9911796707
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Issues:
Classification of imported material for exemption under Notification No. 25/95-Cus., dated 16-3-1995; Allegation of imported material being tanned/dressed fur skins under sub-heading No. 4302.19 of the Customs Tariff; Increase in penalty from Rs. 2,00,000/- to Rs. 10,00,000/-; Reliability of Test Report from the Footwear Design and Development Institute (FDDI); Burden of proof on Revenue; Applicability of exemption under Notification No. 25/95-Cus.; Interpretation of the Tariff description; Lack of categorical evidence in the FDDI report; Doubtful procedures adopted by FDDI; Inconsistencies in FDDI's records; Lack of conclusive evidence for classification as tanned/dressed fur skins. Analysis: The appeal pertains to the classification of imported material by M/s. Phoenix Industries Ltd. for exemption under Notification No. 25/95-Cus. The dispute arose when a Test Report from FDDI indicated the material as tanned/dressed fur skins, leading to a demand for customs duty and a penalty increase to Rs. 10,00,000/-. The appellant argued that the Test Report's veracity was questionable, emphasizing no suppression of facts and reliance on provisional assessment. The Tribunal noted discrepancies in the FDDI report, highlighting the lack of clarity on the tanning process and inconclusive evidence for classification as tanned/dressed fur skins. The Tribunal scrutinized the commercial invoices and import documents describing the goods as "raw skin of lamb with hair," eligible for exemption under Notification No. 25/95-Cus. The appellant maintained that the goods were not tanned or dressed, supported by a letter asserting the material was only salted, dried, and pickled. The FDDI report labeled the sample as "hair on tanned sheep (lamb) skin," but failed to provide definitive proof of tanning or dressing processes, crucial for classification as tanned/dressed fur skins under the Customs Tariff. The Tribunal highlighted the necessity for clear evidence of tanning or dressing processes to classify the goods correctly. The FDDI report's ambiguity, coupled with inconsistencies in records and procedures, raised doubts about the material's classification as tanned/dressed fur skins. The Tribunal, after careful consideration, concluded that the Revenue failed to establish a valid basis for the classification, ultimately setting aside the penalty and ruling in favor of M/s. Phoenix Industries Ltd. The judgment underscores the significance of conclusive evidence in determining the classification of imported materials for customs purposes, emphasizing the burden of proof on the Revenue to justify any alterations in classification.
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