Imported demineralised fish scales classified under Chapter 0511 9090 not fish protein under 3504 0099

CESTAT Bangalore ruled on classification of imported fish protein/demineralised fish scales under Customs Tariff Heading 3504 0099 versus 0511 9190. The tribunal held that imported goods were demineralised fish scales, not fish protein, and should be classified under Chapter 0511 9090 as they are source of protein requiring further processing for protein extraction. For advance authorization scheme, benefits were allowed for 42 consignments but denied for 6 consignments (serial 43-48) due to misdeclaration. Nine provisionally assessed consignments require reclassification. No penalties imposed as it was classification issue. Appeal partially allowed.

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Issues Involved:

1. Classification of imported goods.
2. Alleged mis-declaration of goods.
3. Eligibility for duty-free import under Advance Authorization.
4. Invocation of extended period and imposition of penalties.

Summary:

1. Classification of Imported Goods:
The appellant, M/s. Nitta Gelatin India Limited, imported goods declared as 'fish protein' under Customs Tariff Heading 3504 0099. However, upon inspection and testing, the Revenue found the goods to be processed/de-mineralized fish scales, classifiable under Custom Tariff Heading 0511 9190. The appellant argued that the goods were indeed fish protein, supported by technical literature and test reports. The Tribunal examined the test reports and technical literature, concluding that the imported goods were demineralized fish scales, rich in protein but not protein substances themselves. Therefore, the goods were correctly classifiable under Chapter Heading 0511 9190.

2. Alleged Mis-declaration of Goods:
The appellant described the imported goods as fish protein to match the description in the Advance Authorization and to avoid import restrictions. The Tribunal noted that the goods were labeled as "Decalcified fish scale for collagen (fish protein)" and had a fishy odor. The email correspondence between the appellant and the supplier indicated that the appellant was aware that the goods were demineralized fish scales and not fish protein. Thus, the Tribunal concluded that there was a deliberate mis-declaration of the goods.

3. Eligibility for Duty-Free Import under Advance Authorization:
The Tribunal found that the goods imported under Advance Authorization were not in conformity with the license description. The goods were demineralized fish scales (classified under 0511 9190) and not fish protein (classified under 3504 0099). Therefore, the appellant's claim for duty-free import under Notification No. 96/2009 was denied for the consignments where samples were drawn and tested. However, for the earlier consignments cleared based on the initial test reports, the benefit of the Advance Authorization scheme was allowed.

4. Invocation of Extended Period and Imposition of Penalties:
The Tribunal held that the extended period of limitation was not invokable for the earlier consignments cleared based on the initial test reports. The demand for these consignments was time-barred. However, for the consignments where samples were drawn and tested later, the demand was upheld. The Tribunal also noted that since it was a classification issue and the benefit of the scheme was allowed for some consignments, the question of redemption fine or penalty did not arise.

Conclusion:
The appeal was partially allowed. The goods were classified under Chapter Heading 0511 9190. The benefit of the Advance Authorization scheme was allowed for earlier consignments but denied for later consignments where samples were tested. The demand for duty was upheld for the later consignments, and no penalties were imposed.

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