2024 (1) TMI 738 - AT - Customs

Classification of imported goods - 100% Polyester Woven Gray Fabrics - classifiable under CTH 580 137 10 or under CTH 540 751 19? - entitlement for benefit of N/N. 14/2006-CUS as Upholstery fabric or as other than Upholstery fabric? - HELD THAT - The Notification defines Upholstery fabric to mean material used on furniture or used to cover walls, as curtains or wall hangings and used fabric coverings and treatments in Automobiles, Airplanes, Rail-Road passenger Cars. There is contradiction between the report of Textile committee and the report of ATIRA. The impugned order blindly follows the report of ATIRA without going into the definition of the term Upholstery fabric as given in Notification No. 14/2006-Cus. The definition given in the said Notification is restrictive definition and covers only certain uses of the fabric. In the instance case, while the textile committee has opined that the nature of fabric will depend on usage as it could have multiple uses. The report of ATIRA is absolute. However, without giving any reason as to why it has arrived at that finding. There are no merit in the impugned order blindly relying on the report of ATIRA, especially in presence of an alternate report of an equally competent body namely textile committee which clearly doubts the actual use. The impugned order is set aside and matter remand to the original Adjudicating Authority to give fresh findings, after considering all the evidences produced by the appellant and after examining the nature of goods vis-a-vis the definition is given in Notification 14/2006-Cus. - appeal is allowed by way of remand to the Adjudicating Authority.

Summary

Issues involved:
The issues involved in the judgment are the change of classification of imported goods, demand of Customs duty, interest, imposition of penalty, and confiscation of goods based on the classification dispute.

Classification Dispute:
The appellant, M/s. J K Enterprises, imported "100% Polyester Woven Gray Fabrics" classified under CTH 580 137 10, while the revenue contended that the goods are warp pile fabric (uncut) classifiable under CTH 540 751 19. Various samples were sent to Textile Committee Mumbai and Ahmedabad Textile Industries Research Association (ATIRA) for classification. The Textile Committee opined that the goods were undyed woven polyester fabrics under CTH 5407.61, while ATIRA reported that the fabric was double fabric and Upholstery fabric.

Legal Arguments:
The appellant argued that the nature of fabric should be ascertained from the market, citing a decision of the Hon'ble High Court of Punjab & Haryana. They also highlighted the principle that interpretations favoring the importer should be followed, as held by the Hon'ble High Court of Kolkata. Additionally, they emphasized that the definition of Upholstery fabric under Notification 14/2006-Cus was precise and not adequately examined by ATIRA.

Judgment and Reasoning:
The Tribunal found that the impugned order relied solely on the ATIRA report without considering the conflicting views of the Textile Committee. The definition of Upholstery fabric in the Notification was restrictive and specific, covering certain uses of the fabric. The Tribunal noted that the ATIRA report was absolute without providing reasons for its findings. Moreover, the Tribunal pointed out that alternative reports, such as the one from MANTRA, were not adequately considered in the impugned order.

Decision and Remand:
Consequently, the Tribunal set aside the impugned order and remanded the matter to the original Adjudicating Authority for fresh findings. The Authority was instructed to consider all evidence presented by the appellant, including the nature of the goods in relation to the definition provided in Notification 14/2006-Cus. The appeal was allowed by way of remand to the Adjudicating Authority.

Separate Judgment:
The judgment was delivered by MR. RAMESH NAIR, MEMBER (JUDICIAL) AND MR. RAJU, MEMBER (TECHNICAL) on 16.01.2024.