2024 (8) TMI 480 - AT - Customs

Classification of Aluminum Circles - to be classified under CTH 7606 or under CTH 76169990? The assessee-Respondent has opted to classify the Article in question under 76069110 since according to the assessee they are only raw materials, the department proposed the classification under 7616 in the show-cause Notice, while the DRI which undertook investigation, had initially suggested the same to be classified under 7615. HELD THAT - When the revenue disputes the classification, it is the settled position of law that the burden is heavily on the revenue to justify not only how the declared classification was wrong, but also as to why its proposed classification is to be accepted. It is found that other than denying the contentions of the assessee, that too without any evidence, no material whatso ever is placed on record by the revenue. When their own chartered engineer reports that the articles were raw materials which undergo further process, that aspect has also not been disputed other than the Adjudicating Authority holding that the same was not acceptable. Thus, the allegations are not taken to their logical conclusion. Rule 2(b) is required to be applied in the case on hand, also for the reason that heading 7616 does not require otherwise with regard to classification of material containing a combination of metals. The takeaway from the above is that the heading specifically requires that the product should not be mixed or otherwise prepared and therefore, for classifying any product under that heading, Rule 2(b) could never be applied. But there is no such provision similar to that under 7616 and therefore, any reference to the clause otherwise requires does not have any implications for the reason that the same is not in accordance with the scheme of the heading under chapter 76. From a perusal of CTH 7606, it is found that the aluminium circles are specifically mentioned under heading 7606 9110 and since the same is a composite product made up of aluminium as well as stainless steel, with the predominant material being aluminium, by implication of Rule 2(b), the same has essentially to be classified as aluminium circle only. The department has not made out any case for our interference with the findings of the First Appellant Authority and hence, the classification of articles in question as confirmed in the impugned order is held to be in order. Appeal dismissed.

Summary

Issues Involved:
1. Classification of imported goods.
2. Application of General Rules for the Interpretation of Import Tariff.
3. Burden of proof for classification disputes.
4. Relevance of the Chartered Engineer's report.
5. Admissibility of evidence and procedural compliance.

Issue-wise Detailed Analysis:

1. Classification of Imported Goods:
The primary issue revolves around the classification of goods described as "66215 Kgs of Aluminium Circles and 38000 pieces of Induction Base." The Respondent-assessee classified these goods under CTH 7606, arguing they are raw materials for further processing into utensils. The revenue, however, proposed classification under CTH 7616, and initially, the DRI suggested CTH 7615. The First Appellant Authority ruled in favor of the assessee, classifying the goods under CTH 7606, noting that aluminium predominates in the composite material.

2. Application of General Rules for the Interpretation of Import Tariff:
The First Appellant Authority referenced Rule 2(b) and Rule 3 of the General Rules for the Interpretation of Import Tariff, alongside Note 7 to Section XV, to conclude that the goods should be classified under CTH 7606. The Tribunal upheld this application, emphasizing that the aluminium content predominates, making it the primary material for classification purposes. The Tribunal noted that CTH 7616 is a residuary heading and should only be applied if the goods cannot be classified under preceding headings.

3. Burden of Proof for Classification Disputes:
The Tribunal highlighted that when the revenue disputes the classification, it bears the burden of proving why the declared classification is incorrect and justifying its proposed classification. In this case, the revenue failed to provide substantial evidence to counter the assessee's classification. The Tribunal criticized the revenue for not submitting essential documents like the Show Cause Notice and relevant Bills of Entry, which are crucial for laying the foundation of the dispute.

4. Relevance of the Chartered Engineer's Report:
The Chartered Engineer's report played a significant role in the decision. The report concluded that the goods are raw materials used for producing pressure cookers, facilitating direct usage in mechanical presses without wastage. This report supported the assessee's claim that the goods are raw materials, not finished products or parts, reinforcing the classification under CTH 7606.

5. Admissibility of Evidence and Procedural Compliance:
The Tribunal expressed concern over the revenue's failure to file essential documents, which is a procedural requirement under CESTAT Regulations. This lapse was deemed detrimental to the revenue's case. The Tribunal urged the Supervisory Chief Commissioner to issue necessary guidelines to prevent such procedural lapses in the future.

Conclusion:
The Tribunal dismissed the revenue's appeal, upholding the First Appellant Authority's classification of the goods under CTH 7606. The decision emphasized the predominant aluminium content, the application of relevant interpretative rules, and the procedural shortcomings of the revenue's case. The Tribunal's ruling reinforced the importance of adhering to procedural requirements and the burden of proof in classification disputes.