2014 (1) TMI 119 - CGOVT - Customs

Government upholds penalty for misclassification in customs drawback claim, rejects revision application.

The government rejected the revision application, affirming the Commissioner (Appeals)' findings on the correct classification of goods for drawback ... Duty demand - Confiscation of goods - Duty drawback - Imposition of redemption fine - Mis declaration of goods - Held that:- impugned goods were having elastic tightening at the bottom. It has been observed by the original authority that as per the explanatory notes envisaged in the Classification Guidelines for knitted and woven garments issued by Textiles Committee, Ministry of Textiles, G.O.I., the blouse does not include garments with pockets below the waist or with ribbed waistbank or other means of tightening at the bottom of the garments. From perusal of said explanation, it is ample clear that garment having any means of tightening at the bottom does not fall within the meaning of blouse. Hence, the impugned goods cannot be classified as ‘Blouse’ classifiable under drawback Heading 620603A - goods were mis-classified to avail undue drawback. As such, provisions of Section 113(ii) and Section 114 of the Customs Act, 1962 are attracted and penalty and redemption fine were rightly imposed. Commissioner (Appeals) has already substantially reduced quantum of fine and penalty in this case - Appeal dismissed. Issues: Misdeclaration of goods for claiming excess drawback under incorrect classification, imposition of penalty and redemption fine, reliance on Textiles Committee's classification guidelines, applicability of case law on classification.Analysis:1. Misdeclaration of goods for claiming excess drawback under incorrect classification:The case involves the misdeclaration of goods by the applicant for claiming a higher drawback under the wrong classification. The goods, 100% Rayon Powerloom Woven Ladies Blouses, were found to have elastic tightening at the bottom, which did not align with the definition of a blouse as per the Textiles Committee's classification guidelines. The original authority reclassified the goods under a different drawback heading, resulting in the imposition of penalty and redemption fine.2. Imposition of penalty and redemption fine:The original authority ordered for the confiscation of the goods but allowed redemption on payment of a fine and penalty. The Commissioner (Appeals) modified the quantum of the fine and penalty, reducing them substantially. The government, after careful review, upheld the imposition of penalty and redemption fine, citing the misclassification of goods to avail undue drawback as the basis for penalty under Sections 113(ii) and 114 of the Customs Act, 1962.3. Reliance on Textiles Committee's classification guidelines:The applicant contested the classification based on the Textiles Committee's guidelines, arguing that the goods should be classified under a specific heading. However, the government observed that the Textiles Committee's opinions supported the department's classification under a broader heading, emphasizing that the goods did not meet the criteria for classification as a blouse due to the presence of elastic tightening at the bottom.4. Applicability of case law on classification:The applicant relied on a CESTAT judgment regarding classification issues in drawback cases. However, the government found that the cited case law was not directly applicable to the current scenario, as the facts differed. The government agreed with the Commissioner (Appeals) and upheld the classification and penalty decisions based on the specific circumstances of the case.In conclusion, the government rejected the revision application, affirming the findings of the Commissioner (Appeals) and emphasizing the correct classification of goods for drawback purposes. The case highlights the importance of accurate classification and the consequences of misdeclaration in claiming benefits under customs regulations.