2016 (10) TMI 942 - AT - Customs

Classification of fabric - Application of test reports of samples of present consignment to the goods of previous imports - Held that - Admittedly, the change in the classification of the present import of fabrics is based upon the test result by the chemical examiner whereas it is not disputed that no such test results were carried out in respect of previous imports. The law on the issue is well settled. The test reports of the samples drawn from a particular consignment cannot be applied to the previous consignments. Merely because the deponent of the statement has agreed before the Customs that the previous consignment may be of the same composition, by itself does not establish that the previous consignments were admittedly of the same composition. The expression used by the deponent is may be and he himself was not sure of the same fact. The composition of the fabrics may vary or change from the consignment to consignment inasmuch as there is not much difference in the wool content of the fabrics - appeal dismissed - decided against Appellant.

Summary

Issues: Classification of imported fabrics, Differential duty, Application of test report to previous imports, Evidentiary value of importer's statement

The judgment pertains to an appeal filed by the Revenue against the order passed by the Commissioner (Appeals) regarding the classification of imported textile fabrics. The respondent imported fabrics declared under two categories, and a dispute arose regarding the classification of one category under a specific heading attracting different customs duty rates. A sample was drawn and sent for chemical analysis, leading to a change in the classification of the fabrics. The Revenue proposed applying this test report to previous imports as well, resulting in a demand for differential duty. The original adjudicating authority confirmed the demand, imposed penalties, and held the imports liable for confiscation. On appeal, the appellate authority accepted the importer's stand that the test report of the present import cannot be applied to previous imports, citing relevant legal precedents. The matter was remanded for reevaluation. The Revenue appealed this decision.

In the appeal, the Revenue relied heavily on a statement by the importer agreeing to the classification of the fabrics in the present consignment and expressing readiness to pay the differential duty for previous imports. The Revenue argued that this statement justified the differential demand raised for earlier consignments as well. Despite the importer retracting the statement later, the Revenue contended that the retraction did not diminish its evidentiary value. However, the Tribunal found no merit in the Revenue's argument. It emphasized that the change in classification for the present import was based on a specific test result, which was not conducted for previous imports. The Tribunal reiterated that test reports from one consignment cannot be applied to earlier ones. The Tribunal highlighted that the importer's statement, suggesting the previous consignments "may be" of similar composition, did not establish a definitive link. Additionally, the Tribunal referenced legal precedents, including the decision in the case of M/s. Shalimar Paints, to support its stance.

Ultimately, the Tribunal upheld the order of the Commissioner (Appeals), rejecting the Revenue's appeal. It concluded that the test report for the present import could not be extrapolated to previous imports without specific evidence. The Tribunal emphasized the need for concrete proof to establish the composition consistency across different consignments. Additionally, the Tribunal underscored the importance of legal precedents and established principles in determining customs duty liabilities. The judgment highlighted the significance of factual accuracy and legal soundness in customs classification disputes, ensuring fair treatment for importers based on clear and substantiated evidence.