2001 (2) TMI 720 - AT - Customs

Summary

Issues Involved:
1. Classification of imported goods as "Artificial Fur Lining" or "Flocked Fabrics."
2. Requirement of an import license for the goods imported.
3. Mis-declaration of imported goods by the importers.
4. Validity of the test reports and their interpretations.
5. Adjudicating authority's framing and handling of the issues.

Detailed Analysis:

1. Classification of Imported Goods:
M/s. San International filed a Bill of Entry on 23-10-1996, declaring the goods as "Artificial Fur Lining" under Heading No. 43.04 of the Customs Tariff. However, upon testing, the goods were found to be "flocked fabrics" classifiable under Heading No. 59.07. The adjudicating authority initially classified the goods under Heading No. 43.04, relying on Note 5 of Chapter 43, which describes "artificial fur" as any imitation of furskin consisting of wool, hair, or other fibers gummed or sewn onto leather, woven fabric, or other materials.

2. Requirement of Import License:
For import policy purposes, it was claimed that no import license was required for the import of artificial fur as per para 22 of the Export-Import (EXIM) Policy, 1992-97. However, for "flocked fabrics," an import license was required, which the importers did not possess. The Revenue argued that the goods were flocked fabrics and thus required an import license, which the importers failed to provide.

3. Mis-Declaration of Imported Goods:
The Revenue alleged that M/s. San International had mis-declared the goods as "artificial fur lining" instead of "flocked fabrics." This mis-declaration was supported by test reports from NITRA and SASMIRA, which confirmed that the goods were flocked fabrics and not artificial fur. The adjudicating authority, however, dropped all charges against the importers, concluding that the goods were indeed artificial fur based on the method of manufacture and the absence of weaving or knitting.

4. Validity of Test Reports:
The test reports from NITRA and SASMIRA indicated that the goods were synthetic knitted fabrics coated with colored nylon flocks. These reports classified the goods under Heading No. 59.07. The adjudicating authority questioned the jurisdiction of these testing authorities to classify the goods, arguing that their role was limited to testing the materials and certifying their composition, not classification.

5. Adjudicating Authority's Framing and Handling of Issues:
The adjudicating authority framed the issue as whether the goods should be classified under Chapter 43 or Chapter 59.07, presuming the goods to be artificial fur. This framing was criticized as it did not address the primary allegation of mis-declaration. The adjudicating authority's conclusions were based on the characteristics of synthetic fur and methods of manufacture, without adequately addressing whether the goods imitated furskin as required for classification under Heading No. 43.04.

Conclusion:
The appellate tribunal found that the adjudicating authority did not properly address the core issue of whether the goods were an imitation of furskin. The matter was remanded back to the jurisdictional Commissioner of Customs for de novo consideration, with instructions to provide an opportunity for both sides to present their cases and to pass a speaking, appealable order as per law. The impugned order-in-original was set aside, and both appeals of the Revenue were allowed by way of remand.