2019 (4) TMI 341 - AT - Customs

Imposition of ADD - Classification of imported needles - sewing machine needles or embroidery needles? - N/N. 31/2017 (ADD) dated 22nd June 2017 - Held that - Both Revenue and the assessee are not in disagreement that embroidery needles are distinct from sewing machine needles. From the orders of the lower authorities, we are unable to ascertain the distinction between the two. There is also no reference to any authentic source for the distinction between the two noted by the original authority. Circumstantial evidence, such as stickers on the packing, that part of the consignment declared to be embroidery needles was, admittedly, composed of sewing machine needles and that a different model number designates embroidery needles , are not acceptable in a dispute on classification. We are unable to decide on the appropriate classification. It would have been simplest of tasks on the part of the original authority to have drawn samples for testing by the chemical laboratory or any other competent laboratory for determining if the goods were indeed embroidery needles as claimed by importer or were sewing machine needles as held by lower authorities - matter remanded back to the original authority for carrying out necessary tests. Appeal allowed by way of remand.

Summary

Issues:
1. Import of 'needles' subject to anti-dumping duty
2. Classification dispute between 'sewing machine needles' and 'embroidery needles'
3. Enhancement of value, redemption fine, and penalties

Issue 1: Import of 'needles' subject to anti-dumping duty
The dispute in the appeal pertains to the import of 'needles' by M/s Super Sonic Impex, which was held liable to anti-dumping duty imposed by a specific notification. The appellant argued that a portion of the imported goods were 'embroidery needles' not subject to duty, while customs authorities disagreed. The original authority enhanced the value, imposed anti-dumping duty, and penalties, allowing redemption only for re-export.

Issue 2: Classification dispute between 'sewing machine needles' and 'embroidery needles'
The appellant contended that the imported goods included both 'sewing machine needles' and 'embroidery needles,' with a technical difference in the eye dimension. They argued that 'embroidery needles' fall under a different heading in the Customs Tariff Act compared to 'sewing needles.' The first appellate authority partially allowed the appeal, but the distinction between the two types of needles was not accepted by the authorities, leading to a classification dispute.

Issue 3: Enhancement of value, redemption fine, and penalties
The appellant challenged the enhancement of value, reduction of redemption fine, and imposition of penalties. The first appellate authority set aside the enhancement of value and reduced the redemption fine and penalties but maintained the requirement for re-export. The appellant argued that customs should have returned the samples used for assessment, and the authorities should have accepted the test reports and opinions provided.

The Tribunal noted the disagreement between the Revenue and the assessee regarding the distinction between 'embroidery needles' and 'sewing machine needles.' However, the lack of clarity in the lower authorities' orders regarding the distinction and the absence of authentic sources led to uncertainty. The Tribunal emphasized the importance of proper testing to determine the classification accurately. Consequently, the Tribunal set aside the impugned order and remanded the matter to the original authority for conducting necessary tests and providing an opportunity for the importer to respond before a final decision is made.