2017 (1) TMI 1119 - HC - Customs

Court upholds classification of SCR and ASC under CTH based on expert opinions and functionality

The Court upheld the classification of Selective Catalytic Reduction (SCR) under CTH 38151900 and SCR with Ammonia Slip Catalyst (ASC) under CTH 38151210 ... Classification of two products - Selective Catalytic Reduction Honeycomb (SCR) - SCR with Ammonia Slip Catalyst Honeycomb (SCR with ASC) - whether SCR classifiable under CTH 38151900 or under CTH 84213990? - The Authorities issued notice and received responses from three Commissionerates of Customs. According to the opinion of Principal Commissioner of Customs, Air Cargo, Chennai, the SCR was classified under CTH 38151900. Another Commissioner of Customs i.e. Patparganj, Delhi, opined that SCR was classifiable under CTH 84213990 - The Ruling Authority was of the opinion that SCR was classifiable as CTH 38151900 and SCR with ASC was classifiable under CTH 38151210. Held that: - there is difference of opinion amongst the various Commissionerates. Apparently, two Commissionerates have expressed opinions, particularly, favouring the applicant’s view, whereas the third Commissionerate i.e. Patparganj Commissionerate, has taken a contrary view - In the light of the opinion, the Authorities appear to have resolved that controversy. By itself, this resolution of the controversy, in our opinion, is not premised upon a grave or erroneous understanding of the law. Moreover, at the time of the import, the likely effect of the classification is the same. In other words, where the products are classifiable under one sub head of Chapter 3815 or the other, the duty impact is the same. The question, therefore, as of now is really academic. Petition dismissed - decided against petitioner. Issues:1. Classification of Selective Catalytic Reduction Honeycomb (‘SCR’) and SCR with Ammonia Slip Catalyst Honeycomb (‘SCR with ASC’) under Custom Tariff Heading (CTH).2. Difference of opinion among Commissionerates regarding the classification of the products.3. Interpretation of the law and expert opinions in determining the correct classification.4. Justification for interfering with the impugned order of the Authority.Analysis:Issue 1: Classification of SCR and SCR with ASC under CTHThe Union of India challenged the decision of the Authority for Advance Ruling regarding the classification of SCR and SCR with ASC under the Custom Tariff Heading. The Authority classified SCR under CTH 38151900 and SCR with ASC under CTH 38151210, considering them as catalytic preparations. Expert opinions and European Commission's Ruling supported this classification based on the function and composition of the products.Issue 2: Difference of Opinion Among CommissioneratesVarious Commissionerates provided differing opinions on the classification of the products. While some Commissionerates agreed with the Authority's classification, others suggested different headings. The disagreement among Commissionerates led to the writ petition challenging the Authority's decision.Issue 3: Interpretation of Law and Expert OpinionsThe petitioner argued that the classification of SCR with ASC under CTH 38151210 was incorrect, emphasizing the presence of precious metals as the active substance. The petitioner contended that the precious metals were only used as a coating for the ASC, not as the active substance. However, the Court noted the varying expert opinions and the lack of conclusive evidence regarding the use of precious metals, ultimately upholding the Authority's decision.Issue 4: Justification for InterferenceThe Court found no grave or erroneous understanding of the law in the Authority's decision. Despite the differing opinions among Commissionerates, the duty impact remained the same regardless of the specific subheading under Chapter 3815. Therefore, the Court concluded that there was no justification to interfere with the impugned order of the Authority, leading to the dismissal of the writ petition.In conclusion, the judgment upheld the classification of SCR under CTH 38151900 and SCR with ASC under CTH 38151210 by the Authority, considering expert opinions and the functional aspects of the products. The Court's decision was based on the lack of significant legal errors and the academic nature of the classification controversy in terms of duty impact.