Ghamellas and Taslas are correctly classified under HSN 7323 as taxable household articles rather than exempt agricultural tools under HSN 8201.

By | October 28, 2026
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Ghamellas and Taslas are correctly classified under HSN 7323 as taxable household articles rather than exempt agricultural tools under HSN 8201.

Issue

  • Whether “Ghamella/Tasla” manufactured by the appellant qualifies as an exempt agricultural hand tool under HSN 8201 9000 or as a taxable household/utility article of iron or steel under HSN 7323 94 10.
  • Whether the imposition of an equivalent penalty under Section 122(1)(x) of the CGST/UPGST Act, 2017 for misclassification and suppression of tax is sustainable.

Facts

  • Nature of Business & Product: The appellant, a partnership firm, manufactured Ghamella/Tasla by slitting CR/GI sheets and deep-drawing them into concave bowls with folded rims.
  • Classification Adopted by Appellant: The appellant classified the product under HSN 8201 9000 as an exempt agricultural hand tool and cleared it at NIL tax for the period from 1 July 2017 to 22 January 2018.
  • Audit & Show Cause Notice: An audit observed that the product is a Ghamella classifiable under HSN 7323 94 10 as taxable goods, leading to the issuance of a show-cause notice for tax recovery.
  • Adjudicating & Appellate Rulings: The adjudicating authority dropped the demand, but the First Appellate Authority restored the recovery and tax liability, holding the classification under HSN 7323 94 10.
  • Invoice Shift: Records revealed that up to 22 January 2018, goods were cleared under HSN 8201 9000 at NIL tax, whereas from 23 January 2018, invoice descriptions shifted to Ghamella under HSN 7323 94 10 with tax payment, despite no changes in raw materials, manufacturing process, weight, pricing, or buyers.
  • Penalty Imposed: The First Appellate Authority imposed an equivalent penalty under Section 122(1)(x) for misclassification and suppression, leading to the appeal before the Tribunal.

Decision

  • Classification Under HSN 7323: Articles under Heading 8201 require an active working surface or blade for specialized manual tasks. Since the Ghamella/Tasla functions as a passive load-bearing container for carrying materials, it lacks the operational traits of a tool and is correctly classified under Heading 7323 covering household or utility articles.
  • Specific vs. General Description: Applying General Rule of Interpretation (GRI) 3(a), the specific description of Ghamellas under tariff item 7323 94 10 prevails over general entries, and end-use cannot override clear tariff definitions.
  • Sustainability of Penalty: Because audit verification confirmed that raw materials, processes, and products remained identical before and after 23 January 2018, the sudden shift in invoice nomenclature established deliberate mis-statement and suppression to evade taxes.
  • Dismissal of Appeal: The imposition of an equivalent penalty under Section 122(1)(x) was upheld, and the appeal was dismissed in favor of the Revenue.

Key Takeaways

  • Functional Distinction of Tools vs. Containers: To qualify as a tool under Chapter 82, an item must possess active working or cutting mechanisms rather than serving merely as a passive container or receptacle for carrying materials.
  • Inapplicability of End-Use Manipulation: Taxpayers cannot bypass specific classification headings (such as HSN 7323 for iron and steel articles) by claiming arbitrary end-uses or misapplying agricultural exemptions.
  • Consequences of Deliberate Nomenclature Changes: Altering invoice descriptions and HSN codes without any underlying change in manufacturing processes, raw materials, or physical characteristics constitutes active suppression and attracts strict penalties under Section 122(1)(x).
GOODS AND SERVICE TAX APPELLATE TRIBUNAL , LUCKNOW BENCH
Roongta Ispat Udyog
v.
Commissioner CGST & Central Excise Kanpur
Santosh Kumar Srivastava, Judicial Member
and Arvind Kumar, Technical Member
APL/137/LCK/2026
OCTOBER  15, 2026
Ashish Kumar Bansal, Adv. for the Appellant. Ashwini Kumar Dubey, Superintendent for the Respondent.
ORDER
1. BRIEF FACTS OF THE CASE
1.1 The present appeal has been preferred by M/s Roongta Ispat Udyog (hereinafter referred to as the “Appellant”) under Section 112 of the Central Goods and Services Tax Act, 2017 (the “CGST Act” / “the Act”) against the Order-in-Appeal (OIA) No. 244/GST/Appl/ALLD/2025 dated April 23, 2025 (the “impugned OIA”) passed by the learned Additional Commissioner (Appeals), CGST & Central Excise, Allahabad. By the impugned OIA, the First Appellate Authority reversed the Order-in-Original (OIO) No. GST/09/DIV-II/2023 dated December 23, 2023, which had dropped a tax demand of ₹94,18,554/- proposed under Section 73(1) of the Act.
