2015 (6) TMI 535 - AT - Customs

Classification of goods - import of Hook and Eye - Classification under Chapter 8308 1010 or under CTH 62129090 - Violation of principle of natural justice - Held that - When the lower appellate authority chooses to change the description altogether to a new product other than what was re-assessed by the original authority but failed to give an opportunity to the appellants to put forth their defence. - Commissioner (Appeals) has not only decided the classification to a new product as Bra Extender instead of Hooks & Eyes and also directed the lower authority to initiate proceedings for mis-declaration/suppression and also to examine the past clearances. When the Department chooses to rely on certain evidence whether it is Textile Committee report, literature or any records it is mandatory that appellant shall be given an reasonable opportunity to defend their case. We also find that the appellants have filed appeals before lower appellate authority disputing the classification followed by the Department and the lower appellate authority has gone beyond the grounds of appeal and described the product entirely to a new description as Bra Extenders and also directed the original authority for initiate proceedings against the appellant. - the original authority and the lower appellate authority not followed the principles of natural justice, and it is a fit case to be remitted back to Department, the impugned order is liable to be set aside for deciding the classification issue afresh after providing a reasonable opportunity of hearing to the appellants - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
1. Classification dispute regarding imported goods.
2. Allegations of mis-declaration and suppression by the customs authority.
3. Violation of principles of natural justice in the classification process.

Analysis:
Issue 1: The appellants imported goods classified under Chapter 83081010, but the customs reclassified them under CTH 62129090 as parts of brassieres. The appellants contested this reclassification, arguing that they had been importing similar goods under the original classification for the past 10 years without any dispute. The lower appellate authority changed the classification to a new product, "Bra Extenders," without providing the appellants with an opportunity to defend their case. The Tribunal found that the authorities failed to follow natural justice principles by not informing the appellants of the reasons for the reclassification, and remanded the case back to the original authority for a fresh decision after a proper hearing.

Issue 2: The customs authority initiated proceedings for suppression and mis-declaration based on the reclassification of the goods. The Textile Committee report confirmed the goods as parts of brassieres, but the appellants argued that the items were simply "Hook and Eye" and not "Bra Extenders" as claimed by the authorities. The Tribunal emphasized that the appellants should have been given a reasonable opportunity to defend their case when relying on external evidence like the Textile Committee report. The Tribunal directed the customs to allow clearance of the goods covered under the Bills of Entry with necessary security.

Issue 3: The Tribunal noted that the lower appellate authority did not issue a speaking order justifying the reclassification, and instead decided the case on merits without providing the appellants with a chance to present their arguments. The Tribunal held that both the original and lower appellate authorities violated the principles of natural justice by not informing the appellants of the reasons for the reclassification and not allowing them to defend their case adequately. Consequently, the impugned order was set aside, and the case was remanded for a fresh decision with proper adherence to natural justice principles.

This detailed analysis of the judgment highlights the classification dispute, allegations of mis-declaration, and the violation of natural justice principles in the decision-making process.