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2024 (10) TMI 579 - AT - CustomsClassification of imported goods - parts of the shock absorbers to be classified under Customs Tariff Item CTI 8714 91 00 or under 8714 10 90? - entitlement to the benefit of Notification No. 50/2017-CUS (Sl. No. 532) - Confiscation of the goods under section 111(m) and imposition of redemption fine - Penalty under section 112 upon the appellant - Penalty on Shri Negi Manager (Commercial) of Showa under section 114AA. Classification of goods - HELD THAT - General Rules of Interpretation help in classifying the goods under the Customs Tariff. GIR 1 states that the goods should be classified as per the Customs Headings and sub-headings and the related chapter notes and section notes. There are no chapter notes or section notes, relevant to this case. The undisputed position is that the imported goods were parts of frames of motorcycles. Therefore, they fall under the 4 digit heading of 8714 - the correct classification on six digit level of the imported goods is 8714 10. Within that six digit heading are two 8 digit CTI saddles and others. Since the imported goods are not saddles they fall under others. We have no manner of doubt that appropriate classification for the imported goods is 8714 10 90. Therefore, we hold in favour of the Revenue on the question of classification and uphold the classification of the imported goods in the impugned order. The Commissioner (Appeals) erred in holding that the parts of motorcycle or moped need to have the characteristics of the shock absorber for them to be classified under 8714 10 90. It goes without saying that no part in itself will have the essential character of the article until it becomes the part of the article. However, for that reason it does not cease to be a part of the article. A shock absorber, for instance, will be a shock absorber even if it is not fitted in the motorcycle. Similarly parts of shock absorber will be such parts even before they are assembled together as a shock absorber. The Commissioner (Appeals) clearly erred in holding that the parts have to assume the essential character of the article - Classification of the goods in the order impugned in this appeal under 8714 10 90 needs to be sustained. Benefit of exemption Notification No. 50/2017-CUS (Sl. No. 532) - HELD THAT - All goods falling under the CTI indicated in Column '2 of the notification other than bicycle parts and components are eligible for exemption Notification No. 50/2017-CUS. The notification does not say that all goods in the entire tariff will get exempted other than bicycle parts and components. They must fall under one of the CTI indicated in Column '2' of the table. CTI 8714 10 90 does not fall in Column '2'. Therefore, this assertion of the appellant has no force and deserves to be rejected. Confiscation of the goods under section 111(m) and imposition of redemption fine - HELD THAT - Evidently, goods which do not respond in respect of value or any other particular with the entry made under the Act are liable for confiscation. This would imply that the goods should be as per the declarations. It does not mean that the classification of the goods which is a matter of opinion of the importer self-assessing goods should match with the opinion of the officer who may re-assess the goods. Nothing in this section provides for confiscation of the goods if the classification of the goods by the importer during self-assessment does not confirm to the views of the proper officer or any adjudicating authority. Clearly goods cannot be confiscated under section 111(m), if the classification claimed by the appellant for the Bill of Entry does not confirm to the views which the officers may hold. Therefore, the order of confiscation needs to be set aside and consequently the redemption fine also needs to be set aside. Penalty under section 112 upon the appellant - HELD THAT - Evidently the penalty under section 112 is imposable if the goods are rendered liable for confiscation under section 111. Since, it is held against the confiscation of the goods, under Section 111, the penalty under section 112 also needs to be set aside. Penalty on Shri Negi under section 114AA - HELD THAT - Nothing in the records shows that Shri Negi made any declaration or statement which is false or incorrect in the Bill of Entry. All that was done that was during self-assessment, they classified the goods under a particular CTI which is different from the CTI held in the impugned order. Therefore, the penalty imposed on Shri Negi also needs to be set aside. Appeal disposed off.
Issues Involved:
1. Classification of imported goods under Customs Tariff Item (CTI) 8714 10 90 or 8714 91 00. 2. Eligibility for benefit under Notification No. 50/2017-CUS (Sl. No. 532). 3. Confiscation of goods under Section 111(m) for wrong classification. 4. Imposition of penalty on Showa under Section 112. 5. Imposition of penalty on Shri Negi under Section 114AA. Detailed Analysis: 1. Classification of Imported Goods: The primary issue was whether the parts of shock absorbers imported by Showa should be classified under CTI 8714 10 90 or CTI 8714 91 00. The Customs Tariff categorizes parts and accessories of vehicles, with CTI 8714 10 covering parts of motorcycles and CTI 8714 91 covering frames and forks. Showa argued that their goods should fall under the more specific heading of frames and forks (CTI 8714 91 00) as per Rule 3 of the General Rules for Interpretation (GIR), which prefers specific headings over general ones. However, the Tribunal concluded that the imported goods were indeed parts of motorcycles, thus falling under CTI 8714 10 90. The Tribunal upheld the classification as per the impugned order, rejecting the appellant's reliance on a previous Commissioner (Appeals) decision that had favored classification under CTI 8714 91 00. 2. Eligibility for Notification No. 50/2017-CUS (Sl. No. 532): Showa contended that even if classified under CTI 8714 10 90, the goods would still qualify for exemption under Notification No. 50/2017-CUS. However, the Tribunal found that this exemption applies only to specific CTIs listed in the notification, which did not include CTI 8714 10 90. Therefore, Showa's claim for exemption was rejected. 3. Confiscation of Goods under Section 111(m): The Tribunal examined whether the goods could be confiscated under Section 111(m) for incorrect classification. It was determined that Section 111(m) pertains to discrepancies in value or specifics with the entry made under the Act, not differences in classification opinions between the importer and customs authorities. Consequently, the Tribunal set aside the order of confiscation and the associated redemption fine. 4. Imposition of Penalty on Showa under Section 112: Section 112 imposes penalties for actions rendering goods liable to confiscation under Section 111. Since the Tribunal ruled against the confiscation of the goods, the penalty under Section 112 was also set aside. 5. Imposition of Penalty on Shri Negi under Section 114AA: Section 114AA penalizes the use of false or incorrect material in declarations. The Tribunal found no evidence that Shri Negi made any false declarations; the issue was merely a difference in classification opinion. Accordingly, the penalty imposed on Shri Negi was set aside. Conclusion: The appeals were disposed of with the Tribunal partly allowing Showa's appeal by upholding the classification and duty demand but setting aside the confiscation, redemption fine, and penalty. Shri Negi's appeal was fully allowed, and the penalty on him was set aside. Both appellants were granted consequential relief.
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