2024 (3) TMI 935 - AT - Customs

Classification of imported goods - defatted coconut - to be classified under CTH 08011990 or under CTH 23065020? - Benefit of Notification No.50/2017- Customs dated 30.06.2017 Sl. No. 114 - HELD THAT - As per the first test report dated 11.11.2020, oil content is 46.8% and it confirm to the FSSAI (Food Products Standards and Food Additives) standard of defatted coconut. There is no reason given in the impugned order-in-original to discard the said finding. Thereafter another set of sample were drawn and sent to Coconut Development Board. Vide report dated 08.12.2020, they have also classified that sample submitted is defatted coconut and oil content was 45.51%. Alleging that the said report was not clear about the parameter for identifying the defatted and desiccated coconut, on further query was made and they have confirmed that as per Codex committee there is no difference between defatted and desiccated coconut. The adjudicating authority proceed with technical standards for desiccated coconut as per CODEX standard (CODEX STAN 177-1991) and concluded that goods which was defatted coconut is low fat desiccated coconut classifiable as under CTH 08011110. Such presumption is drawn on conclusion that to bring the goods under CTH 2306, oil should have removed from them and in the nature of residues material suitable for any subsequent use after there primary use in food industry. Such finding is arrived without considering the standard prescribed by the FSSAI and only based on the standard of Codex. Such method adopted by the adjudicating authority for classification of food articles is prima facie unsustainable. Moreover, Revenue is not disputing the fact that similar goods are being imported through Chennai port. There is no infirmity in the order issued by the Commissioner (Appeal) - Revenue is directed to classify the goods as per the declaration made by the respondent by extending the benefit of notification as applicable - Appeal dismissed.

Summary

Issues involved: Classification of imported goods under CTH 23065020, benefit denial under ISPTA Notification, penalty imposition under sections 112(a)(i) and 114A of the Customs Act, 1962.

Classification of imported goods: The respondent imported goods classified as "Defatted coconut" under CTH 23065020, but faced benefit denial under ISPTA Notification. The adjudication held the goods as falling under CTH 08011990, ordering duty recovery, confiscation, and penalties under Customs Act, 1962. The Commissioner (Appeal) allowed the appeal based on a High Court judgment and goods clearance at Chennai port under CTH 23065020.

Cross-objection and arguments: The respondent filed a cross-objection, contending that the appellate authority overlooked the test report and facts, merely following the High Court decision. The respondent's counsel argued based on FSSAI standards, supplier certificates, and HSN codes, maintaining the goods' classification as "Defatted Coconut" under CTH 23065000.

Consideration of submissions: After reviewing test reports confirming compliance with FSSAI standards for defatted coconut, it was found that the adjudication's reliance on Codex standards to classify as low fat desiccated coconut under CTH 08011110 was flawed. The absence of differentiation in FSSAI standards for high and low fat desiccated coconut was highlighted, along with the unsustainable classification methodology based solely on Codex standards.

Judgment: Upholding the Commissioner (Appeal)'s order, the Tribunal directed Revenue to classify the goods as per the respondent's declaration, extending the applicable notification benefits. The appeal was dismissed, with any consequential relief to be granted in accordance with the law.