2015 (2) TMI 126 - AT - Customs

Classification of goods - import of parts of Room Air Conditioners - whether components/parts of Ventilating and Recycling hood - whether the goods imported by the appellant/assessee are classifiable under sub-heading 8414.90 as claimed by the appellant/assessee or under 8415.90 as claimed by the Revenue - Held that - While the appellant/assessee have been able to produce invoice T002 along with the enclosure as also copy of the bill of entry on which assessment were made, the so called literature and catalogue produced by them at the time of clearance has not been produced by them in reply to show cause notice in 1990 or before the adjudicating authority either in 1991 or 2009 or before this Appellate Tribunal in both the rounds of litigation. We are unable to appreciate why the appellant/assessee has not able to produce the literature and catalogue which they claim to have produced to the Appraising Officer at the time of clearance of goods. The obvious conclusion is either no such detailed literature or catalogue was produced or if produced, must be Xerox of some photograph or manipulated document. In fact, if there was detailed catalogue indicating that parts in question are parts of ventilating and recycling hood, there was no need to go for expert opinion, by them. In view of the descriptions given in the tariff, HSN Explanatory Notes relating to ventilating and recycling hood, details available on the Internet in the Google search, report of the Mechanical Engineering Department, Govt. College of Engineering, Pune (as discussed earlier) and the certificate dated 23-10-1989 we have no hesitation in holding that the term ventilating and recycling hood as used in tariff does not cover the Ventilating and recycling hood purported to be an intermediate product in manufacturing of room air conditioner but touch items used in home or in restaurants, canteens, hospitals, etc. In view of this conclusion, the parts imported by the appellant/assessees cannot be considered as parts classifiable under heading 8414.90. In fact, in our view the sub-assembly of air conditioners to which the appellant/assessee is claiming to be ventilating and recycling hood is incorrect and supported by no catalogue literature or any authoritative book. All this is based upon the imagination of appellant as is clear from statement of Shri V.N. Dhoot, Managing Director. There is no dispute all the parts were used to assemble room air conditioner and therefore are to be considered as parts of air conditioner falling under 8415.90. Revenue has also filed an appeal on the ground that Section 112 of the Customs Act, 1962, which provides that when the goods are liable for confiscation, the person responsible shall be liable to a penalty. While we do agree with plea, we note that the issue of question of penalty was discussed by this Tribunal while remanding the matter and the Revenue had not filed an appeal against the said order of the Tribunal before High Court. Hence, the said order of the Tribunal has attained finality. In view of this fact, the learned Commissioner in the impugned order has correctly not imposed penalty. - Decided partly in favour of assessee.

Issues Involved:

1. Classification of imported goods.
2. Confiscation of goods under Sections 111(m) and 111(d) of the Customs Act.
3. Imposition of penalty under Section 112 of the Customs Act.
4. Preliminary objections regarding procedural fairness.

Detailed Analysis:

1. Classification of Imported Goods:

The primary issue was whether the imported goods were classifiable under sub-heading 8414.90 (parts of ventilating or recycling hoods) as claimed by the appellant or under sub-heading 8415.90 (parts of air conditioning machines) as claimed by the Revenue. The Tribunal emphasized that the classification of goods involves both facts and law, and the refusal for cross-examination on this ground was unjustified. The Tribunal noted that the classification requires an understanding of mechanical principles and procedures, not just the customs tariff or explanatory notes. The Tribunal emphasized that the opinion of the College of Engineering should not have been dismissed without consideration.

The Tribunal found that the description "ventilating and recycling hoods incorporating a fan" as used in the Customs Tariff refers to items used in homes, restaurants, canteens, hospitals, etc., and not as parts of air conditioners. The Tribunal rejected the appellant's claim that the imported parts were components of ventilating and recycling hoods. The Tribunal concluded that the parts were used to assemble room air conditioners and should be classified under 8415.90.

2. Confiscation of Goods Under Sections 111(m) and 111(d) of the Customs Act:

The Tribunal upheld the confiscation of the goods under Sections 111(m) and 111(d) of the Customs Act, 1962. The Tribunal noted that the appellant had manipulated documents and misdeclared the goods to evade customs duty. The Tribunal found that the description in the invoice, bill of lading, and other documents was manipulated to mislead the customs authorities. The Tribunal concluded that the goods were liable for confiscation due to misdeclaration and manipulation of documents.

3. Imposition of Penalty Under Section 112 of the Customs Act:

The Tribunal noted that the issue of penalty was discussed in the earlier order of the Tribunal, which had set aside the penalty. The Revenue had not appealed against that order, and it had attained finality. Therefore, the Tribunal upheld the decision of the adjudicating authority not to impose a penalty under Section 112 of the Customs Act.

4. Preliminary Objections Regarding Procedural Fairness:

The appellant raised several preliminary objections, including the non-supply of documents, denial of cross-examination, and refusal to refer documents to a handwriting expert. The Tribunal found that the adjudicating authority had correctly addressed these objections. The Tribunal noted that the appellant had not produced the literature and catalogues allegedly shown to the Appraising Officer at the time of clearance. The Tribunal concluded that the objections were without merit and upheld the adjudicating authority's decisions on these procedural matters.

Conclusion:

The Tribunal dismissed both the appeals of the appellant and the Revenue. The Tribunal upheld the classification of the imported goods under sub-heading 8415.90, confirmed the confiscation of the goods under Sections 111(m) and 111(d) of the Customs Act, and upheld the decision not to impose a penalty under Section 112 of the Customs Act. The Tribunal also found that the preliminary objections raised by the appellant were without merit.

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