Veeresh Prasad General Manager Indirect Taxation vs Commissioner of Customs - Chennai II (Import Commissionerate)

IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL, CHENNAI

Customs Appeal No. 40266 of 2025

(All appeals arising out of Order in Original No. 108828/2024 dated
30.08.2024 passed by the Commissioner of Customs, Chennai – II (Import)
Chennai)


Toyota Kirloskar Motors Pvt. Ltd. Appellant
Plot No. 1, Bibadi Industrial Area
Bidadi Ramagara, Karnataka – 562 109.

Vs.

Commissioner of Customs Respondent
Import Commissionerate
Customs House, 60, Rajaji Salai,
Chennai – 600 001.

With

Customs Appeal No. 40267 of 2025

Shri Ranjan Kumar Verma Appellant
Senior Manager Impex Operations (Planning Dept.)
M/s. Toyota Kirloskar Motors Pvt. Ltd.
Plot No. 1, Bidadi Industrial Area
Bidadi, Ramanagara
Karnataka – 562 109.

Vs.

Commissioner of Customs Respondent
Import Commissionerate
Customs House, 60, Rajaji Salai,
Chennai – 600 001.

And

Customs Appeal No. 40268 of 2025


Shri Veeresh Prasad Appellant
General Manager (Indirect Taxation)
M/s. Toyota Kirloskar Motors Pvt. Ltd.
Plot No. 1, Bidadi Industrial Area
Bidadi, Ramanagara
Karnataka – 562 109.

Vs.

Commissioner of Customs Respondent
Import Commissionerate
Customs House, 60, Rajaji Salai,
Chennai – 600 001.

2
APPEARANCE:

S/Shri T. Viswanathan, Rohan Muralidharan, Ms. Shobana Krishnan and
Shri Anagha Ramadas, Advocates for the Appellants
Shri Anoop Singh, Authorised Representative for the Respondent

CORAM

Hon’ble Shri P. Dinesha, Member (Judicial)
Hon’ble Shri M. Ajit Kumar, Member (Technical)


FINAL ORDER NOS. 40998-41000/2026

Date of Hearing: 11.03.2026
Date of Decision: 08.09.2026

Per M. Ajit Kumar,


All these appeals arise out of a common Order in Original No.
108828 of 2024 dated 30.8.2024 passed by the Commissioner of
Customs (Import), Chennai, hence they were heard together and are
disposed by this common order.
Factual Matrix
2. The appellant, M/s. Toyota Kirloskar Motors Pvt. Ltd. ( TKML ),
are manufacturers of passenger and multi-utility vehicles in India. They
are the Indian subsidiary of M/s. Toyota Motor Corporation, Japan and
have imported various sensors, including Exhaust Gas Temperature
Sensors, Water Temperature Sensors, Nitrogen Oxide Sensors, Oxygen
Sensors and Air-Fuel Ratio Sensors, from their group companies
through various ports and inland container depots. The imports were
investigated by the DRI, Bangalore Zonal Unit, on the allegation of mis-
declaration/misclassification of the imported goods. Upon
investigation, it was observed that TKML had classified identical
components bearing the same part numbers under different Customs
Tariff Headings at different points of time, allegedly resulting in short-

3
payment of customs duty. A Show Cause Notice dated 27.09.2023 was
accordingly issued, covering the period January 2019 to June 2023,
proposing reclassification of the imported goods, recovery of the
alleged short-paid duty with applicable interest, and imposition of
penalties under Sections 112(a), 114A and 114AA of the Customs Act,
1962. After adjudication, the Commissioner passed the impugned
order, leading to the present appeal.
3. Ld. Advocate Shri T. Viswanathan appeared for the appellants
and Ld. Authorized Representative Shri Anoop Singh appeared for the
respondent.
Submissions made by the Appellant
3.1 Shri T. Viswanathan the Ld. Counsel for the appellants at the
outset submitted tabulated information with respect to the differential
duty demanded. The same is reproduced below for ease of reference:
Particulars Differential Duty Amount
including IGST involved
(in INR)
Demand proposed in the SCN 55,15,43,810
Demand confirmed in the OIO 53,77,10,133
Demand dropped in the OIO 1,38,33,676
Demand Appropriated
(OIO read with the Corrigendum)
5,31,72,770
Total voluntary deposits of duties made
by Appellant during course of
proceedings including Rs. 5,31,72,770
12,61,51,401

He stated that the duty demanded for the normal period was from
27.09.2021 to 27.09.2023 (Rs 37.44 Cr) and from 27.09.2018 to
27.09.2021 (Rs 16.32 Cr) for the extended period. He further referred
to a product-wise flow chart depicting the treatment of the impugned
goods , which was subsequently enclosed with their letter dated
13.03.2026, after conclusion of the public hearing. Of the 19 goods for
which duty was confirmed in the impugned order, and shown in the

4
flow chart, the ld. Counsel has advanced arguments on merits with
respect to 9 items at the Bar.
SHOW CAUSE NOTICE,
DTD 27-09-2023
ORDER-IN-ORIGINALDTD
30.08.2026
SENSORS WITHOUTDUTY
SENSORS WITH DUTY DEMAND21
DEMAND36
CONFIRMED - 19
DROPPED - 2
53.77Crs
1.38 Crs
MERITS & OTHER GROUND - 9
- 39.87Crs
ALTERNATEEXEMPTIONCLAIMS - 4
- 11.07Crs .
REVENUE NEUTRALITY ON A/C OF IGST DEMAND
- 2 - 18,473/-
LIMITATION - 4
- 2.8 Crs

As per Appeal Memorandum
The final letter dated 13.03.2026, submitted after conclusion of the
public hearing, referred to above, is in slight variance with their Appeal
Memorandum, as per which the dispute relates to the classification of
52 types of sensors, instead of 57 stated in the flow chart. Out of this
the demand of differential duties is stated to be relating to 21 types of
sensors. Further the re-classification of 31 types of sensors did not
result in any demand of differential duties. Out of the 21 types of
sensors where demand has been confirmed, submissions relate respect
to 16 types of sensors. No submissions are being made in the case of

5
the remaining 5 types of sensors, wherein the ld. Commissioner or the
Appellant has accepted the classification confirmed in the impugned
order. He further made specific submissions on the following issues :
I. Classification on Merits
The submissions in respect of the nine items were further set out in
tabular form in Annexure III to the aforesaid letter. The gist of the
submissions are extracted below:
A. Temperature Sensors
1. Sensor Exhaust Gas Temperature [EGT Sensor]
EGT sensor is a thermistor-based device which exhibits change in
resistance due to change in temperature. It is installed in the exhaust
system before the Selective catalytic reduction (SCR) chamber and
before the Diesel particulate filter (DPF) in order to detect the
temperature of the exhaust gas. Temperature variations cause the
resistance of the sensor to vary, which in turn alters its voltage. Based
on this output voltage, the Engine Control Unit (ECU) measures the
actual temperature of the exhaust gas. This temperature is required to
manage the after treatment of exhaust gases to control emission of
NOx gases and to safeguard thermally sensitive parts in the exhaust
system such as the DPF. The appellant has sought to classify the goods
under CTI 8533 4030, with alternative classification under 9025 1190.
The Department has finalised the classification under CTI 9031 8000.
2. Sensor water Temperature
Water Temperature Sensor detects the engine coolant temperature. It
is essentially a thermistor whose resistance value changes according
to the temperature & consequently voltage and current changes in the
circuit. These changes in the electrical parameters are calibrated to

6
measure the temperature. Changes in the coolant temperature are
thus measured by the changes in the thermistor resistance value. This
temperature measurement is done to ensure that the engine runs at
an optimum temperature to provide the best performance. The
appellant has sought to classify the goods under CTI 8533 4030. The
Department has finalised the classification under CTI 9031 8000.
3. Sensor Inlet Air Temperature
The sensor is basically a thermistor. It is a sensor to monitor the
temperature of the intake air entering engine to regulate the fuel
injection. The IAT sensor has a direct bearing on the air density and
volume changes and hence, the fuel injection needs regulation based
on this factor to maintain optimum efficiency. This part is performing
the temperature measurement by virtue of being a thermistor which is
basically a resistor whose resistance changes depending on the
temperature variation. This change in resistance and resultant
electrical parameters is measured to read the temperature of inlet air.
This is installed at the entry of the inlet air cleaner. The appellant has
sought to classify the goods under CTI 8533 4030. The Department
has finalised the classification under CTI 9031 8000.
Common submission of the Appellant for Temperature Sensors:
a. It is submitted that the temperature sensors are thermistors ,
i.e. resistors whose resistance varies with temperature, and are
specifically classifiable under CTH 8533 40 30, covering thermistors.
The HSN Explanatory Notes to Heading 8533 expressly include non-
linear thermistors. The minor electrical circuitry merely facilitates
transmission of the thermistor’s output and does not alter its essential
character. Reliance is placed on Commission Implementing

7
Regulation (EU) No. 709/2013 , Subros Ltd. Vs Commissioner of
Customs , 2018 (363) E.L.T. 849 (Tri.-Del.), and US Customs
Rulings NY I85509 and NY I85730, wherein thermally sensitive
resistors/temperature sensors were classified under Heading 8533.
b. Alternatively, the sensors are classifiable under CTH 9025, as
electrical resistance-based thermometers, which are specifically
covered by the HSN Explanatory Notes to Heading 9025. The sensors
independently measure temperature and transmit the corresponding
signal to the ECU. Reliance is placed on US Customs Ruling NY 882918
dated 04.03.1993 , concerning EGT sensors. This alternative
classification is duty-neutral.
c. Classification under CTH 9031 is unsustainable, as it is a
residuary heading covering measuring or checking instruments not
specified or included elsewhere. The subject sensors are specifically
covered under CTH 8533, and alternatively under CTH 9025. The fact
that the sensor incorporates minor electrical components does not
convert it into a general measuring or checking instrument under
Heading 9031. The HSN Notes to Heading 9031 relating to apparatus
for testing or regulating vehicle motors do not cover a simple
temperature sensor which merely detects temperature and transmits
a signal to the ECU.
d. The settled principle is that a specific entry must prevail over a
residuary/general entry , and recourse to a residuary heading is
permissible only when the goods cannot be classified under a specific
heading. Reliance is placed on Hamdard (Wakf) Laboratories Vs
Commissioner, Commercial Tax, U.P. - 2026-VIL-20-SC; CCE Vs
Uni Products India Ltd. - 2020 (372) E.L.T. 465 (S.C.); Mauri Yeast

