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TMI Blog2024 (7) TMI 326X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty. Consequently, no penalty can be imposed under section 114A. The impugned order is set aside - Appeal disposed off. - MR. DILIP GUPTA, PRESIDENT AND MR. P. V. SUBBA RAO, MEMBER (TECHNICAL) Shri Devesh Tripathi and Shri Mukeshwar Nath Dubey, Advocates for the appellant. Shri PRV Ramanan, Special Counsel and Shri Rakesh Kumar, Authorized Representative for the Department ORDER These twenty four appeals have been filed by the importers, their partners/ proprietors and the Revenue assailing the same Order in original dated 31.5.2019 [Impugned order] passed by the Principal Commissioner of Customs, ICD, Patparganj. Hence they are being disposed of together. 2. Customs Appeal No. 52255 of 2019 is filed by M/s. Sahi Trading Company [Sahi] to assail the confirmation of demand with interest and imposition of redemption fine and penalties on it. 3. Customs Appeal No. 52470 of 2019 is filed by M/s. Kay Pee Enterprises [Kay Pee] to assail the confirmation of demand with interest and imposition of redemption fine and penalties on it. 4. Customs Appeal No. 52482 of 2019 is filed by M/s. Universal Impex [Universal] to assail the confirmation of demand with interest and imposition of redempt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... processed by the jurisdictional officers and the goods were cleared after examination as per the examination instructions. Orders permitting clearance of goods for home consumption (commonly referred to as out of charge ) were given under section 47 of the Customs Act, 1962 [The Customs Act] and the importers took the goods accordingly to their premises. 18. Thereafter, the DRI received intelligence that ladies trousers were being mis-declared as Girls leggie/Kids Leggie/Pyjama and conducted searches at various warehouses and seized goods, drew samples of goods described as Polyester Knitted Girls Pyjamas and sent them to Textile Committee for test and report. There were two varieties of goods viz., MNS-LBK and HQ-Z series. The Textile Committee gave its reports according to which the HQ-Z series goods declared as polyester knitted girls pyjamas or leggies were made of woven viscose fabrics. MNS-LBK variety was made of Polyester/polyurethane knitted fabrics and that HQ-Z series was made of woven viscose fabrics. Further, as per the reports of the Textile Committee, goods described as girls pyjamas in the test memo were Polyester/polyurethane knitted girls trousers classifiable und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lty under Section 112 of the Customs Act, 1962. Under first proviso to Section 114A of the Act ibid, I give M/s Sahi Trading Company, New Delhi, a option to avail the benefit of reduced penalty to the extent of 25% of the penalty if the entire amount of duty along with interest is paid within a period of 30 days from the date of communication of this order. (B) M/s Kay Pee Enterprises, Khasra No. 748, Extended Lal Dora, Village-Ghevra, New Delhi-110041 (i) I reject the claim of M/s Kay Pee Enterprises, Khasra No. 748, Extended Lal Dora, Village -Ghevra, New Delhi-110041 for classification of Viscose woven trousers imported by them as Polyester knitted leggies under CTH No. 61159990 and order to re-classify the same under CTH No. 62046990 of the Customs Tariff Act, 1975; (ii) I confirm the demand of differential customs duty of Rs. 12,77,696/- as per details mentioned in Annexure-B of this order under section 28 of the Customs Act, 1962 and order that the same be recovered from M/s Sahi Trading Company, New Delhi along with the interest at the appropriate rates under section 28AA of the Act ibid be recovered from M/s Sahi Trading Company, New Delhi on the above amount of short payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -A, Bahadurgarh, Jhajjar-124507 (Haryana): (i) I reject claim of M/s S.P. Enterprises, Plot No. 649, Part-A, Bahadurgarh, Jhajjar -124507 (Haryana) for classification of viscose woven trousers for girls imported by them as polyester knitted Pyjamas under CTH No. 61083990 as per details mentioned in Annexure-D to this order and re-classify the same under CTH No. 62046990 of the Customs Tariff Act, 1975; (ii) I confirm the demand of differential customs duty of Rs. 23,81,648/ as per details mentioned in Annexure-D of this order under section 28 of the Act ibid and order for its recovery from M/s S.P. Enterprises, Plot No. 649, Part-A, Bahadurgarh, Jhajjar-124507 (Haryana) alongwith interest at the appropriate rates under section 28AA of the Act ibid. (ii) (iii) I impose a penalty of Rs. 23,81,648/- on M/s S.P. Enterprises, Plot No. 649, Part-A, Bahadurgarh, Jhajjar-124507 (Haryana) under Section 114A of the Customs Act, 1962 for the contraventions discussed above refrain from imposing any separate penalty on them under Section 112 of the Customs Act, 1962 as penalty under section 114A of the Act ibid has been imposed upon them. Under first proviso to Section 114A of the Act ibid, I g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1962 for the violations as discussed above: S. NO. Name of the Person Partner/ Proprietor Name of the firm Amount of penalty 1 Shri Sanjay Puri Partner Proprietor M/s Goodluck Trading Co. M/s Kay Pee Enterprises 5,80,000/- 2 Shri Amit Malhotra Partner M/s Sahi Trading Co. M/s Universal Impex 3,00,000/- 3 Shri Sanjay Malhotra Partner M/s S P Enterprises 1,20,000/- 4 Ms. Kiran Puri Partner M/s Sahi Trading Co. M/s Universal Impex 3,00,000/- 5 Ms. Ashu Chopra Partner M/s S P Enterprises 1,20,000/- 6 Ms. Tripta Thapar Partner M/s Good Luck Trading Co. 2,30,000/- 7 Shri Vinod Kumar Thapar - - 15,00,000/ I refrain from imposing separate penalty on the above persons under Section 114A 114AA of the Customs Act, 1962 for the reasons mentioned above; 21. Aggrieved, the importers and their partners and proprietors filed these appeals. Revenue was also aggrieved by the impugned order as no penalties were imposed under sections 114A and 114AA of the Customs Act. Hence, Revenue filed these appeals. Submissions on behalf of the importers and their partners/proprietors 22. Learned counsel for the