One Department Wing Cannot Contradict Another On Excise Duty Assessment: CESTAT Chennai

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) on 2 April held that Central Excise authorities cannot question or reclassify goods already assessed by Customs at the time of import.

A Bench comprising Judicial Member P. Dinesha and Technical Member M. Ajit Kumar set aside the demand of CENVAT credit on imported software by Emerson Process Management Chennai Pvt. Ltd. The Tribunal observed:

“When payment of CVD & SAD was accepted and the Customs classification is not disputed by the Customs authorities… it is very strange and uncomfortable situation when another wing of the same Department calls in question the classification of the same goods…”

Emerson Process Management had imported “Valve-Link Software” and classified it under CTH 90328990, paying applicable CVD and SAD and availing CENVAT credit. Subsequently, the Central Excise Department sought to reclassify the goods under CTH 85238020 as “Information Technology Software”, which was exempt, denied the credit, and raised a demand.

The Tribunal noted that Customs authorities had accepted the classification at the time of import and raised no dispute. It held that one wing of the Department cannot question the classification accepted by another, as this creates inconsistency and unnecessary litigation.

The Bench further held that the demand of CENVAT credit was unsustainable, as the credit pertained to duties levied under the Customs Tariff Act and not excise duty on manufactured goods in India.

Accordingly, the CESTAT set aside the impugned order and allowed the appeal with consequential relief.

Appearance for the Appellant: Shri Raja Praveen, Chartered Accountant

Appearance for the Respondent: Smt. G. Krupa, Authorized Representative