2002 (8) TMI 439 - AT - Customs

Tribunal overturns duty payment decision for misclassified goods, burden of proof not met

The Tribunal allowed the appeal in a case concerning the classification of imported goods as 'White Card Board.' The Commissioner of Customs disallowed ... EXIM - DEEC - Sensitive item - White card board - Evidence Issues Involved:1. Classification of imported goods as 'White Card Board'2. Eligibility for clearance under the DEEC scheme3. Interpretation of the term 'White Card Board'4. Compliance with Customs Notification No. 79/955. Allegations of misdeclaration and violation of Export Import PolicyIssue-wise Detailed Analysis:1. Classification of Imported Goods as 'White Card Board':The Commissioner of Customs held that the imported items, declared as 'Tabac Silkia Paper Board (one side coated) and Tabac Coat (Manila Back),' fell under the classification of 'White Card Board' as per the Customs Tariff Heading 4810.99. This classification was based on test reports from the Chief Chemist, Deputy Chemist, and the Institute of Paper Technology, which identified the items as white cardboards. The Commissioner disallowed the benefit of the DEEC scheme, requiring the appellants to pay duty on the consignments.2. Eligibility for Clearance under the DEEC Scheme:The imported goods were sought to be cleared under the DEEC scheme, which allows the import of inputs without payment of basic customs duty. However, 'White Card Board' is listed as a sensitive item under the Export Import Policy 1992-97, prohibiting its import under the DEEC scheme. The Commissioner confirmed that the goods did not qualify for clearance under the DEEC scheme, as the advance licenses produced by the appellants did not cover 'White Card Board.'3. Interpretation of the Term 'White Card Board':The case hinged on the interpretation of 'White Card Board.' The test reports initially classified the items as 'cardboard other than white card board and ivory board.' However, subsequent clarifications indicated that the term 'White Card Board' lacked a technical definition. The Deputy Chief Chemist and Principal Investigator from the Institute of Paper Technology stated that a white card board should be white on both sides, whereas the imported items were white on one side and plain on the other. The DGFT clarified that 'White Card Board' means 'Cardboard having White colour,' but this interpretation was contested by the appellants.4. Compliance with Customs Notification No. 79/95:Customs Notification No. 79/95 exempts materials imported under a Value Based Advance Licence (VABAL) from customs duty, provided they meet certain conditions. The Commissioner found that the imported goods did not conform to the description of packing material as per the notification. The appellants argued that similar goods had been cleared previously and that the test reports did not conclusively categorize the items as 'White Card Board.'5. Allegations of Misdeclaration and Violation of Export Import Policy:The show cause notice alleged that the appellants misdeclared the description of the goods and violated the Export Import Policy. The appellants denied these allegations, stating that the goods were commercially known and used in the export product. They contended that the department's test reports were inconsistent and that the goods were not 'White Card Board' as defined by the DGFT and other authorities.Judgment:The Tribunal found that the department failed to establish that the imported items were 'White Card Board.' The initial test reports and the cross-examination of the Deputy Chief Chemist and Principal Investigator supported the appellants' claim that the items were not 'White Card Board.' The Tribunal emphasized that the burden of proof was on the revenue to establish the classification of the goods, which was not met. The appeal was allowed, setting aside the impugned order, with the condition that the appellants prove that the incidence of duty had not been passed on to consumers.