Pending Revenue Appeal on Classification of Imported Goods, No Ground to Insist on Provisional Assessment US Customs Act 18: Delhi HC

THE Delhi High Court ruled in favor of an importer who was aggrieved by the insistence on provisional fixation of duties by the Customs Department, despite an order from CESTAT regarding the classification of its imported goods.

The applicant company provides after-sales support services for telecommunications network equipment and imported certain goods which were allegedly misclassified.

The petitioner claimed that its goods fall under tariff heading 851770 (parts of cellular telephones and radio terminals), exempt from duty under a notification dated March 1, 2005.

The Ministry of Finance, however, considered the goods to fall under CTH 85176290 (Machines for receiving, converting and transmitting or regenerating voice, images or other data, including switching and routing devices) and raised a demand of Rs. 13,01,83,674/- with penalty interest.

CESTAT ruled in favor of the petitioner. Nevertheless, the Ministry of Finance continued to insist on a provisional valuation of the applicant’s goods under section 18 of the Customs Act.

The petitioner argued that after the order of CESTAT, he has the right to release his goods as per the classification decided by CESTAT and cannot be subjected to provisional assessment.

The Ministry of Finance, on the other hand, contended that the CESTAT order was challenged before the Ministry of Finance and, therefore, the ministry was entitled to insist on an interim assessment since the matter was not final.

It relied on section 18(1)(c) which states that where the importer has produced all the documents necessary for the establishment of duties but the competent officer considers it necessary to carry out further investigation , the competent officer may direct that the duties payable on such goods may be assessed provisionally.

Disagreeing, the High Court held that the mere fact that the Ministry of Finance’s appeal was pending would not compel the ministry to insist on a provisional valuation of the goods.

“Since there is no suspension of the CESTAT order, the goods should be cleared as per the CESTAT order dated 18th December, 2023 as per the classification given by CESTAT i.e. CTH 851770,” he ordered.

Appearance: Advocates Ashwini Chandrasekaran, Priyanka Rathi and Shubhangi Gupta for the petitioner; SSC Anurag Ojha with advocates Dipak Raj and Shubham Kumar for customs

Case title: MS Ciena Communications India Pvt Ltd v. The Chief Commissioner of Imports and Customs

Case number: WP(C) 14512/2024

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