8
India Pvt. Ltd. Vs State of U.P. - 2008 (225) E.L.T. 321 (S.C.); and
Dunlop India Ltd. Vs Union of India - 1983 (13) E.L.T. 1566 (S.C.).
Accordingly, the subject temperature sensors, being thermistors
specifically covered under CTH 8533, are classifiable under CTI 8533
4030, and classification under the residuary CTH 9031 is not
warranted.
B. Gas Analysis Sensors
4. Sensor Air Fuel Ratio and Sensor Oxygen
Both the sensors measure the residual oxygen content in the exhaust
gases, and this information is transmitted to the ECU in the form of an
electric current in order to optimize the performance of the engine (fuel
economy & emission) by controlling the fuel quantity and valve timing.
This sensor is in the exhaust pipe between exhaust manifold & catalytic
converter to assess the emission performance of the engine. This
sensor employs Zirconium Dioxide probe coated with a thin layer of
porous Platinum to form a solid state electro-chemical cell which does
the measurement by the generation of current caused by conversion
of Carbon Monoxide to Carbon Dioxide in presence of oxygen in the
exhaust gases. The appellant has sought to classify the goods under
CTI 9027 1000 . The Department has finalised the classification under
CTI 9031 8000.
5. Sensor Nitrogen Oxide
The sensor is employed as a part of OBD (On Board Diagnostics)
system and helps in controlling the emission performance of the engine
by controlling the operational parameters. This NOx sensor is fitted in
the exhaust pipe of the vehicle and measures the quantum of various
oxides of Nitrogen by employing reactions in the electrochemical cells.

9
The first cell electrochemically pumps out the oxygen to improve the
measurability of the nitrogen oxides in subsequent cells. These cells
use YSZ (Yttrium Stabilized Zirconium) oxide for such reactions. The
appellant has sought to classify the goods under CTI 9027 1000 . The
Department has finalised the classification under CTI 9031 8000.
Common Submissions made by the Appellant for Gas Analysis Sensors
a. The sensors analyse exhaust gases and are specifically
classifiable under CTH 9027 10 00 , covering instruments and apparatus
for physical or chemical analysis, including gas or smoke analysis
apparatus. They operate on the principle of electrochemical reaction to
detect the concentration/presence of gases such as NOx and oxygen .
This classification is supported by Cummins Technologies India Pvt.
Ltd. Vs Commissioner of Customs [2025 (9) TMI 139 (CESTAT-
Mumbai)], wherein NOx sensors were held classifiable under CTI 9027
10 00 , and by US Customs Rulings HQ 11262310 and NY J88011 .
The Department’s contention that the sensors merely measure a
specific gas and therefore fall under CTH 9031 is untenable. The
sensors detect and analyse the composition of exhaust gases and
transmit the resulting signal to the ECU for further action. They
therefore perform the function contemplated by Heading 9027.
b. CTH 9031 is a residuary heading covering measuring or checking
instruments not specified elsewhere in Chapter 90. Since gas analysis
apparatus are specifically covered under CTH 9027, resort to CTH 9031
is unwarranted. The principle that a residuary entry can be invoked
only where no specific entry applies, and that a specific entry must
prevail over a general/residuary entry, is settled by Hamdard (Wakf)
Laboratories (supra); Uni Products India Ltd. (supra); Mauri

10
Yeast India (supra); and Dunlop India (supra) . Accordingly, the gas
analysis sensors, being specifically covered under CTH 9027 , are
classifiable thereunder and not under the residuary CTH 9031.

c. The Department itself has contended in Cummins (supra) that
gas analysis sensors are classifiable under CTH 9027 and has similarly
classified NOx sensors under CTH 9027 in OIO No. JAM-CUSTM-PRV-
COM-003-24-25 dated 23.08.2024 . The Department cannot adopt
inconsistent classifications for similarly situated importers. Reliance is
placed on Volvo India Pvt. Ltd. Vs CC, Nhava Sheva, 2004 (174)
E.L.T. 36 (Tri.-Mumbai) and Damodar J. Malpani Vs CCE, 2002
(146) E.L.T. 483 (S.C.) , recognising the requirement of uniformity in
assessment.

d. Even if the Department’s classification under CTI 9031 8000 is
accepted, the relevant sensors remain eligible for preferential duty
where supported by valid Certificates of Origin. The Sensor Air Fuel
Ratio is covered under Sl. No. 791 of Notification No. 69/2011, while
the Sensor Oxygen is covered under Sl. No. 791 of Notification No.
69/2011 and Sl. No. 1556 of Notification No. 46/2011. The Appellant
had also claimed FTA benefit for Sensor Oxygen under CTH 9027, Sl.
No. 1538 of Notification No. 46/2011 . Reclassification by itself cannot
defeat the preferential rate where the alternative classification is also
covered by the relevant notification and valid COOs are available.
Reliance is placed on Hyundai Motors Vs Commissioner of
Customs, Chennai [2025 (6) TMI 608 (CESTAT Chennai)].

11
C. Other Sensors
6. Sensor Assy Brake Pedal
It is a non-contact type sensor that uses a Hall IC to detect the amount
of depression of the brake pedal and converts this depression into
voltage signals. This signal is used by the onboard ECU to decide
various other functions. This sensor senses the amount of the
depression of the brake pedal and the rate of the depression with
respect to time to differentiate between normal braking and panic
braking. This sensor also aids in air bag deployment (Panic braking
sensing) in conjunction with other supporting sensors. This sensor is
also facilitating the information or the signals towards optimization of
regenerative braking in HEV & PHEV (Hybrid vehicles). The appellant
has sought to classify the goods under CTI 9031 8000. The Department
has finalised the classification under CTI 8708 3000.
Submissions made by the Appellant
a. The Department proposes classification under CTI 8708 3000 on
the ground that the product not only measures brake pedal depression
but also translates the driver’s input into electrical signals through the
hall effect, mounting bracket and protective housing. However, CTH
9031 covers measuring or checking instruments, appliances and
machines. Since the sensor measures the amount and rate of brake
pedal depression and relays that information to the onboard ECU, it is
appropriately classifiable under CTI 9031 8000. CTH 9031 being
residual within Chapter 90, the relevant competing headings must first
be examined. The subject goods are not covered by CTH 9025, 9026
or 9027. The sensor merely generates electrical signals proportionate
to pedal travel. The ECU performs the interpretation, comparison and

12
control logic. The sensor’s essential function therefore remains
measurement, satisfying CTH 9031.
b. Once the sensor is classifiable under CTH 9031, it stands
excluded from Section XVII and CTH 8708 by virtue of Note 2(g) to
Section XVII. CTI 8708 3000 covers “Brakes and servo-brakes; parts
thereof.” The HSN Explanatory Notes refer to brakes and their parts
such as plates, drums, cylinders, mounted linings, oil reservoirs for
hydraulic brakes, servo-brakes and parts thereof. The subject sensor
is not a brake part of the kind contemplated under CTH 8708. A “part”
must be an essential component without which the whole cannot
function. Reliance is placed on CEE Vs Insulation Electrical (P) Ltd.,
[2008 (224) E.L.T. 512 (S.C.)]. The sensor does not perform the
braking function. Even without it, the brakes continue to function.
Therefore, it cannot be treated as a part of brakes merely because it
has a connection with the braking system. The scope of classification
under CTI 8708 3000 cannot be extended to goods that are connected
with braking but are not brake parts. Reliance is placed on CC,
Chennai Vs Hyundai Transys India Pvt. Ltd . [2026 (1) TMI 441 -
CESTAT Chennai].

c. In light of the above, the subject sensor is correctly classifiable
under CTI 9031 8000 and not under CTI 8708 3000. Consequently, the
proposed reclassification fails and the demand is liable to be set aside.
7. Retainer Ultrasonic Sensor
It is a plastic part used to hold the ultrasonic sensors in position and
attached to the inner surface of the bumper. Basically, this part is a
holder made of plastic which holds or provides the mounting for the
ultrasonic sensor and then this holder is fitted into the bumper of the

13
vehicle, that is why it is called a retainer as it retains the sensor in the
fixed position. The appellant has sought to classify the goods under CTI
8708 9900. The Department has finalised the classification under CTI
3926 9099.
Submissions made by the Appellant
a. The product is a plastic retainer used to hold ultrasonic sensors
in position. It is specially designed for use as an internal component of
a motor vehicle and therefore merits classification under CTI 8708
9900. CTH 8708 covers parts and accessories of motor vehicles of
headings 8701 to 8705. The product satisfies the three tests under the
HSN Explanatory Notes to Section XVII: it is not excluded by Note 2 to
Section XVII; it is suitable for use solely or principally with motor
vehicles; and it is not more specifically covered elsewhere in the
Nomenclature.
b. Chapter 39 covers plastics and articles thereof; however, Note
2(t) specifically excludes parts of vehicles falling under Section XVII.
The retainer is not an article of general use. It is solely and principally
designed for use in automobiles and, therefore, Rule 3(a) cannot be
invoked to classify it under the general plastic article heading. Reliance
is placed on Flextronics Technologies Pvt. Ltd. Vs Commissioner
of Customs, Chennai [2024 (2) TMI 1509 - CESTAT Chennai], where
tailor-made mobile phone covers were classified under the specific
heading for mobile phones rather than the general plastic heading.
Accordingly, since the retainer is specifically designed for use with an
ultrasonic sensor as part of a motor vehicle, it is classifiable under CTH
8708 and not CTI 3926 9099.

