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TMI Blog2024 (2) TMI 1508X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal before the Commissioner (Appeals) against the selfassessment, or not - recovery of differential duty - confiscation - interest - penalty. Assessment of Customs Duty - HELD THAT:- Assessment concludes the determination of the liability of the importer to pay duty and is similar to a decree under the Civil Procedure Code, 1908 CPC Section 2 (2) of CPC defines decree as "It means the formal expression of an adjudication which conclusively determines the rights of the parties with regard to all or any of the matters in controversy in the suit." Assessment differs from decree inasmuch as the determination of what is due from the importer as duty is not made by a Court of law but the duty is determined through a quasi-judicial process by the 'proper officer' who re-assesses the duty or is self-determined by the importer. Just like a decree in Civil suits, there is a provision for appeal against assessment. It is appealable by both sides to the Commissioner (Appeals) under section 128 and also to further higher judicial fora. The Commissioner (Appeals) does not assess but either affirms, modifies or annuls the assessment order. In this process, the Commissioner (Appeals) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The proposals in the SCNs to re-classify the goods relying on a notification are not correct. The reasoning in the SCNs is that since the front cover, middle cover and back cover will be exempted under the notification if they fall under CTH 39209999, it means all front cover, back cover and middle covers fall under CTH 39209999. This logic cannot be accepted because the issue of exemption notification is a quasi-legislative function of the Government (and is not appealable) and is not a quasi-judicial function of assessment, including classification, which is appealable. A plain reading of the exemption notification also does not show that it intends to decide the classification of the goods under any heading. It only says that if the goods which match the description also fall under the tariff heading they will be exempt. Confiscation of goods under Section 111(m) and consequent penalty under Section 112 - HELD THAT:- The case of the Revenue in this appeal is that the classification of the goods by the importers in self assessment was not correct. Even if the classification was not correct, it does not render them liable to confiscation under Section 111(m). Similarly, there co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Commissioner, however, dismissed the test report and classified them as articles of plastic under CTH 3920 without giving any reasons for doubting the assertion of the appellant that they were made of crystal or the test report produced by the appellant. No samples were drawn or tested by the Customs to demonstrate that they were made of plastic. In the absence of any evidence from the Revenue, the appellant importer's declaration regarding the nature of the goods and the test reports that it had submitted must be accepted. If Revenue had a doubt regarding the declaration or the reports, it is for the Revenue to produce evidence in support and there is none whatsoever in this case. Thus, there are no justification whatsoever to classify lenses of mobile phones under 39209999 in the impugned orders regardless of which material they are made of. The impugned orders insofar as they relate to classification of lenses also need to be set aside. Conclusion - i) Classification of the goods is a part of assessment and the importer, the proper officer and appellate authorities alone are competent to decide it. ii)The policy of the MeiTY, which is in the nature of an executive policy dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,78,121/- on the appellant and imposed penalty of Rs. 14,00,00,000/- under Section 112 (a) (ii) of the Customs Act, 1962 Act for the period 23.02.2018 to 31.12.2019. 3. Customs Appeal No. 50782 of 2020 is filed by M/s. Vivo Mobile India Pvt. Ltd. Vivo to assail the Order-in-Original dated 16.02.2021 passed by the Principal Commissioner of Customs, Air Cargo Complex, New Delhi, whereby he confirmed the demand of differential duty of Rs. 75,31,26,652/- on the appellant and imposed penalty of Rs. 7,50,00,000/- under Section 112 (a) (ii) of the Act for the period 24.02.2018 to 30.12.2019. 4. Customs Appeal No. 50795 of 2021 is filed by M/s. DBG Technology (India) Pvt. Ltd. DBG to assail the Order-in-Original dated 15.02.2021 passed by the Principal Commissioner of Customs, Air Cargo Complex, New Delhi, whereby he confirmed the demand of differential duty of Rs. 58,33,513/- on the appellant and imposed penalty of Rs. 5,80,000/- under Section 112 (a) (ii) of the Act for the period 20.08.2019 to 31.12.2019. 5. Customs Appeal No. 50796 of 2021 is filed by M/s. Padget Electronics Private Limited Paget to assail the Order-inOriginal dated 15.02.2021 passed by the Principal Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cover, middle cover and front cover (classified by the appellant under 85177090) and camera lens (classified by the appellant under 90021100/85177090) (e) Oppo- Battery cover, middle cover back cover and front cover (classified by the appellant under 85177090) and camera lens (classified by the appellant under 90021100/85177090) (f) Vivo- Battery cover (classified by the appellant under 86177090) and camera lens (classified by the appellant under 90021100) (g) Transsion- Front cover, middle cover and back cover (classified by the appellant under 85177090) and camera lens (classified by the appellant under 90021100) It was also proposed to confiscate the goods under Section 111 (m) of the Customs Act, 1962 and impose penalty under Section 112(a) (ii) of the Customs Act, 1962. 