2017 (5) TMI 932 - AT - Customs

Applicability of concessional rate of duty to imported items in terms of N/N. 24/2005 dated 1.3.2005 - manufacture of optical fiber cables - denial on the ground that imported goods have shifted the classification - denial on the ground that appellants have manufactured their goods without the use of individually sheathed optical fibre in which case their product would be classifiable under heading 9001 10 and the concessional rate of duty would not be available to them - Held that - Both sides have agreed that if test report is accepted, that the final product i.e. optical fibre cable would shift its classification from heading 8544 70 to heading 9001 10, thus not making the notification applicable. As such, we are of the view that the appellants have wrongly availed the benefit of notification No. 24/2005-Cus. Time limitation - Held that - the declaration made by the appellant with the department that they would be using their imported material only for manufacture of cables falling under 8544 70 has been proved to be mis-declared, as is evident from the test report. If that be so, it has to be held that there was a malafide mind of the assessee to avail undue benefit in the guise of following the procedure - the longer period of limitation would admittedly be available to the Revenue. Wherever the cable have been found containing individually sheathed fibre, the benefit of notification would be available to the assessee. However, neither side has been able to make it clear that the demand confirmed by the lower authorities is only in respect of those cables which have not been found to be containing individually sheathed fibre - the matter needs to be remanded to the original adjudicating authority for examination of the said aspect - appeal allowed by way of remand.

Summary

Issues: Applicability of concessional rate of duty to imported items for manufacturing optical fiber cables; Misdeclaration of goods classification; Invocation of longer period of limitation for duty demand.

Analysis:

Issue 1: Applicability of concessional rate of duty
The appellant, engaged in manufacturing optical fiber cables, imported items claiming concessional duty under notification No. 24/2005. The dispute arose when samples tested by Telecommunication Engineering Centre revealed that some cables did not contain individually sheathed optical fibers as required for concessional duty under heading 8544.70. The appellant's final product classification was challenged, leading to duty demands and penalties.

Issue 2: Misdeclaration of goods classification
The appellant argued they imported individually sheathed optical fibers only, disputing the test report findings. However, they failed to challenge the report or seek retesting. The appellant's declaration of using imported materials for cables under heading 8544.70 was deemed misdeclared due to the test report, indicating a malafide intention to benefit from the notification.

Issue 3: Invocation of longer period of limitation
The Revenue invoked a longer period of limitation due to the appellant's intentional misdeclaration and willful suppression. The Tribunal upheld this, rejecting the appellant's argument that the demands were time-barred. The Tribunal found the appellant wrongly availed the notification's benefit and agreed with the Revenue's assessment based on the test report.

Conclusion
The Tribunal upheld the duty demands but remanded the matter to recompute duties for cables not containing individually sheathed fibers. The appellant's failure to challenge the test report and the misdeclaration led to the rejection of their appeal. The Tribunal emphasized the importance of complying with notification conditions and the consequences of misdeclaration, affirming the Revenue's actions and longer limitation period invocation.