2017 (9) TMI 943 - AT - Customs

Classification of imported goods - nine products - interpretation of facts regarding nature and usage of the products - The original authority classified these products either under Chapter 21 or under Chapter 33 depending upon the nature and usage of these products. Chapter 21 deals with miscellaneous edible preparations. Chapter 33 deals with essential oils and resinoids; perfumery, cosmetics or toilet preparations - The appellant-assessee claimed classification under Chapter 22, 29 and 30 of the tariff. These deal with beverages, spirits and vinegar (chapter 22), organic chemicals (chapter 29), pharmaceutical products (chapter 30). Held that - We have perused the product literature and samples of the impugned goods. None of these products merit classification as medicines or medicaments. These are not having any therapeutic or prophylactic value. K-Link Puyikang/Puyikang Takara is basically for ladies hygiene. There is no curative or therapeutic value for these products. At the best, some of these products have effect of removing toxins, overall enhancing the well-being of the person consuming or using them. The appellant-assessee themselves clearly printed in the literature as well as on the product package that these are not drugs and not intended to diagnose, treat, cure or prevent any disease. The product as packed and marketed should be considered for classification. When the appellant-assessee themselves claimed that these are not for curing or treating any disease, the question of considering them as medicaments does not arise. In the present case, we are not dealing with any ingredients or products which are claimed to be in the Ayurvedic text or in recognized Pharmacopoeia. In fact, the Hon ble Supreme Court examined the scope of Chapter 30 and the meaning of the term medicament . As noted earlier in this order and discussed elaborately in the impugned order, none of the products which are examined in the present dispute have any qualities which can be considered as curative in nature. Most of the products are aimed at enhanced well-being or hygiene and improved body conditions. These type of generic group items are rightly to be considered under Chapter 21 or 33 depending on the nature and usage. Extended period of limitation - Held that - there is no evidence to support the claim of the Revenue that the appellant-assessee deliberately mis-declared the description of the imported goods in order to evade payment of duty. It was recorded that the product literature was made available to the department - The claim of the appellant assessee for a particular classification by itself will not make the case for mis-declaration, when all the required details including the product literature and the imported product itself being available at the time of assessment. There can be no question of demand for extended period invoking fraudulent mis-statement etc. in such situation - extended period cannot be invoked. Appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Classification of imported products.
2. Valuation of imported products.
3. Limitation period for demand of differential duty.
4. Penal proceedings against the appellant-assessee and other individuals/CHA.

Detailed Analysis:

1. Classification of Imported Products:
The primary issue in the judgment revolves around the classification of 15 imported products by the appellant-assessee. The original authority found that the classifications declared by the appellant-assessee were incorrect and reclassified the products under different tariff headings. The appellant-assessee accepted the reclassification for six items and contested the remaining nine.

- Rooibos SOD Drink: The original authority classified this product under CTH 210690/21069099/210899, noting it as a nutritional health drink, not a tea, beverage, or medicament. The product literature described it as a health benefit drink with no additives, preservatives, or colorants, and not intended to diagnose, treat, cure, or prevent diseases.

- BAE/K-Liquid Chlorophyll: Classified under 210690/21069099/210899, the product was marketed as a nutritional drink and botanical beverage, not as an organic chemical.

- UIE Power Liquid: Classified under Chapter 21, this product was intended to activate body cells and improve immunity, not as a beverage or pharmaceutical product.

- RIDDANCE: Classified under Chapter 21, marketed for detoxification and health enhancement, with no therapeutic or prophylactic use.

- Warrior Performance: Classified under Chapter 21, a plant extract consumed for general health and well-being, not a medicine.

- K-Link Puyikang/Puyikang Takara, BAE Power Oil/K-Energy Power Oil, Kinotakara, and Power Touch: Classified under Chapter 33, these products were for hygiene and well-being, not as medicines or medicaments.

The Tribunal agreed with the original authority's classification, noting that the products did not have curative qualities and were aimed at enhanced well-being or hygiene.

2. Valuation of Imported Products:
The valuation of the imported products was a secondary issue tied to their classification. The appellant-assessee accepted the valuation for six items but contested it for the remaining nine. The Tribunal upheld the original authority's findings on valuation based on the correct classification of the products.

3. Limitation Period for Demand of Differential Duty:
The original authority dropped the demand for differential duty for goods covered by three Bills of Entry, citing the limitation period. The Tribunal agreed, noting that the SCN was issued beyond the normal period and there was no evidence of deliberate mis-declaration by the appellant-assessee. The product literature and imported goods were available at the time of assessment, negating the claim of fraudulent mis-statement.

4. Penal Proceedings Against the Appellant-Assessee and Other Individuals/CHA:
The original authority dropped penal proceedings against the appellant-assessee and other individuals/CHA, as the demand for differential duty was time-barred. The Tribunal upheld this decision, finding no merit in the Revenue's appeals for penalties.

Conclusion:
The Tribunal dismissed the appeals by both the appellant-assessee and the Revenue, upholding the original authority's findings on classification, valuation, limitation period, and penal proceedings. The Tribunal found no reason to interfere with the original order and noted that the appellant-assessee did not provide sufficient evidence to alter the findings. The COs filed by the assessee in Revenue’s appeals were also disposed of.