2017 (3) TMI 1492 - HC - Customs

Benefit of N/N. 21/2002 dated 1/3/2002 - snap fasteners - According to the petitioners, they have been regularly importing snap buttons from the year 2002/2003 onwards, which would come squarely under Sl.No.140 and the duty was totally exempted, without any conditions attached to it - Revenue s claim that snap fasteners are covered under heading No.96061010, and therefore the goods are eligible for exemption as they are misdeclared - The Department therefore took up a contention that the snap fasteners which are imported by the petitioners under the respective bills of entry can no longer be assessed under Sl.No.140, but assessment can be made only under Sl.No.167. It is submitted that notification bearing No.12/2012 dated 17/3/2012 was published superseding notification No.21/2002 by which the items had been renumbered. The original Sl.No.140 has been renumbered as Sl.No.232 and Sl.No.167 has become Sl.No.282. Held that - It is true that the entry buttons has not been taken away from Sl.No.232. But it is relevant to note that item 282 relates to fasteners, including buttons and snap fasteners. Apparently, there is some difference as far as buttons are concerned compared to that of fasteners. In Sl.No.232, buttons alone has been mentioned whereas in Sl.No.282, the word used is fasteners and it is qualified by the words including buttons and snap fasteners, zip fasteners, including zippers in roll, sliders/pullers and end-stoppers. In other words, if it is merely buttons, it comes under Sl.No.232 and with respect to buttons which can be used as fasteners, it will come under Sl.No.282. There is a difference between both the commodities and it is for the various customs authorities to verify the same and arrive at a conclusion. Hence, I do not think that this Court will be justified in arriving at a conclusion as to whether the particular commodity was either button coming under Sl.No.232 or fasteners /snap fasteners coming under Sl.No.282 The petitioners are permitted to prefer an appeal - goods to be released on furnishing of bank guarantee - petition allowed - decided partly in favor of petitioner.

Summary

Issues:
Claim for exemption from duty on imported commodities under specific notifications; Interpretation of notification entries for duty exemption; Estoppel based on previous judgments; Distinction between buttons and snap fasteners for duty classification.

Analysis:

Issue 1: Claim for Exemption from Duty
The petitioners claimed exemption from duty on imported commodities based on specific notifications issued by the Government of India. They referred to notifications No.21/2002 and No.12/2012, which exempted certain goods from customs duty, including buttons and snap fasteners. The dispute arose when the Department contended that snap fasteners should be classified under a different entry (Sl.No.167/282) rather than as buttons (Sl.No.140/232) for duty exemption, leading to a demand for payment of duty.

Issue 2: Interpretation of Notification Entries
The crux of the matter was the interpretation of the notification entries regarding the classification of imported goods as buttons or snap fasteners for duty exemption. The petitioners argued that previous judgments by CESTAT and the High Court had confirmed that snap buttons fell under the category of buttons (Sl.No.140) for duty exemption. However, the Department relied on amendments to the notifications, specifically including snap fasteners under a separate entry (Sl.No.167/282), thereby challenging the petitioners' claim for duty exemption under the previous entry.

Issue 3: Estoppel based on Previous Judgments
The petitioners contended that the Department was estopped from challenging their claim for duty exemption under the previous entry (Sl.No.140/232) based on the judgments of CESTAT and the High Court, which had upheld their interpretation of the notifications. However, the Department argued that the specific inclusion of snap fasteners under a separate entry in the amended notifications necessitated compliance with the new conditions for duty exemption, distinct from those applicable to buttons.

Issue 4: Distinction between Buttons and Snap Fasteners
The Court deliberated on the distinction between buttons and snap fasteners to determine the correct classification for duty exemption. It noted that while buttons were specifically mentioned under Sl.No.232, the amended entry Sl.No.282 included fasteners, including buttons and snap fasteners. The Court emphasized the need for customs authorities to verify the nature of the imported goods to ascertain whether they fell under the category of buttons or fasteners/snap fasteners for duty classification.

In conclusion, the Court allowed the petitioners to prefer an appeal against the Department's orders, considering the ambiguity in classifying the imported goods as buttons or fasteners/snap fasteners. The Court also granted an extension for invoking the Bank Guarantee and excluded the period during which the writ petition was pending from the limitation period for filing an appeal. The decision highlighted the importance of accurately determining the classification of imported goods for duty exemption under specific notification entries.