importers, their partners and proprietors made the following submissions: (i) The Bills of Entry were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied merely based on this opinion; (xi) Demands were confirmed against importers M/s. SP Enterprises and Goodluck Trading Co. in respect of whose imports there is not even any test report on record; (xii) Even if the department wishes to change the classification, it can only do so prospectively and not for goods which had already been cleared; (xiii) Demands have been made and confirmed on the basis of these test reports on consignments which were cleared in the past. Neither were any samples drawn nor were they tested nor was any expert opinion sought in respect of those goods. Therefore, the demand is not sustainable; (xiv) Even if the classification is decided against the importers, there is no reason to impose penalties or confiscate goods or impose redemption fines; (xv) Learned counsel submitted for our perusal samples of the imported goods. Submissions on behalf of Revenue 23. Learned Special Counsel assisted by the learned authorised representative for the Revenue made the following submissions. (i) While learned counsel for the importers submitted samples for perusal of the bench, it is not clear as to how and when they were drawn. Extra copies of the samples drawn and sea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is Rs.47.98 Lakhs, that for Kay Pee Enterprises is Rs.12.78 Lakhs and that for Good Luck Trading is Rs. 22.87 Lakhs. These amounts are any way recoverable as they within the normal period of limitation; (viii) Statements given by Shri Sanjay Puri, the mastermind of the operations and other partners, particularly Shri Amit Malhotra indicated that the samples examined were representative of the goods imported by the aforesaid five firms and that Shri Puri was looking after the import work for all the firms. Shri Puri refused to comment about the reports of the Committee. Statements of Shri Sanjay Puri have been corroborated by all others. However, he also routinely retracted some of his statements 2 to 4 months after they were recorded. Such retractions were investigated and found to be baseless. Nevertheless, he had confirmed the averments made earlier even after the retraction; (ix) Scrutiny of the records and investigations carried out indicated that the said importers had been importing Polyester Knitted Trousers and Viscose Woven Trousers under various consignments declared as Polyester Knitted Leggies/Pyjamas in the past; (x) In respect of 12 out of 13 Bills of Entry, Girls t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in Paragraphs 10.2 and 10.3 of the SCN was sufficient to impose penalty under section 114AA of the Act on all the 5 entities and their partners and proprietor as also Shri Sanjay Puri and Shri. V.K. Thapar. Findings 24. We find that the following questions need to be answered in these appeals: (a) Based on the available information and evidence, did the Revenue establish that the imported goods were girls trousers and not girls pyjamas? (b) What is the nature of the classification of the imported goods and who can do it? Can an expert determine the classification of the goods under the Customs Tariff? (c) Were the goods liable for confiscation under section 111(m)? If so, were the redemption fines imposed fair? (d) Were the penalties imposed correct and fair? (e) Did the Commissioner err in not imposing certain additional penalties under certain sections as indicated in Revenue s appeals? Pyjamas or trousers and what is the correct classification? 25. According to the declaration by the importers, the goods were girls pyjamas. It is not in dispute that the declarations in the Bills of Entry were as per the import documents. The goods were self-assessed by the importers considerin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication of Garment it states It is not possible to ascertain the correct measurement of the garment as during the testing procedure the sample got de-shaped and destructed; Hence cannot assess the HS Classification. Their report also has a remark that this parameter was subcontracted to EP QA, Naraina (New Delhi). The additional test report dated 21.9.2016, signed by the same Assistant Director (Laboratory) refers to the same sample received on the same date with the same Test Memo and the covering letter of DRI but states that it was tested from 8.7.2016 to 21.9.2016 but gives a different report of the same parameter HS Classification of Garment and it says In our opinion the submitted garment may be classified as Polyester/Polyurethane Knitted Girls Trouser under HS code 61.04.63 . This report also remarks that this parameter was subcontracted to EP QA, Naraina (New Delhi). 28. Thus, according to the above test report and additional test report, the sample received on 8.7.2016 was tested from 8.7.2016 to 30.8.2016 and the composition of the fabric was determined but determination of the nature of the garment and its HS classification was outsourced to EP QA, Naraina (New Delhi) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 before us 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 . 33. In view of the above, 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 34. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the proper officer. Thereafter, if there is any appeal or a demand under section 28, the adjudicating authority or the appellate authority, tribunal or the courts determine the duty payable. Thus, classification of the goods must be done by the importer and can also be done by the proper officer, adjudicating authority, appellate authorities or courts. It is the considered opinion of the person classifying the goods and is not a matter of fact. It is a quasi-judicial decision and is appealable. 