2023 (12) TMI 17 - AT - Customs

Classification of imported goods - Canned Pineapple Slices - classifiable under Customs Tariff Heading No. 0804 3000 or under CTH 08119010? - reliance placed upon the statement of the appellant - demand of differential duty alongwith interest and penalty - extended period of limitation. HELD THAT - As per the explanatory notes, it is noted that for any product to be classified under CTH 0804, they have to be fresh or dried. For fruits to be classified under CTH 0811, the said product has to be Frozen , as elaborated above. In the instant case, the product being imported by the appellant is not frozen. This is amply clear from the statement of the Director of the appellant, wherein he submitted that the fresh fruits (Pineapple) are received, graded, washed, peeled, cut, core, sliced and then put in sterile cans (sterilized by passing under steam); boiling Hot Sugar syrup is added to balance the natural sugar content of the fruit and prevent it from draining out; sugar is added to maintain taste and palatability of the fruit and it is not a preservative; the Hot syrup (water sugar pre mixed) is heated till boiling point to kill any ambient bacteria that may be present and to create vacuum in the cans thus completing the preservation process due to the isolation from atmospheric contact and vacuum. Thereafter, such cans are cooled and released to market. In the instant case, the fresh pineapple slices are sterilized by passing under steam which is followed by adding boiling Hot Sugar syrup to balance the natural sugar content of the fruit and prevent it from draining out. This Hot syrup (water sugar pre mixed) is heated till boiling point to kill any ambient bacteria and to create vacuum in the cans thus completing the preservation process. Thereafter, such cans are merely cooled, and not frozen to enable them to be released for sale. Thus, it is very clear from the facts of this case, the canned pineapple slices are akin to fresh pineapples and are liable to be classified under CTH 0804, and not under CTH 0811, as claimed by the appellant. In the instant case, the classification of the canned pineapple slices would have to be decided as per the HSN explanatory notes and would therefore be appropriately classifiable under CTH 0804 only. It is also noted that in the impugned order, it is recorded that the appellant had themselves quoted that it was their CHA who filed their Bills of Entry under the wrong CTH 20082000 without taking instructions from the regarding the correct classification, which would be CTH 08119010 - it is already opined that the appropriate classification would have to be arrived at by going through the tariff headings, the chapter notes, the HSN explanatory notes therein. The material incriminates the petitioner in the contravention of the provisions of the Customs Act. Such material can certainly be used to connect the petitioner to the contravention. Therefore, there are no infirmity in the impugned order which has relied on the statement of the appellant. Extended period of limitation - HELD THAT - It has been brought on record by the learned counsel for the appellant that there was confusion in the Department itself regarding the classification of canned sliced pineapples - there are merit in the contention that the Department themselves have classified the said goods under different headings. In view of the prevailing circumstances, the extended period cannot be invoked in the instant case. The classification of the canned pineapple slices would be CTH 0804. However, the demand for differential duty is limited to the normal period only. The interest would accordingly be reduced proportionately. The penalty under section 114A is set aside - Appeal allowed in part.

Summary

Issues Involved:
1. Classification of Canned Pineapple Slices
2. Validity of Show Cause Notice
3. Invocation of Extended Period of Limitation
4. Imposition of Penalty

Summary:

1. Classification of Canned Pineapple Slices:
The core issue was whether "Canned Pineapple Slices" should be classified under Customs Tariff Heading (CTH) 08043000 or CTH 08119010. The Tribunal examined the process of canning as explained by the appellant's Director, which involved sterilizing the pineapple slices with boiling hot sugar syrup and then cooling them, without any freezing. The Tribunal referred to the Harmonized System of Nomenclature (HSN) explanatory notes and Supreme Court judgments, concluding that the canned pineapple slices are akin to fresh pineapples and should be classified under CTH 08043000. This classification was supported by the Supreme Court's ruling in Deputy Commissioner of Sales Tax Vs Pio Food Products, which held that there is no essential difference between pineapple fruit and canned pineapple slices.

2. Validity of Show Cause Notice:
The appellant argued that the adjudication proceedings were vitiated because the Show Cause Notice (SCN) was initially issued by the Assistant Commissioner and later made answerable to the Principal Commissioner through a corrigendum. The Tribunal held that such a change in the authority who is to adjudicate the case does not vitiate the proceedings, relying on multiple Tribunal decisions that have upheld the issuance of corrigenda as non-fatal defects.

3. Invocation of Extended Period of Limitation:
The appellant contended that the extended period of limitation was wrongly invoked due to the Department's own confusion regarding the classification of the goods. The Tribunal found merit in this argument, noting that the Department had classified the same goods under different headings at different times. Given the prevailing confusion, the Tribunal held that the extended period could not be invoked.

4. Imposition of Penalty:
The Tribunal set aside the penalty imposed under Section 114A of the Customs Act, 1962, since the extended period of limitation was not applicable. The demand for differential duty was limited to the normal period only, and the interest was reduced proportionately.

Conclusion:
The Tribunal modified the impugned order, holding that the appropriate classification for canned pineapple slices is under CTH 08043000. The demand for differential duty was confined to the normal period, and the penalty was set aside. The appeal was partly allowed.