2017 (1) TMI 1307 - AT - Customs

Exemption under N/N. 21/2002-Cus dated 1st February 2002 - classification of imported item - Beef leather cut pieces set TFC 235-seat - classified under heading 41152090 or under heading 42050090 of the First Schedule to the Customs Tariff Act, 1975? - Held that - The specific description in the notification that enables importers to avail the exemption is blue chrome tanned leather, crust leather, finished leather of all kinds, including splits and sides of the aforesaid. Second column of the said Table restricts the eligibility for exemption only to such goods of that description as are classifiable under chapter 41 - the goods are finished leather suitable for manufacture of car seat covers which may be classifiable in a chapter other than 41, the goods would not be eligible for the benefit of the notification - appeal disposed off - decided against assessee.

Issues Involved:
1. Classification of imported goods under the Customs Tariff Act, 1975.
2. Eligibility for exemption under Notification No. 21/2002-Cus.
3. Competence of the Assistant Commissioner to adjudicate under Section 28(1) of the Customs Act, 1962.
4. Financial limits for issuing demand by an Assistant Commissioner.

Detailed Analysis:

1. Classification of Imported Goods:
The dispute originated from the classification of 300 sets of 'Beef leather cut pieces set TFC 235 - seat' under heading 41152090 of the First Schedule to the Customs Tariff Act, 1975, which was claimed by the importer. The classification was altered to 42050090 by customs authorities, leading to denial of exemption and imposition of differential duty. The Supreme Court remitted the matter back to the Tribunal to reconsider the classification in light of Chapter 87 and Chapter 94 entries.

2. Eligibility for Exemption under Notification No. 21/2002-Cus:
The importer claimed exemption under sl. No. 149 of the Table annexed to Notification No. 21/2002-Cus, which was initially upheld by the Tribunal but later remanded by the Supreme Court. The Tribunal found that the goods, being finished leather cut to specific designs for car seat covers, did not fit the description suitable for Chapter 41, thus disqualifying them from the claimed exemption. The Tribunal concluded that the goods were more appropriately classified under chapters 87 or 94, thereby denying the exemption.

3. Competence of the Assistant Commissioner to Adjudicate:
The Commissioner of Customs (Appeals) set aside the demand on the grounds that the Assistant Commissioner lacked the authority under the proviso to Section 28(1) of the Customs Act, 1962, to invoke the extended period for recovery of duties. This was due to the financial limit in place at that time, which was exceeded in this case. The Tribunal upheld this finding, noting that the review under Section 129D of the Customs Act, 1962, did not challenge this aspect.

4. Financial Limits for Issuing Demand by an Assistant Commissioner:
The Tribunal noted that the demand was in excess of the financial limit prescribed for the Assistant Commissioner to issue such demands. This was another ground on which the Commissioner of Customs (Appeals) had set aside the demand. The Tribunal agreed with this assessment, further supporting the dismissal of the Revenue's appeal.

Conclusion:
The Tribunal dismissed the Revenue's appeal (C/00092/2010) on the grounds that the competence to adjudicate and the financial limits were not challenged. It then proceeded to consider the remanded matter, ultimately finding that the imported goods were not classifiable under Chapter 41 and thus not eligible for the claimed exemption. The Tribunal upheld the classification under chapters 87 or 94, confirming the denial of exemption and the original order of Commissioner of Customs (Appeals). The appeals were disposed of accordingly.

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