Rule 3(a) Interpretation: CESTAT Rejects Revenue’s Attempt to Reclassify Specific Goods Under Residuary Headings [Read Order]

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), has allowed an appeal concerning the classification of imported PVC resin, holding that the goods were wrongly reclassified by the department. The Tribunal further held that the consequent denial of concessional customs duty was unsustainable.

The appeal was filed by Arun Industries, which had imported Polyvinyl Chloride (PVC) Suspension Resin SP 660 and classified the goods under Customs Tariff Heading 39042110 as non-plasticised PVC resin. On this basis, the appellant availed the benefit of concessional basic customs duty under Notification No. 46/2011-Customs. The department disputed the classification and proposed reclassification under CTH 39041090, alleging that the goods were PVC not mixed with any other substances.

A show cause notice was issued proposing denial of the exemption and recovery of differential duty with interest. The adjudicating authority confirmed the proposals, and the Commissioner (Appeals) upheld the order, leading to the present appeal before the tribunal.

The appellant argued that the issue was no longer res integra and identical goods had consistently been classifiable under CTH 39042110 by the tribunal in several earlier decisions. It was contended that the department had adopted an inconsistent approach by relying on test reports of goods imported by other importers, despite binding precedents holding that PVC resin suspension grade SP 660 falls under the specific tariff entry for non-plasticised PVC resins. The appellant also relied on earlier appellate orders and tribunal rulings to argue that a specific tariff entry must prevail over a general or residuary entry.

The tribunal, comprising P. Dinesha (Judicial Member) and Vasa Seshagiri Rao (Technical Member), examined the tariff structure under Heading 3904 and reiterated the settled principle that classification must follow the most specific description. The bench noted that during the relevant period, CTH 39042110 was a specific entry covering PVC resins and that classification under the residuary heading 39041090 was legally impermissible.

Relying on its own earlier decisions and consistent judicial precedent, the tribunal held that the lower appellate authority erred in departing from an already settled position of law.

Accordingly, the tribunal set aside the impugned order passed by the Commissioner (Appeals) and allowed the appeal, holding that the imported goods were correctly classifiable under CTH 39042110 and eligible for the concessional rate of duty. Consequential relief was granted to the appellant in accordance with law.

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