2024 (2) TMI 1097 - AT - Customs

100% EOU - Classification of goods - Bill of Entry describes the goods as Indonesia robusta coffee beans - On examination found to be Coffee husk/bits - Denial from benefit of Notification No.52/2003-Customs - confiscation u/s 111(f)(l)(m) and (o) - Penalty - 100% EOU - whether the Coffee husk/bits with infected coffee beans is also a raw material for manufacture of coffee - HELD THAT - The tariff headings under Chapter 0901 reads as coffee, whether or not roasted or decaffeinated, coffee husks and skins; coffee substitutes containing coffee in any proportion . The Chapter Heading 0901 11 is for coffee and Chapter Heading 0901 9010 is for coffee husks and skins; thus, clearly distinguishing coffee from coffee husk. Therefore, the Commissioner was correct in classifying coffee husk under Chapter Heading 0901 9010 as against Indonesia Robusta coffee beans being classified by the appellant under Chapter Heading 0901 1145. The appellant had produced a procurement certificate from Export Promotion Cell which allows them to import Indonesia Robusta coffee beans thus implying that the benefit of the Notification No.52/2003 will be allowed only if the imported goods are found to be Indonesia Robusta coffee beans and this is a raw material for the manufacture of instant coffee which is to be exported by the appellant. Therefore, the question of allowing coffee husk/bits under the guise of coffee beans is ruled out since the coffee husk in no terms can be a raw material for the manufacture of instant coffee rather it is used only as a waste either as animal feed or as agricultural manure. Hence, the benefit of the Notification cannot be extended to the appellant since it is not a raw material for the items to be exported. This Tribunal in a similar set of facts has held that it is for the concerned authority under Special Economic Zone to consider the request of the EOU to import raw materials suitable for manufacture of export products and to ensure fulfilment of export obligations as per the norms issued from time to time and accordingly, remanded the matter to allow the appellant to produce amended procurement certificate from the concerned authorities under Rule 5(1)(a) of the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017. Since this Tribunal has already remanded the matter for further examination and verification with regard to the procurement certificate, we also remand the case with the following observations (i) To examine whether the amended letter of the Development Commissioner allows coffee husk/bits as the raw material for the manufacture of instant coffee. (ii) To obtain a letter from the Coffee Board whether Coffee Husk can be used as a raw material for the manufacture of instant coffee that the appellant intends to export. Thus, we set aside the impugned order and the appeals are is remanded to the Commissioner for de novo adjudication subject to above observations.

Summary

Issues involved:
The issues involved in the judgment are misdeclaration of imported goods as Coffee Husk/Bits instead of Robusta coffee beans, denial of benefit under Notification No.52/2003, classification of goods, eligibility for exemption, interpretation of import policy, and permission granted by the Development Commissioner.

Summary of Judgment:

Issue 1 - Misdeclaration of Goods:
The appellant declared imported goods as 'Indonesia Robusta coffee beans' but upon examination, they were found to be Coffee Husk/Bits. The goods were confiscated and reclassified, leading to denial of benefit under Notification No.52/2003.

Issue 2 - Classification and Eligibility for Exemption:
The appellant argued that the goods should be classified as Robusta coffee beans under Chapter Heading 0901 1145, eligible for customs duty exemption. However, the examination revealed the presence of coffee husk, leading to classification under Chapter Heading 0901 9010 as coffee husk/bits. The Commissioner's classification was upheld.

Issue 3 - Interpretation of Import Policy:
The appellant contended that the literal interpretation of the import policy should be followed to promote EOU activities. They claimed that even if the goods were coffee husk/bits, they should be permitted for import under specific conditions of Notification No.52/2003.

Issue 4 - Permission by Development Commissioner:
The appellant cited permission from the Development Commissioner for broad banding inclusion of items, including coffee bean with husk and without husk. However, the Commissioner rejected this amendment as it was issued after the goods were imported.

Conclusion:
The Tribunal remanded the case for further examination and verification regarding the permission granted by the Development Commissioner and the usability of coffee husk as a raw material for instant coffee production. The impugned order was set aside, and the appeals were remanded for de novo adjudication.

This summary provides a detailed overview of the judgment, addressing each issue involved in the case.