Customs classification order set aside for imported polyester woven gray fabrics under N/N. 14/2006-CUS after authority ignored contradictory evidence

CESTAT Ahmedabad set aside the classification order for imported 100% Polyester Woven Gray Fabrics disputed between CTH 580 137 10 and CTH 540 751 19 for benefit under N/N. 14/2006-CUS. The tribunal found the lower authority erred by blindly following ATIRA's report while ignoring contradictory Textile Committee findings and the restrictive definition of "Upholstery fabric" in the notification. Matter remanded to original Adjudicating Authority for fresh determination considering all evidence and proper application of notification definition. Appeal allowed by way of remand.

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Issues involved:
The issues involved in the judgment are the change of classification of imported goods, demand of Customs duty, interest, imposition of penalty, and confiscation of goods based on the classification dispute.

Classification Dispute:
The appellant, M/s. J K Enterprises, imported "100% Polyester Woven Gray Fabrics" classified under CTH 580 137 10, while the revenue contended that the goods are warp pile fabric (uncut) classifiable under CTH 540 751 19. Various samples were sent to Textile Committee Mumbai and Ahmedabad Textile Industries Research Association (ATIRA) for classification. The Textile Committee opined that the goods were undyed woven polyester fabrics under CTH 5407.61, while ATIRA reported that the fabric was double fabric and Upholstery fabric.

Legal Arguments:
The appellant argued that the nature of fabric should be ascertained from the market, citing a decision of the Hon'ble High Court of Punjab & Haryana. They also highlighted the principle that interpretations favoring the importer should be followed, as held by the Hon'ble High Court of Kolkata. Additionally, they emphasized that the definition of Upholstery fabric under Notification 14/2006-Cus was precise and not adequately examined by ATIRA.

Judgment and Reasoning:
The Tribunal found that the impugned order relied solely on the ATIRA report without considering the conflicting views of the Textile Committee. The definition of Upholstery fabric in the Notification was restrictive and specific, covering certain uses of the fabric. The Tribunal noted that the ATIRA report was absolute without providing reasons for its findings. Moreover, the Tribunal pointed out that alternative reports, such as the one from MANTRA, were not adequately considered in the impugned order.

Decision and Remand:
Consequently, the Tribunal set aside the impugned order and remanded the matter to the original Adjudicating Authority for fresh findings. The Authority was instructed to consider all evidence presented by the appellant, including the nature of the goods in relation to the definition provided in Notification 14/2006-Cus. The appeal was allowed by way of remand to the Adjudicating Authority.

Separate Judgment:
The judgment was delivered by MR. RAMESH NAIR, MEMBER (JUDICIAL) AND MR. RAJU, MEMBER (TECHNICAL) on 16.01.2024.

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