2019 (4) TMI 945 - AT - Customs

Classification of imported goods - vitrifiable enamels and glazes - whether the imported goods are to be classified as Glass Frit under CTH 32074000 or Vitrifiable Enamels Glaze under CTH 32072010 - no detailed chemical examination carried on - extended period of limitation - HELD THAT - Revenue has not undertaken any chemical examination/ test of the goods to show that the goods in question were not Glass Frit but Ceramic Glaze. When the Revenue had an apprehension that the products in question has been mis-classified as Frit the Revenue should have got the goods chemically examined. The terminology used by the supplier or the statement of the importer cannot be the only ground to classify the product as Glaze - Not only the nature of the product, it was very well open for the revenue to investigate as to how the imported product was put to use. Merely on the basis of the statement, the classification of the product cannot be fixed. The Custom Tariff Entry 32072010 is for Vitrifiable Enamels and glaze , which means that the vitrifiable glaze shall be classified in the said Chapter heading. The CTH 32074000 is for glass frit and other glasses in the form of powder, granules and flakes. As per the adjudicating authority and the Revenue itself, the major difference between the glass frit and glaze is physical properties and appearance. When such a view has been taken by the adjudicating authority, in that case, he should have described / discussed the physical properties and appearance of the goods to finalize the classification of the impugned goods, which was not done. The HSN Explanation considers Glass Frit as the intermediate / preparation to make vitrifiable glaze and after preparing the glass Frit, suitable for further use for glazing, it can be considered as vitrifiable glaze - In the present case, as informed by M/s Vidres S.A., Spain, the product in question is merely glass frit and some additional marginal raw materials, which were added in powder form. Only on this basis it cannot be concluded that it is Vitrified glaze. Also as per the email of supplier, the addition of raw materials to already formed Glass Frit is to cater to the various requirement of each individual customer. However this cannot be interpreted so as to conclude that the product is vitrified ceramic glaze at the time of import per se. Extended period of limitation - HELD THAT - The issue involved is of interpretation and classification of goods. The Appellant had classified the goods on the basis of supplier s invoice. Even in case of past import the dispute of classification was not raised by the revenue - the malafide intention or suppression on the part of the Appellant is not proved - demand is barred by limitation. Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Classification of imported goods as "Glass Frit" under CTH 32074000 or "Vitrifiable Enamels & Glaze" under CTH 32072010.
2. Reliance on product technical data sheets and statements for classification.
3. Requirement of chemical examination/testing for accurate classification.
4. Interpretation of technical and scientific meaning versus commercial nomenclature.
5. Burden of proof on the Revenue Department.
6. Applicability of extended period for demand and penalties.

Issue-wise Detailed Analysis:

1. Classification of Imported Goods:
The primary issue is whether the imported goods should be classified as "Glass Frit" under CTH 32074000 or "Vitrifiable Enamels & Glaze" under CTH 32072010. The Revenue relied on the product technical data sheets from the supplier, which described the product as “Esmalte” in Spanish, translating to “Glaze” in English. The adjudicating authority concluded that the goods were Glaze based on this description and the statements from the appellant's director.

2. Reliance on Product Technical Data Sheets and Statements:
The adjudicating authority relied heavily on the product technical data sheets and the statements of Shri Vishal G. Trivedi, the appellant's director, who admitted that some products were mis-declared as Glass Frit. The authority held that the product descriptions in the technical data sheets provided by the manufacturer were accurate and unambiguous, thus not requiring further testing or expert analysis.

3. Requirement of Chemical Examination/Testing:
The Tribunal found that the Revenue did not undertake any chemical examination or testing of the goods to determine their true nature. The Tribunal emphasized that the classification should not be based solely on the terminology used by the supplier or the statements of the importer. Instead, the nature and content of the product should be analyzed through chemical testing, which was not done in this case.

4. Interpretation of Technical and Scientific Meaning versus Commercial Nomenclature:
The Tribunal cited the Hon’ble Apex Court judgment in Parle Agro Products Pvt. Ltd, which stressed that entries with technical meaning should not be classified based on commercial nomenclature or trade understanding. The Tribunal held that the technical and scientific meaning of the product should be considered, and the onus of proving the correct classification lies with the Revenue.

5. Burden of Proof on the Revenue Department:
The Tribunal noted that the Revenue did not provide sufficient evidence to prove that the imported goods were Vitrifiable Glaze. The Tribunal highlighted that the burden of proof is on the Revenue to show that the goods fall under a specific tariff heading. The Tribunal found that the Revenue failed to conduct necessary tests or provide independent technical evidence to support their classification.

6. Applicability of Extended Period for Demand and Penalties:
The Tribunal held that the demands for differential duty were barred by the limitation period. The Tribunal found no evidence of malafide intention or suppression on the part of the appellant. The goods were classified based on the supplier’s invoice, and no dispute was raised by the Revenue in past imports. Consequently, the Tribunal ruled that the penalties imposed were also not sustainable.

Conclusion:
The Tribunal set aside the impugned orders, holding that the imported goods should be classified as "Glass Frit" under CTH 32074000. The Tribunal allowed the appeals filed by the appellant with consequential reliefs and also allowed the appeals of the co-appellants. The judgment emphasized the importance of chemical testing and independent technical evidence in classification disputes and reaffirmed the burden of proof on the Revenue Department.

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