14
c. The goods originate from Thailand, the Philippines and Singapore
and are accompanied by valid Certificates of Origin. At import, the
Appellant classified them under CTH 8708 and claimed benefit under
Sl. No. 1478 of Notification No. 46/2011. Without prejudice, even if the
Department’s proposed classification under CTI 3926 9099 is accepted,
the goods remain eligible for FTA exemption under Sl. No. 496 of
Notification No. 46/2011. Therefore, the demand is liable to be set
aside on this ground as well. Reliance is placed on Hyundai Motors
(supra).
d. The Retainer Sensor Ultrasonic is correctly classifiable under CTI
8708 9900. In any event, it is eligible for FTA exemption even under
the Department’s proposed classification; hence, the demand is liable
to be set aside.
8. Sensor Speed
It is mounted to the axle hub and bearing assembly near the rotating
encoder, which consists of N and S poles that are arranged in an
alternating sequence. The active sensor uses the hall effect wherein a
sensing element is exposed to the magnetic field of a rotating encoder.
The sensor converts the changes in the magnetic field resulting from
the wheel's rotation into a digital signal and transmits this pulse signal
to appropriate electronic control unit such as the Anti-lock braking
system which does the calculations to arrive at the wheel speed. The
appellant has sought to classify the goods under CTI 8543 7099. The
Department has finalised the classification under CTI 9031 8000.
Submissions made by the Appellant
a. The sensor uses the hall effect to generate a waveform indicating
rotational speed. CTH 8543 covers electrical machines and apparatus

15
having individual functions. The speed sensor performs an independent
electrical function by converting changes in magnetic field into digital
signals relayed to the ECU. Reliance is placed on US Cross Rulings Nos.
N216101 dated 17.05.2012, N281447 dated 21.12.2016 and N321130
dated 01.09.2021, where wheel speed sensors were classified under
CTH 8543.
b. The sensor is not classifiable under CTH 9031. The submissions
made in respect of the EGT sensor on exclusion from CTH 9031 apply
equally to the present goods.
c. The Appellant imported the goods under CTH 8543, 9031 and
9032 and availed FTA benefit under Sl. Nos. 1450, 1556 and 1559 of
Notification No. 46/2011. Assuming, without admitting, that
classification under CTH 8543 is not accepted, the matter remains
revenue neutral as the same FTA benefit is available for goods under
CTH 9031, as confirmed by the Department. Reliance is placed on
Hyundai Motors (supra), which held that preferential duty benefit
may be claimed, subject to valid COO, irrespective of subsequent
classification change. Since the speed sensor originates from Thailand
and is covered by valid COO, the Department’s proposed classification
under CTI 9031 8000 is eligible for FTA exemption under Sl. No. 1556
of Notification No. 46/2011. The demand is therefore liable to be set
aside on this ground alone.
II. Reclassification under Section 28, where no duty has been
demanded - 36 Sensors
The Appellants submit that Section 28 cannot be invoked merely to
reclassify the 36 sensors in respect of which no duty demand has been
raised. A duty demand is a jurisdictional prerequisite for proceedings

16
under Section 28. Since the SCN itself proposes no demand for these
goods, the proposed reclassification is without statutory authority. Any
change to the assessment ought to have been pursued by challenging
the assessment through an appeal under Section 128 of the Customs
Act or modifying the same through review of the order in terms of
Section 129D of the Customs Act.
III. Revenue-neutrality of reclassification – FTA benefit
The Appellants submit that the goods imported from Japan and
Thailand, i.e. (1) Sensor Ultrasonic; (2) Sensor Height Control; (3)
Sensor Light Control and (4) Cable Sub-Assy Spiral W/Sensor, though
reclassified by the Department, remain eligible for nil/concessional
duty under alternate entries of the applicable FTA notifications, namely
Notifications Nos. 46/2011 and 69/2011. The consequential demand of
₹ 10,78,62,162/- is therefore revenue neutral and unsustainable.
Reliance is placed on L.G. Electronics India Pvt. Ltd. Vs
Commissioner of Customs [2025 (9) TMI 1175 (S.C.)], and
Hyundai Motors (supra) .
IV. Differential IGST – availability of ITC
The differential IGST demand of ₹ 18,474/- is fully available as input
tax credit, in the case of Cover for Rain Sensor and Holder Battery
Current Sensor, hence causes no revenue loss. Reliance is placed on
Nirlon Ltd. Vs CCE, Mumbai - 2015 (320) E.L.T. 22 (S.C.);
International Auto Ltd. Vs CCE - 2005 (183) E.L.T. 239 (S.C.);
Narayan Polyplast Ltd. - 2005 (179) ELT 20 (SC) and Narmada
Chematur Pharma . - 2005 (179) ELT 276 (SC).

17
V. Extended period of limitation
The Appellants submit that the extended period under Section 28(4) is
not invocable in the absence of collusion, wilful misstatement or
suppression of facts. The classification was adopted bona fide on the
basis of technical literature and tariff interpretation, and the very fact
that different Customs formations have adopted different
classifications demonstrates the interpretational nature of the dispute.
Reliance is placed on Cummins Technologies (supra); Mahindra &
Mahindra Ltd. Vs CCE - 2000 (125) E.L.T. 477 (Tribunal)]; G.M. Pens
International - 2025 (393) E.L.T. 93 (Tri. - Del.); Coastal Energy
Pvt. Ltd. - 2009 (247) E.L.T.159 (Mad.); Densons Pultretaknik -
2003 (155) E.L.T. 211 (S.C.) and Midas Fertchem Impex Pvt. Ltd.
- 2023 (384) E.L.T. 397 (Tri. - Del.). The Appellants further submit that
the goods were properly described in the Bills of Entry and differential
duty of ₹ 12,61,51,401/- was voluntarily paid, evidencing absence of
intent to evade duty. The differential IGST is also revenue neutral as
the same is available as ITC.
VI. Confiscation and redemption fine
The Appellants submit that the goods are not liable to confiscation
under Section 111(m), as there was no misdeclaration of value or
description; the dispute is essentially one of tariff classification.
Further, redemption fine of ₹ 20,05,05,000/- under Section 125 cannot
be imposed when the goods are no longer available for confiscation.
Reliance is placed on Northern Plastic Ltd. Vs Collector - 1998
(101) E.L.T. 549 (S.C.); Weston Components Ltd. Vs CC - 2000
(115) E.L.T. 276 (S.C.) and the decisions in Suryadev Alloys and
Power (P) Ltd. Vs Principal Commissioner of Customs, Chennai

18
- 2025 (8) TMI 1356- CESTAT CHENNAI, and Flextronics Technology
India (supra).
VII. Penalties on the Appellant
The Appellants submit that penalties under Sections 114A and 114AA
are unsustainable in the absence of evidence of collusion, wilful
misstatement, suppression or deliberate falsification. The dispute
concerns interpretation and classification of technologically
sophisticated goods, and mere adoption of a classification different
from that proposed by the Department does not establish mens rea or
misdeclaration. Reliance is placed on H.M.M. Ltd. - 1995 (76) E.L.T.
497 (S.C.); Hindustan Steel Ltd. - 1978 (2) E.L.T. J159 (S.C.);
Northern Plastic (supra); Suvidh Overseas - 2025 (12) TMI 690 -
CESTAT CHENNAI ; Xiaomi Technology India Pvt. Ltd. - 2025 (11)
TMI 1120 - CESTAT CHENNAI; and Naam Exports - 2022 (382) E.L.T.
251 (Tri. - Chennai).
VIII. Differential IGST – interest and penalty
Without prejudice, the Appellants submit that interest and penalty on
the differential IGST are not sustainable, even for the normal period as
the relevant provisions had not been incorporated for the period in
question. Reliance is placed on Mahindra & Mahindra Ltd. (supra),
affirmed by the Supreme Court, and Suryadev Alloys and Power
(supra); along with A.R. Sulphonates Pvt. Ltd. [2025 (4) TMI 578 -
BOMBAY HIGH COURT; and Flextronics Technology India (supra) .
Submissions on behalf of the Co-Appellants
IX. Penalty under Section 112(a) – classification dispute
The Co-Appellants submit that their respective roles were confined to
classification and indirect-tax compliance. The classification was

19
adopted on the basis of available technical literature and the
understanding of the goods. Since classification is an interpretational
exercise and the Department itself has adopted differing classifications
for similar sensors, no penal consequence can follow in the absence of
deliberate misdeclaration. Reliance is placed on International Exim
Agency , Paras H. Shah , Him Logistics Pvt. Ltd. and Chakiat
Agencies .
X. Absence of confiscation and mens rea
Since the goods are not liable to confiscation under Section 111(m),
penalty under Section 112(a) cannot be sustained. In any event, there
is no evidence of any positive or deliberate intent on the part of the
Co-Appellants to misclassify the goods. Their statements consistently
disclosed the basis on which classification was undertaken. Reliance is
placed on Hindustan Steel Ltd. (supra).
XI. Official capacity and absence of personal gain
The Co-Appellants further submit that they acted in their official
capacity as employees and that no personal gain has been attributed
to them. Penalties on employees cannot be sustained merely on
account of their official roles, particularly where the dispute concerns
interpretation of classification or exemption provisions. Reliance is
placed on Komatsu India Pvt. Ltd. , Gammon India Ltd. ,
Carpenter Classic Exim Pvt. Ltd. and Sterlite Industries (India)
Ltd.
XII. Penalty under Section 114AA
The Co-Appellants submit that Section 114AA requires positive
evidence of knowingly or intentionally making, signing or using a
document containing a false or incorrect material particular. No such

