2014 (2) TMI 114 - AT - Customs

Classification of goods - Import of Combined refrigerator freezer with separate external doors - Classification under heading CTH 8418 21 00 or 8418 10 90 - Benefit of exemption under Sr. No. 50 of Notification No. 85/2004-Cus., dated 31-8-2004 - Held that - sub-heading 841810 covers refrigerators which are combined with freezers and have separate doors, whereas, sub-heading 841821 covers only refrigerators without separate freezers and separate doors. Further, sub-heading 8418 30 covers only freezers . Therefore, a Combined refrigerator freezer with separate external doors merits classification under sub heading 841810. This view is also supported by HS classification. Further, Combined refrigerator freezer with separate external doors of household type is appropriately classifiable under tariff item 8418 10 90, as the other tariff entry at 8418 10 10 covers such refrigerators of commercial type only. Classification of Combined refrigerator freezer with separate external doors would be under sub-heading 8418 10 and not under 8418 21, as was being followed by certain Customs field formations - CBE&C has clarified that the combined refrigerator-freezer fitted with separate external doors would be classifiable under Heading No. 8418 10 and not under Heading No. 8418 21 and, therefore, they are not covered under Sr. No. 50 of the Notification No. 85/2004-Cus., dated 31-8-2004. CBE&C is an apex authority implementing customs laws in this country and, therefore, the clarification issued by such an authority needs to be given due consideration. Hence, the same cannot be brushed aside merely on the basis of a certificate issued by a foreign authority, who is not required to undertake classification for customs purposes - Prima facie case not in favour of assessee - Stay denied.

Issues Involved:
1. Classification of imported goods.
2. Eligibility for concessional rate of duty under Notification No. 85/2004-Cus.
3. Relevance of Certificate of Origin in determining classification.
4. Financial hardship claim by the appellant.

Issue-wise Detailed Analysis:

1. Classification of Imported Goods:
The primary issue revolves around the classification of the imported goods, specifically "Combined Refrigerator-Freezer fitted with separate external doors." The appellant classified the goods under CTH 8418 21 00, claiming they were household refrigerators eligible for concessional duty under Notification No. 85/2004-Cus. However, the department reclassified them under CTH 8418 10 90 based on a clarification from the CBE&C, which stated that such goods should be classified under sub-heading 8418 10 and not 8418 21. The Tribunal upheld this reclassification, emphasizing that the specific description under 8418 10 90 takes precedence over the general description under 8418 21 00.

2. Eligibility for Concessional Rate of Duty:
The appellant claimed the benefit of concessional duty under Sr. No. 50 of Notification No. 85/2004-Cus, which applies to goods classified under 8418 21 00. The Tribunal, however, noted that the imported goods, being classified under 8418 10 90, do not fall under the specified tariff heading in the notification. Therefore, the goods are not eligible for the concessional rate of duty. The Tribunal also referred to the CBE&C Circular No. 23/2008-Cus, which clarified that combined refrigerator-freezers with separate external doors are not covered under Sr. No. 50 of the said notification.

3. Relevance of Certificate of Origin:
The appellant argued that the classification provided in the Certificate of Origin issued under the Thailand-Indo Free Trade Agreement should be considered final. The Tribunal rejected this argument, stating that the classification of goods for customs purposes is a sovereign function that cannot be delegated to a foreign authority. The Tribunal further noted that the Rules of Origin only determine the origin of goods and not their classification for customs purposes. The reliance on previous judgments related to certificates of end-use and essentiality was also dismissed as irrelevant to the present case.

4. Financial Hardship Claim:
The appellant claimed financial hardship, presenting a balance sheet indicating losses. However, the Tribunal found that the appellant had sufficient cash and bank balances (Rs. 5,41,76,000/-) to cover the differential duty demanded (Rs. 54,04,238/-). Consequently, the Tribunal directed the appellant to make a pre-deposit of Rs. 30,00,000/- within eight weeks, with the balance of dues waived and recovery stayed during the pendency of the appeal.

Conclusion:
The Tribunal concluded that the imported goods were correctly classified under CTH 8418 10 90, making them ineligible for the concessional duty under Notification No. 85/2004-Cus. The Certificate of Origin from the exporting country was deemed non-binding for classification purposes. The appellant's claim of financial hardship was also dismissed based on their substantial cash reserves. The Tribunal ordered a pre-deposit of Rs. 30,00,000/- to proceed with the appeal.

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