'Monodisperse Aerosol Generator' Classifiable under CTH 9027: CESTAT Allows ITC Limited's Appeal [Read Order]

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Bangalore Regional Bench, has allowed the appeal filed by ITC Limited, ruling that the imported "Monodisperse Aerosol Generator" is correctly classifiable under Customs Tariff Heading (CTH) 9027 and not CTH 9032 as contended by the Revenue.

The Department had alleged misdeclaration and initiated proceedings, reclassifying the goods under CTH 9032 (Automatic regulating instruments) to demand differential duty with interest and penalty. The Revenue argued that the generator was a regulating instrument and sought to invoke the extended period of limitation, alleging suppression of facts.

The Appellant, represented by Mr. Nischal Agarwal, contended that the item was a component of a larger system used for physical and chemical analysis. It was argued that the generator lacks an in-built mechanism to measure or control parameters on its own a prerequisite for CTH 9032 and should therefore fall under CTH 9027.

The Appellant further submitted that the issue was purely interpretational, pointing to conflicting Show Cause Notices issued by the Department regarding the same goods, and that no suppression was involved.

The Tribunal observed:

“Once the aerosol is generated, the product has no in-built mechanism to measure, control or maintain its parameters on its own... Hence the entire system and apparatus thereof including the products are classifiable under Chapter Heading 9027.”

The Coram of P.A. Augustian (Member Judicial) and Pullela Nageswara Rao (Member Technical) observed that the product is a key component of a system designed for physical and chemical analysis. Since the generator does not operate in isolation to measure or control parameters, the Tribunal ruled it could not be classified under CTH 9032.

Regarding the penalty, the Tribunal relied on various judicial precedents and noted that the Department’s own changing stance on classification indicated the issue was interpretational rather than willful suppression. The Tribunal held that invoking the extended period of limitation was unsustainable.

The CESTAT set aside the order passed by the Commissioner (Appeals), allowed the appeal, and granted consequential relief to ITC Limited.

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