1.2 The Appellant is a partnership firm registered under the under the Goods and Services Tax Act with GSTIN 09AABFR2904D1ZL. The Appellant is engaged in the manufacture and sale of “Ghamella” (Commonly Known as Tasla). The manufacturing process involves procuring cold-rolled (CR) or galvanized iron sheets, slitting them into circular shapes via a circle-cutting machine, and pressing them into a distinct concave shape using a deep-drawing double-action power press, followed by folding the outer edges for manual safety.
1.3 During the course of audit, it had been observed that the appellant, instead of classifying the aforesaid goods ‘Ghamellas’ manufactured by them, under the Tariff Heading No. 73239410, they named it “Tasla” and classified it under Tariff Heading No 82019000, as other hand tools of a kind used in agriculture, horticulture or forestry and did not pay any GST, in as much as, the agriculture implement were exempted from levy of the tax. The product “Ghamellas” trade been specifically classified under tariff no. 73239410 and was very much taxable at the tariff rate.
1.4 The audit alleged that “Tasla” and “Ghamella” are completely synonymous, that the product was never an agricultural tool. Subsequently, the Assistant Commissioner (Audit) initiated the proceedings vide SCN No. 393/GST/IAR/Gr-V/Cir-I/2019 dated 03.02.2022 under Section 73(1) of the Act and proposed a tax liability of ₹94,18,554/- for the period from 01.07.2017 to 24.01.2018.
1.5 The Adjudicating Authority, via the detailed OIO No. GST/09/DIV-II/2023 dated December 23, 2023, accepted the Appellant’s defence, ruling that the notifications of 25th January 2018 operate strictly prospectively and dropped the entire tax demand, interest, and penalty. This decision was based on the finding that the product’s official reclassification into the taxable category only became active on January 25, 2018, through an amendment to Notification No. 1/2017 (CTR), and could not be applied retrospectively. Additionally, internet research confirmed that “Tasla” and “Ghamela” are identical products, supporting the applicant’s defence that they did not misrepresent their goods to evade taxes.
1.6 However, the Commissioner of Central Goods & Service Tax and Central Excise, Kanpur, reviewed this decision and deemed it neither legal nor proper.
1.7 Aggrieved by the absolute deletion of the demand, the department preferred an appeal under Section 107(2), and the First Appellate Authority, via the impugned OIA dated 23.04.2025, completely reversed the lower adjudication order and restored the aggregate recovery. The Appellate Authority held that the taxpayer was engaged in the manufacture and sale of “Ghamellas” under Tariff Heading 73239410 of the GST tariff, a category that is fully taxable. Instead of utilizing the correct classification, the taxpayer miss-classified the product as “Tasla” under Tariff Item 82019000 to wrongfully claim a total tax exemption reserved for agricultural implements. Because there was absolutely no alteration in the manufacturing process, raw inputs, or structural composition of the product, the authority ruled that shifting classifications solely by changing the product’s name on 22 January 2018 was legally invalid. Furthermore, Notification No. 07/2018-Central Tax (Rate) did not change this base classification, and the manufacturer’s reliance on older Central Excise conference decisions was deemed irrelevant under the distinct statutory framework of GST law. Consequently, the department’s appeal was sustained. Aggrieved by this arbitrary reversal, the Appellant has filed this instant appeal.
GROUNDS OF APPEAL
2. Appellant submitted that impugned Show Cause Notice and the subsequent Order-in-Appeal are fundamentally bad in law on the following grounds;
2.1 The Joint Commissioner (Audit) had adjudicated the Final Audit Report (FAR) during the first pre-SCN consultation and formally closed the entire dispute via an official communication dated 13.01.2021. The department, having directed the Appellant to participate in this mandatory legal process, cannot subsequently disregard the outcome under a self-serving administrative claim that the Joint Commissioner was not the “proper officer”. Under Section 5(2) of the CGST Act, 2017, any superior officer may validly exercise the statutory powers and discharge the duties of their subordinates. The CGST Act contains absolutely no provision empowering a subordinate authority, such as the Assistant Commissioner, to administrative reopen, review, or revive a matter already closed by a superior authority on the identical set of facts. Reopening a closed dispute completely defeats the core objective of reducing avoidable litigation mandated under Instruction No. 01/2022-GST, rendering the subsequent Show Cause Notice dated 03.02.2022 an absolute abuse of process, illegal, and void ab initio.
