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TMI Blog2024 (4) TMI 179X X X X Extracts X X X X X X X X Extracts X X X X ..... n the claimed heading. In the absence of such controverting within rule 1 and rule 3 of General Rules for Interpretation of the Import Tariff in Customs Tariff Act, 1975, a finding of conformity of description corresponding to the proposed tariff item that is not followed by resort to rule 3 of General Rules for Interpretation of the Import Tariff in Customs Tariff Act, 1975 places the exercise by the adjudicating authority in serious jeopardy and motivated by intent to deny duty benefits any which way. It is admitted that MIKO 1 was declared as toy but there is no ground to hold fast to the conviction that a subsequent variant, even if conforming to another description, must continue to be classified against an erroneous tariff item. The impugned order has referred to the rejection of application for registration of MIKO 2 under Electronics and Information Technology (Requirements of Compulsory Registration) Order by Bureau of Indian Standards (BIS) owing to expert opinion of Ministry of Electronics and Information Technology (MeitY). It is on record that the registration was subsequently incorporated. It is also contended that MIKO 2 and MIKO 3 are more akin than MIKO 1 is to MIK ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pugned goods are concerned, the impossibility of appending toys renders the claimed classification to be the only one remaining in the ring. Consequently, the classification claimed must remain. The impugned order is set aside to allow the appeal. - HON BLE MR C J MATHEW, MEMBER (TECHNICAL) AND HON BLE MR AJAY SHARMA, MEMBER (JUDICIAL) APPEARANCE: For the Appellant : Shri Prakash Shah, Advocate and Shri Mihir Mehta, Advocate. For the Respondent : Shri S K Hatangadi, Assistant Commissioner (AR). PER: C J MATHEW Both time past and time future cast their shadows on the landscape of this controversy over the rate of duty appropriate to the goods impugned in this appeal of M/s RN Chidakashi Technologies Pvt Ltd. The landscape itself presents a contrast of youthful ingenuity against conventional instinct by placement of a product of the end of the first quarter of this century onto a template devised at the beginning of the last quarter of the previous century; a brooding presence for five decades and straining to come to terms with disruptive development. This is apparent in the inability of the arms of the Central Government to evolve consensus on its fitment and, even more so, in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the earlier version, which was then under import, did not exclude it from automatic data processing (ADP) machine or include it as toy for customs classification which is to be in conformity with its own convention and rules and that, in any case, MIKO II too was incorporated in the registration on 15th February 2023. That the imports were effected between these developments has impacted the assessment is the claim of the appellant. 3. The dispute covers eight bills of entry 954496/8.01.2019, 9629097/14.01.2019, 9722930/21.01.2019, 2641031/30.03.2019, 3191478/11.05.2019, 3396396/27.05.2019, 4300256/31.07.2019 and 4641971/26.08.2019 for import of goods valued at ₹ 3,84,21,981 that were confiscated under section 111(m) and 111(d) of Customs Act, 1962, though permitted for redemption on payment of fine of ₹ 38,00,000, and on which differential duty of ₹ 99,74,345, stemming from adoption of classification proposed in the show cause notice, was ordered to be recovered under section 28(4) of Customs Act, 1962, along with applicable interest thereon under section 28AA of Customs Act, 1962, in order [order-in-original no. CG-GSS/37/2022-23 Adj (I), ACC dated 30th March ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... write-up for concluding that the classification proposed in the notice was more apt description of the impugned goods. 5. From the manner in which the adjudicating authority has disclaimed the appropriateness of classification claimed by the appellant before rendering a sketchy justification of conformity of proposed classification for the impugned goods, we find it necessary to deplore the discarding of the onus to be discharged by customs authorities in classification disputes enunciated by the Hon ble Supreme Court thus It is not in dispute before us as it cannot be, that onus of establishing that the said rings fell within Item No. 22-F lay upon the Revenue. The Revenue led no evidence. The onus was not discharged. Assuming therefore, the Tribunal was right in rejecting the evidence that was produced on behalf of the appellants, the appeal should, nonetheless, have been allowed. in Hindustan Ferodo Ltd v. Collector of Central Excise [1997 (89) ELT 16 (SC)] and 28. This apart, classification of goods is a matter relating to chargeability and the burden of proof is squarely upon the Revenue. If the Department intends to classify the goods under a particular heading or sub-headin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e all about features of the product and that, even if user is a child, it is not a toy by default in the face of sophisticated electronic processing carried out by the product. Its multifarious use for statistical analysis and as a driving companion installed by vehicle manufacturers would, according to Learned Counsel, not lend amenability to classification as toy, even for adults. Reliance was placed on the decision of the Hon ble Supreme Court in Commissioner of Customs, Delhi v. Cartier Aircon Ltd [2006 (199) ELT 577 (SC)]. He also drew attention to Explanatory Notes pertaining to other toys in Harmonized System of Nomenclature (HSN) for derogating resort to that by the adjudicating authority. 