2016 (11) TMI 847 - AT - Customs

Eligibility for concessional rate of additional duty of customs in accordance with N/N. 6/2006-CE dated 1st March 2006 and N/N. 12/2012-CE dated 17th March 2012 - classification of imported goods - external hard disks classified under heading 84717030 or 84717040 of the Schedule of the Central Excise Tariff Act, 1985? - Held that - Under Customs Act, 1962 each import is assessed on its own merits and upon the contents of the declaration in the bill of entry. An assessee is an assessee merely for the limited period that the goods are with the custodian pending clearance for home consumption. No importer can claim to be a permanent assessee for all the goods imported by them. Most often, declarations of the assesses are accepted and, in the last decade or so, allowed clearance with a cursory examination except in the few cases where it is so warranted otherwise. Therefore, there is neither a bar on querying the declared classification at any time nor can it be a valid defence that acceptance of declaration in a past import is an acknowledgement of declaration having been true and correct. It is not uncommon for importers to align description of imported goods, not with the tariff entries, but with descriptions in exemption notification and continuing with that description until the misdeclaration is unearthed. The differential duty is adequate motive for suppression of facts relevant to assessment. The notice issued to appellant alleges that, in the bills of entry, the description did not bring on record that these drives were portable; no justifiable counter to this allegation has been furnished before the adjudicating authority. The plea of limitation raised before us is, therefore, not tenable. The individuals are equally responsible for the evasion of duty. The imports of the appellants are liable to be classified under 84717030 and not 84717020 of the Schedule to the Central Excise Tariff Act, 1985 - appeal rejected - decided against appellant.

Issues Involved:
1. Classification of 'external hard disks' under the Central Excise Tariff Act, 1985.
2. Eligibility for concessional rate of additional duty of customs under specific notifications.
3. Interpretation of exemption notifications and tariff entries.
4. Applicability of trade parlance in classification.
5. Limitation and suppression of facts in customs declarations.

Issue-wise Detailed Analysis:

1. Classification of 'external hard disks':
The primary issue was whether 'external hard disks' should be classified under heading 84717030 or 84717040 of the Central Excise Tariff Act, 1985. The adjudicating Commissioner held that the term 'removable' in heading 84717030 applies to external storage devices, and that external hard disks, due to their additional circuits/connection interfaces/enclosures, qualify as removable disk drives. This decision relied on the Tribunal's ruling in Collector of Customs, Madras v. Pragati Computers.

2. Eligibility for concessional rate of additional duty of customs:
The eligibility for a concessional rate of additional duty of customs was linked to the classification under specific notifications (no. 6/2006-CE and no. 12/2012-CE). The Commissioner denied the exemption under these notifications and instead allowed the benefit of notification no. 2/2008-CE at different rates. The dispute revolved around whether the imported external hard disks met the description and classification criteria for the concessional rate.

3. Interpretation of exemption notifications and tariff entries:
The appellant argued that the description in the exemption notification should prevail over the classification numerals. However, the Tribunal held that entitlement to the exemption follows the primary step of ascertaining the tariff entry, and the classification digits become the standard of identity. The description further narrows the range, making products under 847170 subject to additional descriptive qualifications for exemption.

4. Applicability of trade parlance in classification:
The Tribunal emphasized that the classification should be determined by the common understanding in the commercial world, as laid down by the Supreme Court in Union of India v. Garware Nylons Ltd and Indo-International Industries v. Commissioner of Sales Tax, UP. It was noted that 'hard disk' and 'drive' are used interchangeably in trade, and the essential hard disk drive remains within the computer casing, distinguishing it from removable or exchangeable disk drives.

5. Limitation and suppression of facts in customs declarations:
The appellant contended that the classification dispute could have been raised earlier and that the acceptance of their declaration in past imports precluded the extended period of limitation for recovery of differential duty. The Tribunal dismissed this argument, stating that each import is assessed on its own merits, and there is no bar on querying the declared classification at any time. The Tribunal found that the description in the bills of entry did not disclose the portability of the drives, supporting the allegation of misdeclaration and suppression of facts.

Conclusion:
The Tribunal concluded that the imports should be classified under 84717030 and not 84717020. The appeals of the appellants and individuals were dismissed, affirming the classification and denying the concessional rate of additional duty of customs based on the exemption notifications. The judgment emphasized the importance of accurate classification and the role of trade parlance in determining tariff entries.

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