• Dated 12^th August, 2025

No Anti-Dumping Duty on Spare Parts of Injection Moulding Machines that CESTAT rejects

BRIEF FACTS:

M/s. Huarong Plastic Machinery India Pvt. Ltd. (HPMIPL) imported goods declared as "spare parts for injection Moulding machines" under Customs Tariff Heading 84779000 from Taiwan through three separate Bills of Entry. These goods were examined by customs authorities, during which user manuals and drawings suggest that the goods related to complete Horizontal Injection Moulding Machines were found. Based on this, the Revenue alleged that the goods were actually complete machines in Completely Knocked Down (CKD) condition, liable for anti-dumping duty under Notification No. 09/2016-Cus (ADD), dated 15.03.2016. A Show Cause Notice was issued, and the adjudicating authority changed the classification of goods to 84771000 (complete machines), raising a customs duty demand of ₹92.36 lakhs, imposing penalties, and ordered confiscation. HPMIPL contended that the imported parts were incomplete and required additional locally and separately procured parts, as well as further processing like polishing, drilling, wiring, etc., to be assembled into functional machines. They argued that the goods could not be considered complete or incomplete machines under HSN explanatory notes, and the Show Cause Notice did not propose a reclassification. The matter was appealed before the CESTAT Ahmedabad.

ASSESSEE'S CONTENTION:

The Assessee, M/s Huarong Plastic Machinery India Pvt. Ltd. (HPMIPL), contended that the goods imported were merely spare parts and not complete or incomplete machines in CKD condition as alleged by the Revenue. They argued that the imported goods lacked essential components, many of which were procured locally or separately imported, and could not be assembled into functional injection Moulding machines without undergoing complex mechanical processes like polishing, grinding, drilling, tapping, wiring, painting, and scraping. They emphasized that the presence of user manuals or engineering drawings in the consignment did not establish that the goods constituted complete machines. Further, they pointed out that Rule 2(a) of the General Rules for Interpretation of the Tariff Schedule does not apply since the parts were not presented together at the same time for assessment. They also highlighted that the Show Cause Notice did not propose any change in classification from Heading 84779000 (parts) to 84771000 (complete machines), and thus the demand for anti-dumping duty under the latter heading was without legal basis. The Assessee relied on multiple case laws to support that anti-dumping duty cannot be imposed unless the goods clearly fall under the relevant classification as specified in the notification.

DEPARTMENT'S CONTENTION :

The Department contended that the goods imported by M/s Huarong Plastic Machinery India Pvt. Ltd. (HPMIPL) were, in fact, complete Horizontal Injection Moulding Machines in CKD condition, and not merely spare parts as declared. They relied on the user manuals, technical drawings, and assembly instructions found within the consignment, which carried the branding of the original equipment manufacturer Huarong Plastic Machinery Co. Ltd., Taiwan as evidence that the goods were intended to be assembled into complete machines. The Department referred to Notes IV and V of Section XVI of the HSN Explanatory Notes, which state that incomplete or unassembled machines having the essential characteristics of a complete machine should be classified as complete machines. Based on this, they argued that the goods should be reclassified under Heading 84771000, attracting anti-dumping duty at 27.98% as per Notification No. 09/2016-Cus (ADD). The Department further argued that the presence of assembly manuals and the capability to form machines, even if not fully functional without further processing, was sufficient to classify the goods as machines in CKD condition. Additionally, they challenged the adjudicating authority's decision not to impose penalty under Section 114A, asserting that it was legally permissible to levy penalty under both Section 112(a) and Section 114A for the same offence, citing the Supreme Court's ruling in Union of India v. Dharmendra Textile Processors.

DECISION:

The CESTAT, Ahmedabad Bench, ruled in favour of the Assessee, M/s Huarong Plastic Machinery India Pvt. Ltd. The Tribunal held that the goods imported were not complete or incomplete machines in CKD condition, but merely individual parts that required significant mechanical and electrical processing—such as polishing, drilling, wiring, and painting—before they could be used to assemble as functional Injection Moulding Machines. It observed that the Chartered Engineer's report did not confirm the presence of all essential components or indicate that the goods had the essential character of complete machines. Further, the Tribunal noted that the Show Cause Notice failed to propose reclassification of the goods from Tariff Heading 84779000 (parts) to 84771000 (complete machines), which is a mandatory precondition for imposing anti-dumping duty under Notification No. 09/2016-Cus. (ADD). The Tribunal also held that the mere presence of user manuals and technical drawings did not prove that complete machines were imported. As such, the Tribunal set aside the demand for anti-dumping duty, confiscation orders, and penalties, and dismissed the Revenue's appeal seeking additional penalty under Section 114A.

BTA's COMMENT:

This decision by the CESTAT Ahmedabad reinforces the principle that imported goods must be assessed based on their actual condition and declared classification, not merely on assumptions drawn from accompanying documents like user manuals or drawings. The Tribunal rightly emphasized that anti-dumping duty cannot be imposed without proper legal foundation, especially when the show cause notice does not proposes reclassification. It also highlighted that parts requiring significant processing before assembly do not constitute complete or incomplete machines under the HSN Explanatory Notes. The ruling provides clarity on interpreting CKD/ SKD imports and underscores the importance of strict adherence to classification and procedural safeguards under customs law.

Case Reference: Huarong Plastic Machinery India Plastic Ltd. Vs Commissioner of Customs, Ahmedabad decided on 29-7-2024

Author: Madhurima Bose

Edited by: Shaily Gupta