CESTAT Rules L&T’s Wheel Loaders Classifiable as ‘Front-End Shovel Loaders’, Quashes Extended Period Demand [Read Order]

The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that wheel loaders imported by Larsen & Toubro Limited (L&T) are classifiable under “Front-End Shovel Loaders” and not under the category claimed by the company as “Other” machines used in mining.

Larsen & Toubro Limited, the appellant, imported Komatsu wheel loaders of different models from Japan between December 2018 and July 2021. The company classified the goods under Tariff Item 8429 5900 and claimed exemption under Notification No. 69/2011-Cus.

The Department stated that the correct classification was under Tariff Item 8429 5100, which covers “Front-End Shovel Loaders.” Based on an investigation by the Directorate of Revenue Intelligence, a show cause notice was issued alleging misclassification and proposing the recovery of differential duty along with confiscation and penalties.

The Commissioner of Customs upheld the Department’s view and confirmed the demand.

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The appellant’s counsel argued that the imported wheel loaders were designed for exclusive use in mines and were correctly classifiable under Tariff Item 8429 5900. They also argued that the classification had been consistently accepted by the Customs Department for several years and that the company had disclosed all details in the Bills of Entry.

The revenue counsel argued that the imported goods were front-end shovel loaders with front-mounted buckets used to pick and transport material, falling squarely under Tariff Item 8429 5100. The counsel also argued that the classification does not depend on end use and that the company had imported similar goods earlier and classified them under the same heading.

The two-member bench comprising P. Dinesha (Judicial Member) and M. Ajit Kumar (Technical Member) observed that the machines were self-propelled loaders with front-mounted buckets used to pick up and transport materials and that the end use in mining did not alter their classification. The tribunal explained that the correct classification of the goods is under Tariff Item 8429 5100.

The tribunal found merit in the appellant’s argument that there was no suppression for an extended period. The appeal was partly allowed, with the tribunal sustaining the classification under “Front-End Shovel Loaders” but granting relief to L&T by quashing the extended period demand, fine, and penalties.

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