2012 (10) TMI 990 - AT - Customs

Classification of goods - Misdeclaration of goods - Held that - From the tariff description and the headings reproduced earlier, it can be seen that the sole criterion required to be fulfilled for items imported to be classified under 7013 32 00, is the linear coefficient of expansion. The test memos had clearly indicated that this aspect is required to be verified. The Chemical Examiner has chosen just to say that since there was no breakage, the thermal expansion is nil. When the heading required specific indication that linear coefficient of expansion is less than 5 x 10-6 per Kelvin, in our opinion, this statement of the Chemical Examiner was not sufficient. In fact, the department should have required the Chemical Examiner to specifically indicate the linear coefficient of thermal expansion. Therefore, when the appellants requested for retest by CGCRI, Kolkatta, it could have been considered. In any case option was available to the department to send it for retest to the Chief Chemist at Delhi which was also not done. We have a blank statement from the Chemical Examiner in the test report that, since there was no breakage on hearing and cooling, it indicates lower linear coefficient of expansion. How can we conclude whether it is below the level prescribed in the heading or not is not indicated by the Chemical Examiner. We could have appreciated if he stated clearly that it is lower than what is prescribed in the tariff heading. Even this is not forthcoming from the reports. On the other hand, the supplier of the appellants and CGCRI has clearly measured the linear coefficient of expansion and have indicated the same. Under these circumstances, we have no option but to hold that the department has failed to show and prove that the classification of the goods in question would come under 7013 32 00. Whether there was misdeclaration of description by the appellants - Held that - After opening the packages and inspection, the examining officer had found the goods to be contained in 2 packages and the goods were found to be Opal Glassware Dinner Sets . The fact that even after finding the goods to be Opal Ware on examination, the same were allowed to be cleared when the Bills of Entry had been filed as Glassware supports the claim of the appellants that there was no mis-declaration since Opal glassware is nothing but Glassware. - examination reports in ICD, Vapi go against the department. Further, we also find that according to ASTM C-162-05 Standard Terminology of Glass and Glass Products, Opal Glass means, a glass with fiery translucence; typically nearly opaque white glass. Borosilicate glass means silicon glass with B2O3 content above 4 weight percentage characterized by a moderate to low thermal expansion, long in viscosity versus temperature, and low in density. While borosilicate glass can be Opal glass, it cannot be other way round. From the tariff description, the classification would depend upon the coefficient of thermal expansion and not merely the percentage of boron oxide or the trade name Opal Glass. - findings of misdeclaration of description and misclassification cannot be sustained. Commissioner has not followed proper procedure for redetermination of value and for rejection also while initial grounds for rejection are acceptable after giving an opportunity to the importer and considering the submissions, there has to be a categorical finding as to why the transaction value is not acceptable. In this case the two grounds for rejection of transaction value is mis-declaration of value and inability of the General Manager to explain the difference between their price and price list, dated 9-2-2004 of the supplier. If the General Manager could not explain it at the time of investigation, it does not mean that they could be permanently shut out from explaining afterwards. Therefore, the submissions made during the hearing and in reply to the show cause notice should have been considered. - impugned order is set aside and the matter is remanded to the Original Adjudicating Authority for fresh adjudication - Decided in favour of assessee.

Summary

Issues Involved:
1. Classification of imported goods.
2. Alleged misdeclaration of description.
3. Rejection of transaction value and determination of value.

Issue-wise Detailed Analysis:

1. Classification of Imported Goods:
The primary dispute revolved around the classification of the imported goods under the Customs Tariff. The appellant, Hamilton, classified the goods under Heading 7013 39 00, while the department proposed classification under Heading 7013 32 00. The classification under 7013 32 00 required the goods to have a linear coefficient of expansion not exceeding 5 x 10-6 per Kelvin. The Chemical Examiner's report stated that the goods were borosilicate glassware with no breakage on heating and cooling, indicating lower linear expansion, but did not quantify the coefficient of expansion. Contrarily, the supplier and CGCRI, Kolkata, certified the coefficient as 5.9 x 10-6 and 6.99 x 10-6 per Kelvin, respectively. The Tribunal found the department's evidence insufficient to prove the classification under 7013 32 00 and held that the goods should be classified under 7013 39 00 as claimed by Hamilton.

2. Alleged Misdeclaration of Description:
The department accused Hamilton of misdeclaring Opal Ware as Glassware to undervalue the goods. However, examination reports at ICD, Vapi, indicated that the goods were indeed Opal Glassware Dinner Sets, supporting Hamilton's claim that there was no misdeclaration. The Tribunal referred to ASTM standards, which define Opal Glass and Borosilicate Glass, and concluded that Opal Glassware could be considered Glassware. Therefore, the Tribunal did not find sufficient grounds to sustain the allegation of misdeclaration.

3. Rejection of Transaction Value and Determination of Value:
The transaction value was rejected based on higher prices found in invoices recovered from another importer and an email. The Commissioner noted the absence of a fresh MoU after 2006 and discrepancies in the price lists. However, Hamilton argued that no evidence of additional payments was found, and they had long-term contracts with the supplier. The Tribunal observed that the Commissioner did not follow the proper procedure under the Customs Valuation Rules after rejecting the transaction value. The Tribunal emphasized that the Commissioner should have considered the transaction value of similar goods imported by others and provided a detailed explanation for rejecting Hamilton's transaction value. Consequently, the Tribunal set aside the impugned order and remanded the matter for fresh adjudication, emphasizing the need to follow principles of natural justice and proper valuation procedures.

Conclusion:
The Tribunal found that the department failed to prove the correct classification under Heading 7013 32 00 and that there was no misdeclaration of description by Hamilton. The rejection of the transaction value was not in accordance with the law, and the matter was remanded for fresh adjudication.