2023 (8) TMI 565 - AT - Customs

Classification of imported goods - snow goggles supplied to the Indian Army - classifiable under Customs Tariff Heading CTH 90049090 or under CTH 90041000? - redemption fine - interest and penalty - HELD THAT - The facts of the case are not in dispute. The appellant imported Snow Goggles to supply to Indian Army as per its contractual obligation. The contract does not place any order for sun glasses nor does it use the terms sun glasses and snow goggles synonymously. Thus, as far as the trade parlance, i.e., knowledge of those who deal with the imported goods is concerned, the imported goods are Snow Goggles and not sun glasses. The goods are meant for protection of eyes in snowy region and not protection of eyes from sunlight which is the purpose of sun glasses as is common knowledge. Thus, the finding in the impugned order that the Snow Goggles are also sun glasses is not correct. The contract also lays down detailed specifications of the materials, processing, quality control, dimensions, tolerances, workmanship and finish, pre-inspection, sampling procedure, conformity, test methods, packaging and user instructions - there are nothing in these to suggest that these are the same as sun glasses. It is undisputed that the goods fall under the broad heading of 9004. The dispute is if they are sunglasses and, therefore, fall under 90041000. We found, after examining the contract of the appellant with the Army (to meet which these were imported), that they are not sunglasses but are Snow Goggles. Therefore, the disputed goods cannot fall under 90041000 (sun glasses) and must fall under 900490 Other . This heading covers three types of goods viz., passive night vision goggles, prismatic eye glasses for reading and others. Night vision goggles enable the viewer to see in the dark by converting the infra red rays which are emitted by all objects even in the dark, into visible light. Prismatic eye glasses are meant for reading correcting the vision. The imported goods do not fall under either of these categories. Hence, they were correctly classified by the importer under the residual CTH 90049090 as others. The demand needs to be set aside. Consequently, the demand of interest also needs to be set aside. Levy of redemption fine and penalty - HELD THAT - As the demand itself is set aside, the fine imposed on the appellant also needs to be set aside on this ground alone. Further, penalty under section 112(a) can be imposed if the goods are liable to confiscation under any clause of section 111. In this case, the impugned order held that the goods imported by the appellant which had already been cleared for home consumption were liable for confiscation under section 111(m) for the reason that the imported goods did not match the classification of the goods (as decided in the impugned order). As per Section 17 the importer or exporter has to self-assess duty and the proper officer can re-assess the duty. Both the self-assessment by the importer (or, as the case may be, the exporter) and the re-assessment by the proper officer fall under the definition of assessment as per section 2(2). Thus, the importer (or exporter) and the proper officer are competent to classify the goods and assess the duty payable on them - remedy against self-assessment is re-assessment by the officer or an appeal to Commissioner (Appeals) and the remedy against the re-assessment is an appeal to the Commissioner (Appeals) which option is available to both sides or a notice under section 28 (which is available only to the Revenue and only to recover duties not levied, not paid, short levied, short paid or erroneously refunded). The imported goods do not become liable to confiscation under section 111(m) on the ground that the importer classified the goods under a CTH different from the opinion of the officer. Firstly, the importer is not an expert in taxation and can make mistakes and he cannot be penalized for making mistakes. Secondly, classification is a matter of opinion and the importer s goods cannot be confiscated nor can he be penalized for his opinion. Thirdly, the filing of the Bill of Entry and the self-assessment precede re-assessment by the proper officer and it is impossible for the importer to anticipate under which heading the officer is likely to classify the goods and file the Bill of Entry accordingly. Fourthly, there is no legal obligation on the importer to conform to the possible subsequent view of the officer. The law cannot be read to obligate the importer to do the impossible task of predicting the views of the officer and following them. Thus, wrong classification or wrong claim of an exemption notification, in the Bill of Entry even if they are found to be completely incorrect, do not attract section 111(m) or the consequential penalty under section 112. The impugned order is set aside and the appeal is allowed.

Summary

Issues Involved:
1. Classification of imported snow goggles under the correct Customs Tariff Heading (CTH).
2. Demand of customs duty and Integrated Goods and Services Tax (IGST).
3. Imposition of interest under Section 28AA of the Customs Act, 1962.
4. Liability for confiscation under Section 111(m) of the Customs Act, 1962.
5. Imposition of penalty under Section 112(a) of the Customs Act, 1962.

Summary:

1. Classification of Imported Snow Goggles:
The appellant argued that snow goggles should be classified under CTH 90049090, which attracts a basic customs duty (BCD) of 10%, instead of CTH 90041000, which attracts a BCD of 20%. The adjudicating authority erred in equating snow goggles with sun glasses, which are different products. The contract with the Indian Army specified the supply of snow goggles, not sun glasses, and detailed specifications supported this distinction. The Tribunal found that snow goggles are meant for protection in snowy regions and not just from sunlight, distinguishing them from sun glasses. Thus, the correct classification is under CTH 90049090.

2. Demand of Customs Duty and IGST:
The Principal Commissioner confirmed a demand of Rs. 51,58,683/- as customs duty and IGST on the imported snow goggles. Since the Tribunal decided the classification in favor of the appellant, the demand for customs duty and IGST was set aside.

3. Imposition of Interest:
Interest under Section 28AA of the Customs Act, 1962, was held payable by the appellant. However, as the demand for duty was set aside, the interest demand was also set aside.

4. Liability for Confiscation:
The goods were held liable for confiscation under Section 111(m) of the Customs Act, 1962, but no redemption fine was imposed as the goods had already been cleared. The Tribunal disagreed with this reasoning, stating that classification differences do not amount to mis-declaration warranting confiscation. The Tribunal emphasized that classification is part of the assessment process and differences in opinion do not attract Section 111(m).

5. Imposition of Penalty:
A penalty of Rs. 5,15,850/- was imposed under Section 112(a) of the Customs Act, 1962. The Tribunal set aside the penalty, reasoning that the appellant's classification was a matter of interpretation and not a mis-declaration. Consequently, the goods were not liable for confiscation, and thus, no penalty could be imposed.

Conclusion:
The Tribunal set aside the impugned order, allowing the appeal with consequential relief to the appellant. The correct classification of the imported snow goggles was under CTH 90049090, and the demands for customs duty, interest, and penalties were not sustained.