2017 (2) TMI 664 - AT - Customs

Classification of imported goods - classified as lace falling under CTH 58042990 or as Fabric - Held that - the test report describes the imported goods as Wrap Knitted Fabric . The HSN explanatory note also states that lace is a decorative fabric, which is in the form of wrap Knitted Fabric . There is no dispute that the imported goods are for use as a decoration on readymade Garments. It is also on record that the importer has been importing the very same goods since 2009 and Revenue has not raised any objection to the classification as well as extending the benefit of notification - denial of exemption benefit not justified - appeal dismissed - decided against Revenue.

Summary

Issues: Mis-declaration of imported goods as 'lace' instead of 'Wrap Knitted Fabric'; Classification of goods under Customs Tariff Act; Benefit of Notification No. 21/2002-Cus; Differential duty demand; Appeal against Order-In-Appeal dated 26.10.2015; Commissioner (Appeals) decision; Revenue's challenge to the Order.

Analysis:

1. Mis-declaration of Goods: The appellant imported goods declared as 'lace' under CTH 58042990 but were found to be 'Wrap Knitted Fabric' upon physical examination and testing. The Textile Committee confirmed the mis-declaration through a laboratory report, leading to a Show Cause Notice for differential duty of ?12,01,996 due to past clearances under nil duty benefit.

2. Classification and Benefit of Notification: The Revenue argued that the goods were 'Wrap Knitted Fabric' classifiable under CTH 60053200, not 'lace' as per the importer's declaration. The benefit of Notification No. 21/2002-Cus was claimed by the appellant for goods imported for manufacturing readymade garments for export. The Commissioner (Appeals) allowed the benefit based on the definition of 'lace' and historical import practices.

3. Commissioner (Appeals) Decision: The Commissioner noted that 'lace' is a decorative openwork fabric, and the goods imported were used for decoration on readymade garments. The test report from M/s SGS Shanghai described the goods as 'Wrap Knitted Fabric,' aligning with the HSN explanatory notes on lace. The appellant had a history of importing similar goods without objection from Revenue, leading to the allowance of the benefit of the notification.

4. Revenue's Appeal: The Revenue challenged the Commissioner (Appeals) decision, arguing for a change in classification and denial of exemption benefits due to mis-declaration. However, the Tribunal found no justification to alter the classification abruptly and upheld the Impugned Order, dismissing the Revenue's appeal.

In conclusion, the Tribunal dismissed the Revenue's appeal against the Order-In-Appeal, affirming the Commissioner (Appeals) decision to allow the benefit of Notification No. 21/2002-Cus based on the nature and historical import practices of the goods in question.