1997 (7) TMI 285 - AT - Customs

Summary

Issues Involved: Rejection of benefit under Notification No. 186/86, classification of imported goods, applicability of auxiliary duty, and entitlement to exemption under alternate notifications.

Issue 1: Rejection of Benefit under Notification No. 186/86

The appeal arises from the Order-in-Appeal dated 21-2-1991, where the Collector rejected the claim of benefit of Notification No. 186/86 for auxiliary duty. The appellants imported five consignments of capital machinery for manufacturing watches, valued at Rs. 3,10,49,582.00, and were assessed to duty under Heading 8579.81 read with Customs Notification Nos. 45/85, 186/86, and 55/86 at 10% basic plus 25% auxiliary duty. The goods were cleared on payment of duty. However, the applicable auxiliary duty was 40% as per Notification No. 186/86, leading to a demand notice for the difference in duty amounting to Rs. 46,57,443.60. The Assistant Collector, after adjudication, rejected the importers' claim for the benefit of Customs Notification No. 186/86 read with Customs Notification No. 154/86 and confirmed the demanded amounts.

Issue 2: Classification of Imported Goods

The appellants contended that the goods should be classified under sub-headings 8456 to 8465 CTA, which would allow them to benefit from Notification No. 154/86, offering a lower auxiliary duty rate. However, the Collector held that since the appellants opted for the benefit of Notification No. 45/85, they could not claim the benefit of Notification No. 154/86 for auxiliary duty. The Collector emphasized that Notification No. 186/86 provides complete exemption from auxiliary duty only for goods partially or wholly exempted from basic Customs duty under specific notifications listed in its schedule, which did not include Notification No. 45/85.

Issue 3: Applicability of Auxiliary Duty

The appellants argued that Notification No. 154/86's proviso stated that it should not affect exemptions granted under other notifications, implying they should benefit from Notification No. 188/86. However, the Collector concluded that the appellants could only benefit from Notification No. 186/86 if they opted for concessional assessment under Notification No. 154/86, which they did not, as it was less beneficial compared to Notification No. 45/85.

Issue 4: Entitlement to Exemption under Alternate Notifications

The appellants' counsel argued that when a more advantageous notification exists, it should not be denied, citing Tribunal judgments in similar cases. The counsel pointed out that the goods were classified under Heading 8479.81 and claimed benefits under Notification Nos. 45/85, 186/86, and 55/86. However, for auxiliary duty, the classification should follow Notification No. 154/86, which lists specific items eligible for exemption. The counsel submitted that the goods, although classified under Heading 8479.81 for basic duty, should be reclassified for auxiliary duty under different headings as per Notification No. 154/86.

Detailed Analysis:

The learned DR countered that the appellants' claim was misconceived, as the classification was finalized in the Bill of Entry, declaring the goods as "capital machinery" under Heading 8479.81, claiming benefits under Notification No. 45/85. The classification was not challenged, and the auxiliary duty applicable was 40%, as initially short levied by the Assistant Collector. The DR emphasized that reclassification was not possible as the goods had left Customs charge, citing the Supreme Court's judgment in All India Glass Manufacturers' Federation v. Collector of Customs.

The Tribunal, after considering submissions and perusing the impugned order, noted that the entire machinery was imported for setting up an assembly line for watches. The goods were classified under Heading 84.79 as "machines and mechanical appliances having individual functions." The appellants did not furnish a complete list of machineries, and the goods were not individually assessed on merits. The auxiliary duty at 40% was rightly applied as per Notification No. 188/86.

The Tribunal concluded that the appellants could not claim a different classification for auxiliary duty without subjecting the individual machines to assessment on merits. The appellants' failure to provide necessary documents for such assessment meant they could not urge for reclassification. The judgments cited by the appellants' counsel were deemed inapplicable as they pertained to cases where classification was not disputed. The Tribunal upheld the rejection of the appellants' claim, finding no merit in the appeal, and thus, the appeal was rejected.