2014 (6) TMI 815 - AT - Customs

Waiver of pre-deposit of duty - Import of Synthetic Casting Tapes - Classification of goods - Classification under Heading No.9021. 90 90 or under sub-heading no.3005 9040 - Held that - Heading No.3005 would cover the bandages, impregnated or coated pharmaceutical substances. On the other hand, the Heading No.9021 as claimed by the applicant is applicable for the orthopedic appliances - The product is used for providing immobility in case of fracture and it is a substitute in place of plaster of paris. On exposure to moisture, the tape hardens and provides firm support. It provides additional facility of ventilation which is not available in the more commonly used plaster of paris casting. It is a tape used for orthopaedic purposes and not an appliance in any sense of the term. Deltalite casting tapes , which are polyester cotton fabric coated with polyurethane resin offering controlled rigidity to provide greater strength at the site of fracture, are not devices/instruments/ appliances and hence cannot be considered to fall within the coverage of heading 90.21 and the Tribunal has held that they are akin to goods covered by heading 30.05 which covers wadding, gauzes, bandages and similar articles impregnated or coated with pharmaceutical substances provided these are put up in forms of packings for retail sale for use of medical, surgical, dental or veterinary purposes - import of Synthetic Casting Tape would come under Chapter 30. - Decision in the case of of Johnson & Johnson Ltd. Vs Collector of Customs, Bombay reported in 1998 (9) TMI 184 - CEGAT, NEW DELHI followed - stay granted partly.

Summary

Issues:
- Classification of imported goods under the Customs Tariff Act, 1975
- Applicability of duty for an extended period
- Suppression of facts with intent to evade payment of duty

Classification of Imported Goods:
The applicant imported Synthetic Casting Tapes under the brand name "Articast" declaring them as fracture appliances under Heading No.9021.90.90. However, the adjudicating authority confirmed the duty demand under sub-heading no.3005.9040 applicable to bandages. The applicant argued that the goods are fracture appliances used for support and stopping the movement of fractured bones, not impregnated with pharmaceutical substances, and thus should not fall under Chapter 30. The Tribunal analyzed the issue and referred to the HSN Explanatory Notes, ultimately concluding that the Synthetic Casting Tape falls under Chapter 30, similar to bandages, due to its purpose and characteristics.

Applicability of Duty for an Extended Period:
The applicant contended that the demand of duty for an extended period is not sustainable as there was no suppression of facts. The applicant highlighted previous Tribunal decisions supporting their classification argument and argued that the demand for the normal period would be significantly lower. On the other hand, the Revenue representative argued that there was a clear case of suppression of facts to evade duty payment, as the import pattern was changed to misdeclare items. The Tribunal examined both sides' submissions and directed the applicant to make a pre-deposit of a specified amount within a set timeframe, with the balance dues waived pending appeal disposal.

Suppression of Facts with Intent to Evade Payment of Duty:
The Revenue representative alleged that there was suppression of facts with intent to evade payment of duty, pointing out the change in import pattern to misdeclare items. However, the applicant argued that a mere change in classification does not constitute suppression unless relevant material is concealed. The Tribunal agreed with the applicant's argument, stating that there must be valid material available to prove intent to evade duty. Consequently, the Tribunal directed the applicant to make a pre-deposit while waiving the balance dues until appeal disposal, indicating that the case law relied upon by the applicant did not apply in this instance.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT CHENNAI highlights the key issues of classification, duty applicability, and suppression of facts in the context of the imported Synthetic Casting Tapes, providing a comprehensive understanding of the legal reasoning and decisions made by the Tribunal.