2016 (3) TMI 511 - AT - Customs

Validity of opinion - No opportunity for cross examination - Appellant contended that experts opinions should not be relied upon as their cross-examination was not permitted - Held that - there may be situations where it is felt that fair hearing would make no difference-meaning that a hearing would not change the ultimate conclusion reached by the decision-maker in such situations, fair procedures appear to serve no purpose since the right result can be secured without according hearing/cross-examination. It may not be necessary to strike down the action and refer the matter back to the authorities to take fresh decision after complying with the procedural requirement in those cases where non-grant of hearing has not caused any prejudice to the person against whom the action is taken. Therefore, every violation of a facet of natural justice may not lead to the conclusion that the order passed is always null and void. The validity of the order has to be decided on the touchstone of prejudice. There is no doubt that there can be a situation whether denial of cross-examination of expert may not cause any prejudice and in such case not allowing cross-examination would not vitiate the proceedings. However, in the present case it is eminently arguable that not allowing cross examination of the experts has caused prejudice to the appellant as their opinion was relied upon to negate the appellant s plea/contention and therefore the least that follows is that as the cross examination of the experts who gave their opinions was not permitted/held, their opinion is to be ignored for the purpose of deciding the issue at hand. Applicability of test reports for classification of goods - Samples in respect of some bills of entry were tested and applied to other bills of entry - Held that - the authorised representative of the appellant in his statement categorically stated that the appellant had imported artificial fur lining of the same quality, character and technical specifications (except colour) under all the bills of entry. Further the examination of samples drawn from a number of consignments imported under various bills of entry supported the said statement of the authorised representative. Therefore there is no requirement of drawing the samples from each and every consignment imported under each and every bill of entry. Classification - Whether HSN Explanatory Notes for Chapter 56 of Customs Tariff can be used - Held that - fabrics produced in a similar manner with textile fibres of length 5 mm and above are excluded from CTH 59.07 if they have the character of artificial fur of heading 43.04. The clear implication of this is that fabrics covered with textile flock of less than 5 mm length are not excluded out of the purview of 59.07 even if they have the character of artificial fur. The appellant have nowhere claimed that the impugned goods looked like fur of any particular animal. That however is not of any consequence because even if the impugned goods looked liked some fur, by virtue of the HSN notes cited earlier and the analysis, because of the fact that nylon flocks had the length between 0.45 mm to 0.5 mm, the impugned goods do not get excluded from the scope of chapter heading 59.07. Therefore, to exclude the goods from the scope of 59.07 the flocks have to be of length 5 mm or longer and the goods should have the character of artificial fur.

Summary

Issues Involved:
1. Classification of imported goods under the correct Chapter Heading.
2. Reliance on expert opinions without cross-examination.
3. Applicability of test reports to all bills of entry.
4. Burden of proof for classification.

Issue-wise Detailed Analysis:

1. Classification of Imported Goods:
The primary issue was whether the imported artificial fur lining should be classified under Chapter Heading 59.07 or 43.04. The Commissioner initially classified the goods under 59.07, which was contested by the appellant who claimed classification under 43.04. The adjudicating authority confirmed the demand of duty based on the classification under 59.07, supported by the length of flock fibers being between 0.45 to 0.50 mm. The HSN Explanatory Notes were crucial in determining that fabrics with textile flock less than 5 mm in length fall under 59.07, even if they resemble artificial fur. The appellant's argument that the fur length was irrelevant was dismissed, as the length of the flock was a key determinant for classification.

2. Reliance on Expert Opinions Without Cross-Examination:
The appellant contended that the classification was based on reports from IIT Delhi, SASMIRA, and NITRA, without allowing cross-examination of the experts. Citing several judgments, the appellant argued that the opinions should not be relied upon without cross-examination. The Tribunal referred to Supreme Court judgments, noting that the denial of cross-examination does not always vitiate proceedings unless it causes prejudice. In this case, the Tribunal found that not allowing cross-examination of experts did cause prejudice to the appellant, thereby deciding to ignore the expert opinions for the purpose of classification.

3. Applicability of Test Reports to All Bills of Entry:
The appellant argued that test reports from samples of some bills of entry should not apply to other bills of entry without samples. However, the appellant's representative had stated that all imported artificial fur linings were of the same quality and specifications. The Tribunal found no infirmity in using test reports from some consignments for others, as the goods were consistently described and the representative confirmed their uniformity. Drawing samples from every consignment was deemed unnecessary and potentially harassing.

4. Burden of Proof for Classification:
The appellant cited various judgments asserting that the burden of proof for correct classification lies with the Revenue. The Tribunal agreed that the burden of proof was on the Revenue but found that the classification was determined based on uncontested facts about the length of the flock fibers and the HSN Explanatory Notes. The Tribunal concluded that the Revenue had discharged its burden of proof by providing sufficient evidence and analysis to support the classification under 59.07.

Conclusion:
The Tribunal dismissed the appeal, upholding the classification of the imported goods under Chapter Heading 59.07. The decision was based on the length of the flock fibers and the HSN Explanatory Notes, with the expert opinions disregarded due to the lack of cross-examination. The application of test reports to all bills of entry was justified based on the uniformity of the goods, and the burden of proof was found to be adequately met by the Revenue.

(Pronounced in Court on 1.3.2016)