10. The grounds on which the SCNs proposed to reclassify the goods are as follows :- (i) the goods Battery cover, Front cover, Middle cover, Back Cover and Camera Lens' (which are part/sub-part or accessories of cellular mobile phones) are classifiable under CTH 39209999 and attract BCD @ 15% in terms of S. No. 10 of notification No. 57/2017-Cus dated 30.06.2017, as amended; (ii) Chapter note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal's Final Order No.51665/2023 dated 20.12.2023. Therefore, these appeals may also be decided accordingly. (ii) The appellants had imported front covers, middle covers and back covers of cellular phones which house various components of the phone and also provide for dissipation of the heat. The details of these types of covers are as follows: Back Covers: These help in providing safety to the battery and internal components. They also provide ingress protection, structural support and save internal PCB, sub-components and battery from dust, moisture and other foreign particles. When a PCB or battery is exposed to such particles, it gets damaged resulting in malfunctioning of mobile phone. In some models, the back covers are also layered with zinc, aluminum and other metallic alloys for heat dissipation. Back covers may also have rubber gasket and glass for sealing the camera lens. Front Covers: These form the basic structures wherein the camera, buttons, infrared sensors, amongst others are embedded. Middle Covers: These are layered with zinc and provide housing and protection to sub-parts. The layering helps in heat dissipation. (iii) These phone covers, in gene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced or laminated with other materials. In this case the middle cover is laminated with zinc and hence clearly gets excluded from CTH 3920. The use of these metals not only enhanced the strength of the plastic, but also helps in dissipations of the heat. (vii) Further, for the goods to fall under CTH 3920 they should not be further worked. The phone covers in their case have ground edges, thermos-formed with grooves, drilled and CNC milled and, therefore, they do not qualify as goods 'not further worked'. (viii) The phone covers were correctly classifiable under CTH 85177090 in view of section note (ii) to Section XVI which provides for classification of the parts of the goods falling under chapter 85. Part is defined as one without which a machine is not operational or does not suitably discharge its function. Thus the parts can perform either an electronic function or a mechanical one. In this case, the front covers, middle covers and back covers of cellular phones performed mechanical function as well as provide for heat dissipation. The covers also protect the parts from dust, moisture etc. They correctly merit classification under CTH 8517 7090 which reads as follows :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertains to articles of plastic and include plates, sheets, film, foil and strip (other than those of Chapter 54) and blocks of regular geometric shape, whether or not printed or otherwise surfaceworked, uncut or cut into rectangles (including squares) but not further worked even if when so cut they become articles ready for use. Evidently, lenses cannot fall in this definition because they are not in geometrical shapes. Revenue's contention that lenses need to be classified under CTH 39209999 cannot be sustained. 15. Shri Kunal Kishore, learned counsel for Vivo reiterated the submissions of Shri Lakshmikumaran. He further submitted that Vivo had also imported lenses which form part of the camera of the mobile phones and classified them under CTH 90021100 which the Commissioner incorrectly re-classified under CTH 39209999 as articles of plastic. In fact, the lenses imported by Vivo were not made of plastic at all but were made of crystal and therefore, they can never be classified as articles of plastic under Chapter 39. In support of the claim that they were made of crystal, Vivo had submitted test certificate from M/s. SGS- a reputed testing agency confirming that the lenses were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dle cover fixes the inner components and protects the battery from moisture and dust and it is also made of plastic, therefore, the impugned order was correct in holding that they are classifiable under CTH 39209999. These three covers do not contribute to the functionality of the mobile per-se and, therefore, do not deserve to be classified as parts of the mobile phones and should be classified under Chapter 39. He placed reliance on the following case laws:- i. Ipea Paramount Pvt. Ltd. Versus Commissioner of ii. C. Ex., New Delhi 2002 (143) E.L.T. 632 (Tri. - Del.) iii. Commissioner versus Ipea Paramount Pvt. Ltd. 2008 (228) E.L.T. A136 (S.C.) iv. P.R. Packagings Pvt. Ltd. Versus Commissioner of C. Ex., New Delhi - II 2002 (139) E.L.T. 495 (Tri. - Del.) v. Hariram Govindram versus Collector of CentralExcise, Bombay 1997 (94) E.L.T. 574 (Tribunal) vi. Karnataka Power Corporation Ltd. Versus Commr.of Cus., Chennai 2016 (337) E.L.T. 104 (Tri. - Chennai) vii. General Mills India Ltd. versus Commr. Of Cus.