2015 (9) TMI 614 - AT - Customs

Classification of goods - import of optical fibre cables (OFC) Tariff entry CTH9001 and CTH8544 Confiscation Vide impugned order, adjudicating authority classified optical fibre cables imported by appellant under CTH 9001 and denied benefit of notification No. 24/2005-Cus, confirmed differential duty demand and confiscated goods Whether goods were to be classified under CTH 8544 or under CTH 9001 of Customs Tariff Whether confiscation of goods and imposition of penalty was justified Held that - as observed in case of ALCATEL INDIA LTD 2006 (2) TMI 196 - AUTHORITY FOR ADVANCE RULINGS Optical fibre cables fall under both Headings 85.44 and 90.01, if optical fibre cable was made up of individually sheathed fibre, it fall under Heading 85.44 and all other optical fibre cables fall under Heading 90.01 In current case, Optical fibre cables were not made up of individually sheathed fibres which was basic criterion to be fulfilled by any optical fibre cable to merit classification under tariff heading 8544 Since tariff heading 9001 specifically covers optical fibre cables other than those of heading 8544, products in question would accordingly fall squarely under heading 9001 Thus, correct classification of OFCs imported by appellant was under CTH 9001 Customs Tariff Therefore impugned order in respect of classification of goods, upheld. No evidence to prove that appellant misdeclared description of goods under import with intent to evade payment of duty Goods were imported by appellant over long period of time and they have been classifying same under CTH 8544 all along Goods were also examined or ought to have been examined by Customs at time of importation Therefore, laying claim to some exemption, was matter of belief of assessee and does not amount to misdeclaration warranting confiscation Also show cause notice for demand of differential duty was hit by time-bar Thus, entire differential duty demand with interest, confiscation of goods, imposition of fine and penalties were not sustainable and hereby set aside Decided in favour of Assesse.

Issues Involved:
1. Classification of Optical Fibre Cables (OFCs): Whether they should be classified under CTH 8544 70 90 or CTH 9001.
2. Invocation of Extended Period for Duty Demand and Penalties: Whether the extended period for confirming duty demand and imposing penalties is applicable.

Detailed Analysis:

1. Classification of Optical Fibre Cables (OFCs):

The primary issue was the correct classification of the OFCs imported by the appellant. The appellant argued that the OFCs should be classified under CTH 8544 70 90, which covers optical fibre cables made up of individually sheathed fibres. The appellant provided detailed technical descriptions and references from technical literature and certificates from Corning Cable Systems, Australia, to support their claim that the fibres were individually sheathed.

The Revenue, however, contended that the OFCs should be classified under CTH 9001, based on the HSN explanatory notes and previous decisions by the Tribunal and the Advanced Authority for Ruling. The key argument was that the fibres were not individually sheathed but merely coated, which does not meet the criteria for classification under CTH 8544.

The Tribunal reviewed the manufacturing process and technical details provided by both parties. It referred to previous decisions, including the Optel Telecommunication Ltd. case, which concluded that coating does not amount to sheathing. The Tribunal also considered the detailed analysis in the Alcatel case, which distinguished between coating and sheathing, emphasizing that coating, regardless of its thickness or protective quality, does not qualify as sheathing.

The Tribunal concluded that the OFCs imported by the appellant did not meet the criteria for classification under CTH 8544 as they were not made up of individually sheathed fibres. Therefore, the correct classification of the OFCs is under CTH 9001.

2. Invocation of Extended Period for Duty Demand and Penalties:

The second issue was whether the extended period for confirming the duty demand and imposing penalties was applicable. The appellant argued that they had been consistently classifying the OFCs under CTH 8544, even when the duty rates were the same for CTH 8544 and CTH 9001. They also pointed out that the department had not raised any objections for imports prior to 1-3-2005, which supports their claim of no misdeclaration or suppression.

The Revenue argued that the appellant's technical expert was aware of the correct classification, and the classification under CTH 8544 was an intentional misdeclaration. However, the Tribunal found that the evidence provided by the Revenue was not conclusive enough to establish misdeclaration or suppression.

The Tribunal noted that the goods were imported over a long period, and the classification under CTH 8544 was consistent. The goods were also examined by Customs at the time of importation, and the description in the bills of entry matched the invoices. The Tribunal referred to the Northern Plastic Ltd. case, which held that claiming an exemption, whether admissible or not, is a matter of belief and does not constitute misdeclaration.

The Tribunal concluded that the extended period for confirming the duty demand was not applicable, and the demand was hit by time-bar. Consequently, the entire differential duty demand with interest, confiscation of the goods, and imposition of fines and penalties on the appellant and its employee were not sustainable.

Summary:

1. The Optical Fibre Cables imported by the appellant merit classification under CTH 9001 of the Customs Tariff, not under CTH 8544 70 90.
2. The differential duty demand on account of such re-classification is hit by time-bar. The entire duty demand along with interest, confiscation of the goods, and imposition of penalties on the appellant and its employee are not sustainable in law and are accordingly set aside.

(Operative part of the order pronounced in the Court on 1-1-2015)

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