2017 (2) TMI 136 - AT - Customs

Classification of imported goods - Nigerian origin teak rough square logs - classified under heading 4403.4910 or under heading 4407 as sawn teak wood ? - Held that - heading 4403 is for rough wood and it only states that rough wood, whether or not stripped of bark or sapwood, or roughly squared, while heading 4407 states wood sawn or chipped lengthwise, sliced or peeled, whether or not planed, sanded or end-jointed, of a thickness exceeding 6 mm. The examination report states that some of the samples which were examined by the Committee indicates that the dimensions as mentioned in the report and not the physical condition, whether any bark was apparent on any logs or otherwise - It is also seen from the records of the examination report that the report also talks about presence of bark on one side in few of the logs which are imported - the classification of the imported goods under heading 4403 are well reasoned one - appeal rejected - decided against Revenue.

Issues Involved:
1. Classification of imported Nigerian origin teak rough square logs.
2. Examination and assessment procedures followed by Customs.
3. Adherence to statutory provisions and guidelines by the Commissioner (Appeals).

Detailed Analysis:

1. Classification of Imported Nigerian Origin Teak Rough Square Logs:
The primary issue revolves around the correct classification of the imported Nigerian origin teak rough square logs. The respondents classified the logs under heading 4403.4910, which pertains to "Wood in the rough, whether or not stripped of bark or sapwood, or roughly squared." However, the Customs authorities, after a 100% examination of the consignment, proposed a classification under heading 4406/4407, which pertains to "sawn teak wood." This reclassification resulted in a differential duty liability of ?66,823/-, confirmed by the adjudicating authority along with interest, and also led to the confiscation of the goods with an option for redemption upon payment of a fine. The first appellate authority, however, set aside this decision, favoring the respondents' classification.

2. Examination and Assessment Procedures Followed by Customs:
The learned departmental representative argued that the Commissioner (Appeals) erred by concluding that the proceedings based on the memorandum issued were against legal provisions and not maintainable. They emphasized that the examining officers conducted a 100% examination and issued the memorandum accordingly. The representative also stressed that the examination report indicated that the dimensions of the logs matched the specifications of sawn teak wood under heading 4407, and this examination was conducted in the presence of the importer's representative.

3. Adherence to Statutory Provisions and Guidelines by the Commissioner (Appeals):
The departmental representative contended that the Commissioner (Appeals) did not follow judicial discipline and ignored his own order regarding the examination of similar goods imported by another importer. Furthermore, it was argued that the Commissioner (Appeals) failed to consider the statutory provisions of the Customs Act, 1962, and Customs (Provisional Duty Assessment) Regulations, 1963, regarding provisional assessment. The representative also pointed out that the Commissioner disregarded the guidelines of the Harmonized System of Nomenclature (HSN) and the Section Notes and Chapter Notes of the Customs Tariff Act, which are crucial for determining the appropriate classification of products.

Findings and Conclusion:
Upon reviewing the submissions and records, the Tribunal focused on the classification issue. The Tribunal noted that heading 4403 pertains to rough wood, whether or not stripped of bark or sapwood, or roughly squared, whereas heading 4407 pertains to wood that is sawn or chipped lengthwise, sliced or peeled, with a thickness exceeding 6 mm. The Revenue's argument was based on the examination report indicating that the logs' dimensions exceeded 6 mm and were square in nature, suggesting they were cut to specific lengths, thus meriting classification under 4407.

However, the Tribunal found that the first appellate authority correctly concluded that the products merited classification under heading 4403. The examination report did not clearly record the physical condition of the goods, such as the presence of bark, which is crucial for classification under heading 4403. The Tribunal noted that the factual findings of the first appellate authority were well-reasoned and did not require interference, as the Revenue did not provide contrary evidence to dispute these findings.

Judgment:
The Tribunal upheld the first appellate authority's decision, rejecting the Revenue's appeals as devoid of merit. The imported Nigerian origin teak rough square logs were correctly classified under heading 4403, and the proceedings initiated by the Customs authorities were found to be flawed. The Tribunal pronounced this judgment in court, affirming the respondents' classification and dismissing the Revenue's appeals.

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