(Import), JNCH, Nhava Sheva 2019 (368) E.L.T. 705 (Tri. - Mumbai) viii. Atul Kaushik versus Commissioner of Customs(Export), New Delhi 2015 (330) E.L.T. 417 (Tri. - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue cannot raise a demand by issuing a notice under section 28 without first filing an appeal to the Commissioner (Appeals) is not correct and is contrary to the legal position. While both sides can appeal against the self assessment, Revenue can also issue a notice under section 28 and raise a demand. On the other hand, refund is not a quasi-judicial process but is a mechanical process of refunding the amount if it is due as per the assessment (including self-assessment). The officer sanctioning the refund cannot, in the course of such sanction, sit in judgment over or modify the assessment. The judgments of the Supreme Court in Priya Blue Industries vs Commissioner of Customs (Prev) 2004 (172) E.L.T. 145 (S.C.), Collector of Central Excise vs Flock India 2000 (120) E.L.T. 285 (S.C.) and ITC Ltd. all pertain to the question as to if refund can be sanctioned so as to modify the assessment and the question was answered in negative. None of these judgments says that notice under section 28 cannot be issued without modifying the assessment through an appeal. The order of the Kolkata bench of this Tribunal in Rajib Saha is per incuriam being contrary to the law laid down by the Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 975), or any other law for the time being in force, on goods imported into, or exported from, India. (2) The provisions of sub-section (1) shall apply in respect of all goods belonging to Government as they apply in respect of goods not belonging to Government. 22. Thus, the taxable event, i.e., that event which triggers levy of customs duty is the act of importation (bringing into India from a place outside India) or exportation (taking to a place outside India from India) of goods. The levy is on the goods and not on any person and that levy will apply even if the goods belong to the Government. Assessment 23. Customs duty is levied at such rates as are specified in the Schedules to the Customs Tariff Act, 1975. These rates can be based on quantity (specific rate of duty) or value (ad valorem rate of duty) and on most goods latter is the case. Based on the classification of the goods in the Schedule to the Customs Tariff Act, their value, exemption notifications, etc., the duty of customs has to be assessed. 24. Assessment is defined in Section 2(2) as follows: Section 2. Definitions - In this Act, unless the context otherwise requires, ….. (2) "ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porter, exporter or any other person to produce any document or information, whereby the duty leviable on the imported goods or export goods, as the case may be, can be ascertained and thereupon, the importer, exporter or such other person shall produce such document or furnish such information. (4) Where it is found on verification, examination or testing of the goods or otherwise that the self- assessment is not done correctly, the proper officer may, without prejudice to any other action which may be taken under this Act, re- assess the duty leviable on such goods. (5) Where any re-assessment done under sub-section (4) is contrary to the self-assessment done by the importer or exporter and in cases other than those where the importer or exporter, as the case may be, confirms his acceptance of the said re- assessment in writing, the proper officer shall pass a speaking order on the re-assessment, within fifteen days from the date of re-assessment of the bill of entry or the shipping bill, as the case may be. Explanation. - For the removal of doubts, it is hereby declared that in cases where an importer has entered any imported goods under Section 46 or an exporter has en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmination of the liability of the importer to pay duty and is similar to a decree under the Civil Procedure Code, 1908 CPC Section 2 (2) of CPC defines decree as "It means the formal expression of an adjudication which conclusively determines the rights of the parties with regard to all or any of the matters in controversy in the suit." Assessment differs from decree inasmuch as the determination of what is due from the importer as duty is not made by a Court of law but the duty is determined through a quasi-judicial process by the 'proper officer' who re-assesses the duty or is self-determined by the importer. Just like a decree in Civil suits, there is a provision for appeal against assessment. It is appealable by both sides to the Commissioner (Appeals) under section 128 and also to further higher judicial fora. The Commissioner (Appeals) does not assess but either affirms, modifies or annuls the assessment order. In this process, the Commissioner (Appeals) may also decide the issue of classification of the goods. Similarly, on appeals, the Tribunal or Supreme Court either sustain or set aside the orders of the Commissioner (Appeals) and in the process they may also de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be appealable by any person aggrieved thereby. The expression "Any person‟ is of wider amplitude. The revenue, as well as assessee, can also prefer an appeal aggrieved by an order of assessment. It is not only the order of reassessment which is appealable but the provisions of Section 128 make appealable any decision or order under the Act including that of self- assessment. The order of selfassessment is an order of assessment as per Section 2(2), as such, it is appealable in case any person is aggrieved by it. There is a specific provision made in Section 17 to pass a reasoned/speaking order in the situation in case on verification, self-assessment is not found to be satisfactory, an order of reassessment has to be passed under Section 17(4). Section 128 has not provided for an