7. Learned Authorized Representative who, on behalf of respondent, contended that, without any distinguishable difference from goods imported earlier, viz., MIKO I, the appellant sought to place their imports under a heading that would obtain for them substantial exemption from duties of customs. He submitted that, in the context of the response of Ministry of Electronics and Information Technology (MeitY) as well as the technical literature furnished, it could not be held that the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I are dependent on electronics which is just what automatic data processing (ADP) is about. The contents of the Explanatory Notes are not sufficient to provide any guidance; nor has the Central Government considered it necessary to detail any for guidance. It is the adjudicating authority who has managed to fit in the voluminous details of a sophisticated gadget operating through processors within that sketchy framework. The justifications offered are, thus, erected in fragile foundations demonstrating conceptual partiality, revenue prejudice and legacy propensity. 10. It looks like a toy and, therefore, is a toy is a proposition which, even if superficial, may not be easily dismissed owing to simple appeal to conceptual pre-disposition. Physically, the product is not particularly big and recalls comic book portrayal of engineering fantasy. Conventionally, a toy is a plaything that acts as a prop in childish playacting without capability either for initiative or response. The impugned goods certainly does not conform to such effect notwithstanding which, and in the absence of any standard of measure of toy , its appeal, or lack thereof, is an uncanny resemblance to that object of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. None of this alters the onus that devolves on customs authorities in terms of the decisions of the Hon ble Supreme Court in re HPL Chemicals and in re Hindustan Ferodo. The lack thereof places the findings in the impugned order in serious jeopardy. 13. The description of the imported goods is not just toys made of plastic. That it has capabilities endowed by technological development does set it apart from a toy and, even if does conform to toy, it was necessary to show that the goods do not contain the essentials enumerated in tariff item 8471 4190 of First Schedule to Customs Tariff Act, 1975. Such finding is glaringly deficient in the impugned order. The classification adopted in other countries may not be a guide for assessment in India when the dispute has its genesis in perceived evaporation of duty; it is inevitable that identical duty rates marginalizes declaration relevance. Reliance thereto will not suffice for the purpose. 14. The claim of technological evolution of product being cause for declaration of another tariff item for assessment would inevitably lead to scrutiny of the departure from the earlier version. The adjudicating authority did take note of 19.3 Miko ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n chapter 84, pertaining to claimed classification, is not in consonance with judicial decisions supra mandating identification of appropriate classification on its own as a pre-requisite and that 20.3 Further, as per Note 3 to Section XVI states that Unless the context otherwise requires, composite machines consisting of two or more machines fitted to form a whole and other machines designed for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function. I find that the primary function of the subject goods is impart education/knowledge through entertainment etc. primarily for kids of age group 5 to 10 years. Reliance is placed on the decision of Hon'ble Supreme Court in the case of Commissioner of Customs, Bangalore Vs. N.I. Systems (India) P.Ltd. - 2010 (256) ELT 173 (SC) wherein Hon'ble S. Court held that PXI Controller which was a computer based instrumentation product and capable of being controlled by a Personal Computer/Laptop but is not a PC/laptop - principal function of controllers is executing control algorithms for real-t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1975. This may, at best, serve to confuse an assessing authority who is bound by the Rules thus Children playing with toys like in this instance Miko are simply engaging in play and interaction with a toy. While this toy robot itself may have some level of programming or automation, it is not performing complex data processing tasks in the same way that an ADP machine would. Instead, the robot is likely designed to respond to certain stimuli or commands in a pre-programmed manner, providing a fun and interactive experience for children. We fail to perceive the dearth of complexity that may justify shift of classification from within heading 8471 to heading 9503 of First Schedule to Customs Tariff Act, 1975. The findings are conjectures and assumptions that are not backed by authoritative texts, notes or definitions in law or even logical sequencing. These are not tenable in a classification exercise. 17. The impugned order has not established the primacy of heading 9503 of First Schedule to Customs Tariff Act, 1975 nor the inappropriateness of heading 8472 of First Schedule to Customs Tariff Act, 1975. The rules of engagement enunciated by the Hon ble Supreme Court for altering c ..... 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