2024 (7) TMI 326 - AT - Customs

Classification of imported goods - girls trousers or girls pyjamas - determination of classification of the goods under the Customs Tariff by expert - Import of readymade garments - Importer classified them as Polyester knitted Girl s/kids leggings - confiscation - penalties. Pyjamas or trousers and what is the correct classification? - HELD THAT - The disputed garments were not girls trousers according to the import documents, invoices, etc. There is nothing on record to show that any investigation was conducted to ascertain how those goods were sold by the importer after import. The packings of individual garments as per the samples presented by both sides also do not indicate anywhere that they are girls trousers . Thus, the they are not being sold as girls trousers to the ultimate consumers. Thus, they are not girls trousers as per trade parlance. As per the original test reports also, this parameter could not be determined. It is only the additional test reports submitted on the basis of the same samples which were already destroyed during testing, that the expert from the Textile Committee formed an opinion that they were girls trousers . The finding in the impugned order that that the garments in question were girls trousers cannot be sustained and needs to be set aside as it is primarily based on the revised subjective opinion of an expert contrary to the overwhelming documentary evidence and the packing of individual garments, none of which call them trousers. Classification under Customs Tariff Heading and who is competent to decide it - HELD THAT - Classification is an appealable, quasi-judicial decision by the officers or authorities empowered to determine it. Either party aggrieved by the classification can appeal to the higher authority. An expert s opinion, is just his opinion and it is not an appealable order. If classification of the goods is left to experts, it will cause utter chaos and confusion. One expert may classify the goods under one head and another expert may give a contrary opinion. Even otherwise, if there is anyone who really has the expertise in classifying goods, it will be the appraising officer and Assistant/Deputy Commissioner dealing with the group in the Custom House who deal with classification of similar goods everyday. In this case, DRI sought the opinion of the Textile Committee regarding the HS classification of the goods who initially declined to given their opinion because the samples were destroyed during testing and after some days gave their opinion based on the samples which were already destroyed. Clearly, their opinion is irrelevant to classification of the goods which must be as per the GRI provided in the Customs Tariff - the department has not made out a case to re-classify the goods. Confiscation under section 111(m) - imposition of redemption fines - HELD THAT - The entire case was built against the importers on the basis of intelligence received by DRI and the unsubstantiated subjective opinion of the experts from the Textile Committee that they were girls trousers. Therefore, it cannot also be said that the nature of the goods was mis-declared and hence they were liable for confiscation under section 111(m) - the confiscation of the goods under section 111(m) is not sustainable and needs to be set aside. The option of redeeming the goods on payment of redemption fines is redundant. Penalties - HELD THAT - There is not even a single piece of evidence that they were known as or were being sold as girls trousers . The goods imported under the Bills of Entry were cleared at least in some cases after examination. The Textile Committee reports nowhere indicate as to why they were not girls pyjamas or girls leggings as evidenced from the documents but were girls trousers . Thus, these are not cases of false declarations but merely cases where DRI and the Textile Committee hold a different opinion. Penalty under section 114AA cannot be imposed because the importers declarations do not match with the subsequent opinions of DRI and the Textile Committee - As the issue is held in favour of the importers on merits regarding the declaration of the nature of the goods and their classification, there is no non-payment or short payment of duty. Consequently, no penalty can be imposed under section 114A. The impugned order is set aside - Appeal disposed off.

Summary

Issues Involved:
1. Classification of imported goods as "girls trousers" or "girls pyjamas".
2. Competence to classify goods under Customs Tariff.
3. Liability of goods for confiscation under section 111(m).
4. Fairness of imposed penalties.
5. Non-imposition of additional penalties under certain sections as indicated in Revenue's appeals.

Detailed Analysis:

Classification of Imported Goods
Issue: Whether the imported goods were "girls trousers" or "girls pyjamas".

Findings:
- The importers declared the goods as "girls pyjamas" based on import documents and invoices. The goods were self-assessed and cleared by customs officers.
- Samples produced during the hearing were labeled as "premium leggings" and not "girls trousers".
- The Textile Committee's test reports were inconsistent; initial reports indicated the samples were destroyed during testing, yet subsequent reports classified them as "girls trousers".
- The Tribunal found the test reports lacked credibility and did not provide reasons why the goods were not "girls pyjamas" or "leggings".
- The goods were not known or sold as "girls trousers" in trade parlance.

Conclusion: The finding that the imported goods were "girls trousers" was set aside due to unreliable test reports and lack of evidence supporting the classification.

Competence to Classify Goods
Issue: Who is competent to classify goods under Customs Tariff.

Findings:
- Classification is part of the assessment process, which includes determining the dutiability of goods.
- The importer initially self-assesses the goods, and the proper officer can re-assess. Adjudicating authorities or appellate bodies can also determine classification.
- Expert opinions on the nature of goods can be sought, but classification must be done as per the Customs Tariff and General Rules of Interpretation (GRI).
- The Textile Committee's subjective opinion on HS classification was deemed irrelevant for determining the Customs Tariff classification.

Conclusion: Classification must be performed by the proper authorities as per the Customs Tariff and GRI, not based on expert opinions.

Liability for Confiscation under Section 111(m)
Issue: Whether the goods were liable for confiscation under section 111(m).

Findings:
- Section 111(m) pertains to goods not corresponding in value or material particular with the Bill of Entry.
- Classification and exemption notifications are part of the assessment and can differ based on the importer's or officer's opinion.
- The Tribunal found that differing opinions on classification do not render goods liable for confiscation under section 111(m).
- The goods were cleared after examination by customs officers, and the case against the importers was based on DRI intelligence and the Textile Committee's opinion.

Conclusion: The confiscation of goods under section 111(m) was set aside as there was no mis-declaration of facts, only differing opinions on classification.

Fairness of Imposed Penalties
Issue: Whether the penalties imposed were correct and fair.

Findings:
- Penalties under section 112 can be imposed if goods are liable for confiscation under section 111.
- As the confiscation was set aside, the consequential penalties under section 112 were also set aside.
- Penalties under section 114AA require false or incorrect declarations, which were not found in this case.
- Penalties under section 114A require short-levy or non-levy of duty due to collusion, wilful mis-statement, or suppression of facts, which were not established.

Conclusion: All penalties imposed under sections 112, 114AA, and 114A were set aside.

Non-Imposition of Additional Penalties
Issue: Whether the Commissioner erred in not imposing additional penalties under certain sections.

Findings:
- The Revenue's appeal for non-imposition of penalties under sections 112(a) and (b) and 114AA was dismissed.
- The Tribunal found no basis for imposing these penalties as there was no evidence of mis-declaration or short payment of duty.

Conclusion: The appeals filed by the Revenue were dismissed.

Final Order:
1. Appeals filed by importers and their partners/proprietors were allowed, setting aside demands, redemption fines, and penalties.
2. Appeals filed by the Revenue were dismissed.

[Order pronounced on 01/07/2024]