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2024 (10) TMI 1555 - AT - CustomsClassification as Naphtha under Tariff Item 27101290 or as Natural Gasoline Liquid (NGL) under Tariff Item 27101220 - Department responsibility to discharge burden cast on it to establish their claim for classification of goods - onus cast upon the Revenue to establish that the imported goods were classifiable under TI 2710 1220 of the Customs Tariff Act, 1975 as NGL has not been discharged - whether, even if the imported goods considered as Natural Gasoline Liquid (NGL) as claimed by the revenue, the same falls under the broad description of Naphtha and consequently the clearance of goods under advance authorization which mentioned the imported goods as Naphtha is correct and legal or otherwise. HELD THAT - It is settled law that in case the department does not discharge the onus cast upon it for its claim of classification of goods the entire proceeding is vitiated. As discussed above the facts of this case, the department did not discharge the onus to prove the claim of the classification of goods as NGL under tariff item 2710 1220 as correct. Therefore, the classification of goods as Naphtha under Tariff item 27101290 as declared by the appellant is held to be correct.
Issues Involved:
1. Classification of imported goods: Whether the goods should be classified as "Naphtha" under Tariff Item 27101290 or as "Natural Gasoline Liquid (NGL)" under Tariff Item 27101220 of the Customs Tariff Act, 1975. 2. Eligibility for exemption under Advance Authorization: Whether the imported goods, if classified as NGL, still qualify for exemption under the Advance Authorization Scheme. 3. Jurisdiction of demand under Section 28 of the Customs Act, 1962, prior to finalization of provisional assessments. Detailed Analysis: 1. Classification of Imported Goods: The core issue was whether the imported goods should be classified as "Naphtha" under TI 27101290 or as "NGL" under TI 27101220. The appellant argued that the goods were correctly classified as "Naphtha" and that the burden of proof lay with the Revenue to establish otherwise. The Revenue's case relied heavily on the opinion of the Joint Director, which was found to be "cryptic, unreasoned, and unsubstantiated." The tribunal noted that the Revenue failed to discharge its burden of proof as required by law, referencing the Supreme Court's stance that the onus is on the taxing authorities to prove their classification claims. The tribunal concluded that the goods met the criteria for "Naphtha" as per the technical literature, and the Revenue's evidence was insufficient to classify the goods as NGL. 2. Eligibility for Exemption under Advance Authorization: The tribunal addressed whether the goods, if classified as NGL, could still be eligible for exemption under the Advance Authorization Scheme. It was argued that NGL is a type of "Naphtha," and thus falls under the broad description allowed by the Advance Authorization. The tribunal agreed with this interpretation, noting that the legislative changes under the Finance Act, 2019, aimed to resolve classification disputes by encompassing all types of Naphtha, including NGL. Consequently, the tribunal found that the clearance of goods under Advance Authorization was justified, regardless of the classification dispute. 3. Jurisdiction of Demand under Section 28 of the Customs Act, 1962: The appellant contended that the demand for customs duty under Section 28 was premature, as the provisional assessments had not been finalized. The tribunal found merit in this argument, stating that the demand was "without jurisdiction" and thus null and void. It was emphasized that the relevant date for duty recovery in provisional assessments is the date of final assessment, which had not occurred. Conclusion: The tribunal concluded that the Revenue failed to substantiate its claim that the goods were NGL and not Naphtha. The tribunal set aside the impugned order, allowing the appeal and granting consequential relief to the appellant. The decision underscored the importance of the Revenue's burden to provide clear and substantiated evidence when challenging the classification of goods.
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