2.2 The Appellant argues that the SCN is structurally defective and legally unsustainable because it proposes a tax demand at a combined rate of 18% (9% CGST and 9% SGST) without identifying or specifying the applicable serial number, schedule, or taxing entry of the principal rate Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 under which the liability is derived. Under Section 9 of the CGST Act, taxability cannot be determined merely on a standalone HSN classification, since identical 4-digit headings frequently repeat across six separate Schedules carrying distinct notified rates. It is an indispensable requirement of law that the department must identify the exact entry to enable a taxpayer to defend his case effectively, and a demand raised without an identifiable rate-fixing entry fails to exist in point of law.
2.3 It is a settled canon of interpretation that a taxing statute or rate notification which introduces a new commercial disability, modifies accrued rights, or imposes a fresh tax obligation can only operate prospectively unless the legislature expressly provides for retrospective effect, as ruled by the Constitution Bench of the Supreme Court in CIT New Delhi v. Vatika Township Pvt. Ltd. [2014]. Entry No. 236A of Schedule III to Notification No. 01/2017-CTR—which specifically taxed “Ghamella” under HSN 73239410 at 18% was introduced only with effect from 25.01.2018 via Notification No. 06/2018-CTR. The Adjudicating Authority had categorically held in the Order-in-Original that these amendments were strictly prospective and could not be applied retrospectively to the period spanning from 01.07.2017 to 24.01.2018. Since the department did not challenge this specific finding in its appeal before the lower appellate authority, the finding on the prospective nature of the rate change has attained absolute finality and bars any retrospective recovery.
2.4 The Appellant argues that the simultaneous and coordinated legislative amendments introduced on 25.01.2018 whereby the Central Government added the qualifying restriction “other than Ghamella” at the end of Exemption Entry No. 137 of Heading 8201 while simultaneously inserting Entry No. 236A under Heading 7323—unambiguously establishes that “Ghamella/Tasla” was textually covered under the exemption entry prior to that date. It is a basic and well-settled canon of statutory construction that an exclusion carved out from a particular entry presupposes that the excluded item was, until the moment of that exclusion, fully comprehended and covered within that very entry. Had the product always been taxable under Chapter 73 as a domestic household article from day one of the GST rollout, there would have been no legislative occasion whatsoever for the government to exclude it from the agricultural hand tool category under Chapter 82.
2.5 The Appellant highlights that the entire manufacturing process, raw material inputs, shape, size, and agricultural end-use of their “Tasla/Ghamella” products were thoroughly scrutinized by the All-India Central Excise Tariff Conference held at Chandigarh on October 28–29, 2015. The Tariff Conference, acting under Minutes Agenda Point B.8, decisively rejected the department’s domestic kitchenware theory on the ground that the base metal sheet undergoes hazardous zinc/lead coatings and is not safe for culinary or household consumption. It ruled that the product falls under Heading 8201 as an agricultural hand tool, relying directly on the established judicial precedent of the Hon’ble Tribunal in CCE, Nagpur v. Mehta Steel Industries (2000) 120 E.L.T. 583 (Tri.). This conference resolution was given binding effect via the Order-in-Original dated 29.08.2016 by the Commissioner of Central Excise, Kanpur. Because the first schedule of the Customs Tariff Act, 1975, which is adopted for GST interpretation, is identical to the Central Excise Tariff, and because there has been absolutely no change in the physical attributes or manufacturing of the product, this classification finality cannot be questioned by a lower authority.
2.6 The Appellant points out that throughout the historical minutes of the Tariff Conference and the final Central Excise adjudication orders, the department used the phrases “Ghamella/Tasla” and “Ghamella(Tasla)” interchangeably to denote the exact same physical product. Even the Adjudicating Authority under GST explicitly recorded that both terms describe the same baseline base-metal article. Since the department did not dispute this finding in its review order, it cannot now create a fictitious nomenclature controversy to retroactively strip away the Appellant’s exemption.
