General Rules for the Interpretation of the Import Tariff Schedule, the Bench observed that the heading providing the most specific description must be preferred. During the relevant period, Tariff Item 3904 21 10 specifically covered “Poly (vinyl chloride) resins,” whereas CTH 39041090 was a residuary entry. Therefore, the specific entry under 3904.21 was applicable.
Holding that the issue was no longer res integra, the Tribunal set aside the impugned Order-in-Appeal and allowed the appeal with consequential benefits, if any, in accordance with law.
Case Details
Case Title: M/s Krishna Marketing vs. Commissioner of Customs
Case No.: Customs Appeal No. 40336 of 2016
Coram: P. Dinesha (Judicial Member) and Vasa Seshagiri Rao (Technical Member)
Date of Decision: 19.02.2026.
