2015 (10) TMI 188 - AT - Customs

Classification of VGA card/TV tuner Invocation of extended period for imposing demand of duty Vide impugned order, adjudicating authority classified VGA card/box/TV Tuner imported by appellant falling under CTH 8528 71 00 as reception apparatus for television not designed to incorporate video display as against claim of appellant that same falls under CTH 8473 30 99 as parts/accessories of computer Consequently, authority confirmed confiscation, penalty and duty demand by invoking extended period of time along with interest thereon Held that - show cause notice has been issued after lapse of six months from date of import of impugned goods, and has been issued beyond normal period of limitation Goods were subjected to first check before they were finally assessed and, therefore, department was fully aware of nature of product imported Therefore, question of invoking extended period of time would not arise Clear that there were divergent practices with regard to classification of TV tuners used for ADP machines and, therefore, appellant is right in entertaining bona fide belief that classification of goods imported by them could be under CTH 8473 30 99 In said circumstances, bona fide of belief entertained by appellant cannot be questioned at all Consequently, entire demand and consequent liability are not legally sustainable and is set aside Decided in favour of Assesse.

Summary

Issues: Classification of imported goods under Customs Tariff Heading (CTH) 8528 71 00 or CTH 8473 30 99, invocation of extended period under Section 28(1) of the Customs Act, 1962, imposition of duty demand, confiscation of goods, imposition of penalties, misdeclaration of goods, and applicability of penalty under Section 114A of the Customs Act.

Classification Issue Analysis:
The appellant, M/s. Neotric Informatique Ltd., imported VGA card/box/TV Tuner claiming classification under CTH 8473 30 99 as parts/accessories of a computer, contrary to the adjudicating authority's classification under CTH 8528 71 00 as a reception apparatus for television. The appellant argued that the VGA box is designed for use with a computer, not as a standalone device, and provided evidence of sales to computer dealers. They cited past acceptance of similar classification and a Tribunal decision supporting their claim. The appellant contended that their classification was based on a bona fide belief and common trade parlance. The Revenue, however, alleged misdeclaration and suppression of facts, invoking extended period and seeking penalty under Section 114A. The Tribunal found that the show cause notice was issued beyond the normal limitation period, rejecting the extended period invocation. It upheld the appellant's classification under CTH 8473 30 99, setting aside the duty demand, confiscation, and penalties.

Legal Analysis:
The Tribunal noted the appellant's consistent classification practice, acceptance by the department, and reliance on a Tribunal decision supporting their position. The Board's circular highlighted divergent practices in TV tuner classification, supporting the appellant's belief. The Tribunal emphasized the bona fide nature of the appellant's belief, rejecting the extended period invocation. It dismissed the Revenue's argument for penalty under Section 114A, as the show cause notice was not based on the circular. The Tribunal's decision rested on the legality of the demands, finding them unsustainable due to time-bar and classification considerations. The appeal by the appellant was allowed, with consequential relief, while the Revenue's appeal was dismissed. The Tribunal refrained from opining on the goods' classification due to the duty demand's annulment.

Conclusion:
The judgment by the Appellate Tribunal CESTAT Mumbai addressed the classification dispute, extended period invocation, misdeclaration allegations, and penalty applicability under the Customs Act. It upheld the appellant's classification under CTH 8473 30 99, rejecting the duty demand, confiscation, and penalties imposed by the adjudicating authority. The decision emphasized the appellant's bona fide belief, common trade parlance, and past practices, while dismissing the Revenue's contentions. The Tribunal's detailed legal analysis and reasoning resulted in setting aside the demands and providing relief to the appellant, while dismissing the Revenue's appeal.