2022 (10) TMI 267 - AT - Customs

Recovery of duty drawback - Jurisdiction of Tribunal - Appeals to the AppellateTribunal - Section129A of the Customs Act, 1962 - export of Alloy Steel Forging Rings - Rejection of classification of goods under CTH 73261990 and proposal to classify the goods under CTH 84829900 - HELD THAT - The Appellate Tribunal does not have jurisdiction to decide the appeal in respect of order referred to in clause (c) of sub-section (1) to Section 129A of the Customs Act, which is relatable to payment of drawback as provided in Chapter-X and the rules made thereunder. However the Jurisdiction of the Appellate tribunal is not excluded as regard the appeal against any order of Commissioner (Appeals) if such order relates to recovery of drawback already sanctioned and paid arise due to classification disputes - the Recovery of Drawback already sanctioned and paid is different from payment of drawback. Apart from the general legal proposition that payment and Recovery are two separate events and different proceedings as well as different provisions are involved. Section 130 of Customs Act provides for an Appeal to the High Court from every order passed by the Appellate Tribunal. Such tax appeal is, however, not maintainable against an order relating among other things, to the determination of any questing having a relation to the rate of duty of customs or to the value of goods for purpose of assessment - In the present matter main controversy question is whether the goods were classifiable under Tariff heading 7326 or Tariff heading 8482 and the recovery of drawback is consequential controversy. Following the Hon ble Apex Court judgment in M/S. ASEAN CABLESHIP PTE. LTD. VERSUS THE COMMISSIONER OF CUSTOMS 2022 (3) TMI 760 - SUPREME COURT , it is held that the present Appeals are maintainable before the Tribunal. Classification of the impugned goods manufactured and exported by the Appellant - whether it would be classifiable under Chapter heading 73261600 as claimed by the Appellant or 84829900 as held by the Ld. Commissioner (Appeals)? - HELD THAT - The disputed goods require further operation and such goods when not fit for being ready to use, would appropriately classifiable under Tariff item 7326. The issue under reference is also duly covered by the case of M/S SHRI ROLEX RINGS PVT. LTD., SHRI MANESH MADEKA VERSUS COMMISSIONER OF CUSTOMS, KANDLA 2015 (11) TMI 446 - CESTAT AHMEDABAD , where it was held that The goods exported by the Appellant declaring Alloy Steel Forging (Machined) for use of rings of Bearing and Gear Blank in their shipping bills, require further operation and such goods when not fit for being ready to use, would appropriately classifiable under tariff item No.732615 of Drawback Schedule. - Therefore, following the ratio of said decision, in the present case also, it is held that impugned goods classifiable under chapter heading 7326 and therefore, the impugned order is not sustainable in law. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Jurisdiction of the Tribunal.
2. Classification of exported goods.
3. Recovery of excess drawback.
4. Imposition of penalties and confiscation of goods.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Tribunal:
The Revenue raised a preliminary objection regarding the Tribunal's jurisdiction, arguing that the matter pertains to the payment of drawback under Chapter X of the Customs Act, 1962, and should be addressed by the Revisionary Authority under Section 129DD. The Tribunal, however, found that its jurisdiction is not excluded in cases where the principal question relates to the classification of goods, even if the outcome involves recovery of drawback. The Tribunal referenced Section 129A of the Customs Act, which distinguishes between the payment of drawback and the recovery of already sanctioned and paid drawback. The Tribunal concluded it has jurisdiction to entertain the appeal as the primary issue was the classification of goods, not the payment of drawback.

2. Classification of Exported Goods:
The core dispute was whether the goods should be classified under CTH 73261990 (as claimed by the appellant) or CTH 84829900 (as determined by the Revenue). The Tribunal examined the processes involved in manufacturing the goods, which included forging, annealing, machining, and turning. The Tribunal noted that the goods were not ready for use as parts of bearings and required further processing by the buyers. It referenced the Chartered Engineer's Certificate and customer statements confirming additional processes were needed. The Tribunal concluded that the goods were appropriately classifiable under CTH 73261990, aligning with the precedent set in the case of Shri Rolex Rings Pvt. Ltd. v. Commissioner of Customs.

3. Recovery of Excess Drawback:
The Tribunal addressed the issue of recovery of excess drawback claimed by the appellant. It distinguished between the payment and recovery of drawback, affirming that the latter falls within its jurisdiction. The Tribunal found that the recovery of drawback was a consequence of the classification dispute and, since it ruled in favor of the appellant on the classification issue, the recovery of excess drawback was not justified.

4. Imposition of Penalties and Confiscation of Goods:
The Tribunal examined the imposition of penalties and the proposed confiscation of goods under Sections 114(iii)/114AA and 113(ii) of the Customs Act, respectively. Given its ruling on the classification issue, the Tribunal found the penalties and confiscation orders to be unwarranted. It noted that the goods were already exported and not physically available for confiscation, rendering the confiscation order invalid. The Tribunal set aside the penalties imposed on the appellant and the Vice President of the appellant company.

Conclusion:
The Tribunal allowed the appeals, setting aside the impugned orders and granting consequential relief to the appellants. The judgment emphasized the distinction between payment and recovery of drawback and upheld the classification of the goods under CTH 73261990, consistent with the established precedent. The Tribunal also invalidated the penalties and confiscation orders, providing comprehensive relief to the appellants.