2021 (11) TMI 738 - AT - Customs

Classification of goods - sweet corn or maize? - Scope of Show cause notice (SCN) - Levy of penalty u/s 112 of CA - Recovery of differential duty - statutory intent of primacy of section 114A of Customs Act 1962 had been overlooked in the adjudication order - HELD THAT - There has been no controverting of the claim of the importer that the impugned goods are sweet corn which is essentially a vegetable but owing to design of nature for propagation of the species through seed finding fitment elsewhere too in the tariff. As use is not the criteria for classification save where explicitly intended the tariff accords recognition of these as cereals to enable national policy to be determined accordingly and within the enumerations under the relevant subheading. Nonetheless sweet corn though a fresh cereal thereby is further excepted from such coverage by the general notes pertaining to chapter 10 in the Explanatory Notes to the Harmonized System of Nomenclature (HSN). Consequently sweet corn is not cereal for the purposes of exclusion from chapter 12 of the First Schedule to Customs Tariff Act 1975. The permission envisaged under the Policy on Seed Development 1988 requiring appropriate clearance by the competent authority empowered by the Plant Quarantine (Regulation of Imports into India) Order 2003 has also made it abundantly clear that the seeds are intended for sowing. While not sufficing for classification it does establish the description of the goods impugned in this proceeding - The adjudicating authority has not undertaken classification of the impugned goods in accordance with the General Rules for the Interpretation of the Harmonized System but set out to deny the effective rate of duty available to specific enumerations. The classification claimed by the importer in the bill of entry even if substitutable by a more apt tariff item cannot be discarded owing to absence of such proposal in the show cause notice. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of imported goods under tariff item 1005 10 00 for seeds of maize (corn) in the Customs Tariff Act, 1975; Denial of benefit under specific notifications; Imposition of differential duty, interest, and penalties under Customs Act, 1962; Interpretation of notes to chapters and general rules for classification.

Analysis:

Classification Issue:
The appeal by M/s Syngenta India Ltd revolves around the classification of imported goods under tariff item 1005 10 00 for seeds of maize (corn) in the Customs Tariff Act, 1975. The dispute arises from the customs authorities' decision to classify the goods under this tariff item, denying the benefits available under specific notifications.

Denial of Benefits:
The appellant challenges the order for recovery of differential duty, interest, and penalties under the Customs Act, 1962. The dispute includes the imposition of penalties under sections 112 and 114AA of the Customs Act, 1962, and the denial of benefits available in specific notifications.

Interpretation of Notes and Rules:
The crux of the issue lies in the interpretation of notes to chapters and general rules for classification. The appellant argues that the imported goods, identified as 'sweet corn,' should not be classified as 'cereals' under chapter 10 of the Customs Tariff Act, 1975, but should fall under the category of 'seeds for sowing' under a different tariff item.

Decision and Reasoning:
The Tribunal analyzed the contentions of both parties, emphasizing the significance of the notes to chapters and general rules for classification. It was noted that the imported goods, being 'sweet corn,' do not fit the classification as 'cereals' and should not be excluded from the category of 'seeds for sowing.' The Tribunal found that the adjudicating authority had failed to classify the goods in accordance with the General Rules for the Interpretation of the Harmonized System, leading to the denial of applicable duty rates.

Conclusion:
Ultimately, the Tribunal allowed the appeal of M/s Syngenta India Ltd, overturning the decision of the customs authorities. The appeal by Revenue was dismissed, affirming the classification of the imported goods as 'sweet corn' for sowing purposes. The judgment was pronounced in the open court on 16/11/2021.