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Dated: 01.02.2025

CESTAT Kolkata rules that drawings and designs are classifiable under CTH 49.06 and allows zero-rate duty benefit

The CESTAT Kolkata ruled in favor of M/s IFB Agro Industries Ltd, confirming that imported engineering drawings should be classified under CTH 49.06 and are exempt from customs duty. This decision sets a crucial precedent for importers dealing with technical designs, reinforcing the correct application of duty exemptions under Notification No. 12/2012-Cus.

Key Points of the Case:

1. Customs Classification Dispute:
   • The Revenue Department classified the drawings under Customs Tariff Heading (CTH) 84.19 (machinery for treatment of materials), which would attract customs duty.
   • The Respondent (IFB Agro) argued that the drawings should be classified under CTH 49.06 (architectural, engineering, and industrial plans), which attracts zero duty under Notification No. 12/2012-Cus.
2. Revenue’s Arguments:
   • The imported drawings were linked to pre-import activity and should be included in the assessable value of the Effluent Treatment Plant (ETP).
   • The classification under CTH 84.19 would make the consignment liable for 7.5% customs duty plus other applicable charges.
3. Respondent’s Counterarguments:
   • The drawings were for different plant segments to be constructed in India, not pre-manufactured equipment.
   • The agreement clearly stated that the drawings were originally created by the supplier abroad and were not supplied by the buyer.
   • The valuation rules cited by the Revenue were misinterpreted.
4. Tribunal’s Final Decision:
   • The Tribunal ruled that the drawings and designs are classifiable under CTH 49.06, not CTH 84.19.
   • No customs duty is applicable since they qualify for zero-rate duty under Notification No. 12/2012-Cus.
   • The appeal by the Revenue was dismissed, and the Commissioner (Appeals)’ decision was upheld.

Conclusion:

The Tribunal rejected the Revenue’s appeal and reaffirmed that engineering drawings should be classified under CTH 49.06, making them duty-free. This ruling ensures that imported technical drawings and designs are not subject to customs duty, provided they meet the classification requirements.

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Source: CESTAT Kolkata

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