20
evidence has been produced. Mere adoption of a classification
subsequently found unacceptable by the Department cannot amount
to falsification of documents. Reliance is placed on Sree Ayyangar
Spinning & Weaving Mills Ltd. , CC v. Sri Krishna Sounds and
Lightings and Orion Enterprises .
XIII. Prayer
Accordingly, the Appellants submit that the demands, interest,
confiscation, redemption fine and penalties imposed on the Appellant
and the Co-Appellants are unsustainable and pray that the impugned
order be set aside with consequential relief.
Submissions made by the Respondent-Revenue
3.2 Shri Anoop Singh ld. Authorized Representative appeared for the
respondent. He submitted that:
A. Investigation
DRI investigation indicated that M/s TKML classified identical imported
sensors, including EGT, water-temperature, oxygen, air-fuel-ratio and
NOx sensors, under different Customs Tariff Headings during January
2019–June 2023, resulting in alleged short-payment of customs duty.
He further took us through the impugned order relating to the
classification of the impugned goods under dispute and submitted as
under.
B. Sensor Exhaust Gas Temperature
The Exhaust Gas Temperature (EGT) sensor is fitted to the exhaust
manifold to measure the temperature of the exhaust gas. It is made of
a chromium-manganese thermistor assembly. However, the imported
item is not just a thermistor. It also includes the housing, electrical
connectors, and an electrical circuit. The thermistor senses changes in

21
temperature by changing its electrical resistance. This change is
converted into an electrical signal and sent to the ECU (Engine Control
Unit). The ECU uses this information to control fuel combustion, engine
performance, air-fuel mixture, and particulate-filter regeneration.
Therefore, the thermistor is only one part of the complete EGT sensor.
The imported item is a complete temperature-measuring device and
cannot be treated simply as a thermistor under CTI 85334030. The
item also does not perform physical or chemical analysis under CTH
9027, does not automatically regulate a system under CTH 9032, and
does not fall within the specific instruments covered by CTH 9025.
Since the imported item is a complete measuring device, it is
appropriately classifiable under CTI 9031 8000. The contrary view
stated on 19-06-2023—that a measuring instrument must show a
readable or graduated result—is not supported by the WCO
Explanatory Notes to Heading 90.31. These notes also cover equipment
used for testing and regulating motor-vehicle systems. Therefore,
classification of the EGT sensor under CTH 8533, 9027, or 9032 is not
appropriate. Such classification allegedly resulted in the importer
receiving benefits under Notifications Nos. 24/2005-Customs and
50/2017-Customs that were not legally available.
C. Sensor Nitrogen Oxides
An electrical sensor downstream of the catalytic converter that
measures exhaust NOx concentration. Its feedback enables the ECU to
regulate urea injection for SCR, thereby limiting emissions and
supporting fuel economy and engine performance. The NOx sensor,
part of the SCR system, uses electrochemical cells to measure NOx and
oxygen concentrations in vehicle exhaust and sends the results for

22
emission control. It is not the industrial gas-analysis apparatus
contemplated by Heading 90.27, nor an instrument of Heading 9025
or an automatic controller of Heading 9032. It is therefore
appropriately classifiable under CTH 9031 8000 as a measuring or
checking instrument not elsewhere specified. Heading 8708 is also
inapplicable because Section XVII covers vehicle parts only when they
are not more specifically included elsewhere; this sensor is specifically
covered by Heading 9031.
D. Sensor Air-Fuel Ratio
Both sensors monitor exhaust oxygen and transmit data to the engine-
management system to optimise the air-fuel mixture and ignition
timing. The oxygen sensor measures through voltage, while the air-
fuel-ratio sensor uses current and supports finer emission control. An
electrical sensor in the exhaust manifold that measures residual
oxygen and sends real-time data to the ECU for maintaining the correct
air-fuel ratio. They measure rather than analyse exhaust gases and are
not the industrial gas-analysis apparatus described in Heading 90.27.
Both are therefore appropriately classifiable under CTH 9031 8000.
E. Sensor Assembly Accelerator Pedal
This assembly comprises the accelerator pedal and position sensors
that detect pedal movement and control throttle opening. As an
assembly of motor-vehicle parts, it is appropriately classifiable under
CTH 8708 9900.
F. Retainer Ultrasonic Sensor
These plastic components mount and hold ultrasonic sensors. Section
Note 2(b) of Section XVII excludes plastic goods similar to “parts of
general use,” including mountings of Heading 8302, from classification

23
as motor-vehicle parts. The definition is heading-based and applies
even to specialised components used solely with vehicles, as supported
by Spire India v. CCE , 2006 (200) ELT 539 (T), and Kirloskar Pneumatic
Co. Ltd. v. CC , 1997 (90) ELT 428 (T). Accordingly, the retainer and
clip are classifiable under CTH 39269099.
G. Sensor Inlet Air Temperature
The IAT sensor measures intake-air temperature so that the ECU can
adjust the fuel-air mixture. Although it contains a thermistor, its
circuitry is essential to transmit the measurement to the ECU; the
complete device cannot therefore be treated as a thermistor under CTH
85334030. Its predominant function is measurement, making CTH
9031 8000 the appropriate classification.
H. Sensor Water Temperature
A negative-temperature-coefficient thermistor assembly in the coolant
line. It measures coolant temperature and signals the ECU to adjust
engine parameters for optimum operating temperature and
performance. The engine-coolant-temperature sensor uses a
thermistor within a protective housing, together with connectors,
wiring, mounting provisions and sealing components, to measure
coolant temperature and signal the ECU. Because its function depends
on the complete assembly, not the thermistor alone, classification
under CTH 85334030 is inappropriate. Its predominant measuring
function places it under CTH 9031 8000.
I. Sensor Speed
The speed sensor uses Hall-effect technology to measure rotational or
vehicle speed. It is therefore classifiable under CTH 9031 8000 as a
measuring instrument not elsewhere specified.

24
J. Sensor Assembly Brake Pedal
The brake-pedal sensor assembly detects pedal position and
movement and transmits corresponding signals to the ECU or brake-
control module. Its functions extend beyond measurement to braking-
force control, coordination with ABS and ESC, regenerative braking and
brake-light activation. As an integrated assembly comprising sensors,
Hall-effect circuitry, connectors, mounting bracket and housing, it is
appropriately classifiable under CTH 8708 3000 as a motor-vehicle
part.
The ld. A.R. prayed that the appeal may be rejected.
Analysis and Findings
4. We have carefully gone through the oral and written submissions
made by the parties to the dispute. The following issues have been
raised by the Appellant:
I. Classification of 9 Sensors on merits

A. Temperature Sensors (3 sensors)
B. Gas Analysis Sensors (3 sensors)
C. Other Sensors (3 sensors)

II. Reclassification under Section 28, where no duty has been
demanded - 36 Sensors

III. Revenue-neutrality of reclassification – FTA benefit

IV. Differential IGST – availability of ITC

V. Extended period of Limitation

VI. Confiscation, Redemption Fine and Penalties On Appellant
and Co-Appellants
4.1 We find that the Appellant has relied on foreign Rulings and
Regulations, without showing whether the Tariff on which they are
based are pari materia to the Indian Customs Tariff. In any case these

25
Rulings are also private tax ruling and cannot formally be cited as an
authority by another taxpayer/ appellant in their own judicial
proceedings. Each Ruling is an authority in the setting of its own facts
and will not help advance other appellants cause in their case before
judicial fora. The Income Tax Appellate Tribunal – Mumbai, in the case
of Assistant Director Of Income Tax Vs Green Emirate Shipping
And Travels [(2006) 100 ITD 203 (MUM) / [2006] 286 ITR 60 (MUM)],
while examining Rulings given by Indian Authorities, after referring to
the Hon’ble Supreme Court’s judgment in Union Of India And Anr
Vs Azadi Bachao Andolan And Anr [AIR 2004 SUPREME COURT
1107], held that the Authority for Advance Rulings, not being a
part of the judicial hierarchy, cannot lay down a binding
precedent for anyone - the Revenue, the assessees or the
appellate authorities - except for the assessee who sought the
Ruling and its jurisdictional authority. This according to us,
would be applicable with greater force to foreign Rulings,
where the law is not even shown to be pari materia to the
applicable domestic law.
4.2 We are of the opinion that such a Ruling cannot be relied upon
even for its persuasive value unless it is first shown that the statutory
provisions, policy conditions and factual circumstances considered in
that decision are pari materia with those in the case before us.
Otherwise, it would amount to relying on an unverified premise. In the
absence of such a foundation, the decision may have little or no bearing
on the issue before us. We, therefore, do not find it necessary to
examine the decisions so relied upon. We now take up the issues
sequentially :

26
I. Classification of 9 sensors on merits
5.1 We have examined the competing classifications in the light of
the General Rules for Interpretation of the Import Tariff, the relevant
Section and Chapter Notes, the Harmonised System Explanatory Notes
and the judicial authorities cited by both sides.
5.2 Under Rule 1, classification is to be determined according to the
terms of the headings and the relevant Section and Chapter Notes, and
Rule 6 applies at the subheading level. The goods have to be classified
in the condition in which they are imported, having regard to their
objective characteristics and function. In Commissioner of Customs,
New Delhi Vs Sony India Ltd. [2008 (231) E.L.T. 385 (S.C.)], the
Supreme Court held, that it is a settled position in law that the goods
would have to be assessed in the form in which they are imported and
presented to the customs and not on the basis of the finished goods
manufactured after subjecting them to some process after the import
is made.
5.3 It is equally settled that where Revenue seeks to depart from the
classification declared by the importer, the burden of establishing the
proposed classification lies upon Revenue. The Supreme Court in HPL
Chemicals Ltd. v. Commissioner of Central Excise, Chandigarh ,
[2006 (197) E.L.T. 324 (S.C.)], held that classification is a matter of
chargeability and that Revenue must adduce proper evidence when it
seeks to classify the goods under a heading different from that claimed
by the assessee
A. Temperature Sensors – General
5.4 In the present case relating to ‘Temperature Sensors’, the
imported articles incorporate a thermistor, housing, electrical

