2024 (4) TMI 184 - AT - Customs

Classification of goods - Levy of penalty - Bill of Entry for clearance of Sweet Pearl P200 classified under 29054900 - Revenue reclassified the goods under 21069060 - Burden Of proof - HELD THAT - We find that it was Revenue which disputed the classification declared by the appellant and hence, the initial burden is on the Revenue to disprove the case of the appellant. The burden is also on the Revenue to justify the reclassification made under 21069060. From the impugned order, we find that the Revenue sought opinions of two experts i.e. EIA and Central Food Laboratory, Mysore but they appear to have been not considered. It is the further case of the appellant that it has been classifying Maltitol crystals / sweet pearl under the very same CTH 2905 4900 since 2004 and hence, as ruled by the Hon'ble Supreme Court in a catena of decisions including the following cases, when the Revenue challenges the classification declared by the importer, the onus is always on the Revenue to establish that the item in question falls under the taxing category as claimed by them A perusal of the impugned order reveals that it is the case of the Revenue that the goods in question being artificial sweetener and a food ingredient used in the manufacture of chewing gum merits classification as a food flavouring material under CTH 2106. Sweet pearl is a flavour enhancer but the impugned order does not discuss the properties of a flavour enhancer and how the goods in question fit into the said description. Thus, we are of the clear view that the classification declared by the appellant deserves to be upheld since Revenue has not justified reclassification of the impugned goods under CTH 2106 and therefore, we set aside the impugned order and allow the appeal with consequential benefits, if any, as per law. Revenue has also preferred an appeal against the impugned order on the ground that the adjudicating authority has erred in not imposing equal penalty u/s 114A of the Customs Act, 1962, since the adjudicating authority has confirmed the duty demand u/s 28 of the Customs Act, 1962. However, as we have set aside the duty demand as confirmed by the original authority vide impugned order, we do not see any merit in the Revenue s appeal for imposing equal penalty in terms of sec. 114A. Therefore, the department s appeal is dismissed.

Summary

Issues Involved:
Classification of imported goods under Tariff Item 29054900 by the appellant disputed by Revenue, reclassification under Tariff Item 21069060 demanded, differential duty demand imposed, burden of proof on Revenue to justify reclassification, appeal filed challenging the Order in Original.

Summary:

The appeal was filed by the importer-appellant against the Order in Original passed by the Commissioner of Customs (Seaport - Import), Chennai, disputing the classification of imported goods under Tariff Item 29054900. The Revenue sought opinions from Expert Inspection Agency (EIA) and Central Food Laboratory, Mysore, but failed to consider them in the impugned order. The appellant argued that the burden is on the Revenue to disprove their classification and justify reclassification under Tariff Item 21069060, citing legal precedents. The appellant contended that the goods should be classified under Chapter 29 as they contain Maltitol, supported by an expert opinion from CFL/CFTRI, Mysore. The Revenue's case that the goods are artificial sweetener and food flavouring material under CTH 2106 was not adequately supported in the impugned order.

The Tribunal found that the Revenue did not establish its case for reclassification, and upheld the appellant's classification under Tariff Item 29054900. Citing a previous decision, the Tribunal emphasized that if goods are not classifiable under the proposed chapter heading by the Revenue, the case of the department will fail. As the Revenue failed to discharge the burden of proof, the classification declared by the appellant was upheld, and the impugned order was set aside with consequential benefits. The Revenue's appeal for imposing equal penalty under sec. 114A of the Customs Act, 1962 was dismissed due to the setting aside of the duty demand.