Supreme Court to Decide Customs Appeal for Dispute of Classification of Fish Oil Ethyl Esters [Read Judgement]

The Supreme Court of India has admitted a Civil Appeal filed by the Revenue, the Commissioner of (GST and Central Excise), which challenges the CESTAT order that reclassified the product 'Fish Oil Ethyl Esters' under CETH 1516.

The appeal was filed against the final order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai Regional Bench, dated March 11, 2025.

The appeal involves Arjuna Natural Extracts (the respondent), which is engaged in the further purifying and concentrating of purified fish oil to supply Fish Oil - Ethyl Ester (EE), classifying the final product under Heading 1504 of the Central Excise Tariff Act.

The Department sought to reclassify the product under CETH 3824 90 90, leading to the confirmation of an entire demand, interest, and equal penalty in the original order.

The CESTAT comprises Mr. Vasa Seshagiri Rao (Member-Technical) and Mr. Ajayan T.V. (Member-Judicial), in its final order dated 11.03.2025, held that the impugned goods, being an Esterified Fish Oil / Ethyl Esters, could not be classified under CETH 1504 as they were chemically modified.

The tribunal relied on the Explanatory Notes of the HSN to CETH 1516 (which covers inter-esterified/trans-esterified fats and oils) and the Harmonised System Committee's Classification Rulings, the Tribunal concluded that the goods would merit classification under CETH 1516 1000.

The Tribunal also rejected the Revenue's proposed classification under CETH 3824, which is a residuary heading, by citing judicial precedents that mandate recourse to a specific heading before resorting to a residuary clause.

The CESTAT set aside the invocation of the larger period of limitation and all consequent penalties, including the one imposed on the employee, due to the absence of suppression or wilful mis-statement. Aggrieved by the CESTAT's decision, the revenue filed a Civil Appeal before the Supreme Court.

The bench comprising Justice Mr. J.B. Pardiwala And Justice Mr. K.V. Viswanathan condoned the delay in filing the appeal. The bench admitted the matter for adjudication.

The Supreme Court will now decide the classification dispute between CETH 1516 and CETH 3824 for the Fish Oil Ethyl Esters, which was the subject matter of the Customs, Excise and Service Tax Appellate Tribunal's order.

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