2021 (2) TMI 565 - AT - Customs

Classification of imported goods - Winches (stage Lighting Equipment) and LED Balls of different sizes - winches classified under Custom Tariff Heading 84253100 and those of LED Ball under 85395000 or otherwise? - correct Classification of the imported good under the heading 84253100 or 94054090? - requirement of registration with BIS, in view of the provision of the Electronics and IT Goods (Requirements for Compulsory Registration) Order, 2012 - confiscation - penalty. Correct Classification of the imported good under the heading 84253100 or 94054090? - HELD THAT - In the present case, both the authorities below have determined the essential character of the impugned goods as lighting fixture after considering the product catalogue (literature) and the Chartered Engineer Certificate. Appellants have not produced anything before us to disturb the said findings of lower authority, and establish that impugned goods are simple handling/ lifting equipment to merit classification under heading 84253100 - When both authorities have determined the essential character of the impugned goods as Lighting Fixture, then the classification as determined by them under heading 94054090 cannot be faulted with. Whether the goods are required to be compulsorily registered with BIS, in view of the provision of the Electronics and IT Goods (Requirements for Compulsory Registration) Order, 2012? - HELD THAT - From the Electronics and IT Goods (Requirements for Compulsory Registration) Order 2012, it is quite evident that the said order is applicable in respect of the Goods, as defined and specified in the schedule. Further the goods should be conformity with specified Indian Standard as per the schedule. Both the authorities below have failed to specify the Indian Standard as per the Schedule, to which these imported goods, i.e. LED Winches should have been in conformity before proceeding to hold them to be imported in contravention of the provisions of Electronics and IT Goods (Requirements for Compulsory Registration) Order 2012. In absence of any determination of the Indian Standard, which would be applicable in respect of these goods the impugned order holding that goods have been imported in contravention of the provisions of the Electronics and IT Goods (Requirements for Compulsory Registration) Order 2012, cannot be sustained. The order holding that the goods are prohibited and liable for absolute confiscation needs to be reconsidered by the authorities below in terms of the provisions of the Electronics and IT Goods (Requirements for Compulsory Registration) Order 2012. Hence the matter needs to be remanded back to the original authority for determination of Indian Standard as per the column (3) of the Schedule to the Electronics and IT Goods (Requirements for Compulsory Registration) Order 2012. Are Goods liable for confiscation and penalty on the importer justified? - HELD THAT - Time and again it has been held by various authorities that mere misclassification of goods, is not misdeclaration for which the goods can be held liable for confiscation under Section 111 (m) of the Customs Act, 1962. However it is found that the Assistant Commissioner has for confiscation not only invoked Section 111 (m) but has also held that the goods are prohibited goods and are liable for confiscation under section 111 (d) too. Since the goods have been held as prohibited for the reason of failure to comply with the requirements of compulsory registration of the goods as per Electronics and IT Goods (Requirements for Compulsory Registration) Order 2012, and we are remanding the matter for consideration of applicability of the said order to the impugned goods, the issue of confiscation in terms of this Section 111 (d) and penalty under Section 112 (a) also is remanded back to the original authority. Appeal allowed by way of remand.

Summary

Issues Involved:
1. Correct Classification of the imported goods under the heading 84253100 or 94054090.
2. Whether the goods are required to be compulsorily registered with BIS, in view of the provisions of the Electronics and IT Goods (Requirements for Compulsory Registration) Order, 2012.
3. Goods liable for confiscation and penalty on the importer justified.

Detailed Analysis:

1. Correct Classification of the Imported Goods under the Heading 84253100 or 94054090:
The appellant claimed the classification of winches under Custom Tariff Heading (CTH) 84253100, while the revenue classified them under CTH 94054090. The Commissioner (Appeals) referred to the Kinetic Lighting User Manual and found that the LED Winch is a part of the Kinetic Lighting System, performing functions such as lifting LED equipment, dimming lights, changing colors, and providing power to LED balls. The equipment was thus determined to be a lighting fixture rather than simple lifting equipment.

The tribunal noted that the classification should be based on the essential character of the goods. The Chartered Engineer's Certificate confirmed that the primary use of the winches was for synchronized spatial choreography of lighting elements, specific to stage lighting. Therefore, the tribunal upheld the classification under heading 94054090, as the goods were not simple handling or lifting equipment but lighting fixtures.

2. Whether the Goods are Required to be Compulsorily Registered with BIS:
Both the Assistant Commissioner and the Commissioner (Appeals) found that the goods were imported in contravention of the Electronics and IT Goods (Requirements for Compulsory Registration) Order, 2012. The Assistant Commissioner noted that the winches incorporated the function of LED drivers and required BIS registration. The Commissioner (Appeals) agreed, stating that the LED Winch is a light fixture incorporating an LED driver, which falls under the compulsory registration order.

However, the tribunal found that the authorities did not specify the Indian Standard applicable to these goods as per the schedule. Without determining the specific Indian Standard, the tribunal held that the order declaring the goods prohibited and liable for confiscation could not be sustained. The matter was remanded back to the original authority for reconsideration.

3. Goods Liable for Confiscation and Penalty on the Importer Justified:
The Assistant Commissioner held the goods liable for confiscation under Sections 111(d) and 111(m) of the Customs Act, 1962, citing deliberate misclassification to evade customs duty and non-compliance with BIS registration requirements. The tribunal agreed that mere misclassification does not constitute misdeclaration under Section 111(m). However, since the goods were also held as prohibited due to non-compliance with the compulsory registration order, the tribunal remanded the issue of confiscation and penalty back to the original authority for reconsideration.

Conclusion:
The appeal was disposed of with the tribunal remanding the matter back to the original authority for reconsideration of the classification under the Electronics and IT Goods (Requirements for Compulsory Registration) Order, 2012, and the applicability of confiscation and penalty provisions. The Assistant Commissioner was directed to prioritize the issue and pass an order within three months.