2020 (2) TMI 1603 - AT - Customs

Classification of imported goods - Desiccants-MBD 99 - to be classified under CTH 250810190 of Customs Tariff Act 1975 or under CTH 38029019 of CTA 1975 - It is alleged that the activated clay/ activated earth/ processed bentonite falls under CTH 3802.90 since it is acid activated because of which a different product with modified molecular structure having distinct properties like absorptive capacity catalytic properties ion exchange capacity bearing different industrial use emerges? - extended period of limitation. HELD THAT - In narrating the facts in the appeal memo the appellant has stated that the said product was Heat Processed and Grounded Bentonite having the property of absorbing moisture and by heat processing the water contents are removed to improve absorbent property of the said Bentonite clay. We need not analyze the issue of classification any further as the product imported by the appellant is more or less similar to the product considered by the Tribunal in KOMAL TRADING COMPANY VERSUS COMMISSIONER OF CUS. (IMPORT) MUMBAI 2014 (5) TMI 754 - CESTAT MUMBAI where it was held that for the period from 1-2-2003 to 31-12-2006 activated Bentonite has to be classified under CTH 2508 10 90 (because of its specific inclusion in the tariff description). However for the period prior to 1-2-2003 and from 1-1-2007 onwards when there is no specific inclusion in view of Note 1 to Chapter 25 which excludes products whose structure has undergone a change the said product merits classification under CTH 3802 90 19. Thus the product Desiccants - MBD 99 is correctly classifiable under chapter sub-heading 38029019 of CTA 1975. Extended period of limitation - HELD THAT - In the present case also there is no suppression of facts or mis-declaration as all the relevant materials were submitted by the appellant at the time of import of goods for assessment. Accordingly invoking extended period in confirming the demand is unsustainable. The impugned order is upheld to the extent of confirming the classification of the imported goods under CTH 38029019. However the demand confirmed invoking extended period of limitation and imposition of penalty and confiscation directed against the appellant are hereby set aside - Appeal allowed in part.

Summary

Issues involved:
Classification of imported product 'Desiccants - MBD 99' under Customs Tariff Act, 1975; Allegation of incorrect classification by the Department; Burden of proof on correct classification; Applicability of CBEC Circular; Interpretation of law regarding classification; Extended period of limitation for demand confirmation; Imposition of penalty and confiscation.

Classification Issue:
The appeal involved the classification of the imported product 'Desiccants - MBD 99' under the Customs Tariff Act, 1975. The appellant claimed the product to be 'Heat Processed and Grounded Bentonite' under CTH 25081090, emphasizing its moisture absorption property. The Department alleged it to be 'Activated Clay and Activated Bleaching Earth' under CTH 38029019. The appellant argued that the correct classification burden rested on the Department, citing CBEC Circular inapplicability due to subsequent amendments. The Tribunal referred to the case law precedent and HSN Explanatory Notes, concluding that the product falls under CTH 38029019 due to molecular structure changes from acid activation.

Extended Period of Limitation:
The show-cause notice for differential duty recovery was issued to the appellant after a significant period from the Bill of Entry filing, invoking the extended period of limitation. The Tribunal, while confirming the classification under CTH 38029019, set aside the demand confirmed during the extended period. The Tribunal noted that there was no suppression of facts or mis-declaration by the appellant during import assessment, rendering the extended period invocation unsustainable.

Penalty and Confiscation Issue:
The Tribunal upheld the classification of the imported goods under CTH 38029019 but set aside the imposition of penalty and confiscation directed against the appellant. The decision was based on the absence of any suppression of facts or mis-declaration, leading to the conclusion that the imposition of penalty and confiscation was unwarranted and unjustified.

In conclusion, the appeal was partly allowed, confirming the classification of the imported goods under CTH 38029019 while setting aside the demands confirmed during the extended period of limitation, as well as the penalty and confiscation imposed on the appellant.