CBIC Instruction on classification of automobile parts after dismissal of Review Petition in Westinghouse judgment

by | Oct 6, 2022 | Outlook

We apprised you on issue of classification of automobile parts in light of the Supreme Court judgment in Westinghouse Saxby Farmer Limited v. CCE, 2021-VIL-33-SC-CE (‘Westinghouse’) and its incongruity with earlier jurisprudence in this regard.

Post this ruling, the CBIC issued Instruction No. 01/2022 – Customs dated January 5, 2022 (‘Old Instruction’) clarifying that law laid down in Westinghouse ruling need not be generalized and goods should be classified as per relevant Section, Chapter and HSN Explanatory Notes and earlier jurisprudence.

Thereafter, vide Order dated August 10, 2022, the Supreme Court dismissed Review Petition against Westinghouse judgment.

Recently, the CBIC has issued Instruction No. 25/2022 – Customs dated August 3, 2022 (‘New Instruction’), reiterating that Old Instruction continues to be valid even after dismissal of Review Petition in Westinghouse judgment.

NITYA Comments: New Instruction is re-assuring and correctly clarifies that goods should be classified as per relevant Section, Chapter and HSN Explanatory Notes and earlier jurisprudence. However, judgment of the Supreme Court is law of land and cannot be overruled by a CBIC Instruction. It can only be overruled via Larger Bench judgment of the Supreme Court or via a legislative change. In our view, despite being incorrect, law laid down by the Apex Court still holds good. Further, despite Old Instruction directing field officers not to apply Westinghouse judgment in all cases, classification of automobile parts continues to be disputed by departmental officers at ground level.

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