37. Classification of goods has to be done as per the Customs Tariff. The General Rules of Interpretation [GRI] help in classifying the goods. Classification is not a matter of fact to be determined by an expert but a quasi-judicial matter to be decided as per the law. 38. The subjective opinion of the experts from the Textile Committee regarding the correct harmonised system (HS) classification of the imported goods is irrelevant. The adjudicating authority cannot classify the goods under Customs Tariff based on the opinion of an expert. An expert s opinion can be sought on the nature of the goods (say, nature of the fabric used, composition of fibres- natural or synthetic, etc.) However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned order holds that the imported goods were liable for confiscation under Section 111(m) and consequently, imposed penalty on the appellant under Section 112. According to the learned counsel for the appellant, even if the classification of the goods is decided against the appellant, it cannot be said that the goods were liable for confiscation under Section 111(m) because the appellant self-assessed the goods classifying them under the Customs Tariff Heading, which, according to it, was correct. Since the goods were not liable to confiscation, no penalty could have been imposed under Section 112. 44. According to the Revenue, classification of goods by the appellant importer is part of the entry made under Section 46 of the Customs Act, i.e., the Bill of Entry and since the goods did not match this part of the Bill of Entry, the imported goods were squarely covered by and were liable to confiscation under Section 111(m). Since the goods were liable to confiscation, penalty can be imposed and was correctly imposed under Section 112. 45. We find that classification of the goods, their valuation and applying exemption notifications are all part of assessment. Thus, the Bill of Entry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not dispute the classification. It is only the officers of DRI who disputed it based on the intelligence which they had collected and the subjective opinion of the Textile Committee. 48. If Section 111(m) of the Customs Act is read to mean that goods can be confiscated if the classification of the goods and the exemption notifications claimed by the importer self-assessing the duty under Section 17 and indicated in the Bill of Entry do not match the classification of the goods or the exemption notifications which the proper officer may apply during re-assessment or some post clearance opinion of DRI or Audit, it would result in absurd results. The importer cannot predict the mind of the proper officer much less, the minds of any DRI officers after the goods are cleared, and self-assess duty so as to conform to it. Insofar as the valuation is concerned, the importer is required to truthfully declare the transaction value, any additional consideration and relationship with the overseas seller. He is not required to predict whether the proper officer will value under Rule 12 and if so, what value he will determine. Lex non cogited impossibilia the law does not compel one to do impos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alty for improper importation of goods, etc. Any person,- (a)who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act, or (b)who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111, shall be liable,- (i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty [not exceeding the value of the goods or five thousand rupees] whichever is the greater; (ii) in the case of dutiable goods, other than prohibited goods, to a penalty [not exceeding the duty sought to be evaded on such goods or five thousand rupees,] whichever is the greater; (iii) in the case of goods in respect of which the value stated in the entry made under this Act or in the case of baggage, in the declaration made under section 77 (in either case hereinafter in this section referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orters declarations do not match with the subsequent opinions of DRI and the Textile Committee. 55. In the appeals filed by the Revenue, non-imposition of penalty under section 114A in the impugned order has been assailed. This section reads as follows: 114A. Penalty for short-levy or non-levy of duty in certain cases. Where the duty has not been levied or has been short-levied or the interest has not been charged or paid or has been part paid or the duty or interest has been erroneously refunded by reason of collusion or any wilful mis-statement or suppression of facts, the person who is liable to pay the duty or interest, as the case may be, as determined under sub-section (8) of section 28 shall, also be liable to pay a penalty equal to the duty or interest so determined: Provided that where such duty or interest, as the case may be, as determined under sub-section (8) of section 28, and the interest payable thereon under section 28AA, is paid within thirty days from the date of the communication of the order of the proper officer determining such duty, the amount of penalty liable to be paid by such person under this section shall be twenty-five per cent. of the duty or interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e after testing the samples which had already been destroyed are not sufficient to classify the goods as girls trousers as held in the impugned order. (b) Classification of the goods is a part of assessment and is a quasi-judicial function to be performed by the importer, proper officers, adjudicating authority and appellate authorities as per the Customs Tariff read with the General Rules of Interpretation. While expert opinion may be sought on the nature of the goods, classification cannot be based on the opinion of the expert. The GRI do not provide for classification based on any opinion of any expert. (c) Even if the classification of the goods in the Bills of Entry is not in conformity with the views of the proper officer or any other investigating agency or audit goods cannot be confiscated under section 111(m) because there is no mis-declaration (of any fact) but only classification as per the importer s opinion. Even if the classification is incorrect, the goods cannot be confiscated. (d) Consequently, no penalty can be imposed under section 112. (e) Penalties under section 114 A and 114AA also cannot be imposed as there was neither any short payment of duty nor any mis-de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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