2008 (6) TMI 383 - AT - Customs

Summary

Issues:
1. Classification of imported item under Customs Tariff Act.
2. Challenge against penalty imposed on the appellant.
3. Classification of repacked goods under Central Excise Tariff Act.
4. Chargeability of duty on repacked goods.

Analysis:
1. The first issue in this judgment involves the classification of the item imported by the appellant under the Customs Tariff Act. The appellant, M/s. CIBA, imported a compound declared as "LIBREL ZN (EDTA CHELATE) CONTAINING 14% ZINC AS ZN," which was initially classified under SH 3105 90 90. However, the Commissioner of Customs reclassified the goods under Heading 2922 and demanded differential duty. The appellant argued that the compound is a micronutrient fertilizer falling under SH 3105 90 90, which carries a lower duty rate. The appellant presented evidence, including a test report from the Regional Fertilizer Control Laboratory (RFCL), supporting their classification claim. The court found that the compound, ZINC-EDTA CHELATE, is a chemically defined compound containing zinc linked with nitrogen and oxygen atoms, but also noted that it is considered a micronutrient fertilizer under the Fertilizer Control Order. Based on the evidence and arguments presented, the court granted waiver of pre-deposit and stay of recovery in favor of the appellant.

2. The second issue pertains to the penalty imposed on the appellant by the Commissioner of Central Excise in connection with repacked goods. M/s. CIBA had supplied the imported item to M/s. Swathi, who repacked and cleared the goods without paying duty. The Central Excise department viewed the repacked product as excisable under Note 10 to Chapter 29 of the Central Excise Tariff Act, leading to a demand for duty. The appellants contended that the repacked goods should be classified as micronutrient fertilizers under Heading 3105 and thus be exempt from duty. The court, having already determined the classification in the Customs appeal, upheld the classification of the repacked goods under Heading 3105. As the benefit of a nil rate of duty applied to fertilizers, the court granted waiver of pre-deposit and stay of recovery for the duty demanded and penalties imposed on M/s. Swathi and others involved.

In conclusion, the judgment addressed issues related to the classification of imported items under the Customs Tariff Act and the Central Excise Tariff Act, as well as the imposition of penalties. The court carefully considered the chemical composition of the imported compound, expert opinions, and relevant tariff provisions to make its determinations, ultimately granting relief to the appellants based on the classification of the goods as micronutrient fertilizers.