2013 (12) TMI 707 - AT - Customs

Tribunal orders reclassification and penalty review, stresses timely decision-making.

BANDANA OVERSEAS Versus COMMISSIONER OF CUSTOMS (PORT), KOLKATA

The Tribunal allowed the appeal by way of remand, directing the Commissioner of Customs to re-determine the classification based on the CRCL test reports ... Classification of goods – Benefit of Notification No. 141/2005 – Held that:-The CRCL report answers to the description of the goods as per heading 5407 6190 - Therefore the goods are rightly classifiable under 5407 61 90 - assessee have also claimed benefit of Notification No. 14/2005 which provides effective rate of duty as 15% subject to condition that ‘they are’ other than upholstary’ – The Commissioner has granted the benefit of Notification No. 141/2005 at Sl. No. 53 carrying the similar condition i.e. other than upholstery - Thus the appellant are eligible for the benefit of the notification – Commissioner is directed to re-quantify the duty liability - neither side has challenged the enhancement of value – Therefore the Commissioner is also directed to re-determine the penalty – Decided in favour of Assessee. Issues Involved:1. Classification of goods under the Customs Tariff Act.2. Adherence to Tribunal's directions regarding the use of CRCL test reports.3. Imposition of penalty for misdeclaration of goods.4. Eligibility for benefit under Notification No. 14 of 2005 (Cus.).Issue-Wise Detailed Analysis:1. Classification of Goods:The primary issue was the classification of 19003 meters of fabric under Heading No. 54076900 of the Customs Tariff Act. The Tribunal had previously directed that the classification should be based on the CRCL test reports. However, the Commissioner of Customs re-determined the classification based on the Textiles Committee's report, which was contrary to the Tribunal's specific direction. The Tribunal reiterated that the CRCL test reports should be the basis for classification, as they were reliable and had not been demonstrated to be erroneous. The CRCL report described the fabric as woven, composed of non-textured polyester multifilament yarns, and treated with an organic polymeric material, making it water repellent. Based on this, the Tribunal concluded that the goods were rightly classifiable under Heading 54076190.2. Adherence to Tribunal's Directions:The Tribunal noted that the Commissioner of Customs did not follow its clear direction to use the CRCL test reports for re-determining the classification. The Tribunal emphasized that the CRCL report should form the basis for classification, as previously directed. The Tribunal found that the Commissioner's attempt to rely on the Textiles Committee's report was unjustified and set aside the impugned order for not adhering to the Tribunal's specific instructions.3. Imposition of Penalty:The issue of penalty for misdeclaration of goods and value was to be reconsidered after re-determining the classification. The Tribunal had earlier remanded the matter for fresh determination regarding the classification and penalty, considering various judicial decisions. The Tribunal directed the Commissioner to re-determine the penalty amount in accordance with the law after re-quantifying the duty liability based on the correct classification.4. Eligibility for Benefit under Notification No. 14 of 2005 (Cus.):The appellant claimed the benefit of Notification No. 14 of 2005 (Cus.), which provides an effective rate of duty at 15% for goods other than upholstery. The Tribunal found that the Commissioner had granted the benefit of a similar notification, indicating that the goods were eligible for the reduced duty rate. Therefore, the Tribunal concluded that the appellant was entitled to the benefit of the notification.Conclusion:The Tribunal allowed the appeal by way of remand, directing the Commissioner of Customs to re-determine the classification based on the CRCL test reports and re-quantify the duty liability accordingly. The Commissioner was also instructed to re-determine the penalty as per law. The Tribunal emphasized the need for expeditious completion of the quantification of duty, redemption fine, and penalty, preferably within three months, and directed that a reasonable opportunity of hearing be granted to the appellant.