27
connections and associated components. The thermistor changes its
electrical resistance according to the exhaust temperature, and the
resulting electrical signal is transmitted to the ECU. The material
question is whether the imported article itself performs the function of
measuring/converting the temperature, or whether it merely provides
a temperature-dependent resistance signal which is subsequently
processed by the ECU.
5.5 CTH 8533 specifically covers electrical resistors, and other
variable resistors, other than heating Resistors. CTI 8533 4030
specifically covers thermistors . A heating resistor is a resistor
specifically designed to convert electrical energy into heat. Whereas a
thermistor is a temperature-sensitive resistor, not ordinarily a heating
resistor. The Indian tariff accordingly contains a specific description for
thermistors which indicates that it is not normally to be treated as a
heating resistor.
5.6 On the other hand, CTH 9025 covers hydrometers,
thermometers and pyrometers etc. It would apply where the imported
article itself constitutes a thermometer, including an electrical-
resistance thermometer, rather than merely a thermistor whose
resistance varies with temperature.
5.7 CTH 9031 is a residual provision for measuring or checking
instruments not specified or included elsewhere in Chapter 90. It
cannot be invoked where the goods are specifically covered by Heading
9025, nor can the mere fact that the sensor is used in an automotive
control system convert it into a Heading 9031 instrument. Likewise,
the fact that the ECU subsequently uses the signal for fuel control,
emission control or particulate-filter regeneration does not make the

28
sensor itself an automatic regulating or controlling apparatus under
Heading 9032.
5.8 We are of the opinion that the mere presence of housing,
connectors, wiring, mounting arrangements or protective components
does not, by itself, transform a thermistor into a thermometer. What
is decisive is the function of the complete article as imported. If the
imported sensor merely senses temperature through the resistance
change of the thermistor and transmits the resulting electrical signal
to the ECU, while the ECU performs the conversion, calibration or
interpretation necessary to determine the actual temperature, the
article remains appropriately classifiable as a thermistor under CTI
8533 4030.
5.9 Conversely, Heading 9025 would become applicable if the
evidence establishes that the imported assembly itself incorporates the
necessary circuitry or electronics to convert the sensed resistance into
a calibrated temperature value and thereby constitutes a complete
temperature-measuring instrument. A physical display or graduated
scale is not, by itself, essential to a modern electronic thermometer;
however, there must be evidence that the imported article itself
performs the temperature-measuring function rather than merely
supplying a raw temperature-dependent electrical signal.
5.10 In the present case, the Department has not established, by
technical evidence, that the electrical circuitry incorporated in the
imported EGT sensor performs such conversion or calibration. The
assertion that the circuitry is necessary to transmit the signal to the
ECU does not, by itself, establish that the sensor is a complete
thermometer. The subsequent use of the signal by the ECU for engine-

29
management functions likewise cannot determine the tariff
classification of the imported sensor.
5.11 Accordingly, on the evidence available, the imported article is not
appropriately classifiable under CTH 9031. It is also not classifiable
under Heading 9025. Department has not established that the
imported assembly itself performs the temperature-measuring/
conversion function. In the absence of such evidence, and having
regard to the specific tariff description of thermistors under CTI 8533
4030, the goods are correctly classifiable under CTI 8533 4030.
6. Product wise classification
6.1 Exhaust Gas Temperature (EGT) Sensor

The EGT sensor contains an NTC thermistor whose resistance changes
with exhaust-gas temperature. The housing, fixing arrangement, heat-
resistant cable and connector serve installation and signal
transmission. On the stated construction, and in the absence of
evidence that the internal circuitry independently converts or calibrates
the signal into a temperature value, the essential character remains
that of a thermistor. Accordingly, as discussed above, the department
has not been able to establish the correctness of classification of the
impugned article. In the absence of such evidence, Revenue has not
been able to dislodge the classification of CTI 8533 4030 adopted by
the appellant and is hence sustained. Heading 9025 would apply only
if the imported unit itself functions as a complete temperature-
measuring instrument. CTH 9031 being a residual provision cannot be
preferred over a specific heading.

30
6.2 Engine Coolant/Water Temperature Sensor
The NTC thermistor, together with its housing, connector, wiring and
sealing components, senses coolant temperature and transmits the
resulting electrical signal to the ECU. Revenue has not been able to
demonstrate that these components, by themselves, are a separate
measuring instrument. Hence on the stated facts and discussion above,
the goods as classified by the Appellant under CTI 8533 4030 merits
acceptance.
6.3 Inlet Air Temperature (IAT) Sensor
The IAT sensor operates through a thermistor whose resistance varies
with intake-air temperature, with the ECU using the signal for engine
control. Its automotive use and downstream function do not determine
its tariff classification. For reasons discussed, the goods remain
classifiable under CTI 8533 4030 as declared by the Appellant.
B. Gas Analysis Sensors – General
7. Heading 9027 covers instruments and apparatus for physical or
chemical analysis, including gas or smoke analysis apparatus, with CTI
9027 1000 specifically covering gas or smoke analysis apparatus.
Heading 9031 is a residuary provision for measuring or checking
instruments not specified or included elsewhere in Chapter 90.
Accordingly, where the goods are specifically covered by Heading
9027, Heading 9031 cannot be preferred. The decisive consideration is
the function and objective characteristics of the imported goods. The
sensors in question use zirconia-based electrochemical cells to
determine the concentration of particular constituents in exhaust gas.
The fact that they transmit the resulting electrical signal to the ECU, or

31
are installed in a motor vehicle, does not alter their intrinsic analytical
function.
8. Product wise classification

8.1 Oxygen and Air-Fuel Ratio Sensors: Both sensors determine the
oxygen content of exhaust gas using zirconium-dioxide electrochemical
elements with platinum electrodes. The difference between
conventional oxygen sensors and wide-band air-fuel-ratio sensors lies
principally in their method and range of measurement. Both analyse
an identified constituent of exhaust gas and are therefore specifically
covered by CTI 9027 1000. CTH 9031 being a residual provision cannot
be preferred over a specific heading.
8.2 Nitrogen Oxide Sensor: The NOx sensor uses zirconia-based
electrochemical cells to determine the concentration of nitrogen oxides
in exhaust gas. Its signal may subsequently be used by the ECU to
control the SCR/urea-dosing system, but that downstream use does
not change the sensor's analytical function. It is accordingly classifiable
under CTI 9027 1000. The issue is also supported by Cummins
Technologies (supra), wherein NOx and allied exhaust-gas sensors
were treated as gas-analysis apparatus under CTI 9027 1000. The
settled principle that a specific tariff entry prevails over a residuary
entry is also reflected in Dunlop India Ltd. (supra), Mauri Yeast
India (supra), Uni Products India Ltd. (supra), and Hamdard
(Wakf) Laboratories (supra). Accordingly, Oxygen Sensor, Air-Fuel
Ratio Sensor and Nitrogen Oxide Sensor are classifiable under CTI
9027 1000. The alternative claims applicable only to residuary CTH
9031 therefore do not survive for consideration.

32
C. Other Sensors
9. Sensor Assy Brake Pedal
We find that the imported Sensor Assy Brake Pedal uses a Hall-effect
integrated circuit to detect pedal position and movement and
generates a corresponding electrical signal. The ECU or brake-control
module subsequently uses this signal for braking, ABS/ESC,
regenerative braking and other vehicle functions. The sensor itself
neither applies braking force nor automatically regulates the braking
system. Pedal position and its rate of change are measurable physical
quantities. In the absence of a more specific Chapter 90 heading, the
assembly is therefore classifiable under CTI 9031 8000 as another
measuring or checking instrument. Having been classified as an article
of Chapter 90, the sensor is excluded from the expression “parts”
under Note 2(g) to Section XVII and consequently cannot be classified
under Heading 8708, the sensor does not itself constitute or perform
the braking function covered by CTI 8708 3000. Accordingly, the
Sensor Assy Brake Pedal is classifiable under CTI 9031 8000, and
classification under CTI 8708 3000 is rejected.
10. Retainer Ultrasonic Sensor
We have considered the rival submissions and find that the article is a
specially moulded plastic retainer fixed inside a vehicle bumper to hold
an ultrasonic sensor in its required position. Revenue invokes Note 2(b)
to Section XVII and CTI 3926 9099; the Appellant claims CTI 8708 99
00, relying on its dedicated automotive use and Note 2(t) to Chapter
39. Note 2(b) excludes plastic goods only when they are similar to
tariff-defined “parts of general use.” Revenue has not demonstrated
that this sensor retainer is a general-purpose or interchangeable

33
mounting. The Appellants claim that the goods are suitable solely or
principally for motor vehicles; are not proved to be excluded by Note
2 to Section XVII, and are not more specifically covered elsewhere,
thus needs to be upheld. They therefore fall under Heading 8708 and,
by Note 2(t) to Chapter 39, stand excluded from Heading 3926. Spire
India [2006 (200) E.L.T. 539 (Tri.-Mumbai)], and Kirloskar
Pneumatic [1997 (90) E.L.T. 428 (Tri.-Delhi)], concerned goods
expressly covered as parts of general use and are distinguishable.
Flextronics Technologies (supra), though arising under a different
tariff structure, supports classification by the article’s specialised
identity rather than by its constituent plastic alone. We hence hold that
the Retainer Ultrasonic Sensor is classifiable under CTI 8708 9900 as
an “other” part or accessory suitable for use solely or principally with
motor vehicles. Classification under CTI 3926 9099 is set aside.
11. Sensor Speed
11.1 We have considered the rival submissions. The imported article is
mounted near the rotating encoder of the wheel hub and bearing
assembly. The encoder has alternating N and S poles and, through the
Hall effect, the sensor detects the changes in the magnetic field caused
by rotation. It converts these changes into a digital pulse signal which
is transmitted to the ABS/ECU. The ECU thereafter performs the
necessary calculations to determine the wheel speed. The said
functional characteristics are material for determining the
classification. The sensor itself does not calculate, indicate or display
the speed of the wheel. It merely detects changes in the magnetic field
and converts them into an electrical signal, from which the ECU
subsequently determines the wheel speed. Heading 9031 covers

