2003 (1) TMI 326 - AT - Customs

Summary

Issues Involved:
1. Classification of imported goods.
2. Applicability of the extended period for duty recovery.
3. Validity of the Board's circular on classification.
4. Determination of whether the goods qualify as "massage apparatus."

Issue-wise Detailed Analysis:

1. Classification of Imported Goods:
The primary issue in this appeal is the classification of goods imported by the appellant, described as "magnetic accupressure treating instrument." The appellant claimed classification under Heading 9019.10 of the Tariff, which covers "Mechano-therapy appliances; massage apparatus; psychological aptitude-testing apparatus." The department, however, proposed classification under Heading 9404.29, which includes "articles of bedding and similar furnishings" such as mattresses and pillows. The Commissioner confirmed the classification under Heading 9404.29, leading to a demand for duty short-levied.

2. Applicability of the Extended Period for Duty Recovery:
The department issued twenty-five notices to the appellant, proposing to recover duty short-levied by classifying the goods under Heading 9404.29. An additional notice dated 8-12-2000 invoked the extended period under Section 28(1) of the Act for recovery of duty on goods cleared between June 1997 and July 2000. The Commissioner ruled that the extended period could not be applied, dropping the demand for Rs. 17.92 crores, but confirmed the demand for Rs. 16.03 crores for goods imported between March and July 2000.

3. Validity of the Board's Circular on Classification:
The appellant relied on Circular No. 56/2001 dated 25-10-2001, which suggested that goods described as "Magnetic Accupressure Treatment System" should be classified under Heading 9019.10 as "massage apparatus." The circular aimed to bring uniformity in classification and was considered binding on the department. However, the department contended that the goods referred to in the circular were not descriptive of the goods under consideration. The Tribunal noted that the circular was issued after the impugned order and required verification to determine its applicability to the goods in question.

4. Determination of Whether the Goods Qualify as "Massage Apparatus":
The appellant argued that the goods should be classified as massage apparatus due to their magnetic properties and design, which purportedly provide therapeutic benefits such as improved blood circulation and prevention of bedsores. However, the Tribunal found no scientific evidence supporting the therapeutic effects of magnets and concluded that the goods did not meet the definition of "massage apparatus" as it requires manipulation of the body by an external force. The Tribunal emphasized that the goods' construction and superficial structure did not justify their classification as massage apparatus.

Conclusion:
The Tribunal rejected the appellant's claim for classification under Heading 9019.10, affirming the Commissioner's classification under Heading 9404.29. However, it acknowledged the binding nature of the Board's circular and remanded the matter to the Commissioner for detailed examination to determine if the goods correspond to those referred to in the circular. The Commissioner was directed to consider the case law on the applicability of such circulars and whether it applies to goods imported prior to its issue. The appeal was allowed, and the impugned order was set aside.