2023 (7) TMI 666 - AT - Customs

Classification of imported goods - stainless steel tube fittings couplings, tees, crosses - to be classified under tariff item 7307 2200 or under tariff item 7307 2900 of First Schedule to the Customs Tariff Act, 1975 - N/N. 50/2017-Cus dated 30th June 2017 - HELD THAT - Neither of the lower authorities have examined the meaning of the expression threaded elbows and sleeves as declared and have come to the conclusion that the imported goods do not match the description therein. There is no record of any evidence that the said finding is based upon visual examination of goods or scrutiny of any documents pertaining to the import. Furthermore, it is seen that, without reference to the entries within heading 7307 of First Schedule to Customs Tariff Act, 1975, the HSN Explanatory Notes have been relied upon. Crucial to the displacement of a tariff item as declared, is the available of an alternative tariff item that must, independently conform to the goods. This has been held in the decision of the Hon ble Supreme Court in HPL CHEMICALS LTD. VERSUS CCE, CHANDIGARH 2006 (4) TMI 1 - SUPREME COURT holding that If the Department intends to classify the goods under a particular heading or sub- heading different from that claim by the assessee, the Department has to produce proper evidence and discharge the burden of proof. In the present case the said burden has not been discharged at all by the Revenue. With the two rival classifications at the eight digit level within the same heading the resort to one alternative classification that is a residual entry, it would appear that the lower authorities have not given any justification for discarding the claim by the appellant or preferring the revised one over the declared one. The entire process of re-determination of the classification is not in accordance with the decision of the Hon ble Supreme Court - Impugned order set aside - appeal allowed.

Summary

Issues:
The incorrect application of classification under the Customs Tariff Act, 1975 leading to the denial of the duty rate claimed by the appellant.

Summary:
The appeal was filed by M/s Bombay Fluid Systems Components Pvt Ltd against the order of the Commissioner of Customs (Appeals), Mumbai - III, regarding the classification of imported 'stainless steel tube fittings - couplings, tees, crosses' under the Customs Tariff Act, 1975. The appellant claimed a duty rate of 10% under tariff item 7307 2200, but the lower authorities reclassified the goods under the residual heading in tariff item 7307 2900, denying the claimed rate.

The first appellate authority determined that the goods did not fall under the category of 'flanges, threaded elbows, bends and sleeves,' leading to the resort to the residual entry under the Customs Tariff Act, 1975. However, it was noted that the lower authorities did not examine the actual meaning of the declared expression 'threaded elbows and sleeves' nor provided evidence based on visual examination or import documents.

The Tribunal highlighted the importance of proper evidence and burden of proof on the Revenue when classifying goods differently from the claim made by the assessee. Referring to legal precedents, the Tribunal emphasized that the burden of proof lies with the Revenue, and in this case, it was not adequately discharged. The lower authorities did not justify discarding the appellant's claim or preferring the revised classification over the declared one.

In light of the above, the Tribunal found that the re-determination of classification was not in accordance with the principles established by the Hon'ble Supreme Court. Consequently, the impugned order was set aside, and the appeal was allowed.