2012 (7) TMI 877 - CGOVT - Central Excise

Denial of duty drawback claim - Drawback @ 1.7% of FOB value of exports or @ 5.3% under Chapter Heading No. 9401 - Wrong classification of goods - Classification under CTH 9401 or 9403 - Held that - 9403 covers only those goods, which are not covered in above Tariff Headings viz, under CTH 9401 & 9402. Further, 9401 covers all seats. Further, as evident from HSN to Tariff Heading 9401 that such seat covers various kinds of chairs. Once, the goods find classification under CTH 9401, it cannot be classified under 9403, as 9403 covers only those furniture and parts thereof, which are not covered by the previous Heading. - Board vide Circular, categorically held that all chairs will be classified under 9401 and not under 9403. As in the instant case, only chairs as stand alone have been exported, their classification is more appropriate under CTH 9401 than 9403, applicant has also stated that for their subsequent exports, department is allowing classification under Heading 9401 and sanctioning drawback a higher rate. - impugned goods by Sorav Dining Chairs are classifiable under CTH 9401 and hence, the applicant is entitled for drawback at higher rate as claimed by them. - Decided in favour of assessee.

Summary

Issues Involved:
1. Classification of exported goods (dining chairs) under the correct Customs Tariff Heading (CTH).
2. Entitlement to a higher duty drawback rate.
3. Timeliness and condonation of delay in filing the revision application.

Detailed Analysis:

1. Classification of Exported Goods:
The primary issue revolves around whether the dining chairs exported by the applicant should be classified under CTH 9401 or 9403. The applicant initially classified the goods under CTH 9403 (covering "Other furniture and parts thereof") but later contended that the correct classification should be under CTH 9401 (covering "Seats (other than those of Heading 9402)"). The applicant argued that dining chairs are used for seating purposes and should fall under CTH 9401, which includes all kinds of seats such as lounge chairs, armchairs, and folding chairs. This classification is supported by the HSN explanatory notes and a clarification issued by the Additional Commissioner of Customs, Jodhpur.

2. Entitlement to Higher Duty Drawback Rate:
The applicant claimed that they were entitled to a duty drawback rate of 5.3% under CTH 9401, rather than the 1.7% rate applicable under CTH 9403. The applicant cited various case laws to support their contention that the correct classification should lead to a higher duty drawback rate. The department, however, argued that the goods were correctly classified under CTH 9403 based on the shipping bills and other documents, which described the items as "Indian Artistic Handicrafts Furniture items of Wood."

3. Timeliness and Condonation of Delay:
The revision application was filed after a delay of 4 years, 5 months, and 10 days. The applicant explained that they had erroneously filed an appeal before CESTAT, which was dismissed as not maintainable. The government noted that as per Section 129DD of the Customs Act, 1962, a revision application can be filed within 3 months of the communication of the order-in-appeal, with a possible condonation of delay up to 3 months if justified. The government referred to judgments from the High Courts of Gujarat and Delhi, which allowed the exclusion of time spent pursuing an appeal in a wrong forum under a bona fide belief. After excluding the time consumed before CESTAT, the delay in filing the revision application was within the condonable limit of 3 months.

Government's Observations and Decision:
The government carefully examined the relevant case records, including the orders-in-original and orders-in-appeal. It observed that the classification of goods under CTH 9401 was more appropriate, as 9401 covers all seats, including various kinds of chairs. The HSN explanatory notes for CTH 9401 and a Board's Circular No. 17/87 supported this classification. The government noted that once goods are classified under CTH 9401, they cannot be classified under CTH 9403, which covers only those furniture items not included in the previous headings.

Conclusion:
The government concluded that the dining chairs in question should be classified under CTH 9401, entitling the applicant to a higher duty drawback rate of 5.3%. The orders of the Commissioner (Appeals) were set aside, and the revision applications were allowed. The delay in filing the revision application was condoned, and the applicant's entitlement to the higher duty drawback rate was recognized.

Order:
The revision applications succeed, and the government sets aside the orders of the Commissioner (Appeals), allowing the applicant to receive the higher duty drawback rate as claimed.