34
measuring or checking instruments, appliances and machines not
specified or included elsewhere in Chapter 90. In our view, the
imported sensor cannot be regarded as a measuring instrument merely
because the signal generated by it is ultimately used by the ECU for
determining wheel speed. The measurement is performed only after
processing of the signal by the ECU and is not undertaken by the sensor
itself.
11.2 The Revenue's contention that the goods are a type of position
sensor used for measuring vehicle speed does not alter the above
conclusion. Classification has to be determined having regard to the
function performed by the imported article itself. In the present case,
that function is detection of magnetic-field variation and conversion
thereof into an electrical/digital signal, and not measurement or
indication of speed. Heading 8543 covers electrical machines and
apparatus having individual functions, not specified or included
elsewhere in Chapter 85. The impugned sensor is an electrical
apparatus having an individual function of detecting changes in
magnetic field and generating a corresponding electrical signal. It is
not shown to be more specifically covered elsewhere in Chapter 85.
Accordingly, on the evidence available, the department has not been
able to establish the correctness of classification of the impugned
article. In the absence of such evidence, the appellants classification
as CTI 8543 7099 is more appropriate. Heading 9025 would apply only
if the imported unit itself functions as a complete temperature-
measuring instrument. CTI 9031 8000 is hence not sustainable. Hence
the appellant's claim under CTI 8543 7099 is accordingly accepted.

35
II. Reclassification under Section 28, where no duty has been
demanded - 36 Sensors
12. The Appellants submit that Section 28 cannot be invoked merely
to reclassify the 36 sensors in respect of which no duty demand has
been raised. A duty demand is a jurisdictional prerequisite for
proceedings under Section 28. Since the SCN itself proposes no
demand for these goods, the proposed reclassification is without
statutory authority. Any change to the assessment ought to have been
pursued by challenging the assessment through an appeal under
Section 128 of the Customs Act or modifying the same through review
of the order in terms of Section 129D of the Customs Act.
12.1 We have considered the rival submissions. The limited issue is
whether the classification of the 36 sensors, for which the show cause
notice does not propose any demand of differential duty, can be altered
in proceedings initiated under Section 28 of the Customs Act, 1962.
12.2 Section 2(2) of the Customs Act defines “assessment” to include
determination of the dutiability of goods and the amount of duty, tax,
cess or other sum payable and expressly includes provisional
assessment, self-assessment, re-assessment and any assessment in
which the duty assessed is nil. Classification of goods is an integral part
of such assessment. Thus, the fact that no duty is payable does not
mean that there is no assessment. A nil-duty assessment is expressly
recognised by the statute as an assessment.
12.3 Section 17 provides the statutory mechanism for assessment and
re-assessment. The importer or exporter is required to self-assess the
duty and the proper officer may, on verification, examination or
testing, re-assess the duty where the self-assessment is found to be
incorrect. Where such re-assessment is contrary to the self-

36
assessment and is not accepted by the importer or exporter, the proper
officer is required to pass a speaking order under Section 17(5). The
power under Section 17, however, operates in the course of
assessment of the imported or export goods. Once the assessment
process has culminated and the goods have been cleared, a completed
assessment cannot be reopened merely because another officer
subsequently forms a different opinion regarding classification. A
statutory source of power is necessary for such reopening or
modification. The issue came up for consideration by a Coordinate
Bench of this Tribunal at New Delhi in the case of M/s Samsung India
Electronics Pvt. Ltd. Vs Principal Commissioner of Customs, Air
Cargo Complex (Import), [FINAL ORDER NO. 51665/2023, dated:
20.12.2023 / 2023 (12) TMI 1155 - CESTAT NEW DELHI]. It held as
under:
“17. After the duty is assessed on the imported goods and
the duty is paid, the proper officer clears the goods for home
consumption under Section 46. Once this action is
completed, they cease to be imported goods, they
cease to be dutiable goods and the importer ceases to
be the importer. Sections 2(14), 2(25) and 2(26) which
explain this legal position read as follows.

2. Definitions

(14) " dutiable goods " means any goods which are
chargeable to duty and on which duty has not been
paid;

(25) " imported goods " means any goods brought
into India from a place outside India but does not
include goods which have been cleared for home
consumption;

(26) " importer", in relation to any goods at any
time between their importation and the time
when they are cleared for home consumption ,
includes any owner, beneficial owner or any person
holding himself out to be the importer;

37
18. This process of self-assessment by the importer and re-
assessment by the proper officer comes to an end once an
order permitting the clearance of goods for home
consumption is issued under Section 46. Thereafter, the
goods cease to be imported goods or dutiable goods and no
duty can be assessed. The only exception is when the
goods are cleared for home consumption on
provisional assessment in which case the assessment
concludes after the assessment is finalized and an
order is passed by the officer. Provisional assessment is
not relevant to this appeal.

19. Assessment concludes the determination of the liability
of the importer to pay duty and is similar to a decree under
the Civil Procedure Code, 1908 [CPC]. Section 2 (2) of CPC
defines decree as "It means the formal expression of an
adjudication which conclusively determines the rights of the
parties with regard to all or any of the matters in
controversy in the suit." Assessment differs from decree
inasmuch as the determination of what is due as Revenue
by the importer is not made by a Court of law but is
determined through a quasi-judicial process by the ‘proper
officer‘ who re-assesses the duty or is self-determined by
the importer. Just like a decree in Civil suits, there is a
provision for appeal against assessment. It is appealable by
both sides to the Commissioner (Appeals) under section 128
and also to further higher judicial fora. The Commissioner
(Appeals) does not assess but either affirms, modifies or
annuls the assessment order. In this process, the
Commissioner (Appeals) may also decide the issue of
classification of the goods.”
(emphasis added)

12.4 The Hon’ble Supreme Court, in its three Judge review judgment
in Commissioner of Customs Vs Canon India Pvt. Ltd . [2024 (390)
E.L.T. 545 (S.C.)], examined the changes introduced in Section 17 by
the Finance Act, 2011, vis-à-vis the unamended provision, and held as
under:
"89. . .

(d) Scheme of Section 17(5): The old Section 17(5)
requires the proper officer to provide a speaking order
within 15 days of the date of assessment of duty if the same
is contrary to the claim of the assessee or is not accepted in
writing by the assessee. The new Section 17(5) is analogous
to the old sub-section (5) except that it requires a speaking
order within 15 days from the date of the “re-assessment”

38
of duty. Such change shows the legislative intent to
transfer the process of “assessment” under the old
Section 17 to the stage of “re-assessment” under the
new Section 17 and replace the “assessment” to be
done by the proper officer under the old Section 17
with the process of “self-assessment”.

90. These changes highlight that the competence of the
proper officer to conduct "assessment" is completely taken
away by the legislature vide the amendment to Section 17.
The new Section 17 empowers the proper officer to perform
the functions of verification of self-assessment and
subsequent re-assessment, if found necessary. However,
such re-assessment is not a mandatory function on
the same footing as "assessment" under the old
Section 17. Therefore, in our considered view the
scope of the functions of the proper officer under the
new Section 17 is limited ."

. . *

96. The proceedings under Section 28 are subsequent
to the completion of the process set out in Section 17
of the Act, 1962. The procedure envisaged Review Petition
No. 400 of 2021 Page 91 of 161 under Section 28 is in the
nature of a quasi-judicial proceeding with the issuance of
the show cause notice by the proper officer followed by
adjudication of such notices by the field customs officers. It
is also worth noting that in the case of DRI, the proceedings
under Section 28 start only after an investigation has been
undertaken by DRI. This is reaffirmed by Circular No. 4/99-
Cus dated 15.02.1999 and Circular No. 44/2011-Customs
dated 23.11.2011. Therefore, the nature of review
under Section 28 is significantly different from the
nature of assessment and reassessment under
Section 17. The ambit of Section 28 has also been
restricted to the review of assessments and re-
assessments done under Section 17 for ascertaining
if there has been a short-levy, non-levy, part
payment, non-payment or erroneous refund.
(emphasis added)

12.5 This Tribunal in Valeo India Pvt. Ltd. Vs Commissioner of
Customs (Sea Port–Import), Chennai, [2024 (4) TMI 484 - CESTAT
CHENNAI / Final Order No. 40393/2023, Dated: 10.04.2024], speaking

39
through one of us while sitting as a Single Member [Shri M. Ajit kumar
– Member (Technical)], held that classification is an integral part of
assessment and that, after the assessment process is completed, the
assessment cannot simply be amended except under a statutory
provision authorising such action. The CTH plays a crucial role in the
assessment of imported goods. It helps classify goods into specific
categories. The effective customs duty rates are determined based on
the CTH. Some tariff headings may be subject to preferential treatment
under trade agreements or special arrangements. They also helps
enforce regulations related to health, safety, environment, and other
aspects. The Tribunal also noted that the self-assessment itself
constitutes an assessment and is appealable under Section 128. It held
that once an assessment attains finality under Section 17, the proper
officer becomes functus officio , and cannot review or reassess the
assessment in the absence of a specific statutory power to do so. The
Tribunal also observed that any alteration of substantive rights and
liabilities already determined must follow the more rigorous and
transparent appellate process, with statutory safeguards relating to
limitation, review and further appeal.
12.6 The question, therefore, is whether, in the absence of any duty
sought to be recovered in respect of the 36 sensors, Section 28 can
nevertheless be invoked to alter the classification forming part of a
completed assessment under Section 17 or whether the Revenue is
required to pursue the appellate remedy under Section 128.
12.7 Section 28 is a specific provision for recovery of duty not levied,
not paid, short-levied, short-paid or erroneously refunded. Thus, where
an incorrect classification has resulted in non-levy or short-levy of

