Classification of Fibreglass Bags Upheld, Limitation Period Ruling Partially Favors Appellant in Customs Tariff Dispute.

The Tribunal upheld the reclassification of "HUY Glass 1105 Membrane Bags" under Customs Tariff Heading 8421, agreeing with the authorities that the bags, made of fibreglass, were not covered under Chapter 59. However, on the limitation period issue, the Tribunal found that the appellant, although a State Government Undertaking, was not subject to the one-year notice period due to its registration under the Companies Act, 1956. The impugned order was upheld regarding classification but rejected on the limitation ground. Thus, the appeal was partially allowed, with the judgment delivered on 09.01.2024.

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Issues Involved:
1. Classification of imported product "HUY Glass 1105 Membrane Bags (Filter Bags)"
2. Applicability of limitation period under Section 28(1)(a) for issuing notice to State Government Undertaking

Summary:

Classification Issue:
The appellant, a State Government-owned limited company engaged in mining and manufacturing Titanium Dioxide, imported 'Huy glass 1105 M-Membrane Bags' classified under Customs Tariff Heading 5911 9090. However, upon scrutiny, it was found that the bags were made of fibreglass non-woven material, leading to a reclassification under Customs Tariff Heading 8421. The Commissioner (Appeals) upheld the differential duty demand, prompting the appellant to appeal. The appellant argued that the bags should be classified under Heading 59, similar to cloth used in paper making machines. The authorities contended that the bags, made of fibreglass material, were rightly classified under Heading 8421 for filtering titanium dioxide powder. The Tribunal agreed with the authorities, citing specific exclusion of glass fibre articles from Chapter 59 and inclusion in Chapter 8421, thereby confirming the correct classification under CTH 8421.

Limitation Period Issue:
Regarding the limitation period under Section 28(1)(a), the Commissioner (Appeals) justified issuing the notice within one year, as applicable to State Government Undertakings. However, the appellant, though a State Government Undertaking, was registered under the Companies Act, 1956. Citing a Kerala High Court case, it was argued that being registered under the Companies Act, the appellant cannot be considered a Government undertaking for notice issuance purposes. Consequently, the impugned order was upheld on the classification issue but rejected based on the limitation ground. The appeal was partially allowed, with the judgment pronounced on 09.01.2024.

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