appeal against a speaking order but against 'any order' which is of wide amplitude. The reasoning employed by the High Court is that since there is no lis, no speaking order is passed, as such an appeal would not lie, is not sustainable in law, is contrary to what has been held by this Court in Escorts (supra). Demands under Section 28 31. While both the importer and Revenue can appeal to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... selfassessment and selective re-assessment by the officers were introduced initially as a practice. Later, in 2011 Section 17, which deals with assessment, itself was amended and the concept of self assessment and selective re-assessment were introduced in the Customs Act itself. The question which then arose was if the goods were cleared without any assessment by the proper officer, can a refund be claimed because there is no order or assessment by the proper officer to appeal against. In Aman Medical Products Ltd. vs Commissioner 2010 (250) E.L.T. 30 (Del.) and Micromax Informatics Ltd. vs UOI 2016 (342) E.L.T. A183 (Del.), Delhi High Court held that in cases where there is no assessment or order by the proper officer, refunds can be claimed without any appeal to the Commissioner (Appeals). These and several other cases were appealed against before the Supreme Court by the Revenue. The larger bench of Supreme Court in ITC Ltd. finally decided that all assessments including self-assessments can be appealed against before the Commissioner (Appeals) and no refund can be sanctioned unless the assessment is modified. 36. Ms. Madhumita Singh has mis-construed this requirement for sanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (emphasis supplied) 38. This legal position was quoted with affirmation in ITC Ltd. The relevant portion of the judgment is as follows: 40. In Priya Blue Industries Ltd. v. Commissioner of Customs (Preventive) - 2004 (172) E.L.T. 145 (S.C.) = (2005) 10 SCC 433, the Court considered unamended provision of Section 27 of the Customs Act and a similar submission was raised which was rejected by this Court observing that so long as the order of assessment stands, the duty would be payable as per that order of assessment. This Court has observed thus : "6. We are unable to accept this submission. Just such a contention has been negatived by this Court in Flock (India) case (2000) 6 SCC 650. Once an order of assessment is passed the duty would be payable as per that order. Unless that order of assessment has been reviewed under Section 28 and/or modified in an appeal, that order stands. So long as the order of assessment stands the duty would be payable as per that order of assessment. A refund claim is not an appeal proceeding. The officer considering a refund claim cannot sit in appeal over an assessment made by a competent officer. The officer considering the refund claim c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n appeal against any assessment including self assessment, what is the nature of this power of 'the proper officer' to issue a Show Cause Notice under section 28 to modify the assessment and demand duty short paid, not paid, etc. The nature of this power was examined by the Supreme Court in two different judgments. In Commissioner of Customs (Preventive) vs Sayed Ali. 2011 (265) ELT 17(S.C.), the question before the Supreme Court was if the Commissioner of Customs (Preventive) could exercise powers under section 28 and in that context, the Supreme Court examined the nature of the power under section 28 as follows: "16. In the present cases, the import manifest and the bill of entry having been filed before the Collectorate of Customs (Imports) Mumbai, the same having been assessed and clearance for home consumption having been allowed by the proper officer on importers executing bond, undertaking the obligation of export, in our opinion, the Collector of Customs (Preventive), not being a "proper officer" within the meaning of Section 2(34) of the Act, was not competent to issue show cause notice for reassessment under Section 28 of the Act. Nothing has been brought on record to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preme Court in the case of I.T.C. Vs. Commissioner of Central Excise, New Delhi [2019(368) ELT 216 (SC) wherein it has been held that the department cannot demand differential duty without challenging the self-assessment made by the importer. Accordingly, they contended that the impugned order is not sustainable. ….. 10. We observe that the self-assessment of the Bills of Entry by the importer was not challenged by the department. The Hon'ble Supreme Court in the case of ITC Ltd, has held as under: When we consider the overall effect of the provisions prior to amendment and post-amendment under Finance Act, 2011, we are of the opinion that the claim for refund cannot be entertained unless the order of assessment or self-assessment is modified in accordance with law by taking recourse to the appropriate proceedings and it would not be within the ken of Section 27 to set aside the order of selfassessment and reassess the duty for making refund; and in case any person is aggrieved by any order which would include self-assessment, he has to get the order modified under Section 128 or under other relevant provisions of the Act. 11. We observe that the ratio of the abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssification of the goods under the Customs Tariff. Of the three grounds on which the classification is proposed to be changed in these SCNs, the policy of MeITY as a ground cannot, therefore, be sustained. Exemption notifications 47. Section 25 gives the Central