Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(CESTAT) 655

CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
P. Dinesha, Judicial Member, Vasa Seshagiri Rao, Technical Member
Dell International Services India Private Ltd. – Appellant
Versus
Principal Commissioner of Customs – Respondent
Customs Appeal No. 40646 of 2023

Advocates:
For the Appellants/Petitioners: Raghavan Ramabadran, Rohan Muralidharan, Ganesh Aravindh
For the Respondents: Anoop Singh

Goods cannot be classified under Heading 9804 as 'dutiable goods imported for personal use' if they are exempt from or have Nil Basic Customs Duty, nor if the transaction involves commercial sales rather than personal importation.

Headnote:(A) Customs Act, 1962 - Section 2(14) - Definition of "dutiable goods" - Goods chargeable to duty under the Customs Act are only those on which basic customs duty is leviable - IGST is not a duty under the Customs Act and does not render goods "dutiable" for classification under Heading 9804 - If goods are exempt from basic customs duty or prescribed as 'free', they cannot be classified as "dutiable goods". (Paras 17, 18, 19, 20)

(B) Classification - Heading 9804 - Import for personal use - Requires three conjunctive ingredients: dutiable goods, imported, and for personal use - Goods sold by a manufacturer to domestic customers in the course of business do not constitute "personal use" under the header meant for baggage or personal importations. (Paras 21, 22, 23, 24)

(C) Proof - Burden of proof - When Revenue seeks to reject a declared classification, the initial burden lies on the Revenue to prove the declared classification is wrong and the suggested reclassification is justifiable, which was not discharged. (Para 29)

Facts of the case:
The appellant, an SEZ unit, cleared computers (laptops/desktops) and monitors to DTA customers. These were classified by the appellant under specific CTH headings. The Audit Commissionerate alleged misclassification, arguing they should be under Heading 9804 (dutiable goods imported for personal use) on the basis that they were cleared for personal use by individuals, attracting IGST, and thus demanded differential duty, interest, and penalties.

Findings of Court:
The Tribunal held that the goods are not 'dutiable' under the Customs Act as they are 'free' or exempt from Basic Customs Duty. It further held that SEZ-DTA clearances for sale to customers do not constitute 'import for personal use'. The Adjudicating Authority failed to discharge the burden of proof regarding misclassification.

Issues: Whether the subject goods can be classified under Heading 9804 as dutiable goods for personal use, and whether the revenue correctly reclassified them from their specific CTH headings.

Ratio Decidendi: Goods are only 'dutiable' if they are liable to customs duty under the Customs Act; IGST is not a customs duty. Furthermore, commercial sales from SEZ to DTA customers do not meet the criteria for "personal use" within the scope of Heading 9804 which is intended for passenger baggage and personal imports.

Result: Appeal allowed.

Table of Content
1. basis of classification dispute: revenue seeks reclassification from specific cth headings to 9804 for sez-dta goods. (Para 1 , 2 , 3)
2. appellant contends goods are not 'dutiable' under customs act due to exempt status or nil rate. (Para 6 , 7 , 8 , 9 , 10)
3. definition of 'dutiable goods' requires duty to be leviable under the customs act, 1962 exclusively. (Para 16 , 17 , 18 , 19 , 20)
4. commercial sales to customers do not meet the criteria of 'imported for personal use'. (Para 21 , 22 , 23 , 24)
5. burden of proof lies with revenue for reclassification, and sez act recovery mechanisms are limited. (Para 27 , 28 , 29 , 30 , 31 , 32)

DATE OF HEARING : 22.01.2026

DATE OF DECISION : 17.03.2026

Per: Shri P. Dinesha

1. M/s. Dell International Services India Private Ltd., the Appellant herein is engaged in the manufacture and sale of Information Technology (‘IT’) products, namely Desktops, Laptops, Monitors etc. (“subject goods”) from their SEZ unit located at Kancheepuram, Tamil Nadu. The Appellant undertakes domestic sales from their SEZ unit to individuals in the Domestic Tariff Area (DTA). At the time of clearance of the subject goods from SEZ to DTA, the Appellant classified the subject goods under their respective headings and discharged applicable taxes, as per the table below:

Sl. No	Product	Classification	Integrated Goods and Service Tax (“IGST”)
1.	Laptops	CTI 8471 30 10	18%
2.	Desktops	CTI 8471 50 00	18%
3.	Monitors	CTI 8528 52 00	18%

2. After the Post clearance audit, the Audit Commissionerate was of the view that the subject goods removed from the SEZ unit to the DTA were misclassified under CTH 8471 30 10, 8471 50 00 and 8528 52 00. According to the Department, the subject goods merited classification under CTH 9804 90 00 since the subject goods were removed to individual customers in DTA for their personal use. Pursuant to this, the Department issued the Show Cause Notice dated 20.01.2023 inter alia proposing reclassification and thereby demanding differential duty to the tune of Rs.82,78,72,633/- along with applicable interest; confiscation of goods under Section 111 (m) & (o) and also for imposing penalty under Section 112(a) of the Customs Act, 1962.

3. The Principal Commissioner of Customs, Chennai (Adjudicating Authority) after hearing the submissions of the Appellant passed Order-In-Original No.102699/2023 dated 12.07.2023. The Adjudicating Authority vide Impugned Order, confirmed the proposed demands in the SCN on the ground that the subject goods were cleared to individuals in DTA for personal use and the goods are otherwise ‘dutiable’ as IGST @ 18% is being paid on the subject goods. Therefore, it was held that the subject goods are classifiable under CTH 9804 90 00 as ‘dutiable goods imported for personal use’.

4. Aggrieved by the said order of the Adjudicating Authority the present Appeal has been filed before this Tribunal.

5. Heard Shri Raghavan Ramabhadran, learned Advocate, assisted by Shri Rohan Muralidharan & Shri Ganesh Aravind, ld. Advocates for the Appellant; and Shri Anoop Singh, learned Joint Commissioner defended the impugned order.

6. The only issue is with respect to the classification of the subject goods viz. personal computers cleared by the Appellant from SEZ through DTA to customers. The conflicting Headings are CTH 98049000 [Department] and CTH 84713010, 84715000 & 85285200 [Assessee].

7. It is the case of the Appellant that the subject goods have been correctly classified under their respective sub headings as against which, the Revenue has termed the above as misclassification by the Appellant.

8. Contentions of ld. Advocate are that the subject goods are not classifiable under Heading 9804 which covers ‘all dutiable goods imported for personal use’; it emerges from the CTI that for any goods to merit classification under Heading 9804,

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2026 Supreme(Online)(CESTAT) 655

CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNALP. Dinesha, Judicial Member, Vasa Seshagiri Rao, Technical MemberDell International Services India Private Ltd. – AppellantVersusPrincipal Commissioner of Customs – RespondentCustoms Appeal No. 40646 of 2023

Goods cannot be classified under Heading 9804 as 'dutiable goods imported for personal use' if they are exempt from or have Nil Basic Customs Duty, nor if the transaction involves commercial sales rather than personal importation.

CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
P. Dinesha, Judicial Member, Vasa Seshagiri Rao, Technical Member
Dell International Services India Private Ltd. – Appellant
Versus
Principal Commissioner of Customs – Respondent
Customs Appeal No. 40646 of 2023