Reassessment u/s 28 Valid Despite Finalised Bills of Entry: CESTAT Upholds Duty Demand for Misclassification of Door Handle Parts [Read Order]

In a significant ruling on the scope of reassessment under the Customs Act, the CESTAT Principal Bench, New Delhi, has upheld the validity of a demand under Section 28(1) even where Bills of Entry were self-assessed and finalised. The Tribunal upheld 1.33 crore duty demand on the appellant.

Aisin Automotive Haryana Pvt. Ltd., engaged in manufacturing passenger car parts, imported “Cap Sub-Assembly for Door Outside Handle” from Thailand and classified it under Customs Tariff Heading (CTH) 8708 99 00 “other parts and accessories of motor vehicles.” Based on this classification, the company availed the 5% concessional Basic Customs Duty under Notification No. 46/2011-Cus., as amended by Notification No. 82/2018-Cus.

Upon audit, the Department found that the goods were more appropriately classifiable under CTH 8708 29 00, covering “parts and accessories of bodies.” This change would make the imports ineligible for the concessional rate. Accordingly, the Commissioner of Customs, ICD Patparganj, issued a show cause notice and later confirmed a differential duty demand of ₹1,33,82,357 under Section 28(1), with interest under Section 28AA.

The importer challenged this before CESTAT, arguing that since its Bills of Entry were accepted and finalised, the Department’s only recourse was an appeal under Section 128, not a reassessment under Section 28.

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The appellant relied heavily on the Supreme Court’s ruling in ITC Ltd. v. CCE, Kolkata [2019], asserting that a finalised assessment cannot be reopened through a Section 28 demand. The importer argued that the Department’s action effectively sought to “review” a concluded assessment without following the appellate route prescribed by law.

The appellant also contended that all required documents were submitted, and the classification under CTH 8708 99 00 had consistently been accepted in prior imports. It maintained that the show-cause notice was issued solely based on a change of opinion.

On interest, the appellant submitted that since the duty was already paid at the time of import, interest under Section 28AA could not be levied, citing Pratibha Processors v. Union of India and Bill Forge Pvt. Ltd.

The Department countered that the assessment was self-assessed under Section 17(1) of the Customs Act, and therefore any short payment arising from misclassification is recoverable under Section 28(1). It argued that ITC Ltd. does not apply to self-assessment cases because that decision dealt with departmental assessments.

The Department further maintained that the imported goods were described as “door handles” in the Bills of Entry themselves, showing that they were misclassified. Since the importer failed to correctly declare the goods, the demand under Section 28 was proper.

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The Bench comprising Dr Rachna Gupta (Judicial Member) and Ms Hemambika R. Priya (Technical Member) held that Section 28 permits recovery in self-assessment cases where duty has been short-paid due to misdeclaration or incorrect classification. The Tribunal distinguished the ITC Ltd. decision, observing that it did not preclude the Department from issuing a demand in self-assessed cases.

It noted that the importer’s own declarations in the Bills of Entry described the goods as door handles, supporting the finding of misclassification. Therefore, the differential duty demand under Section 28(1) was valid.

On interest, the Bench relied on Pratibha Processors v. Union of India (1996 ELT 12 SC) to hold that once duty becomes payable, interest liability arises automatically.

Finding no infirmity in the Commissioner’s reasoning, CESTAT dismissed the appeal, affirming the ₹1.33 crore duty demand and interest. The ruling clarifies that finalized self-assessed Bills of Entry can be reopened under Section 28 if short payment or misclassification is discovered later, reaffirming the wide scope of reassessment powers under the Customs Act.

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