2021 (6) TMI 671 - AT - Customs

Valuation of imported goods - baby garment woolen knitted top - baby garments woolen knitted jacket - change in classification - classification be revised from tariff item no. 6111 30 00 to tariff item no. 6106 20 10 and tariff item no. 6203 33 00 of First Schedule to Customs Tariff Act, 1975 respectively or not - enhancement of declared value - HELD THAT - The classification for baby woolen tops and baby woolen jackets , adopted by the importer, appeared to have been discountenanced by the Textile Committee for two reasons that the articles were made of polyester fibre, and not of wool as described in the bill of entry, and that visual examination by the Textile Committee found these to be intended not for babies but for girls and boys. The boys jackets , found not to be knitted, was sought to be fitted within chapter 62 of First Schedule to Customs Tariff Act, 1975. On these bare facts, the defensibility of the conclusions may not offer cause for quarrel. The tariff schedule, however, is no streetside smorgasbord. Chapter 61 and 62 of the First Schedule to Customs Tariff Act, 1975 enumerate groupings of apparels designed for human wear and, under the broad categorisation as knitted/crocheted and those that are not, save for a single exception which is not material to this dispute, as mutually exclusive. In both, distinction of gender is the consistent dichotomy; the stages of human life though, are reduced to three in the interest of eliminating controversy - The claim of the importer for coverage of the imported goods under tariff item 6111 30 00 may not, necessarily, have been in conformity with the description in the bill of entry. Nevertheless, it is in consonance with the composition as indicated by testing of the samples; the claimed classification pertains to garments made of synthetic fibres which, though wool may not be, polyester is nothing but. There was, thus, no reason to allege misdeclaration, either on the count of size or of composition, with the detrimental consequences of revising the rate of duty and the assessable value. As the declaration is not in question as far as the goods for which bill of entry had been filed is concerned, the order for recovery of differential duty and confiscation of goods as well as imposition of penalty does not have the authority of law and must be set aside - Appeal allowed in part.

Summary

Issues:
1. Enhanced assessable value and duty demand
2. Confiscation of impugned goods and penalty imposition
3. Dispute over revision in classification
4. Allegations of deliberate evasion of customs duties
5. Misdeclaration of goods and rejection of declared value
6. Correctness of classification by the Textile Committee
7. Legal authority of the impugned order for recovery of duty, confiscation, and penalty

Issue 1: Enhanced assessable value and duty demand
The appellant challenged an order enhancing the assessable value to &8377; 45,74,066 from &8377; 11,29,709, resulting in a duty demand of &8377; 82,21,792. The appellant filed a bill of entry with declared values for various garments, but discrepancies were found during examination, leading to re-assessment and increased duty liability.

Issue 2: Confiscation of impugned goods and penalty imposition
The impugned goods were confiscated under section 111(m) of the Customs Act, 1962, with a penalty imposed under section 112. The appellant contested the confiscation and penalty, arguing against any complicity in consigning undeclared goods, while acknowledging duty liability on the undeclared items.

Issue 3: Dispute over revision in classification
The appellant's main contention was the revision in classification by the adjudicating authority based on the advice of the Textile Committee. The appellant disputed the reclassification of certain garments, leading to an increase in duty liability, and questioned the diligence of the adjudicating authority in following proper procedures.

Issue 4: Allegations of deliberate evasion of customs duties
The appellant disputed the finding that they deliberately attempted to evade customs duties. The appellant argued that the adjudicating authority had not adequately considered relevant tariff descriptions and bills of entry, and had relied heavily on the advice of the Textile Committee.

Issue 5: Misdeclaration of goods and rejection of declared value
The appellant was accused of misdeclaring the composition of garments, which led to the rejection of declared values for assessment. The appellant contested this accusation, stating that the claimed classification was in line with the composition indicated by testing of samples.

Issue 6: Correctness of classification by the Textile Committee
The classification of certain garments by the Textile Committee was questioned by the appellant, who argued that the size and composition of the samples warranted classification under specific tariff items, and the Textile Committee had overlooked key factors in their assessment.

Issue 7: Legal authority of the impugned order for recovery of duty, confiscation, and penalty
The legality of the order for recovery of duty, confiscation of goods, and imposition of penalties was challenged by the appellant. The appellant contended that apart from the duty liability on specific items, the other detrimental consequences were not justified, leading to a request for setting aside the impugned order.

This detailed analysis covers the various issues raised in the legal judgment, highlighting the key arguments and contentions put forth by the appellant in challenging the orders and decisions made by the adjudicating authority and the Textile Committee.