Government the power to issue exemption notifications exempting goods either fully or partly, conditionally or unconditionally from duty. Issuing these notifications -which are in the nature of subordinate legislation- is a quasi-legislative function of the Government. Section 25 reads as follows. "Section 25. Power to grant exemption from duty. - (1) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette, exempt generally either absolutely or subject to such conditions (to be fulfilled before or after clearance) as may be specified in the notification goods of any specified description from the whole or any part of duty of customs leviable thereon. ******* (4) Every notification issued under sub-section (1) or sub-section (2A) shall, unless otherwise provided, come into force on the date of its issue by the Central Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in column 3 shall be classified in the heading in column 2. Evidently, goods of the description in column 3 may fall in the heading in column 2 in which case, the exemption applies or the goods may not fall under the heading in column 2 in which case, the exemption does not apply. 50. During assessment, the goods must be first classified and thereafter it must be examined if the notification applies or not and not the other way round. Issue or withdrawal or modification of a notification cannot determine the classification. The proposals in the SCNs to re-classify the goods relying on a notification are not correct. The reasoning in the SCNs is that since the front cover, middle cover and back cover will be exempted under the notification if they fall under CTH 39209999, it means all front cover, back cover and middle covers fall under CTH 39209999. This logic cannot be accepted because the issue of exemption notification is a quasi-legislative function of the Government (and is not appealable) and is not a quasi-judicial function of assessment, including classification, which is appealable. A plain reading of the exemption notification also does not show that it intends to decid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;… 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, subject to the provisions of Section 114A, to a penalty not exceeding ten per cent. of the duty sought to be evaded or five thousand rupees, whichever is higher. 53. According to the learned counsels for the appellants, even if the classification of the goods is decided against the appellants, it cannot be said that the goods were liable for confiscation under Section 111(m) because the appellants had self-assessed the goods classifying them under the Customs tariff heading, which, according to them, was correct. Since the goods were not liable to confiscation, no penalty could have been imposed under Section 112. According to the learned special counsel and the learned authorised representative for 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per officer is empowered to reject the transaction value under Rule 12 of the Customs Valuation Rules and redetermine the value of the imported goods based on the value of the contemporaneous imports of identical goods, similar goods, etc., following Valuation Rules 4 to 9. It needs to be pointed out that the power to reject the transaction value under Rule 12 vests in the proper officer and not in the importer. The importer will also not have access to the values of contemporaneous imports of identical or similar goods by others. Therefore, the only way an importer can self-assess the duty on the imported goods is based on his own transaction value and any additional consideration which it may be paying. 56. It is impossible for the importer to predict if the proper officer would re-classify the goods and if the proper officer would, after rejecting the transaction value, re-determine the value based on contemporaneous imports or through other methods or what value the officer will fix. Nothing in the law requires an importer to anticipate what classification the proper officer would find proper for the goods and classify the goods or anticipate if the proper officer would reject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the goods, viz., front cover, middle cover, battery cover, front cover housing, middle cover housing and rear cover housing back cover of mobile phones. Of the three grounds on which these goods were re-classified in the impugned order, we have already found two grounds cannot determine the classification; these are the exemption notification issued by the Central Government and the policy notified by the MeITY. We proceed to decide the classification based on the Customs Tariff. The Rules of Interpretation of this tariff, in a nutshell are as follows: Rule 1. The titles of Sections, Chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions: Rules 2 (a) which deals with incomplete or unassessmbled or disassembled articles and 2 (b) which deals with mixtures of substances are not relevant to this case. Rule 3. When by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove rules, on the understanding that only sub headings at the same level are comparable. For the purposes of this rule the relative Section and Chapter Notes also apply, unless the context otherwise requires. 60. The two competing entries in the Tariff are CTH 85177090 (as claimed by the appellant) and CTH 39209999(as held in the impugned order). The relevant chapter notes are as follows: "Chapter 39 2. This Chapter does not cover: …. (s) articles of Section XVI (machines and mechanical or electrical appliances); 10. In headings 3920 and 3921, the expression ―plates, sheets, film foil and strip applies only to plates, sheets, film, foil and strip (other than those of Chapter 54) and to blocks of regular geometric shape, whether or not printed or otherwise surfaceworked, uncut or cut into rectangles (including squares) but not further worked (even if when so cut they become articles ready for use)." 