Customs Cannot Reclassify Dolomite as Marble Based on Other Importers' Test Reports: CESTAT Mumbai

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) on 8 June held that customs authorities cannot reclassify imported goods as marble blocks by relying on test reports of consignments imported by other entities when laboratory reports of the importer's own goods classify them as dolomite.

Judicial Member S.K. Mohanty and Technical Member M.M. Parthiban allowed the appeals filed by Shri Parasnath Exports and its partner Sampat Ostwal against the order passed by the Commissioner of Customs, Nhava Sheva. The Bench held:

"We further find that when test reports of the representative samples of the imported goods are available, the classification of the said goods cannot be decided by not considering/rejecting the same, by placing reliance on the test reports of goods belonging to some other importers."

The dispute arose from imports made between February 2018 and March 2021, where the importer classified the goods as “Rough Dolomite Blocks” under Customs Tariff Item (CTI) 2518 1000 and claimed applicable customs duty benefits.

Following an investigation by the Directorate of Revenue Intelligence (DRI), the Department alleged that the goods constituted “Rough Marble Blocks” classifiable under CTI 2515 1210, attracting a higher rate of duty.

Authorities issued a show cause notice proposing reclassification of the goods, recovery of differential duty, confiscation, and imposition of penalties on the appellants. The Commissioner confirmed the demand along with interest and also imposed penalties and redemption fine.

Before the Tribunal, the appellants argued that Customs officials drew representative samples at the time of import and sent them for chemical examination. They submitted that the laboratory reports consistently showed the goods as composed of calcium and magnesium carbonates, identifying them as dolomite, and contended that the Department could not disregard these reports in favour of test results relating to other importers' consignments.

The Bench noted that test reports relating to seven bills of entry identified the goods as dolomite. It further held that the adjudicating authority erred by relying on test reports of similar consignments imported by other entities while ignoring the laboratory findings relating to the appellants' goods. It observed:

"The imported goods are identified in the chemical examination as 'dolomite' and not as 'marble'. Therefore, on the basis of factual details of the impugned goods, whose test reports as provided by the DYCC, CRCL Laboratory are available on record, we are of the prima facie view that the impugned order revising of the classification of impugned goods contrary to the above factual position, confirming the adjudged demands and consequent confiscation of imported goods, imposition of penalty on the appellants is not legally sustainable."

The Bench also relied on its earlier decision in NITCO Limited, which arose from the same DRI investigation and held similar goods classifiable as dolomite blocks under CTI 2518 1000.

Accordingly, the CESTAT set aside the duty demand, confiscation, and penalties and allowed the appeals, finding that the Department failed to justify reclassification of the goods as marble blocks.

Appearance for the Appellants: Shri Sanjay Singhal, Advocate

Appearance for the Respondent: Shri Mahesh Patil, Authorized Representative