Accepted tariff classification cannot be displaced absent cogent technical evidence establishing the imported goods’ actual composition.

Elvance Overseas LLP imported six consignments described as “Mixed Lot of Polyester Knitted Fabric (Rolls of Assorted Colours & Weight)” from China through suppliers in the United Kingdom and Hong Kong.

The goods, having a cumulative assessable value of ₹2,17,57,575.51, were self-assessed under Customs Tariff Item (CTI) 6006 9000 and cleared on payment of duty at the concessional rate of 10% under Serial No. 169 of Notification No. 82/2017-Customs.

The Department subsequently alleged that the goods were knitted fabrics of synthetic fibres and were classifiable under CTI 6006 3200, attracting Basic Customs Duty at 20% under Serial No. 168 of the notification.

The adjudicating authority confirmed the demand and penalty, and the Commissioner (Appeals) upheld that order. The importer thereafter appealed to the Tribunal.

Whether the imported “Mixed Lot of Polyester Knitted Fabric” was correctly classifiable under CTI 6006 9000, or was liable to reclassification under CTI 6006 3200 as knitted fabric of synthetic fibres.

Whether the Department could disturb the classification accepted at the time of original assessment without laboratory testing or other cogent evidence establishing the composition and characteristics of the imported goods.

Whether the differential-duty demand, interest and penalty under Section 114A of the Customs Act, 1962 were sustainable.

The Tribunal applied the scheme of Chapter 60 of the First Schedule to the Customs Tariff Act, 1975, under which Heading 6006 covers “other knitted or crocheted fabrics” and distinguishes fabrics of wool, cotton, synthetic fibres, artificial fibres and “other” fabrics.

Chapter Note 1 to Chapter 54 treats polyester as a synthetic fibre, but classification must nevertheless be established with reference to the actual goods and their relevant characteristics.

The Tribunal reiterated that a classification accepted on original assessment cannot be displaced merely by a subsequent change of opinion, particularly in the absence of mala fide conduct or wilful suppression, and that the Revenue bears the burden of producing cogent evidence to establish the alternative classification.

Each Bill of Entry is a separate assessment, requiring classification based on the goods covered by that particular Bill and the evidence relating to it.

Penalty under Section 114A requires material establishing deliberate suppression, wilful misstatement or other conduct resulting in duty evasion; an essentially interpretational classification dispute, without such material, does not justify the penalty.

The Tribunal found that the goods had been declared as a “mixed lot,” rather than as a homogeneous product of established synthetic-fibre composition.

Although the description referred to polyester, the Department did not conduct laboratory or textile testing, draw samples, or produce technical evidence demonstrating that all the goods covered by the six Bills of Entry necessarily satisfied CTI 6006 3200.

The original assessments had accepted CTI 6006 9000, and the Department had not challenged them at the relevant time; therefore, a later change in classification based only on a different perception could not displace the accepted assessment.

The Tribunal also noted that the demand had been calculated using enhanced assessable values, although the enhancement had previously been set aside in separate proceedings.

Contemporaneous acceptance of CTI 6006 9000 for comparable imports further supported the appellant’s classification, particularly since the Revenue produced no material showing that such practice had been disputed or overturned.

As the reclassification itself failed, the consequential duty demand and penalty could not survive; in any event, the record did not establish deliberate suppression or wilful misstatement necessary for Section 114A.

The differential customs-duty demand of ₹25,13,000 and applicable interest were set aside, as was the penalty imposed under Section 114A of the Customs Act, 1962.

The appeal was allowed with consequential relief, if any, in accordance with law.