2.7 The department cannot use the Appellant’s voluntary realignment of its practice after 25.01.2018 as an admission of past taxability. Post-amendment, the Appellant was faced with a unique situation where “Ghamella” was excluded from Heading 8201, but no new taxable entry was introduced for Heading 8201 under Notification No. 01/2017-CTR. To ensure total compliance and avoid aggressive detentions of their shipments by state mobile squads, the Appellant shifted to Heading 73239410 under a bona fide belief, while explicitly stamping a declaration on every single tax invoice stating: “Old HSN code of our product is 8201 9000.
2.8 The Appellant challenges the legality of the demand on the ground that the department completely failed to conduct an independent inquiry into the actual nature and destination of the supplies. The SCN raised a consolidated demand for CGST and SGST on the unexamined and unverified presumption that 100% of the sales made during the disputed period were intra-state supplies within Uttar Pradesh. This runs completely contrary to Section 9 of the CGST Act and Sections 5, 7, and 10 of the IGST Act, 2017, especially since all invoices and destination records (including inter-state shipments to regions like Bihar) were fully available to the audit team.
2.9 The Appellant points out a fatal statutory contradiction in the department’s enforcement actions. The SCN was strictly initiated and confirmed under Section 73 of the CGST Act, 2017, a provision reserved for demands that do not involve any elements of fraud, wilful misstatement, or suppression of facts with an intent to evade tax. Despite this, the first appellate authority mechanically upheld a maximum 100% penalty under Section 122(1)(x), recording an adverse finding that the Appellant “knowingly and willingly suppressed facts”. The department cannot legally or simultaneously assert the absence of intent to evade to invoke Section 73 while asserting the presence of intent to evade to justify a 100% penalty on the same set of facts. A classification dispute based on a binding commissioner’s order never involves mens rea, and penalties under Section 73 are statutorily capped at 10% of the tax amount or Rs. 10,000/-, whichever is higher.
2.10 The Appellant further argues that the first appellate authority’s reliance on complex valuation adjustments peculiar to the pre-GST era is misplaced. While the department attempts to cite legal fictions of full payment or retail valuation markers akin to the principles discussed by the Hon’ble Supreme Court in Sony India Ltd. v. CCE 2004 167 ELT 385 (SC), such principles governing consumer retail packaging or valuation adjustments at depots have absolutely no bearing on a standalone classification dispute involving bulk agricultural implements under GST.
2.11 Without prejudice to the core arguments on merits, the Appellant submits that if this Hon’ble Tribunal is inclined to sustain any portion of the tax demand, the department must be directed to restore and adjust all Input Tax Credit (ITC) that the Appellant had previously reversed under Rule 42 and Rule 43 of the CGST Rules, 2017. This reversal was made on the explicit understanding that the supply of “Tasla” was an exempt supply. If the department strips away that exempt character retroactively, the original basis for the ITC reversal ceases to exist, and a refusal to restore the corresponding credit would result in unconstitutional double taxation.
3. SUBMISSIONS OF THE RESPONDENT;
3.1 The learned departmental representative submits Order-in-Appeal No. 244/GST/ADC/ALD/2025 dated 23.04.2025 passed by the Additional Commissioner (Appeals), CGST & Central Excise, Allahabad is correctly upheld the recovery of ₹94,18,554/- along with applicable interest and an equivalent penalty.
3.2 The primary stand of the Department is that the product “Ghamella” (also known as “Tasla”) manufactured and cleared by the Appellant from 01.07.2017 to 22.01.2018 is strictly classifiable under Tariff Item No. 73239410 of the First Schedule to the GST Tariff. By virtue of this explicit entry, the product was fully taxable at the rate of 18% (9% CGST + 9% SGST) from the very beginning of the GST regime on 01.07.2017. The Appellant’s persistent counter-claim that the product merits classification under Tariff Item No. 82019000 as “Other hand tools of a kind used in agriculture, horticulture or forestry” to claim a absolute exemption under entry number 137 of Notification No. 02/2017-Central Tax (Rate) is a structural misconstruction of the law.
3.3 The Department structurally differentiates the product from Chapter 82 hand tools based on its precise manufacturing process, physical geometry, and fundamental utility. As recorded by the Appellant themselves, the manufacturing process involves procuring cold rolled (CR) or galvanized iron sheets (GI/GP classified under Chapter Heading 72104900), slitting them into circles via a circle cutting machine, and deep drawing them using a double-action power press into a deep bowl shape, with the rim melded or folded for handling safety. This process yields an open, shallow, load-bearing container or tray that completely lacks any functional cutting edge, blade, working surface, or specialized mechanical parts intended for manual operation by a craftsman or agriculturist. Relying on authoritative lexicographical criteria, including the Oxford and Google Dictionaries, a “tool” or “hand tool” is defined as an implement held in the hand used by a craftsman for manual operations such as chopping, chiselling, sawing, filing, or forging. A Ghamella serves none of these functions, it is a passive receptacle used purely for the collection, carrying, and dispersal of material, which excludes it from the scope of Chapter 82 hand tools.