40
duty, Section 28 can undoubtedly be invoked, and determination of the
correct classification would be incidental to determination and recovery
of the differential duty. In such a situation, Section 128 cannot be
regarded as an invariably mandatory precursor to proceedings under
Section 28. The mere fact that an assessment has already been made
does not, by itself, bar recourse to Section 28. [See Union of India
Vs Jain Shudh Vanaspati Ltd., - 1996 (86) E.L.T. 460 (S.C.) and
ITC Ltd. Vs Commissioner of Central Excise, Kolkata-IV, - 2019
(368) E.L.T. 216 (S.C.)]. However the position is different where no
duty is sought to be recovered . In such a case, a distinction has to be
made between re-assessment undertaken to determine and recover
duty under a statutory provision and a mere change in the classification
of goods already assessed, where no duty or other liability under
Section 28 is proposed to be recovered.
12.8 In the present case, the show cause notice proposes
reclassification of the 36 sensors but does not raise any demand of
differential duty in respect of them. There is, therefore, no allegation
that duty on these goods was not levied, not paid, short-levied or
short-paid. It seeks, in substance, to alter the classification forming
part of an assessment which has already been completed. Re-
assessment is not an independent source of power. It must be
undertaken under a statutory provision conferring such power.
Section 17 of the Customs Act provides for verification of self-
assessment and re-assessment, where the proper officer does
not accept the self-assessment. Section 2(2) expressly includes
self-assessment, re-assessment and an assessment in which
the duty assessed is ‘nil’ within the definition of “assessment”.

41
Hence a nil-duty assessment is also an assessment and
consequently, changing the classification of goods covered by
such assessment amounts to altering/reassessing the
assessment made. This may have effect on the taxability and
importability of the goods, as discussed above, altering
substantive rights and liabilities already determined. Once the
assessment or re-assessment under Section 17 is completed
and the goods cleared from Customs control, the proper officer
becomes functus officio and cannot review or alter the
assessment except under a specific statutory provision
empowering such action. The Supreme Court in Canon India
(supra), has clarified that the functions of assessment and re-
assessment under Section 17 and recovery of duty under Section 28
are distinct. Section 28 provides a subsequent quasi-judicial
mechanism for determination and recovery of duty which has not been
levied, has not been paid, has been short-levied or short-paid, or has
been erroneously refunded. Applying the above principles, we find that
the proposed reclassification of the 36 sensors, in respect of which no
differential duty is demanded, is beyond the scope of the Section 28
proceedings.
12.9 Accordingly, the proposal to reclassify the 36 sensors, in respect
of which no duty demand has been raised, merits to be set aside. We
however make it clear that this finding does not preclude the
Department from examining the correct classification of these goods in
accordance with law at the stage of assessment of any subsequent Bill
of Entry. Each Bill of Entry constitutes a fresh assessment, and the
classification declared therein is liable to be examined in accordance

42
with law at that stage, where fresh grounds exist for departing from
the classification adopted in the earlier assessment. [See: Warner
Hindustan Ltd. Vs Commissioner — 1999 (113) E.L.T. 24 (SC)]
III. Revenue-neutrality after reclassification – FTA benefit
13. The Appellants has stated that with respect to (1) Sensor
Ultrasonic; (2) Sensor Height Control; (3) Sensor Light Control and (4)
Cable Sub-Assy Spiral W/Sensor, though reclassified by the
Department, remain eligible for nil/ concessional duty under alternate
entries of FTA notifications Nos. 46/2011 and 69/2011, hence the
consequential demand of ₹ 10,78,62,162/- is revenue neutral and
unsustainable. They have not challenged the classification of the goods
finalised in the impugned order. Reliance is placed on L.G. Electronics
(supra), and Hyundai Motors (supra) . They have stated that the
benefit was denied by the Original Authority without examining the
merits of their submission, merely because the exemption benefit was
not claimed at the initial stage, which is not legally sustainable.
13.1 We are of the opinion that revenue-neutrality, involves a
question of fact and law and mainly presupposes;
(i) the availability of an alternate exemption to the assessee
itself, that will completely extinguish the duty liability, with the
assessee establishing that the eligibility/ conditions was
applicable to the goods at the relevant time – hypothetical
neutrality would not suffice; and/or,
(ii) duty was payable, but the same duty was immediately
available as credit to the same assessee. [See: CCE Vs Textile
Corporation Marathwada Ltd. - 2008 (231) E.L.T. 195 (S.C.)].

43
Further where the duty demanded is revenue neutral as per scenario
(ii) and is fully available as credit to the same assessee with the
eligibility of such credit not being in dispute, the absence of any
economic benefit from non-payment of duty is a material circumstance
against the allegation of intention to evade duty and consequently the
invocation of the extended period and penalty. [See: Nirlon Ltd. Vs
CCE, Mumbai (supra)]. However a plea of revenue neutrality cannot
be accepted in a cases of abuse of law or procedure, like where the
claim to preferential tariff treatment is itself tainted by fraud, the
importer cannot claim that the duty impact is neutral. Therefore, if the
Certificates of Origin are found to be invalid, manipulated, or procured
by misdeclaration, or if the goods do not satisfy the applicable Rules of
Origin etc, the benefit is inadmissible. [See: Trafigura India Private
Limited Vs Union Of India - 2023-TIOL-737-HC-AHM-CUS]
13.2 It is also a settled principle of law that an assessee cannot be
denied the benefit of an exemption notification to which it is otherwise
entitled merely because the benefit was not claimed at the initial stage,
except perhaps where fraud or other disentitling circumstances are
established. In Unichem Laboratories Ltd. Vs Collector of Central
Excise, Bombay [(2002) 7 SCC 145], the Hon’ble Supreme Court held
that, in the absence of any prescribed time limit for claiming an
exemption, the benefit thereof may be claimed subsequently and must
be extended if the notification is otherwise applicable. The same
principle was reaffirmed in Share Medical Care Vs Union of India
[(2007) 4 SCC 573 / 2007 (209) E.L.T. 321 (S.C.)], where the Court
held that failure to claim an exemption at the initial stage does not
preclude an assessee from claiming it subsequently. Significantly, the

44
Court also held that where the assessee is otherwise eligible under
another applicable category of the exemption notification, the benefit
cannot be denied merely because exemption was earlier claimed under
a different category.
13.3 As the foundational issues of fact and law were not examined and
determined by the Original Authority, the matter requires to be
examined afresh on merits by it. The Hon’ble Karnataka High Court in
Assistant Commissioner of Commercial Taxes (Audit) Vs
Kapsons Online Pvt. Ltd. , [NC:2026:KHC:4310-DB, dated:
21.01.2026], held that an appellate Tribunal cannot assume the
original authority's jurisdiction by considering fresh material and
deciding foundational facts not examined by the said Authority. This
principle is consistent with the observations of the Hon’ble Supreme
Court in Ramakant Ambalal Choksi Vs Harish Ambalal Choksi &
Ors. [2024 INSC 913], relying, inter alia, on Shyam Sel & Power
Ltd. Vs Shyam Steel Industries Ltd., [(2023) 1 SCC 634] and
Monsanto Technology LLC Vs Nuziveedu Seeds Ltd., [(2019) 3
SCC 381].
13.4 Accordingly, the issue merits to be remanded to the Original
Authority to determine the Appellants' entitlement under the
alternative FTA notification as submitted by them, in accordance with
law. The plea of revenue neutrality shall also be decided by the
Authority, consequentially.
IV. Differential IGST – availability of ITC
14. The Appellant contends that the differential IGST demand of Rs
18,474/- relating to two items i.e. (i) Cover for Rain Sensor and (ii)
Holder Battery Current Sensor, is revenue neutral, as the

45
corresponding IGST is available as input tax credit. We find that the
Appellant has accepted the classification of the goods as done in the
impugned order. We are of the opinion that revenue neutrality, does
not by itself extinguish a substantive duty liability and needs to be
established, as discussed above. However, considering the low tax
amount involved in the dispute we do not feel it necessary to remand
the matter for examination and in the peculiar circumstances accept
the Appellants plea.
V. Extended period of limitation
15. The Appellant has stated that demand in the case of four items
i.e (i) Sensor Asst Accelerator Pedal, (ii) Sensor Clamp Skid Control,
(iii) Plate Crank Angle Sensor and (iv) Sensor Knock is hit by limitation.
They have not challenged the classification of the goods.
15.1 Per contra Revenue has stated that in the case of:
(i) Sensor Assy Accelerator Pedal, the appellant has classified the
item under different CTIs viz. 8537 1000, 8708 1090, 8708 9900, 9027
1000, 9032 8910, 9032 9000.
(ii) Sensor Clamp Skid Control, the impugned item is rightly
classifiable under CTI 7326 9099, and that the differential duty on
account of above mis-classification under CTI to the tune of Rs.1,359/-
is payable by the importer.
(iii) Plate Crank Angle Sensor, the appellant has accepted that the
impugned item merits classification under CTI 8409 9941/8409 9191
and paid an amount of Rs. 260/- for the Bills of Entry which were within
two years of notice period.
(iv) Sensor Knock, the importer has classified the impugned item
under different CTl’s viz., 9031 8000, 9032 8990 and 9032 9000.

