2018 (3) TMI 367 - AT - Customs

Classification of goods - Bentonite Powder BH 200 Mesh - Volclay Bentonite Powder Fine 325 Mesh - The case of the department is that the goods i.e. Bentonite Powder BH 200 Mesh and Volclay Bentonite Powder Fine 325 Mesh were Activated Bentonite classifiable under CTH 38029019 attracting duty at a higher rate - Held that - the supplier has clearly certified that the product supplied was not activated with any acid alkaline and soda ash. These are natural unactivated bentonite and are only dried, ground and sized before supply. In view of the certificate, nothing contrary can be assumed and the product as per the certificate is not activated bentonite. The Revenue could not bring anything on record to contradict this certificate. Therefore, in absence of any evidence which can remotely indicate that the product is activated bentonite, we cannot agree with the finding given by the learned Commissioner in the impugned order. The courts have clearly held that the burden of classification is on the Revenue which has to be discharged with evidence - In the present case, no such burden was discharged by the Revenue. Appeal allowed - decided in favor of appellant.

Summary

Issues: Classification of goods under Customs Tariff Heading, Burden of proof on correct classification, Evidence required for disputing classification

The judgment by the Appellate Tribunal CESTAT MUMBAI revolves around the classification of Bentonite Powder BH 200 Mesh and Volclay Bentonite Powder Fine 325 Mesh under the Customs Tariff Heading (CTH) 25081090. The department argued that the goods were Activated Bentonite classifiable under CTH 38029019, attracting a higher duty rate due to a change in the tariff entry. The adjudicating authority classified the goods under CTH 3802, leading to a demand for differential duty, confiscation of goods, and imposition of penalties. The appellant contended that the goods were natural unactivated bentonite, supported by a supplier's certificate and analysis, challenging the department's classification based on assumption and presumption.

The learned counsel for the appellant argued that the burden of correct classification lies with the department, requiring evidence such as test reports or technical analysis to dispute the classification. The appellant cited various judgments emphasizing the department's obligation to provide substantial evidence for classification. In contrast, the Assistant Commissioner representing the Revenue maintained that the goods were activated bentonite based on their specifications and distinct properties, justifying the adjudicating authority's classification decision.

Upon review, the Tribunal found that the Revenue failed to establish the goods as activated bentonite through test reports or technical analysis. The appellant's supplier certificate explicitly stated that the products were natural unactivated bentonite, contradicting the department's classification. The Tribunal emphasized that the burden of classification rests with the Revenue, which was not met in this case due to the absence of evidence supporting the activated bentonite classification. Consequently, the impugned order was deemed unsustainable, leading to the appeal's allowance in favor of the appellant. The judgment highlighted the necessity for concrete evidence to substantiate classification decisions and reiterated the department's responsibility to discharge the burden of proof in such matters.