2021 (9) TMI 142 - AT - Customs

Imported goods classified as Lime Mortar under CTH 25222000, appeal allowed, no misdeclaration found.

PK Exim Versus C.C. -Mundra

PK Exim Versus C.C. -Mundra - TMI Issues Involved:1. Classification of imported goods as Lime Mortar (Slaked Lime) under CTH 25222000 or as a preparation under CTH 38245090.2. Reliance on the test report for classification and its applicability to past consignments.3. Validity of the extended period for demand of differential duty and penalty.4. Confiscation of goods and imposition of penalties under sections 112(a) and 114 of the Customs Act.5. Applicability of interest under section 28A of the Customs Act.Detailed Analysis:1. Classification of Imported Goods:The primary issue was whether the imported goods should be classified under CTH 25222000 as Lime Mortar (Slaked Lime) or under CTH 38245090 as a preparation. The department's case was based on a test report from the Customs House Laboratory, Kandla, which indicated that the product was a preparation with metallic additives. However, the appellant argued that the product was naturally occurring slaked lime and should be classified under CTH 25222000. The tribunal noted that the test report was contradictory and did not conclusively establish the product as a preparation. The tribunal referred to the explanatory notes to Chapter 25, which clearly included slaked lime under CTH 25222000, and concluded that the product should be classified under this heading.2. Reliance on Test Report:The tribunal observed that the test report from CHL, Kandla, was inconsistent and based on assumptions. The report did not specify the process of preparation or the inclusion of any foreign materials. The tribunal emphasized that the goods were mainly composed of calcium oxide with minor impurities, which is typical of natural mineral products. The tribunal also noted that the same goods were previously tested in 2013 and classified under CTH 25222000. The tribunal held that the test report could not be relied upon to reclassify the goods.3. Validity of Extended Period for Demand:The appellant argued that the demand for differential duty on 11 past consignments was time-barred as the bills of entry were finally assessed. The tribunal agreed, stating that the extended period could not be invoked in cases of classification disputes. The tribunal cited several judgments to support the view that test results of one consignment could not be applied retrospectively to past consignments. Therefore, the demand for differential duty and penalties for the past consignments was deemed unsustainable.4. Confiscation and Penalties:The tribunal found that there was no misdeclaration or suppression of facts by the appellant. The goods were declared based on the supplier's documents, and the classification was consistent with the explanatory notes to Chapter 25. Consequently, the tribunal held that the goods were not liable for confiscation under section 111(m) of the Customs Act, and penalties under sections 112(a) and 114 were not imposable.5. Applicability of Interest:The tribunal did not specifically address the applicability of interest under section 28A of the Customs Act in detail, but given the findings on classification and the invalidity of the extended period for demand, the imposition of interest was also deemed unsustainable.Conclusion:The tribunal concluded that the classification of the imported goods as Lime Mortar (Slaked Lime) under CTH 25222000 was correct and legal. The test report from CHL, Kandla, was found unreliable, and the extended period for demanding differential duty and penalties was not applicable. The tribunal set aside the impugned order and allowed the appeal.