2024 (11) TMI 1239 - AT - Customs

Waste from pulses classified under heading 0713 not 2302, department's classification rejected as incorrect

KITCHEN XPRESS OVERSEAS LTD Versus COMMISSIONER OF CUSTOMS - KANDLA CUSTOMS

CESTAT Ahmedabad held that waste arising from pulses is classifiable under heading 0713 (dried leguminous vegetables) rather than 2302 (bran, sharps and ... Classification of waste arise from the pulses - Classifiable under 2302 5000 as claimed by the department or under chapter heading 0713 as claimed by the appellant - HELD THAT:- From the plain reading of the chapter heading 2302, it is found that the same is applicable for the goods such as Bran, Sharps and others residues whether or not in the form of palates derived from the sifting, milling or other working cereal or of leguminous plants. That means it applies to the goods namely, cereals of leguminous plant. In the present case the waste arise from the pulses and pulses are not covered either as cereals or leguminous plant. Therefore, on this basis, it is clear that the appellant’s product being a waste arise from the pulses does not cover under the tariff heading 2302. It is a settled legal position that irrespective of the position whether the assessee’s claim of classification is right or wrong but if the classification proposed by the department fails than the entire proceeding is vitiated and no consequential demands will sustain. Therefore, in the present case, since, it could not be established that the goods in question is classifiable under tariff heading 2302. The impugned order is not sustainable. Classification of goods i.e. waste of pulses under 0713 - The entry of the same reads as “DRIED LEGUMINOUS VEGETABLES, SHELLED, WHETHER OR NOT SKINNED OR SPLIT”. We find that as against the cereal and vegetable plants, the goods is appropriately classifiable as dried leguminous vegetables. Therefore, in our considered view, we hold that the appellant have correctly classified the goods under 0713. Issues Involved:1. Classification of waste pulses: Whether the waste pulses should be classified under tariff heading 0713 or 23025000.2. Eligibility for duty exemption under Notification No. 12/2012.3. Validity of the proceedings based on the incorrect classification by the department.Issue-wise Detailed Analysis:1. Classification of Waste Pulses:The primary issue revolves around the classification of waste pulses, specifically the off-specs pulses, tukdi of pulses, and bhushi/bhuki of pulses mixed with impurities, which are not of export quality. The appellant argues that these should be classified under chapter heading 0713, which pertains to 'DRIED LEGUMINOUS VEGETABLES, SHELLED, WHETHER OR NOT SKINNED OR SPLIT.' This classification would make them eligible for duty exemption under Notification No. 12/2012. The department, however, contends that the correct classification is under sub-heading 23025000, which includes 'Bran, Sharps and other residues of leguminous plant.'The adjudicating authority initially decided in favor of the department, classifying the goods under 23025000 and confirming the duty paid under protest. However, upon appeal, it was argued that the waste arises from pulses, which are not covered as cereals or leguminous plants under the said entry. The tribunal found that the classification under 2302 was not applicable as the waste arises from pulses, not cereals or leguminous plants, thus supporting the appellant's classification under 0713.2. Eligibility for Duty Exemption:The classification under chapter heading 0713 makes the waste pulses eligible for duty exemption as per Notification No. 12/2012 (Sr. No. 21). The appellant's argument hinges on this classification to avail the duty exemption, which the department's classification under 23025000 would negate. The tribunal's decision to classify the waste under 0713 thus supports the appellant's claim for duty exemption.3. Validity of the Proceedings:The appellant argued that the entire proceedings were vitiated due to the incorrect classification by the department. It was asserted that if the department's classification fails, the consequential demands and proceedings should not sustain. The tribunal referred to precedents, including the cases of Pepsico Holdings Pvt Ltd and Warner Hindustan Ltd, to support the stance that once the department's claim on classification fails, the entire proceedings consequential to the said proposals must be set aside.In the case of Pepsico Holdings Pvt Ltd, it was emphasized that if the classification proposed by the revenue is inappropriate, the claimed classification by the assessee will sustain, even if it may appear to be inappropriate. Similarly, the Warner Hindustan Ltd case highlighted that it is impermissible for the Tribunal to consider a case laid for the first time in appeal, indicating that the department cannot propose a new classification at the appellate stage.Conclusion:The tribunal concluded that the goods in question are classifiable under tariff heading 0713 as 'DRIED LEGUMINOUS VEGETABLES,' and not under 23025000 as proposed by the department. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief. The tribunal's decision was based on the established legal position that incorrect classification by the department invalidates the proceedings and demands based on such classification. The appellant's classification was upheld, granting them the duty exemption under Notification No. 12/2012.