2019 (4) TMI 1097 - AT - Customs

Classification of imported goods - whether classified under CTH 54075490 as Polyester Woven Fabrics as against the classification declared by the appellant under CTH 63041990 as Polyester Bed Sheet ? - HELD THAT - The essential distinguishing feature of made up article is that it should be produced in finished state and ready for use without sewing or other working. The fabric needs to be hemmed and stitched firmly in order to assume the shape of a bed cover/quilt cover/bed sheet - The imported goods, as presented, are in the form of fabrics folded and stitched roughly on two sides. The test report from both the expert agencies to whom samples were sent have concurrently reported that the goods cannot be classified as made ups but are more appropriately classified as polyester woven fabric . Confiscation of the imported goods - misdeclaration of goods or not - penalty - HELD THAT - The appellant has declared the classification of goods as per their understanding. The export invoice indicates the goods as Polyester bed sheet . The actual nature of the imported goods for the purpose of correctly classifying the goods become evident only after examination of the goods and obtaining expert opinion - the charge of misdeclaration cannot be fastened upon the appellant. There is nothing on record to substantiate the view that the appellant has intentionally misdeclared the goods - order of Confiscation set aside - The penalty imposed under Section 112 (a) is also set aside. Appeal allowed in part.

Summary

Issues: Classification of imported goods under CTH 54075490 as "Polyester Woven Fabrics" instead of CTH 63041990 as "Polyester Bed Sheet", Confiscation of goods, Penalty imposition, Misdeclaration of goods

Classification Issue:
The appellant declared the imported goods as "Polyester Bed Sheet" under CTH 63041990, but upon examination, it was found that the goods were more appropriately classified as "Polyester Woven Fabrics" under CTH 54075490. Expert opinions from Textile Committee, Mumbai, and Ahmadabad Textile Industry's Research Association supported this reclassification. The goods did not meet the criteria for "made ups" as per Note 7 of Section XI of Chapter 50. The fabrics were roughly stitched on two sides and did not satisfy the requirements for a made-up article. The Tribunal upheld the reclassification and the demand for Customs duty along with interest.

Confiscation Issue:
The Adjudicating Authority ordered confiscation of the goods under Section 111(m) due to alleged misdeclaration by the appellant. However, the Tribunal noted that the dispute was primarily about classification, not intentional misdeclaration. The appellant had declared the goods based on their understanding, and the actual nature of the goods became clear only after examination and expert opinions. As there was no evidence of intentional misdeclaration, the Tribunal set aside the order of confiscation and the penalty imposed under Section 112(a).

Conclusion:
The Tribunal modified the impugned order, partially allowing the appeal. It upheld the reclassification of the imported goods as "Polyester Woven Fabrics" under CTH 54075490 instead of "Polyester Bed Sheet" under CTH 63041990. The demand for Customs duty and interest under the revised classification was confirmed. The Tribunal set aside the order of confiscation and the penalty imposed, as there was no evidence of intentional misdeclaration by the appellant.