2009 (5) TMI 446 - AT - Customs

Classification- Notification No. 21.2002-Cus.-Limitation- The appellants are manufacturing PCO Call Monitors using WISMO Modules and the PCO Call Monitors have been assessed to Central Excise Duty by classifying them under Heading 84702000 of the Central Excise Tariff, which is not in dispute. Therefore, the WISMO Modules imported by the appellants are admittedly used as Parts in the manufacture of the same and are duly classifiable under Heading 8473 of the Customs Tariff. During the year 2002 to 2004, the appellants classified the item under 8473. In their first import of the impugned goods, they classified the items under 8529 as Parts of Cellular phones . But the Customs authorities revised the classification from 8529 to 8473 as Parts of PCO Call Monitor and assessed to duty accordingly. Held that- classifiable under Tariff item 8529 90 90 ibid and not under heading 85.17 ibid which relates to line telegraphy. Benefit of concessional rate of duty under Notification No. 21.2002-Cus. is available. for the extended period department itself unsure of classification and advising assessee at different time to classify impugned goods under different headings, thus invocation of extended period found to be improper u/s 28 of Custom Act, 1962.

Summary

Issues Involved:
1. Classification of WISMO Modules
2. Applicability of Exemption Notifications
3. Allegations of Mis-declaration and Invocation of Extended Period
4. Confiscation and Penalty Imposition

Issue-wise Detailed Analysis:

1. Classification of WISMO Modules:
The appellants imported WISMO Modules and declared them as 'Parts of Electronic Calculating Machine' under CTH 84732100, claiming exemption under Notification No. 5/2004-Cus. The Commissioner ruled out this classification, stating that the product is not used solely or principally in the manufacture of PCOs, and considered classification under Chapter 8517.90, based on the opinion that the goods are populated PCBs used in telecommunication apparatus. The appellants contended that WISMO Modules are used in manufacturing PCO Call Monitors, classifiable under Heading 8473. They argued that WISMO Modules operate in a GSM/CDMA environment and are not used in line telephony, making them suitable for classification under 85299090.

The Tribunal concluded that WISMO Modules are used in wireless applications and are classifiable under CTH 85299090, as they are not used in line telephony but in GSM/CDMA environments, aligning with the apparatus of heading 8525.

2. Applicability of Exemption Notifications:
The appellants initially claimed exemptions under Notification No. 5/2004-Cus and Notification No. 21/2002-Cus. The Commissioner denied these exemptions, asserting that the goods are populated PCBs, which exclude them from the benefit of exemption under Entry No. 321 of Notification 5/2004. The Tribunal, however, accepted the appellant's classification under 85299090, making them eligible for a concessional rate of 5% under Notification No. 21/2002 [Sl. No. 321(ii)].

3. Allegations of Mis-declaration and Invocation of Extended Period:
The Commissioner alleged willful mis-statement and invoked the extended period under Section 28A of the Customs Act, justifying the demand of duty. The appellants contested this, arguing that the Customs Authorities had reclassified the product multiple times, indicating no willful mis-declaration. They cited various case laws to support their position against the allegations of willful mis-statement and the invocation of the extended period.

The Tribunal found that the Department itself was unsure of the product's classification, initially classifying it under 8473 on the Department's advice. Given the lack of clarity and the appellant's cooperation, the Tribunal ruled that the invocation of the extended period was unjustified.

4. Confiscation and Penalty Imposition:
The Commissioner confiscated 2000 WISMO Modules and imposed a penalty under Section 114A of the Customs Act. The appellants argued against the confiscation and penalty, citing the lack of willful mis-declaration and the provisional assessment of several Bills of Entry.

The Tribunal set aside the confiscation and penalty, ruling that there was no justification for such actions. The duty payable was determined under 85299090 at a concessional rate of 5%.

Conclusion:
The Tribunal allowed the appeal, classifying the WISMO Modules under CTH 85299090 and granting the concessional rate of duty. The allegations of mis-declaration and the invocation of the extended period were dismissed, and the confiscation and penalty were set aside. The decision emphasized the importance of accurate classification and the unjust nature of penalties in cases of departmental uncertainty.