2023 (4) TMI 975 - AT - Customs

Classification of imported goods - digital cameras - to be classified under tariff item 8525 8090 of First Schedule to Customs Tariff Act, 1975 or tariff item 8525 8020 of First Schedule to Central Excise Tariff Act, 1975? - burden to prove - denial of notification no. 12/2012-Cus dated 17th March 2012 (at serial no 428A) and notification no 50/2017-Cus dated 30th June 2017 (at serial no 502) - recovery of duty short-paid under section 28 of Customs Act, 1962, along with applicable interest under section 28 AA of Customs Act, 1962. HELD THAT - The appellant has claimed the benefit of notification no. 12/2012-Cus dated 17th March 2012 (at serial no 428A) for imports effected against bills of entry filed before 1st July 2017 and notification no. 50/2017-Cus dated 30th June 2017 (at serial no. 502) thereafter. The eligibility for the notification is, first and foremost, claim of classification within the description corresponding to tariff item 8525 8020 of First Schedule to Customs Tariff Act, 1975 and, thereafter, to conformity with digital still image video camera describing the article to which the exemption may be allowed. It must be categorically stated, and contrary to the submissions made by Learnt Authorised Representative as well as references in the impugned order, that the technical specifications for limiting the eligibility of article for exemption had ceased to exist by the time the impugned imports were effected. Its continued inclusion in other notifications, not adduced to in the bills of entry, and in circulars elaborating such other notifications, or even the impugned notification before amendment for exclusion of the Explanation, are not germane to determination of eligibility for exemption of the impugned goods from duties of customs. For technical exposition, cited on behalf of Revenue as respondent in these appeals, on the specific description in the exemption notification to be tenable implies the possibility that tariff item 8525 8020 is also a likely description of the impugned goods which runs contrary to the finding in the impugned order of tariff item 8525 8090 to be the most apt description of the impugned goods. Consequently, there is disbarment of proposition of Revenue that the impugned goods must conform to some technical specification for eligibility to the exemption notification. In the absence of such bar, the potential for being left without any appropriate tariff item is significantly so high as to render the entire exercise under section 12 of Customs Act, 1962 to be non-starter. Hence, while appreciating the diligence and erudition of Learned Authorised Representative in his grasp of details of cameras, the limitations thereof must also be placed on record. The only three elements of the last of the sub-headings are separately enumerated as three tariff items leaving no scope, in the absence of reference to any composite mix of products in the description corresponding to the heading, for a fourth within it. In the absence of a finding in the impugned order that could, possibly, place the impugned goods within such general, and residual, description of others , the responsibility of customs authorities to initiate rejection of a declared classification has not been fulfilled. The declared classification, against tariff item 8525 8020 of First Schedule to Customs Tariff Act, 1975, cannot be substituted in these circumstances. There is nothing on record to indicate that the imported goods do not conform to the description that entitles them to the benefit of exemption in the impugned notification. The rescinding of the Explanation therein has done away with any technical specification that may, at some in the past, have served to segregate digital still image video camera as eligible and ineligible for the exemption. The confirmation of demand under section 28 of Customs Act, 1962, therefore, has no basis in law. The confiscation under section 111(m) of Customs Act, 1962 in the impugned order is vacated along with consequential redemption fine, if any, as well as any penalties under section 112 of Customs Act, 1962, section 114A of Customs Act, 1962 and section 114AA of Customs Act, 1962. The appeals are allowed.

Issues Involved:

1. Classification of imported goods.
2. Eligibility for exemption under specific customs notifications.
3. Justification for the adoption of a different tariff item.
4. Validity of demand for differential duty and penalties.

Summary:

1. Classification of Imported Goods:
The appellants challenged the classification of their imported goods, specifically two models of GoPro cameras, under tariff item 8525 8090 of the First Schedule to the Customs Tariff Act, 1975. They argued that the correct classification should be under tariff item 8525 8020, which covers digital cameras capable of capturing both still and video images. They relied on previous Tribunal decisions and rulings that supported their classification.

2. Eligibility for Exemption Under Specific Customs Notifications:
The appellants claimed exemption under notification no. 12/2012-Cus dated 17th March 2012 and notification no. 50/2017-Cus dated 30th June 2017, which allowed a 'nil' rate of duty for 'digital still image video cameras' covered by tariff item 8525 8020. They contended that their goods met the description and should be eligible for the exemption. The adjudicating authority had denied the exemption based on an outdated explanation and technical specifications that were no longer applicable.

3. Justification for the Adoption of a Different Tariff Item:
The customs authorities had reclassified the goods under tariff item 8525 8090, arguing that the principal function of the imported cameras was video recording, not still imaging. They relied on declarations from other distributors, website categorizations, and circulars that emphasized the video recording capability. The Tribunal noted that the customs authorities failed to discharge the burden of proof required to justify the reclassification and that the goods did fit the description under tariff item 8525 8020.

4. Validity of Demand for Differential Duty and Penalties:
The Tribunal found that the customs authorities had not provided sufficient evidence to support the reclassification and, consequently, the denial of the exemption. The confirmation of demand under section 28 of the Customs Act, 1962, and the confiscation under section 111(m) of the Customs Act, 1962, were deemed to have no basis in law. The Tribunal vacated the confiscation, redemption fine, and penalties imposed under sections 112, 114A, and 114AA of the Customs Act, 1962.

Conclusion:
The impugned order was set aside, and the appeals were allowed with consequential relief. The Tribunal emphasized that the customs authorities had not fulfilled their responsibility to justify the reclassification and that the imported goods were eligible for the claimed exemptions. The miscellaneous application seeking a change of name was also allowed.

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