2017 (12) TMI 105 - AT - Customs

Classification of imported goods - Concentrated Mineral Drops (CMD) - food preparation or not - whether the goods imported by the appellant viz. Concentrated Minerals Drops (CMD) Elete Electrolyte (Elete) and Nanosil would merit classification as declared by the appellant under CTH 30045020 or under CTH 21069099 as maintained by the department? - Held that - We are unable to find any facts or evidence adduced by department to establish that CMD is a food preparation per se. By its very nature the use of the word preparations in heading 21.06 will surely result in foods to be subjected to some type of preparation or in other words food that has been worked on so as to result in substance like those exemplified in note 5 that there was no test report brought about by Revenue to discharge the burden of proof to claim that goods in question subject to Tariff Entry 2106 and also to satisfy that it was a preparation with or without certain composition and had undergone the process - In the case at hand also there has been no evidence adduced say by way of an expert opinion or test report from a competent authority / organization to support the claim of the department that the products are food preparations - the impugned Concentrated Mineral Drops imported by the appellant will not merit classification under 21069099. Valuation of imported goods - enhancement of value - whether the enhancement of the declared import values by the department is in order? - Held that - From the narration in the SCN it is found that certain details had been retrieved from the hard disc and other documents recovered from the premises of the appellant. From these documents it emerged that commercial invoices submitted by the appellant at the time of import indicated lower values per bottle against actual values - the appellant has not disputed the fact of recovery of the hard disc / files / documents which have been analyzed by the Commissioner as aforesaid. They have also not been able to adequately refute by adducing any evidence to the contrary that the adjudicating authority has erred in arriving at the aforesaid conclusions concerning undervaluation. In the circumstances we are unable to find any infirmity with that portion of the impugned order rejecting the value declared for the impugned goods and redetermining the same. However to arrive at the exact quantum of differential duty liability considering the impugned goods as classifiable under CTH 2501 but on enhanced assessable value based on the re-determined unit values arrived at in para-29 of the impugned order the matter is remanded to the adjudicating authority for this limited purpose. Appeal allowed in part and part matter on remand.

Summary

Issues Involved:
1. Classification of imported goods (CMD, Elete Electrolyte, and Nanosil).
2. Enhancement of declared import values by the department.

Issue-wise Detailed Analysis:

1. Classification of Imported Goods:
The appellants imported Andersons Concentrated Mineral Drops (CMD), Elete Electrolyte (Elete), and Nanosil, declaring them under Chapter 3004 5020 of the Customs Tariff Act, 1975. The department contended that these products should be classified under CTH 2106 9099 as "food preparations not elsewhere specified or included." The appellants argued that CMD and Elete are 100% natural mineral concentrates sourced from the Great Salt Lake in Utah, USA, and are not food preparations. They cited a previous tribunal decision in the case of Keva Industries, where similar products were classified under CTH 2501 as sea water. The tribunal noted that CMD and Elete are natural products and not food preparations, as they have not undergone any preparation process. The tribunal also referenced the Central Food Laboratory's report, which stated that the imported goods do not fall under the category of food articles. Consequently, the tribunal concluded that CMD and Elete should not be classified under CTH 21069099 but under CTH 2501. Similarly, Nanosil, a suspended silver solution, was argued to be a therapeutic product and not a food preparation. The tribunal agreed with the appellants that Nanosil should be classified under CTH 30045020.

2. Enhancement of Declared Import Values:
The department alleged that the appellants had misdeclared the value of the imported goods to evade customs duty. The appellants' invoices indicated lower values than the actual prices, and discounts meant for container shipments were applied to air shipments. The tribunal found evidence in the form of email correspondence and documents recovered from the appellants' premises, which supported the department's allegations of undervaluation. The tribunal upheld the department's decision to reject the declared values and re-determine them as follows: CMD 1 oz (30 ml) at $1.21, CMD 2 oz (60 ml) at $2.08, and Nanosil 8 oz at $15 per bottle. The tribunal remanded the matter to the adjudicating authority to determine the exact quantum of differential duty liability based on the re-determined values.

Conclusion:
The tribunal concluded that CMD and Elete should be classified under CTH 2501, and Nanosil under CTH 30045020. The enhancement of declared values by the department was upheld, and the matter was remanded for determining the differential duty liability. The appeal was partly allowed and partly remanded.