2022 (1) TMI 468 - AT - Customs

Classification of imported goods - Polyester Bed Cover or Polyester Fabric - classifiable under Custom Tariff Heading 63041930 as declared by the Appellant or under Custom Tariff Heading 54075490 as claimed by revenue? - discharge of burden of prove or not - HELD THAT - The department to classify the goods as polyester woven fabric under CTH 54075490 and to prove that the goods are polyester woven fabric has relied on three textile committee reports reproduced in the impugned order. By perusing the reports dated 28.02.2017 it is clearly mentioned in the column of correct description Classification of the sample that appropriate HS Code could not be provided due to rupture of yarn in weft while untwisting - Even if we accept the corrected report and all other reports they are all inconclusive and instead of relying upon them they should have been sent for retesting which the commissioner categorically denied stating that he does not find any cogent reason to grant resampling and retesting at this stage as samples were tested at two different recognised institutions and expert committee. Secondly to decide the correct classification of goods the commissioner held the Subheading 540751 to 540754 cover other woven fabric, containing 85% or more weight of textured polyester filaments. For that the authority has relied upon report of ATIRA stating the fabric is made entirely of texturised yarn to be covered under the above heading the fabric should contain 85% or more weight of texturised polyester filaments, now as per the report of ATIRA as well as report of Textile committee, that could not be ascertained as the weft ruptured, therefore the basic condition of 85 % percent could not be fulfilled and could not be ascertained whether weft is texturised yarn or not - the only conclusion that could be drawn from the above facts is department has not discharged their burden of proof and the classification of the department should be rejected. In view of the settled law, irrespective whether the classification claimed by the appellant is correct or not since the classification proposed by the Revenue is absolutely incorrect, the entire case of the Revenue will not sustain - Since the revenue has not been able to discharge their burden of proof. Hence the classification of goods declared by the appellants cannot be disturbed. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Classification of imported goods as Polyester Bed Cover or Polyester Fabric under Custom Tariff Heading 63041930 or 54075490.

Detailed Analysis:

1. Classification of Goods:
The Appellants imported goods declared as 100% Polyester Bed Cover under CTH 63041930. The goods were examined by DRI and Textile Committee, leading to conflicting reports on the composition of the material. Despite inconclusive reports, a Show Cause Notice was issued based on expert opinions. The matter was adjudicated, and appeals were filed before CESTAT. The CESTAT remanded the case for decision based on statutory definitions and tariff notes. The Adjudicating authority upheld the demands, leading to the present appeals.

2. Examination of Reports:
The department sought to classify the goods as "polyester woven fabric" under CTH 54075490, relying on various reports. However, most reports were inconclusive, with one report classifying the sample as a quilt cover. The department failed to prove the composition of the goods, as essential criteria like the percentage of texturised polyester filaments could not be ascertained. The burden of proof lies with the taxing authorities, as established in various legal precedents cited by the Appellant.

3. Legal Precedents and Burden of Proof:
Legal precedents like UIO vs Garware Nylons Ltd. and HINDUSTAN FERODO LTD. Vs COLLECTOR OF CENTRAL EXCISE emphasize the burden of proof on taxing authorities to establish the taxable nature of goods. The Appellant cited ALPHA FOAM PVT. LTD. Vs COMMISSIONER OF CENTRAL EXCISE to highlight the importance of conclusive evidence in classification disputes. The settled legal position dictates that if goods are not classifiable under the proposed heading by the revenue, the department's case will fail.

4. Final Decision:
Given the revenue's failure to discharge their burden of proof and the inconclusive nature of reports, the classification of goods declared by the Appellants as Polyester Bed Cover under CTH 63041930 cannot be disturbed. The impugned orders were deemed unsustainable, leading to their setting aside. The appeals were allowed with consequential relief, if any, in accordance with the law.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT AHMEDABAD highlights the complexities of classifying imported goods and the importance of conclusive evidence in such disputes.