CESTAT Sets Aside Customs Duty Demand On OPGW Cables For Lack Of Sample Testing And Suppression Evidence
Pranav B Prem
The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has dismissed the Revenue’s appeal and allowed the importer’s appeal, holding that customs duty demands on Optical Ground Wire (OPGW) fibre optic cables cannot be sustained in the absence of fresh sample testing and any proof of suppression or misdeclaration. The Tribunal observed that where classification disputes involve interpretation of tariff entries and remain pending before the Supreme Court, invocation of extended limitation is impermissible.
The Bench comprising R. Muralidhar (Judicial Member) and Rajeev Tandon (Technical Member) noted that the classification of OPGW cables has been under litigation for nearly two decades and continues to remain sub judice before the Supreme Court, which has stayed the operation of the Larger Bench decision in Commissioner of Customs (Import), Mumbai v. Vodafone Essar Gujarat Ltd. In such circumstances, the Tribunal held that the Revenue could not allege suppression of facts merely because it held a different view on classification.
The dispute arose from imports of OPGW fibre optic cables made during the period from June 2016 to June 2021. The importer had consistently classified the goods under Customs Tariff Heading (CTH) 8544 70 90. Following investigations, the Directorate of Revenue Intelligence (DRI) issued a show cause notice in June 2021 alleging that the goods were classifiable under CTH 9001 00 00, proposing recovery of differential customs duty amounting to over ₹2.38 crore along with interest and penalties.
The adjudicating authority partly accepted the importer’s submissions and dropped demands of approximately ₹2.23 crore on the ground that the extended period of limitation could not be invoked in the absence of suppression. However, it confirmed a smaller demand of ₹14.85 lakh for the normal period. Aggrieved by different portions of the order, both the importer and the Revenue filed appeals before the Tribunal.
Before the Tribunal, the Revenue contended that detailed investigations had established that OPGW cables were classifiable under CTH 9001 00 00 and relied heavily on the Larger Bench ruling in Vodafone Essar. It was argued that the importer had knowingly misdeclared the classification and that the adjudicating authority erred in dropping the bulk of the demand on limitation. The Revenue also sought revival of penalty proceedings against company officials, even though no separate appeals had been filed against them.
The importer, on the other hand, argued that the dispute was purely one of classification and interpretation of tariff entries, with no element of suppression or misdeclaration. It pointed out that identical goods imported earlier had been subjected to testing by the Electronics Regional Test Laboratory (EAST) in 2014, which confirmed that individual protective coating was provided on each fibre core. Based on this test report, Customs had accepted classification under CTH 8544 70 90 and had finalized provisional assessments.
It was further submitted that for the consignments imported between 2019 and 2021, the Department had neither drawn samples nor conducted any fresh testing. According to the importer, the Revenue could not rely on assumptions, selective correspondence, or generic technical opinions without concrete evidence in the form of contemporaneous test reports.
Examining the rival submissions, the Tribunal reiterated that classification of OPGW cables has been a long-standing contentious issue and that the Larger Bench ruling in Vodafone Essar itself stands stayed by the Supreme Court. In this backdrop, the Tribunal held that extended limitation under the Customs Act could not be invoked, as the issue involved interpretation of tariff entries and there was no concealment of facts by the importer.
On the Revenue’s appeal, the Tribunal upheld the adjudicating authority’s decision to drop the extended-period demand, observing that settled judicial precedent bars allegations of suppression in classification disputes involving interpretational issues.
On the importer’s appeal, the Tribunal went a step further and set aside even the demand confirmed for the normal period. It emphasized that Customs had failed to draw or test samples of the disputed consignments, despite Board Circulars requiring verification in each case. The Tribunal reiterated that test results of one consignment cannot be mechanically applied to other consignments and that each bill of entry constitutes a separate and independent assessment.
The Tribunal also noted that the earlier test report in the importer’s own case had been accepted by the Department and had attained finality, including in subsequent refund proceedings decided in favour of the importer. In the absence of any fresh evidence or testing, reopening the classification issue after several years was held to be legally unsustainable.
Accordingly, the CESTAT dismissed the Revenue’s appeal in its entirety and allowed the importer’s appeal, setting aside the confirmed demand of ₹14.85 lakh along with consequential relief as per law. The Tribunal clarified that it had not ruled on the correct classification of OPGW cables, as the issue is pending before the Supreme Court, and that its decision was confined strictly to the evidentiary shortcomings and limitation aspects in the present case.
Cause Title: M/s. KEC International Limited Versus Commissioner of Customs (Port), Kolkata
Case No: Customs Appeal No. 75518 of 2023
Coram: R. Muralidhar (Judicial Member) and Rajeev Tandon (Technical Member)
