2018 (4) TMI 1049 - AT - Customs

Classification of goods - sew on the metal button - difference in rate of additional duty - whether classifiable under heading 9606 2100 of the First Schedule to the Customs Tariff Act, 1975 with nil rate of additional duty or under 9606 1010 and subjected them to appropriate rate of additional duty, i.e. 14% before 7th December 2008 and 10% after that date? Held that - In the absence of such sampling, there is no justification for alteration of what is essentially a mechanism for fastening or bringing two ends of a garment together which could be buttons, fasteners or any other, as a fastener instead of button - the classification of goods in bill of entry no. 784321 dated 16th February 2009 under heading 9606 2100 of the First Schedule to the Customs Tariff Act, 1975 with nil rate of additional duty upheld. The dispute is one of classification, both the fasteners and buttons find use in garments and it is only the policy framework of the Government of India that has assigned additional duty to one while exempting the other. Such outcome of policy framework are not permanent and a classification which chooses, in the absence of specific description, to suit commercial advantage does not necessarily imply a deliberate attempt to misdeclare. Confiscation of earlier as well as live consignments - Held that - on the earlier consignments there is no ground for sustaining the confiscation of those - Insofar as the live consignments are concerned the outcome in classification of mechanism for joining two ends of a garment does not indicate that any material particular had been suppressed, confiscation of live consignment also do not sustain. Penalties also not justified. Appeal allowed in part.

Summary

Issues involved:
Classification of imported goods under Customs Tariff Act, 1975, reclassification of goods by the original authority, imposition of additional duty, confiscation of goods, penalty under section 112(a) of the Customs Act, 1962, admissibility of trade catalogues as evidence, distinction between 'sew buttons' and 'snap buttons', justification for altering classification of earlier consignments, policy framework for classification, liability for confiscation under section 111(m), imposition of penalties.

Analysis:

1. Classification of imported goods: The appeal pertains to the classification of 'sew on the metal button' imported under a specific bill of entry. The original authority reclassified the goods and imposed additional duty based on the classification under the Customs Tariff Act, 1975.

2. Reclassification and imposition of additional duty: The dispute revolves around the difference in the rate of additional duty due to the reclassification of the imported goods. The appellant contested the reclassification, arguing that the goods were 'sew buttons' and not 'snap buttons.'

3. Admissibility of trade catalogues: The appellant contended that the trade catalogues provided by them were disregarded by the adjudicating authority. They argued that the alternative classification was not supported by a proper evaluation of the available material on record.

4. Distinction between 'sew buttons' and 'snap buttons': The contention was made regarding the nature of the imported buttons, whether they were 'sew buttons' or 'snap buttons.' The classification was based on the mechanism of fastening and stitching involved in the buttons.

5. Justification for altering classification of earlier consignments: The appellant objected to the alteration in the classification of earlier consignments. The argument was made that the goods from previous consignments were similar to the live consignment, but there was no evidence of physical examination of samples from the previous consignments.

6. Policy framework for classification: The judgment highlighted the policy framework of the Government of India regarding the classification of goods and the assignment of additional duty. It emphasized that classifications based on commercial advantage do not necessarily imply deliberate misdeclaration.

7. Confiscation of goods and penalties: The goods from both the live and previous consignments were held liable for confiscation. However, the judgment concluded that there was no justification for sustaining the confiscation of the earlier consignments. Consequently, the imposition of penalties was also deemed unjustified.

In conclusion, the appellate tribunal upheld the classification of goods in the specific bill of entry while setting aside the demand for recovery of duty on the earlier consignments, as well as the confiscation and penalties imposed on the appellant.