3.4 The Department stands ground on the rule of statutory interpretation that a specific entry provides a superior classification and must be preferred over a general or residual entry. This aligns perfectly with Rule 3(a) of the General Rules for the Interpretation of the Tariff. While Chapter 82 covers general metal articles of the nature of tools, Chapter 73 covers specific articles of iron and steel sheet or plate. Tariff Item No. 73239410 features an explicit, textually dedicated entry specifically naming “Ghamellas”. When the legislature creates a specific statutory description for a commodity by its exact commercial name, it is legally invalid to bypass that entry and route the commodity into a generic basket heading like 82019000 under the pretext of its partial end-use. The Department stresses that the size and objective character of the item govern its classification under HSN Chapter 73. Even according to the Harmonized System of Nomenclature (HSN) Explanatory Notes, Chapter 73 specifically includes household or domestic articles made of iron or steel sheet, including buckets and coal scuttles. A Ghamella matches this material category completely.
3.5 Furthermore, the quality and technical specification of the raw material used by the Appellant galvanized sheet containing coating layers of zinc and lead, which the Appellant themselves admitted is hazardous and non-compliant for human kitchen consumption is an absolute irrelevant consideration for ousting the product from Chapter 73. Chapter Heading 7323 encompasses not merely kitchenware, but explicitly covers “Table, kitchen or other household articles”. A deep iron pan or container used for household chores, multi-purpose carrying, municipal cleaning, building repairs, construction, or mining sits squarely within the scope of “other household or domestic articles” under Chapter 73.
3.6 The Department completely rejects the Appellant’s reliance on historical, Pre-GST legacy assessments, central excise adjudications, or old Tariff Conference minutes from 2015. The Appellant points out that the Tariff Conference at Chandigarh on 28-29 October 2015 concluded that Tasla/Ghamella of the kind described by the Lucknow Zone was classifiable under Heading 8201, leading to the legacy Central Excise Order-In-Original No. KNP-EXCUS-000-COM-040-16-17 dated 29.08.2016 dropping previous duties. The Department’s definitive stand is that the introduction of the Goods and Services Tax on 01.07.2017 created a completely independent, distinct, and fresh legislative tariff matrix. Legacy trade interpretations, administrative advisories, and judicial orders under the erstwhile Central Excise Tariff Act, 1985 cannot override or paralyze the independent operation of GST schedules. This separation of regimes was explicitly recognized by the Appellate Authority in Paragraph 6.2 of the impugned order, which noted that tariff classification rules in GST law are structurally different in applicability. From 01.07.2017 until 22.01.2018, the Appellant cleared the goods under the name “Tasla” and HSN 82019000 at a NIL tax rate. However, w.e.f. 23.01.2018, the Appellant suddenly shifted their commercial stance, updated the product description to “Ghamellas”, re-classified it under HSN 73239410, and began paying the standard 18% GST.
3.7 During the audit investigation, the Department verified that there was absolutely no change in the underlying nature of the raw material, chemical coatings, machinery press layouts, weight (approximately 1.5 kgs), or pricing models before or after January 2018. Over 95% of the buyers and wholesale dealers located in urban and city areas remained identical. Since the physical reality of the product remained unchanged, the Appellant’s sudden modification of invoice nomenclature proves that their earlier window of non-payment was a conscious strategy to avoid tax, rather than a genuine classification doubt.
3.8 The Respondent maintains a firm stand regarding the exact legal impact of the exemption modifications introduced on 25.01.2018. The central government issued Notification No. 07/2018-Central Tax (Rate), which added the words “other than Ghamellas” after the phrase “used in agriculture, horticulture or forestry” under entry number 137 of Heading 8201. Concurrently, Notification No. 06/2018-Central Tax (Rate) inserted entry number 236A under HSN 73239410 specifically declaring an 18% tax rate for Ghamellas. The Appellant misinterprets these notifications to argue that Ghamellas were explicitly included within HSN 8201 until their formal exclusion on 25.01.2018. The Department’s position is that these dual notifications were purely clarificatory in nature and did not introduce a new retrospective tax liability. The amendments were issued by the council solely to resolve misclassification disputes, correct industry-wide errors, and eliminate the exact tax loophole that the Appellant was ill-using. Because HSN Code 73239410 already contained a specific statutory entry for “Ghamellas” from day one of the GST implementation (01.07.2017), the item was taxable from the beginning. The clarificatory exclusion under Heading 8201 simply validated the pre-existing base levy.