46
15.2 We have considered the submissions of the Revenue. Under the
self-assessment regime introduced w.e.f. 08.04.2011, the importer is
required to correctly declare the description, classification, value, rate
of duty and eligibility for availing an exemption. Reliance on the
classification indicated by a foreign supplier does not absolve M/s TKML
of this statutory obligation, and repeated adoption of different
classifications for the same goods, is a red flag and may warrant
scrutiny of the action. However, for invoking the extended period under
Section 28(4) of the Customs Act, 1962, mere wrong classification or
breach of the obligation under Section 17 is insufficient. The Revenue
must establish, by cogent evidence, collusion, wilful misstatement or
suppression of facts etc with intent to evade duty.
15.3 The law in this regard is settled by the Hon’ble Supreme Court
in Easland Combines, Coimbatore Vs. CCE [2003 (152) E.L.T. 39
(S.C.)], and Uniworth Textiles Ltd. Vs CCE [2013 (288) E.L.T. 161

(S.C.)], wherein it was held that the extended period requires a
positive act indicating wilful default. Further, in State of Kerala Vs
M.K. Mathew [AIR 1978 SC 1571], the Apex Court held that suspicion,
however strong, cannot substitute legal proof.
15.4 In the present case, the Revenue has relied on the changing
pattern of classification adopted by M/s TKML along with its enhanced
responsibility due to its AEO Tier-3 status. It is true that with greater
trust by the department and higher levels of facilitation comes greater
responsibility, by the Tier-3 importer. These circumstances, by
themselves, however do not establish deliberate suppression or wilful
misstatement with intent to evade duty. The presumption of innocence
is a background assumption of our legal system. The Bills of Entry

47
contained the relevant particulars and were self-assessed under the
statutory scheme. The subsequent adoption of a different classification
cannot by itself, without sufficient evidence, either direct or
circumstantial, raising adverse inference, establish a charge of
suppression or wilful misstatement. As discussed something more is
required. The decision in Keihin Automotive Systems India Pvt.
Ltd. [2020 (371) E.L.T. 737 (Tri.-Del.)], is distinguishable on facts and
cannot be read to mean that every repeated wrong classification under
self-assessment automatically attracts the extended period.
15.5 Accordingly, in the absence of sufficient evidence of collusion,
wilful misstatement or suppression of facts with intent to evade duty,
the extended period under Section 28(4) is not invocable. The demand
raised by invoking the extended period is barred by limitation and is,
accordingly, set aside. We make it clear that the demand falling within
the normal period of limitation for the goods under consideration here,
shall stand governed by the impugned order.
VI. Confiscation, Redemption Fine and Penalties.
16. In view of our findings recorded above, the confiscation and
imposition of fine on goods along with penalties on the appellant and
co-appellant are not sustainable. The same are accordingly liable to be
set aside.
VII. Interest on IGST
17. The Appellant has stated that interest and penalty on the
differential IGST are not sustainable, even for the normal period as the
relevant provisions had not been incorporated in law for the period in
question. We find that the issue was examined by this Bench in

48
Flextronics Technology India (supra), cited by the Appellant.
Relevant portion of the same is reproduced below:
“No Interest or Penalty is leviable in the absence of
machinery provision

6. The Appellant submits that IGST is levied under
Section 3(7) of CTA. However, the CTA has limited
provisions, and it borrows various provisions from the
Customs Act for implementation of its provisions. Section
3(12) of the CTA, which is the borrowing provision with
regard to IGST, did not borrow provisions of interest from
the Customs Act. Therefore, it is submitted that interest
cannot be recovered for non-payment of IGST which is
chargeable under Section 3 of the CTA.

6.1 Section 3(12) of the Customs Tariff Act, 1975, as it
stood just prior to the Finance (No 2) Act 2024 been notified
on 16th August 2024, is extracted below for ease of
reference:

3(12) The provisions of the Customs Act, 1962 (52 of 1962)
and the rules and regulations made thereunder, including
those relating to drawbacks, refunds and exemption from
duties shall, so far as may be, apply to the duty or tax or cess,
as the case may be, chargeable under this section as they
apply in relation to the duties leviable under that Act.

While interest is compensatory in character, the Sub-
Section above did not make any reference to interest.
Although the Section 3(12) as it stood above is an inclusive
one and should be given a broad meaning, Constitutional
Courts have held that demand for interest can be made only
if the legislature has specifically intended the collection of
interest.

6.2 We find that the Hon’ble Bombay High Court in
Mahindra & Mahindra Ltd. v. Union of India , [2022 (10)
TMI 212 - BOMBAY HIGH COURT], has examined an
identical issue regarding interest. It was held that there is
no substantive provision in Section 3 of Customs Tariff Act,
1975 requiring payment of interest and in the absence of
specific provisions for levy of interest, same cannot be levied
or charged. The relevant portion of the decision is extracted
below:

“34. Section 9A(8) of the Customs Tariff Act, 1975 which
borrowed provisions from Customs Act, 1962 did not borrow
provisions relating to interest and penalty. The Hon'ble
Courts, in judgments cited supra, held that in view of no
specific borrowing, no interest and penalty can be imposed on
anti-dumping duty. Later on, Finance (No.2) Act, 2004
amended sub-section (8) of Section 9A suitably to include
interest and penalty. However, similar amendments have not

49
been made to Section 3(6) of the Customs Tariff Act, 1975
relating to CVD, i.e., additional duty equal to excise duty or
Section 3A(4) of Customs Tariff Act, 1975 relating to SAD, i.e.,
special additional duty or surcharge under Section 9(3) of the
Finance Act, 2000.

35. Further, Section 12 of the Customs Act, 1962 levies duty
on goods imported into India at such rates as may be specified
in the Customs Tariff Act, 1975. In Customs Tariff Act, 1975,
Section 2 provides the rates at which duties of customs are to
be levied under the Customs Act, 1962 are as specified in the
first and second schedules of the Customs Tariff Act, 1975. In
Section 12 of the Customs Act, 1962 there is no reference to
any specific provision of Customs Tariff Act, 1975.
…

37. In view of the above, imposing interest and penalty on the
portion of demand pertaining to surcharge or additional duty
of customs or special additional duty of customs is incorrect
and without jurisdiction.”

The said decision has been affirmed by the Hon’ble Supreme
Court in Union of India v. Mahindra and Mahindra [2023
(8) TMI 135 - SC ORDER].

6.3 We also notice that Section 3(12) of the Customs
Tariff Act has been substituted, vide Finance (No 2) Act
2024 which was notified on 16th August 2024, specifically
including ‘interest’ among others measures. The new sub-
section is reproduced below.

"(12) The provisions of the Customs Act, 1962 and all rules
and regulations made thereunder, including but not limited to
those relating to the date for determination of rate of duty,
assessment, non-levy, short-levy, refunds, exemptions,
interest, recovery, appeals, offences and penalties shall, as
far as may be, apply to the duty or tax or cess, as the case
may be, chargeable under this section as they apply in relation
to duties leviable under that Act or all rules or regulations
made thereunder, as the case may be.". (emphasis added)

The legislature having now incorporated ‘interest’ into the
Customs Tariff Act, 1975, the same can be demanded for
non-payment of IGST only after the substitution of the said
sub-section as above, from 16.08.2024 and not on the
impugned goods which were imported before that date. The
appellants prayer hence succeeds on this issue.

17.1 We find that the demand for the normal period in this case is up
to 27.09.2023. Having set aside all penalties, the issue of interest on
IGST demanded for the normal period needs to be decided. As stated

50
in our Order above, ‘interest’ can be demanded for non-payment of
IGST only from 16.08.2024. Since the impugned period is prior to the
said date, no interest is payable on the IGST demanded.
Conclusion
18. In view of the foregoing findings, the impugned order is modified
to the following extent:
(A) The classification of (i) Sensor Exhaust Gas Temperature; (ii)
Sensor Water Temperature; (iii) Sensor Inlet Air Temperature; (iv)
Sensor Air Fuel Ratio; (v) Sensor Oxygen; (vi) Sensor Nitrogen Oxide;
(vii) Sensor Assy Brake Pedal; (viii) Retainer Ultrasonic Sensor; and
(ix) Sensor Speed, as finalised in the impugned order, is set aside and
the classifications declared by the appellant allowed, for the reasons
recorded above.
(B) The reclassification of 36 sensors under Section 28 of the
Customs Act, 1962, in respect of which no differential duty has been
demanded, is set aside. This, however, shall not preclude the
Department from determining the correct classification of these goods
in accordance with law at the stage of assessment of any subsequent
Bill of Entry, as observed above.
(C) The appellant's claim for benefit under the alternative FTA
notifications in respect of (i) Sensor Ultrasonic; (ii) Sensor Height
Control; (iii) Sensor Light Control; and (iv) Cable Sub-Assy Spiral
W/Sensor is remanded to the Original Authority for fresh consideration,
after affording the appellant a reasonable opportunity to make
submissions, both oral and written. The proceedings shall be completed
within 90 days from the date of receipt of this order. The appellant

51
shall extend necessary cooperation. The plea of revenue neutrality
shall also be considered and decided consequentially.
(D) The differential IGST demand of Rs. 18,474/- in respect of (i)
Cover for Rain Sensor and (ii) Holder Battery Current Sensor is set
aside, in the peculiar facts and circumstances of the case.
(E) The plea of limitation in respect of (i) Sensor Assy Accelerator
Pedal; (ii) Sensor Clamp Skid Control; (iii) Plate Crank Angle Sensor;
and (iv) Sensor Knock is accepted. The demand relating to the
extended period in respect of these goods is accordingly set aside as
barred by limitation. The demand falling within the normal period of
limitation for the said goods, if any, shall stand governed by the
impugned order.
(F) The confiscation/ fine imposed on the goods and penalties
imposed upon the appellant and co-appellant as per the impugned
order are set aside.
(G) No interest is payable on the IGST portion being demanded, for
reasons stated above.
The appellant shall be entitled to consequential relief, if any, in
accordance with law. The appeals are disposed of accordingly.
(Order pronounced in open court on 08.09.2026)



Sd/- Sd/-
( M. AJIT KUMAR ) ( P. DINESHA )
Member (Technical) Member (Judicial)



Rex