2018 (3) TMI 1263 - AT - Customs

Classification of imported goods - Nylon Taffeta with PU (Polyurethane) - coating of material could not be ascertained - whether the coating on the fabric can be seen with naked eye or otherwise? - Held that - Since this issue is also technical and on this particular aspect, no opinion is available either with the Textile Committee or DyCC. It is premature to decide the classification. Therefore, for this purpose, the matter needs to be remanded to the adjudicating authority to obtain an expert opinion from DyCC that whether the coating can be seen with the naked eye or otherwise - appeal allowed by way of remand.

Summary

Issues: Classification of imported goods, Valuation of imported goods

Classification Issue Analysis:
The case involved a dispute regarding the classification of imported goods. The assessee claimed classification under CTH 59031090, while the Revenue contended for classification under CTH 54074230. The examination revealed that the fabric was composed of 82.8% polymide woven fabric and 17.2% coating, with the exact coating material initially unascertainable. The Textile Committee's chemical analysis confirmed the presence of a chemically separable coating. However, no specific criteria or norms were available regarding the thickness of coated fabric. The DyCC later reported that the fabric was made of nylon filament yarn coated with a polymeric substance (PU type material). The adjudicating authority rejected the assessee's classification, reclassifying the goods under CTH 54074230 as dyed nylon taffeta fabric. The Commissioner (Appeals) upheld this classification in favor of the Revenue. The tribunal noted that the crucial criterion was whether the coating could be seen with the naked eye, a technical aspect not clarified by the Textile Committee or DyCC. Consequently, the matter was remanded to the adjudicating authority for an expert opinion on the visibility of the coating.

Valuation Issue Analysis:
Regarding valuation, the adjudicating authority had enhanced the value based on contemporaneous imports, a decision contested by the assessee. The Commissioner (Appeals) rejected the valuation enhancement, noting differences in material and quantity compared to the contemporaneous import relied upon. The tribunal agreed with the Commissioner (Appeals) that the contemporaneous import was not relevant for valuing the goods. Consequently, the enhancement of valuation was rightfully rejected. The Revenue's appeal was dismissed, while the assessee's appeal was remanded to the adjudicating authority for fresh consideration in light of the observations made.

This detailed analysis covers the classification and valuation issues addressed in the legal judgment delivered by the Appellate Tribunal CESTAT MUMBAI.