2025 (1) TMI 997 - AT - Customs

Classification of imported goods - Broom Sticks (between 140 to 160 cm.) - to be classified under the CTH 14049090 or under CTH 96031000? - denial of benefit under Sl. No.1580(I) of Notification No.46/2011-CUS dated 01.06.2011. and Sl. no. 93B of Notification No. 2/2017 dated 01.07.2017 - HELD THAT - Sub-heading 9603 specifically covers brooms whereas chapter sub-heading 1404 deals with vegetable products not elsewhere specified . In the Order-in-Original the Ld. adjudicating authority has observed that CTH 1404 covers raw stalks of broom . It is observed that chapter 1404 is a residuary sub- heading covering vegetable products not elsewhere specified. As per the General Rules of Interpretation for classification of goods a specific heading is always preferred over a general heading. In the present case it is observed that the goods imported by the appellant are brooms which is specifically covered under the sub-heading 9603 whereas sub-heading 1404 is a general entry covering vegetable material not elsewhere specified. Resorting to such general entry is required only when there is no specific sub-heading covering the goods. In this case there is a specific sub-heading 9603 is available in the Tariff covering the goods brooms and broomsticks used for making brooms. Thus on comparison of the description of the entries available in CTH 9603 and CTH 1404 the imported goods are more appropriately classifiable under Chapter 96 and not under Chapter 14. Chapter Note 3 of Chapter 96 provides that such expression in heading 9603 applies to materials which are ready for incorporation without division in brooms or which require only such further minor process as trimming to shape at the top to render them ready for such incorporation. In other words broom sticks can be of vegetable twigs and are merit classifiable under CTH 96031000 when ready for incorporation without division in broom or when require minor process as trimming to shape at the top to render them ready for such incorporation - the goods imported by the appellant are appropriately classifiable under the CTH 96031000 and the appellant would be eligible for the benefit of Sl. No.1580 (I) of Notification No.46/2011-CUS dated 01.06.2011 with respect to BCD and Sl. No.144 of Notification No.02/2017-CUS towards exemption of IGST. Thus the demand of customs duty of Rs.4, 59, 025/- along with interest confirmed in the impugned order by denying the benefits of the above said notifications is not sustainable and accordingly the same is set aside. Conclusion - The demand of customs duty confirmed in the impugned order by denying the benefit of the Notification No. 46/2011-Cus on the ground of mis declaration is legally not tenable. The benefit of Notification No.002/2017- ITR dated 01.07.2017 available for IGST exemption cannot also be denied to the importer/appellant. Assuming but not admitting that the goods are merit classifiable under CTH 14049090 then also benefit of Sl. No. 93B of Notification No. 002/2017-ITR dated 01.07.2017 for IGST and Sl. No. 116(I) of Notification No.46/2011-CUS dated 01.06.2011 for BCD is available to the importer/appellant. The demand of customs duty of Rs.4, 59, 025/- along with interest confirmed in the impugned order by denying the benefits of the above said notifications is not sustainable. The order of confiscation and imposition of fine in lieu of such confiscation in the impugned order set aside - penalties set aside. Appeal allowed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the imported goods, described as "Broom Sticks," were correctly classified under the Customs Tariff Heading (CTH) 96031000 or should be reclassified under CTH 14049090.
Whether the appellant was entitled to the benefit of exemptions under Notification No. 46/2011-CUS and Notification No. 02/2017-CUS.
Whether the order of confiscation and imposition of penalties for alleged mis-declaration was justified.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Classification of Imported Goods

Relevant Legal Framework and Precedents: The classification of goods under the Customs Tariff Act is guided by the General Rules for Interpretation of the Harmonized System, which prioritize specific headings over general ones. Chapter Note 3 of Chapter 96 was particularly relevant, as it defines "prepared knots and tufts for broom or brush making."
Court's Interpretation and Reasoning: The court observed that CTH 96031000 specifically covers brooms and brushes made of vegetable materials, whereas CTH 14049090 is a residual category for unspecified vegetable products. The court emphasized that specific headings should be preferred over general ones.
Key Evidence and Findings: The Examination Report described the goods as "vegetable twigs and raw materials used for manufacture of Jhadu," supporting classification under CTH 96031000.
Application of Law to Facts: The court found that the goods were more appropriately classifiable under CTH 96031000, as they were ready for incorporation into brooms with minimal processing.
Treatment of Competing Arguments: The appellant argued for classification under CTH 96031000 based on the goods' description and Chapter Note 3. The Revenue's argument for classification under CTH 14049090 was based on a revised Country of Origin Certificate, which the court found irrelevant to the classification issue.
Conclusions: The court concluded that the goods were correctly classifiable under CTH 96031000.

Issue 2: Entitlement to Exemption Benefits

Relevant Legal Framework and Precedents: Notification No. 46/2011-CUS and Notification No. 02/2017-CUS provide exemptions from Basic Customs Duty (BCD) and Integrated Goods and Services Tax (IGST) for certain classifications.
Court's Interpretation and Reasoning: The court held that if the goods were classified under CTH 96031000, the appellant was entitled to the exemptions. The revised COO was not a valid basis for denying benefits, as the classification dispute did not affect the goods' origin.
Key Evidence and Findings: The appellant initially filed for exemptions under the correct classification, and the revised COO did not substantiate mis-declaration.
Application of Law to Facts: The court found that the exemptions should apply as the effective duty would be nil under both classifications if the notifications were applied.
Treatment of Competing Arguments: The appellant argued against the denial of benefits based on alleged mis-declaration. The court found the Revenue's reliance on the revised COO to deny benefits unfounded.
Conclusions: The court concluded that the appellant was entitled to the exemption benefits under the relevant notifications.

Issue 3: Justification of Confiscation and Penalties

Relevant Legal Framework and Precedents: Sections 111(m) and 112(a) of the Customs Act, 1962, deal with confiscation and penalties for mis-declaration.
Court's Interpretation and Reasoning: The court held that a classification dispute does not constitute mis-declaration. The goods were declared based on available documentation, and there was no manipulation of import documents.
Key Evidence and Findings: The court noted inconsistencies in penalty imposition and found no basis for confiscation or penalties.
Application of Law to Facts: The court found that the imposition of penalties was arbitrary and not justified by the facts.
Treatment of Competing Arguments: The appellant argued against penalties due to the absence of mis-declaration. The court agreed, noting the lack of evidence for manipulation.
Conclusions: The court set aside the order of confiscation and penalties.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: "We observe that the goods imported by the appellant are 'brooms' which is specifically covered under the sub-heading 9603 whereas sub-heading 1404 is a general entry covering vegetable material not elsewhere specified."
Core Principles Established: Specific tariff headings take precedence over general ones; classification disputes do not constitute mis-declaration; exemptions cannot be denied based on irrelevant grounds.
Final Determinations on Each Issue: The goods were classifiable under CTH 96031000, entitling the appellant to exemption benefits. The confiscation and penalties were set aside.

In conclusion, the court allowed the appeal, setting aside the impugned order, and ruled in favor of the appellant on all issues presented.

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