2024 (12) TMI 1039 - AT - Customs

Scope of Notification No. 23/2012-Cus - Viscose Filament Yarn - It is the appellants contention that the impugned goods are embroidery threads and that under the Customs Tariff there is no difference between 'embroidered yarn' and 'embroidery thread', since embroidered yarn is specifically excluded from the scope of Notification No. 23/2012-Cus, no duty is payable by them - HELD THAT - CTH 5403 of the Customs Tariff reads as Artificial filament yarn (other than sewing thread) not put up for retail sale, including artificial mono filament of less than 67 decitex . The use of the phrase other than sewing thread , indicates that the heading though dealing with Artificial filament yarn does not specifically exclude threads other than sewing thread. Embroidery thread is not the same as sewing thread in trade parlance. It is perhaps for this reason that even the department has found the imported thread classifiable under CTH 5403 since it is found the description of the goods has not been challenged nor has any test or expert opinion been sought for. As rightly stated by the appellant and also held by the Hon ble Supreme Court in CC v. Dilip Kumar 2018 (7) TMI 1826 - SUPREME COURT , that when the issue pertains to imposing a levy, the onus is on the Department to prove that the goods are leviable to such duty. The issue involves a question of fact which is very technical in nature as seen from the portions highlighted in the extract of the OIO above. The classification of the impugned goods between Embroidery Yarn and Embroidery Thread , requires a physical scrutiny of the characteristics of the goods. However, neither are the goods available to us nor is there any manufacturers product literature; examination report by the department or a test report / opinion of an expert body been placed - there is a lack of evidence to back the findings made by the Ld Adjudicating Authority. To avoid a confusion on basic facts, it was for the departmental authorities to gather the product literature, process of manufacture and even a test report/ opinion from the appropriate authority and make it a part of the SCN, while seeking to change the classification and extending the levy under ADD to the product, since the burden of proof is on the department. In fine, there is a complete absence of anything to prove the allegation made in the Show Cause Notice. It is found that the impugned order has failed to see that the OIO has not discharged the burden of proof to come to a conclusion that the goods attract anti-dumping duty under N/N. 23/2012 dated 04.05.2012. The impugned order hence merits to be set aside - appeal allowed.

Summary

Issues Involved:

1. Classification of imported goods as 'Embroidery Thread' or 'Viscose Filament Yarn'.
2. Applicability of Anti-Dumping Duty (ADD) under Notification No. 23/2012-Cus.
3. Alleged misdeclaration and liability for penalties under Section 112 of the Customs Act, 1962.
4. Burden of proof regarding the levy of ADD.

Detailed Analysis:

1. Classification of Imported Goods:

The primary issue was whether the imported goods should be classified as 'Embroidery Thread' or 'Viscose Filament Yarn'. The appellants argued that the goods were 'Embroidery Thread' and thus not subject to ADD, as per the Customs Tariff classification under CTH 5403. The department, however, contended that the goods were 'Viscose Filament Yarn', which falls under CTH 5403 and is subject to ADD. The Tribunal noted that the description of the goods was not disputed and that the goods were declared as 'Embroidery Thread'. The Tribunal emphasized the lack of physical scrutiny or expert opinion to substantiate the department's classification of the goods as 'yarn' rather than 'thread'.

2. Applicability of Anti-Dumping Duty (ADD):

The appellants contended that the goods, being 'Embroidery Thread', should not attract ADD as per Notification No. 23/2012-Cus. The department argued that the goods were classifiable as 'Viscose Filament Yarn', which is subject to a 5.04% ADD. The Tribunal highlighted that the Customs Tariff under CTH 5403 does not specifically exclude threads other than sewing thread. The Tribunal found that the department failed to provide evidence to support the claim that the goods were subject to ADD.

3. Alleged Misdeclaration and Liability for Penalties:

The department alleged that the appellants misdeclared the goods as 'thread' with the intent to evade ADD, thus attracting penalties under Section 112 of the Customs Act, 1962. The Tribunal noted that the department did not challenge the description of the goods nor provide sufficient evidence of misdeclaration. The Tribunal concluded that the department's reliance on assumptions and the appellants' admission during the personal hearing was insufficient to establish misdeclaration.

4. Burden of Proof Regarding the Levy of ADD:

The Tribunal reiterated the principle established in the Supreme Court judgment in CC Vs. Dilip Kumar, stating that the burden of proof lies with the department to demonstrate that the goods are liable to ADD. The Tribunal found that the department failed to discharge this burden, as there was a lack of evidence, such as product literature or expert opinion, to substantiate the classification and levy of ADD on the imported goods.

Conclusion:

The Tribunal set aside the impugned order, emphasizing the department's failure to provide adequate evidence to support the classification of the goods as 'Viscose Filament Yarn' and the consequent levy of ADD. The Tribunal concluded that the burden of proof was not discharged by the department, and the appeals were disposed of with consequential relief as per law.