3.9 The respondent asserts that the Appellant’s behaviour constitutes a clear case of wilful suppression of facts with intent to evade the payment of tax under the CGST Act, 2017. The Appellant deliberately hidden the factual nature of their product on their outward sales invoices and dynamic portal returns. They miss-declared an urban-bound, multi-purpose carrier article as a purely exempted “agricultural implement” to wrongfully claim a tax benefit they knew was inapplicable. They did not issue proper tax invoices under Section 31 read with Rule 46, nor did they self-assess their true tax liabilities under Section 59, thereby violating the fundamental reporting requirements of Sections 7, 9, and 35 of the CGST Act, 2017. This tax leakage was completely hidden from the authorities and was only discovered when the Department initiated a comprehensive audit review of the books under Section 65. In terms of Section 73(1), when a taxpayer deprives the government of legitimate revenue by misrepresenting their transactions, the extended provisions for recovery are fully triggered. Furthermore, because the Appellant knowingly falsified their operational descriptions to evade tax, the 100% equivalent penalty of ₹94,18,554/- imposed under Section 122(1)(x) of the CGST Act, 2017, is perfectly valid and justified. The Department concludes that the Appellant’s claims regarding the invalidity of the demand due to a favourable recommendation during the first pre-SCN consultation are completely hollow. The administrative power of review exercised by the Commissioner, which determined the case fit for a Show Cause Notice, was a valid exercise of supervisory authority. The Order-in-Appeal has accurately determined the points of law and fact, and there is absolutely no valid ground for this Hon’ble Tribunal to interfere with the confirmed demand.
3.10 The learned departmental representative respectfully prays that this Hon’ble Tribunal may be pleased to dismiss the Appeal filed by the Taxpayer in its entirety, uphold the Order-in-Appeal No. 244/GST/ADC/ALD/2025 dated 23.04.2025 in full.
4. FINDINGS & DISCUSSION
4.1 We have carefully examined the impugned Order-in-Appeal No. 244/GST/ADC/ALD/2025 dated 23.04.2025, the grounds raised in the present appeal, the Order-in-Original (OIO) No. GST/09/DIV-II/2023 dated December 23, 2023, and the judicial precedents relied upon by the appellant and the material available on record.
4.2 The Appellant argues that the Joint Commissioner (Audit) closed the dispute vide letter dated 13.01.2021, and that under Section 5(2) of the CGST Act, 2017, a subordinate authority like the Assistant Commissioner cannot administratively reopen or revive a matter closed by a superior officer. However, the Respondent maintains that the administrative power of review exercised by the Commissioner was valid and that internal audit recommendations cannot paralyze statutory enforcement. We find the Appellant’s reliance on Section 5(2) misplaced in this context. While it is true that superior officer may exercise the powers of a subordinate, an internal audit clearance or a pre-SCN administrative closure is not a formal, quasi-judicial adjudication order. Section 65 of the Act empowers the department to conduct audits, and Section 73(1) explicitly mandates that: “Where it appears to the proper officer that any tax has not been paid or short paid. he shall serve notice on the person chargeable with tax.”. Therefore, the issuance of the Show Cause Notice on 03.02.2022, was valid, and the Appellant’s plea of res judicata at the pre-notice stage is not sustainable.
4.3 The core classification dispute must be resolved by examining the raw statutory entries of the competing chapters. For clarity, the relevant text of Chapter 82 and Chapter 73 of the First Schedule to the Customs Tariff Act, 1975 (as adopted under GST law), is reproduced below:
“Heading 82.01: Hand tools, the following: spades, shovels, mattocks, picks, hoes, forks and rakes; axes, bill hooks and similar hewing tools; secateurs and pruners of any kind; scythes, sickles, hay knives, hedge shears, timber wedges and other tools of a kind used in agriculture, horticulture or forestry.”
“Heading 73.23: Table, kitchen or other household articles and parts thereof, of iron or steel; iron or steel wool; pot scourers and scouring or polishing pads, gloves and the like, of iron or steel.”