61. Goods should be classified under the tariff should be as per the headings and sub-headings and relevant section notes and chapter notes. Chapter note 2 (s) to chapter 39 clearly excludes goods falling under Section XVI under which chapter 85 also falls ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce the amount of dust on battery terminals and it is also made of plastic. The middle cover fixes the inner components and protects the battery from moisture and dust and it is also made of plastic, therefore, the impugned orders were correct in holding that they were classifiable under CTH 39209999. According to them, these three covers do not contribute to the functionality of the mobile per-se and, therefore, do not deserve to be classified as parts of the mobile phones and should be classified under Chapter 39. According to them, every part of a machine does not merit being classified along with the machine or as its part under Chapter 85 and some parts of machine can also be classified under Chapter 39. They rely on Ipea Paramount Pvt. Ltd., P.R. Packagings Pvt. Ltd., Hariram Govindram, Karnataka Powers Corporation Ltd., General Mills India Ltd., Atul Kaushik, Towa Ribbons Pvt. Ltd. and Speedway Rubber Co. in support of this submission. 64. On the question of whether the specific entry should prevail over the general entry, learned special counsel and learned authorized representative appearing for the Revenue submitted that since the impugned goods do not merit classificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cording to the appellants, the middle covers also have a layer of zinc to help dissipate the heat. The fifth step of thermoforming changes the shape of the article from a plain sheet of plastic to one with the required shape and dimensions including the rounded edges. Thermoforming is a common industrial process which involves heating of a plain plastic sheet and moulding it into articles - such as inner panels of a refrigerators, panels in a car or disposable food trays. In our considered view, this is a process beyond mere cutting and surface working and this process also takes it out of the purview of chapter note 2(s) to Chapter 39. The sixth and the last process is CNC milling to cut holes in these covers to install various components. CNC or Computerised numerically controlled machines, as is well known, are modern, automated versions of lathe machines which are used to cutting, grinding, etc. to work on a piece of material to convert it into desired articles. In our considered view, CNC milling also goes beyond mere cutting and surface processing of the sheet. 67. Thus, applying the first Rule of Interpretation, they cannot be classified under CTH 3920- the vapor deposition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that all parts of refrigerating machines are not automatically to be classified under Chapter 84. The Revenue has also not contended nor brought any evidence on record that the impugned goods are for the treatment of materials by a process involving a change of temperature. Accordingly, we hold that the impugned goods are classifiable under respective Headings in Chapters 39 and 40 of the Central Excise Tariff. We, thus allow the Appeal. 69. Similarly, the decision in the case of RR Packaging was based on Trade Notice No. 67/86 dated 30-9-1986 issued by the Bombay Collectorate which was in favour of the assessee and was binding on the officers. The question in Hariram Govindram was related to classification of the outer covers of the cassettes. Relying on Board's order dated 29- 7-1994 issued under Section 37B of the then Central Excises and Salt Act, 1944, the classification was decided in favour of the assessee. 70. In Karnataka Power Corporation, the dispute was whether imported parts of Hydro Electric Generator i.e., 'Epoxy insulated single turn half coils with accessories and Epoxy insulated single turn half coils wave stator windings etc.' were classifiable under 8503 or u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were made of crystal or the test report produced by the appellant. No samples were drawn or tested by the Customs to demonstrate that they were made of plastic. In the absence of any evidence from the Revenue, the appellant importer's declaration regarding the nature of the goods and the test reports that it had submitted must be accepted. If Revenue had a doubt regarding the declaration or the reports, it is for the Revenue to produce evidence in support and there is none whatsoever in this case. Thus, we find no justification whatsoever to classify lenses of mobile phones under 39209999 in the impugned orders regardless of which material they are made of. The impugned orders insofar as they relate to classification of lenses also need to be set aside. 76. To sum up: a. Classification of the goods is a part of assessment and the importer, the proper officer and appellate authorities alone are competent to decide it. b. The policy of the MeiTY, which is in the nature of an executive policy decision of that Ministry cannot determine the classification of goods under the Customs Act firstly, because the authority making the policy is not empowered under Section 17 and secondly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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