2018 (7) TMI 82 - AT - Customs

Classification of imported goods - Plant Leaf Extract - appellant claiming CTH classification No. 13021990 - the adjudicating authority held that the goods are actually insecticides and classifiable under CTH 38089199 - Confiscation - Held that - The report of IICT, Hyderabad has unequivocally stated that the samples sent to them were not pesticides. While a miniscule quantity of 'matrine' has been detected, no presence of oxymatrine is reported. The absence of matrine finding a place in the substances specified or included in the definition of insecticides in 3 (e ) of the Insecticides Act, 1968, will only mean that the presence of matrine, and that too in such a miniscule quantity cannot make the impugned product to be nomenclatured as insecticides and classified under CTH 38089199 - appeal dismissed - decided against Revenue.

Summary

Issues: Classification of imported goods under CTH, Confiscation, Redemption Fine, Penalties under Customs Act, 1962

Classification of Goods under CTH:
The case involved the classification of imported goods declared as "Plant Leaf Extract" under CTH classification No. 13021990. The dispute arose when the adjudicating authority classified the goods as insecticides under CTH 38089199, leading to confiscation and penalties imposed on the respondents. However, the Commissioner (Appeals) allowed the appeal, classifying the goods under CTH13021990. The key argument revolved around whether the presence of matrine in the goods qualified them as insecticides.

Confiscation and Penalties under Customs Act, 1962:
The adjudicating authority ordered the confiscation of the goods but allowed redemption on payment of a fine. Additionally, penalties were imposed under Section 112 (a) and Section 114 AA of the Customs Act, 1962, on the respondents. The penalties were challenged in the appeal, where the Commissioner (Appeals) ruled in favor of the respondents, leading to the department filing further appeals.

Analysis:
During the hearing, the Revenue argued that the presence of matrine, a precursor of oxymatrine, in the goods justified their classification as insecticides. On the contrary, the respondents' counsel pointed out that the test reports indicated no presence of pesticides, only a minuscule amount of matrine. The counsel referenced the Insecticides Act, 1968, to argue that matrine did not fall under the definition of insecticides, thus contesting the department's classification under CTH 38089199.

Upon review, the Tribunal found merit in the respondents' contentions. The report from IICT, Hyderabad confirmed the absence of pesticides and the negligible presence of matrine, with no oxymatrine detected. The Tribunal emphasized that matrine and oxymatrine were distinct components, and the presence of matrine, especially in such small quantities, did not warrant classification as insecticides under CTH 38089199. Consequently, the Tribunal dismissed the department's appeals, finding no legal basis to support the classification as insecticides and upholding the decision to classify the goods under CTH13021990.

In conclusion, the Tribunal's detailed analysis focused on the chemical composition of the goods, the definitions under the Insecticides Act, and the absence of conclusive evidence to support the department's classification as insecticides. The judgment highlighted the importance of precise classification criteria and the need for substantial evidence to justify such categorizations under the Customs Act, 1962.