S J EXIM Services

“Indirect Tax I Indirect Tax Litigation I Customs & FTP I Central Licensing I Arbitration I Advisory”

Dated: 18.04.2025

CESTAT Mumbai Allows Larsen & Toubro’s Appeal on Water Meter Classification Dispute

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai Bench upheld the appeal of Larsen & Toubro Ltd. (L&T), deciding that its imports of Battery operated Ultrasonic/Electromagnetic AMR Water Meters are classifiable under CTH 9026 1010 as “Flow Meters”, and not under CTH 9028 2000 as “Liquid Supply Meters” as claimed by the Department.

Case Background:

• L&T imported water meters from Slovakia for supply to Pune Municipal Corporation (PMC) under a contract for Smart City potable water metering.
• The water meters, required to measure both volume and flow rate, were cleared under CTH 9026 1010 with exemption claimed under Notification No. 24/2005-Cus.
• The DRI initiated an investigation contending misclassification, proposing reclassification under CTH 9028 2000 and demanded ₹3.32 crore in differential duty, besides proposing fine and penalty.
• The Commissioner of Customs, ACC Mumbai, confirmed the demand under Section 28(4), imposed ₹3 crore redemption fine and equal penalty under Section 114A.

L&T’s Key Arguments:

• Meters were designed to measure both flow rate and volume, aligning with the definition of “Flow Meters” in CTH 9026 1010.
• Relied on HSN Explanatory Notes, which distinguish flow meters from mere supply meters.
• Cited conformity with ISO 4064/OIML R 49 and BIS IS 779:1994, both of which emphasize flow measurement.
• Referenced Supreme Court’s decision in Moorco (India) Ltd., which clarified classification based on principal function.

Tribunal’s Observations:

• The imported meters indicate both flow rate (m3/h or l/h) and volume (m3).
• CTH 9028 covers meters merely indicating volume, while flow meters fall under CTH 9026, even if they also record volume.
• Functionality, not billing usage, should guide classification.
• ISO and BIS standards describe the meters primarily as devices to measure flow rate.
• Agreed that reliance on US Customs ruling and mere absence of “flow meter” in description was irrelevant.
• Cited WCO Explanatory Notes and Section Notes to reinforce classification principles.

Final Verdict:

• Rejected the classification under CTH 9028 2000.
• Confirmed that the goods are rightly classifiable under CTH 9026 1010.
• Set aside the demand of ₹3.32 crore, ₹3 crore redemption fine, and penalty under Section 114A.
• Allowed the appeal in full with consequential relief to L&T.

Significance:

• This ruling provides clarity on the classification of smart water meters, especially under municipal infrastructure and smart city projects.
• Reinforces the primacy of technical specifications and functionality over commercial usage in tariff classification.
• Sets a precedent for similar disputes involving multifunctional metering devices.

In case you face any issues related to Indirect Tax-Customs, GST, Foreign Trade Policy (FTP), Arbitration matters and Central Licensing and related advisory matters in India then please feel free to get in touch with SJ EXIM Services.

We offer Legal advice and litigation support in matters related to Indirect Tax-Customs, FTP, other Indirect Tax matters & Arbitration law, all sorts of Central licensing and related matters. Come and explore the new way of doing business with us!

Source: CESTAT Mumbai

Download CESTAT Mumbai Order Below

Connect with us for more-

@ Team S J EXIM SERVICES, New Delhi, IN

CP: Ms. Shubhra Jha, Founder

Tel: +91-11-4999 2707 I +91-9999005693

Web: www.sjexim.services

EMAIL: operations@sjexim.services  I shubhra@sjexim.services

Facebook: www.facebook.com/sjeximservices

LinkedIn: https://www.linkedin.com/company/90794255/admin/feed/posts/

YouTube: https://www.youtube.com/@sjeximIndia

Subscribe our WhatsApp Channel: https://whatsapp.com/channel/0029VaTxDT8JZg4CHEOSoK47

Subscribe our Telegram Channel: https://t.me/sjeximindia

Disclaimer:

1. The views expressed are based on the interpretation of the relevant information/documents, applicable law, and government policy and there is no assurance that a court or tribunal or regulatory body or other governmental authority may not interpret it differently.

2.  We are not responsible for updating or revising this article on account of any change in law or interpretation thereof or a change in events or circumstances informed or occurring after the date of this article unless specifically requested for it.

3. Our advice should not be taken or used out of context or reproduced for any other purpose or transaction. Views expressed in this update are strictly personal, based on our understanding of the underlying law.

4. We are not responsible for any injury, loss or cost arising to any person who refers to this update and acts or refrains from any act accordingly. We would suggest that detailed legal advice must be sought before relying on this update.

NOTE: All Inquiries/Consulting/Advisory/Assignments are solicited via email only & it is a PAID Service only!

#LawFirm #Lawyers #Arbitration #ArbitrationLaw #ADR #India #Law #LegalUpdates #NewDelhi #IndirectTax #IndirectTaxLaw #CBIC #FTP #CommercialLaw #CorporateLaw #ConstitutionalLaw #BarandBench #InternationalArbitration #InternationalCommercialArbitration #WTO #TBT #QCO #BIS #UnitedNations #UNO #DutyDrawback #CustomsAct #Advisory #ProBonoConsulting #IndiaCustomsAtWork #Facebook #Twitter #Instagram #LinkedIn #Tumblr #WhatsAppChannel #WhatsApp #YouTubeChannel #YouTube #KPMG #Deloitte #ErnstandYoung #GrantThornton #EY #PWC #BDO #Consulting #SettlementCase #DGFT #CII #FICCI #IndianChamberofCommerce #InternationalChamberofCommerce #PHDChamberofCommerce #FTP #FTP2023 #Compliance #CDSCO #HighCourts #SupremeCourt #DPIIT #CESTAT #CAAR #AdvanceRuling #CEX #Appeal #Refunds #IGSTRefund #Google #GoogleSearch #GoogleSEO #AIFTA #FTA #ASEAN #CustomsAdvanceRuling #JICA #JETROIndia #KITAIndia #KOTRAIndia #Multinationalcompanies #JapaninIndia #KoreainIndia #GovtofIndia #MinistryofcommerceIndia #TradeDeals #FTA #RulesofOrigin #SJEXIMServices #NewDelhi #India #Ministryofsteel #SteelQCO