2020 (2) TMI 1432 - AT - Customs

Benefit of exemption Notification 12/2012-Cus., dated 17-3-2012, Sl. No. 399(A) - Import of Power Tiller - respondent had claimed the benefit of Notification No. 12/2012-Cus., dated 17-3-2012 under Sl. No. 399(A) which is available to Rotary Tiller/Weeder - Confiscation - redemption fine - penalty - HELD THAT - The Power Tiller, which in the form of pedestrian controlled tractor, and the Rotary Tiller, which are equipment to till the soil. Tractors including pedestrian controlled tractors or power tiller are classifiable under Customs Tariff Heading 8701. Rotary tillers are classifiable under Chapter Heading 84 as agriculture equipment. The Rotary tiller is specifically covered under Customs Tariff Heading 8432. As there was a confusion among the some field formations, this matter was discussed at length in C.B.E. C. s Circular. No. 45/2001-Customs dated 7th August, 2001. We have gone through the letter/memo of the Ministry of Agriculture relied upon by the first appellate authority in the impugned order. This only mentions that the benefit of Notification No. 12/2012-Cus. available to Rotary Tiller, may also be extended to power tiller and requested the Under Secretary of their own Department, to take up the matter with the Finance Ministry in regard to eligibility of exemption notification or classification. We also note that the Ministry of Agriculture is not expert in classification of goods under the Customs Act, valuation, determination of duty or availability of benefit of exemption notification. They have rightly applied their mind from their point of view and felt that the exemption notification must be available to power tiller also. This view of the Ministry of Agriculture, cannot determine the eligibility or otherwise of the exemption notification to power tiller. It must be determined solely based on the way exemption notification as it is drafted. A bare perusal of the exemption notification, shows that it is available, inter alia, to rotary tiller/weeder. It does not suggest directly or indirectly that it is available to power tillers also - Therefore, in our considered view, the benefit of exemption notification is not available to the power tillers imported by the appellant. Confiscation - redemption fine - penalty - HELD THAT - Considering that the importers could have entertained the wrong belief that the exemption Notification is available to them and made an ineligible claim, we do not find sufficient grounds to uphold the confiscation of the goods under Section 111(m) or imposition of penalty, fine upon the respondent. Appeal allowed in part.

Summary

Issues Involved:
1. Eligibility for exemption under Notification No. 12/2012-Cus., dated 17-3-2012.
2. Classification of imported goods as Rotary Tillers or Power Tillers.
3. Liability for confiscation, fine, and penalty under the Customs Act, 1962.
4. Applicability of National Litigation Policy due to the monetary limit involved.

Issue-Wise Detailed Analysis:

1. Eligibility for Exemption under Notification No. 12/2012-Cus., dated 17-3-2012:
The respondent imported goods declared as Rotary Tillers, which were later found to be Power Tillers. The original authority denied the benefit of the exemption Notification No. 12/2012-Cus., dated 17-3-2012, which is available to Rotary Tillers/Weeders, not Power Tillers. The first appellate authority, however, allowed the exemption, relying on a "clarification" from the Ministry of Agriculture. The Tribunal concluded that the benefit of the exemption notification is not available to Power Tillers as the notification specifically mentions Rotary Tillers/Weeders. The Ministry of Agriculture's opinion cannot determine the eligibility for exemption under the Customs Act.

2. Classification of Imported Goods:
The goods were classified under Bills of Entry as Rotary Tillers but were found to be Power Tillers upon examination. The Tribunal discussed the distinction between Power Tillers (pedestrian-controlled tractors) and Rotary Tillers (agricultural equipment). Power Tillers are classifiable under Customs Tariff Heading 8701, whereas Rotary Tillers fall under Chapter Heading 8432. The Tribunal referred to the CBEC Circular No. 45/2001-Cus., which clarified that pedestrian-controlled tractors (Power Tillers) are different from Rotary Tillers and should not be misclassified.

3. Liability for Confiscation, Fine, and Penalty:
The original authority ordered the confiscation of goods under Section 111(m) of the Customs Act, 1962, and imposed a fine and penalty on the respondent. The first appellate authority set aside these orders. The Tribunal upheld the setting aside of the fine and penalty, considering that the importers might have genuinely believed they were eligible for the exemption. However, the Tribunal did not find sufficient grounds to uphold the confiscation of goods under Section 111(m).

4. Applicability of National Litigation Policy:
The respondent argued that the duty involved was less than ?10 lakhs, and thus the appeal should be rejected under the National Litigation Policy. The Revenue countered that the policy's monetary limit is subject to exceptions involving classification, valuation, and substantive questions of law. The Tribunal agreed with the Revenue, stating that the appeal involves classification and exemption notification issues, thus not covered by the Litigation Policy's monetary limit.

Conclusion:
The Tribunal modified the impugned order by setting aside the benefit of the exemption Notification No. 12/2012-Cus. but upheld the setting aside of fine and penalty. The appeal filed by the Revenue was partly allowed. The judgment emphasized the importance of correct classification and the limitations of relying on non-expert opinions for determining eligibility for customs exemptions.