1999 (10) TMI 267 - AT - Customs

Summary

Issues:
Application for stay of penalty under Section 112(a) of the Customs Act, 1962 and Section 114A of the Act - Classification of imported goods under Tariff Item 2302 or Heading 2941.00 and 2941.90 - Contention of goods being animal feed supplement - Interpretation of judgments in Tetragon Chemie Pvt. Ltd. case and CCE, Bangalore v. Tilrode Chem case - Prima facie view on applicability of cited judgments to the present case - Direction on prepayment of penalty and stay of recovery.

Analysis:
The judgment concerns an application for the stay of penalties imposed on the appellants under Sections 112(a) and 114A of the Customs Act, 1962. The penalties were imposed in relation to the classification of imported goods, Virginiamycin (Poultry feed) by brand name Stefac 1000 from Belgium, under Tariff Item 2302 or Heading 2941.00 and 2941.90. The appellants claimed that the goods should be treated as animal feed, while the department argued for their classification under Heading 29 of the Tariff, alleging a violation of Section 111(m) of the Customs Act.

The appellants relied on the observations of the Assistant Commissioner on the Bill of Entry, indicating the use of the goods as an animal/cattle/poultry supplement. They also cited the judgments in Tetragon Chemie Pvt. Ltd. case and CCE, Bangalore v. Tilrode Chem case to support their contention that the goods should be classified as animal feed supplement. The Senior Counsel for the appellants argued that the department's classification was incorrect based on the mentioned judgments.

On the other hand, the department contended that the product was a 100% antibiotic and not a food supplement, citing the HSN provisions that treat Virginia as a Peptide falling under Heading 2940. The Tribunal considered the submissions of both sides and noted that the judgments cited by the appellants might not be directly applicable to the present case. The Tribunal expressed a prima facie view that the appellants had not established a strong case. However, considering it was a prepayment of penalty, the Tribunal directed the appellants to pay a specified amount within a month to stay the recovery and waive the pre-deposit of the remaining penalty amounts until the appeal's disposal.

In conclusion, the judgment analyzed the classification of imported goods and the applicability of cited judgments to determine whether the appellants had made a strong case for the stay of penalties. The Tribunal provided a direction for prepayment of a specified amount to stay the recovery of penalties pending the appeal's disposal.