• “Tariff Item 7323 94 10: — Ghamellas”
To qualify an article as a “hand tool” under Heading 8201, it must inherently possess an active working surface, blade, or mechanical layout designed to perform specialized manual actions like chopping, digging, or sawing. The cold-rolled or galvanized iron sheets procured by the Appellant merely undergo plain circular slitting and pressing into a concave, deep bowl shape with a folded rim for manual safety. This process yields a passive, load-bearing container or tray used for collecting, carrying, and dispersing materials like concrete, mud, or agricultural produce, thereby completely lacking any active mechanical or operational traits of a craftsman’s tool. Applying Rule 3(a) of the General Rules for Interpretation (GRI), a specific description must always override a general or residual entry. Since Tariff Item 73239410 contains an explicit, textually dedicated entry specifically naming “Ghamellas”, it is legally invalid to bypass this direct commercial name to claim an expansive agricultural exemption under Heading 8201 under the pretext of partial end-use.
4.4 The Appellant has relied on the historical resolutions of the 2015 Central Excise Tariff Conference and subsequent legacy adjudication orders to claim finality over the Chapter 82 classification. We find that the introduction of the Goods and Services Tax on 01.07.2017, created an entirely independent, distinct, and fresh legislative tariff matrix that operates completely unburdened by legacy trade interpretations. Legacy administrative advisories, circulars, or judicial orders issued under the erstwhile Central Excise framework cannot override or paralyze the independent operation of modern GST schedules and council recommendations. Furthermore, the Appellant’s technical defences that the presence of hazardous zinc or lead coatings prevents the item from being classified as “kitchenware” is legally irrelevant. Chapter Heading 7323 is not restricted to culinary utensils; it includes “Table, kitchen or other household articles”, which easily absorbs a multi-purpose deep iron container used for household chores, municipal cleaning, or construction work.
4.5 We reject the Appellant’s claim that the simultaneous notifications issued on January 25, 2018, confirm that Ghamellas were textually exempt prior to that date. To properly evaluate the legislative intent, we look at the precise wording of the amendments. Notification No. 07/2018-Central Tax (Rate) modified Entry No. 137 of Heading 8201 by adding the words:
“.and other tools of a kind used in agriculture, horticulture or forestry other than ghamella”
Concurrently, Notification No. 06/2018-Central Tax (Rate) explicitly inserted Entry No. 236A under Schedule III to Notification No. 01/2017-CTR, specifying:
• “7323 94 10: Ghamella (Rate of Tax: 18%)”
The specific description for “Ghamellas” under Tariff Item 73239410 was fully active in the GST Tariff from the very inception of the regime on July 1, 2017. The subsequent addition of the words “other than Ghamellas” under Heading 8201 was strictly a clarificatory amendment executed by the GST Council to eliminate ambiguity, resolve industry-wide misclassification errors, and plug the tax loophole exploited by various manufacturers. Since the product was structurally taxable from day one under Chapter 73, the Department has not retroactively created a new tax liability but has merely recovered a lawful tax that was wrongfully bypassed.
4.6 This is a clear case of miss-statement and suppression of facts to avoid tax payment. The record reveals that from 01.07.2017, to 22.01.2018, the Appellant cleared the goods under the name “Tasla” and HSN 82019000 at a NIL tax rate, but suddenly on January 23, 2018, they modified their invoice nomenclature to “Ghamellas”, updated the HSN code to 73239410, and began paying the standard 18% GST. Audit verifications established that there was absolutely no change in the underlying raw materials, machine press layouts, chemical coatings, weight, pricing models, or wholesale buyers before or after January 2018. Since the physical reality of the product remained entirely identical, the deliberate manipulation of invoice descriptions to mask a fully taxable article under an exempted category proves that the Appellant actively suppressed the true nature of their transactions from the digital portal to wrongfully capture a tax benefit. Because the intentional miss-statement of the product description to evade tax stands clearly established, the imposition of the equivalent penalty under Section 122(1)(x) is perfectly sustainable and justified.
4.7 In view of the above, we find that the OIA is fully sustainable and requires no judicial interference from this Bench.
Order
In view of the foregoing discussion and findings, the Appeal No. LCK/137/2026 filed by the Appellant (M/s Roongta Ispat Udyog) is hereby dismissed. The Order-in-Appeal No. 244/GST/Appl/ALLD/2025 dated 23.04.2025, is upheld.