2016 (1) TMI 624 - AT - Customs

Tribunal grants Customs duty benefit in appeal, citing misclassification oversight & compliance with ISFTA criteria.

The Tribunal allowed the appeal, finding the appellant eligible for the Customs duty benefit under Notification No.26/2000-Cus. The misclassification of ... Classification of import of RBD Palmolein Mixture from Sri Lanka - Country of Origin - edible mixture or not - classifiable under CTH 15.17 or under 15.18 - benefit of exemption Notification No.26/2000-Cus - Held that:- there is no doubt that the goods (palmolein oil CTH 1511) imported into Sri Lanka had undergone a change at four digit level vis-a-vis the goods exported to India classifiable under 15.17. Further, in the wake of test report of FDA, the Commissioner's observation that the goods did not conform to the standards laid down under Item A-17.15 of Appendix B of PFA Rules, is without any basis. Incidentally, even if the classification is taken as CTH 15.18 even then the Country of Origin requirements remain satisfied and therefore for the purpose of assessment of duty this controversy/contention regarding classification of the impugned goods is not of any consequence though in the light of the analysis above, we are of the view that the appellant has been able to demonstrate that the classification CTH 15.18 (instead of 15.17) shown by the exporter in the invoice was pure oversight. Ld. Adjudicating authority has acknowledged that certificate of country of origin has been issued by competent Sri Lankan authority certifying that the value of non-originating material is 54.23% which is less than the 65% of FOB value of the goods which conforms to the requirement of Rule 7(b) of DOO Rules, 2000. From the foregoing discussion it is also evident that as per the requirement under Rule 7(b) of DOO Rules, 2000, non-originating materials were sufficiently processed so as to result in a different classification at the 4 digit level of the Harmonized Commodity Description and Coding System. Appellant satisfied the requirement of Country of Origin as stipulated in the DOO Rules, 2000 and therefore, was entitled to the benefit of Notification No.26/2000-Cus. - Decided in favor of assessee. Issues:Customs duty demand under Notification No.26/2000-Cus, penalty imposition under Sections 114(A) and 112(a) of the Customs Act, 1962.Analysis:1. Customs Duty Demand: The appellant imported a consignment labeled as 'RBD Palmolein Mixture' from Sri Lanka, seeking exemption under Notification No.26/2000-Cus. However, the adjudicating authority found misdeclaration, stating the goods were classifiable under CH 1511 instead of CH 1518, thus denying the concessional duty rate. The penalties were imposed accordingly.2. Appellant's Contention: The appellant argued that the imported mixture was compliant with ISFTA criteria, containing 80% RBD Palmolein Oil and 20% coconut oil, as per Sri Lankan export permissions. They claimed an oversight in classification, supported by the exporter's application and opinion of Sri Lankan Customs Authorities.3. Judicial Analysis: The Tribunal considered the test report certifying the goods as RBD Palmolein, indicating edibility. The endorsement from Sri Lankan Customs Authorities supported the appellant's classification claim under CTH 15.17. The Country of Origin Certificate and compliance with DOO Rules, 2000 were crucial in determining the goods' origin and classification change at a 4-digit level.4. Decision: The Tribunal concluded that the appellant satisfied Country of Origin requirements, making them eligible for the Notification No.26/2000-Cus benefit. The misclassification was deemed an oversight, and the appeal was allowed, rendering the impugned order unsustainable.