2015 (10) TMI 1021 - AT - Customs

Classification of Goods Goods under issue are nutritional powder which is a proprietary food - Appellant contends the classification of goods imported under Customs Tariff Heading 1901 and the classification claimed by the appellant is 19019090 - Revenue contends that the said product shall be classified under Customs Tariff Heading 2106 and seeks to classify the same under Chapter Heading 21069099. Held That - Products having preparations predominantly of milk powder would merit classification under Chapter 1901 and there is no dispute as to the claim of the appellant that the imported goods contain cocoa of 2.5%, hence Chapter Note of Chapter Heading 1901 clearly applies Further, It can be clearly held after reading the HSN Explanatory Notes of Chapter 1901 and Chapter 2106 holistically goods imported by the appellant would merit classification under Chapter 1901 only. - Correct classification of products imported by Appellant is 19019090 Impugned order is set aside and appeal allowed Decided in favour of the Appellant.

Summary

Issues Involved:
1. Classification of imported goods under the Customs Tariff.
2. Applicability of concessional Basic Customs Duty (BCD) under Notification No. 46/2011.
3. Correctness of the appellant's product description and its impact on duty assessment.
4. Imposition of penalties and interest for alleged misclassification.

Detailed Analysis:

1. Classification of Imported Goods:
The core dispute revolves around the classification of the imported goods, described by the appellant as "Mama's Best India Chocolate 400 grams" and claimed to be classifiable under CTH/CETH 19019090. The Revenue, however, classified the goods under 21069099. The appellant argued that their product, predominantly composed of skim milk powder (64.7%), lactose (15.2%), sucrose (12%), cocoa powder (2.5%), oligofructose (2.2%), minerals, and vitamins, should fall under Chapter 19 due to its significant milk content and dietetic purpose. They referenced HSN Explanatory Notes and previous Tribunal decisions, including the classification of "SIMILAC-2," to support their claim. The Tribunal agreed with the appellant, noting that the product's primary ingredients and purpose align with Chapter 19, specifically under 19019090, rather than the residual category of 2106.

2. Applicability of Concessional BCD:
The appellant claimed a concessional BCD under Notification No. 46/2011 (Sr. No. 158) based on the goods' origin from an AIFTA country (Singapore), supported by a Certificate of Origin. The Tribunal did not dispute the validity of the certificate or the appellant's eligibility for the concessional rate, given the proper classification under Chapter 19.

3. Correctness of Product Description:
The Revenue contested the description of the goods as "Mama's Best India Chocolate 400 grams" on the Bill of Entry, arguing it should have been "Mama's Best Premium Chocolate" (a nutritional powder). The Tribunal acknowledged the discrepancy but emphasized that the classification should be based on the product's composition and intended use. The Tribunal found that the product's primary ingredients and its classification under Chapter 19 were appropriate despite the labeling inconsistency.

4. Imposition of Penalties and Interest:
The Revenue sought to impose penalties and recover differential duties with interest, alleging misclassification by the appellant. However, the Tribunal, after examining the product's composition, HSN Explanatory Notes, and previous judicial precedents, concluded that the appellant's classification under 19019090 was correct. Consequently, the Tribunal set aside the impugned orders, negating the penalties and interest imposed by the adjudicating authority.

Conclusion:
The Tribunal concluded that the appellant's imported goods should be classified under Chapter Heading 19019090, aligning with the HSN Explanatory Notes and previous Tribunal decisions. The appellant was entitled to the concessional BCD under Notification No. 46/2011. The Tribunal set aside the orders imposing penalties and interest, allowing the appeals with consequential relief.