2025 (10) TMI 335 - AT - Customs

Appeal dismissed: importer's dried black currant classification rejected; reclassification and recovery of short-paid duty upheld

CESTAT MUMBAI - AT dismissed the appeal, holding the importer's claimed classification for dried 'black currant' was not sustainable and the ... Recovery of short paid Customs Duty - import of dried black currant - to be classified under tariff item 0810 3000 of First Schedule to Customs Tariff Act, 1975 or under tariff item 0806 2010 of First Schedule to Customs Tariff Act, 1975? - revision of classification on the basis of exemption notification was valid or not - HELD THAT:- The Hon’ble Supreme Court in In Hindustan Ferodo Ltd v. Collector of Central Excise [1996 (12) TMI 49 - SUPREME COURT], it was held that 'It is not in dispute before us as it cannot be, that onus of establishing that the said rings fell within Item No. 22-F lay upon the Revenue. The Revenue led no evidence. The onus was not discharged. Assuming therefore, the Tribunal was right in rejecting the evidence that was produced on behalf of the appellants, the appeal should, nonetheless, have been allowed.' The appellant chose to avail a classification that, by its very description, did not cover the goods. It would also appear that the expression ‘currant’ and ‘black’ from the pigment were portmanteaued to convey an impression about goods that it clearly was not. The communication of the appellant with supplier is evidence of the influence of the former over the latter in making of documentation. Customs authorities in India, generally not having to be familiar with the distinction between dried ‘product of vine’ and a berry that flourishes in temperate lands, could not be expected to distinguish the two for intervention in self-assessment but the appellant, involved in the trade, could not but be aware of the consequences. After all, only about two percent of grape production of the world reaches consumers in dried form and those in the trade cannot be absolved of deliberateness. Therefore, the case law cited will not apply to facts of this dispute. There being no merit in the submissions on behalf of appellant, appeal is dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether the imported goods described as 'dried black currant' were correctly classified by the importer as 'raisins' attracting the tariff item and exemption claimed, or whether they fall under 'grape, dried' (sub-heading 0806 20) attracting a higher rate of duty. 2. Whether the appellant's subsequent revision/renunciation of the declared classification relieves the Revenue of its burden of proof or otherwise precludes reassessment, confiscation and penalties. 3. Whether an advance ruling in favour of another importer is binding on the appellant and, if not, the relevance of that advance ruling and the CAG report relied upon by the appellant. 4. Whether reliance on past Tribunal/Supreme Court authority cited by the appellant (challenging invocation of extended period, classification-based confiscation and penalties) is apposite on the facts. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Classification of imported goods ('dried black currant' vs 'raisins' / 'dried grapes') Legal framework: Classification under the First Schedule to the Customs Tariff Act, 1975 (statutory headings and sub-headings); applicability of exemption notification contingent on correct tariff classification; powers of customs to reassess and determine correct classification. Precedent treatment: Court notes established principles that classification is a question of fact and law and that the burden to establish a particular classification rests with the party asserting it; cited authorities (Supreme Court) emphasize burden on Revenue when it seeks to classify differently, but also recognise evidentiary requirements on importer when its declared description is inconsistent with the goods. Interpretation and reasoning: The Tribunal found the declared description ('raisins') did not accurately reflect the imported commodity which, on technical, commercial and regulatory inputs, corresponded to 'grape, dried' (sub-heading 0806 20) rather than the tariff item/exemption relied on for 'raisins'. The appellant's own admissions and later renunciation of the declared classification evidenced misdescription; documentary communications with supplier indicated deliberate influence in documentation. The Tribunal rejected the contention that 'raisins' is a generic descriptor covering all dried grapes including currants, finding clear disparity between the declared term and the actual dried variant presented. Ratio vs. Obiter: Ratio - where the declared description by importer is inconsistent with the actual commodity and the importer renounces the declaration, the declared tariff item cannot be maintained; classification must reflect the true nature of the goods as established by technical and commercial evidence. Obiter - comments on general unfamiliarity of customs officers with agricultural distinctions (informative, not essential). Conclusion: The Tribunal affirmed reassessment under the correct tariff sub-heading and sustained differential duty; the declared classification as 'raisins' was inappropriate and could not be retained. Issue 2 - Effect of appellant's revision/renunciation of declared classification on burden of proof, reassessment, confiscation and penalties Legal framework: Principles of self-assessment; statutory provisions permitting reassessment and recovery of duty; sections permitting confiscation (e.g., s.111(m)) and levy of penalties (e.g., ss.112, 114A, 114AA) where misdeclaration, short payment or evasion established; redemption under s.125. Precedent treatment: Authorities cited by the Tribunal indicate that where Revenue seeks to classify goods differently, it must discharge onus; conversely, an importer's admission or renunciation of its earlier declaration may remove the Revenue's initial evidentiary burden to establish a different classification because the importer no longer maintains the original position. Interpretation and reasoning: The Tribunal emphasized that the appellant itself altered the applicable tariff item before the adjudicating authority, thereby abandoning the originally declared classification. That abandonment relieved the Revenue of the need to lead extra proof to establish an alternative classification for the consignments under adjudication. The Tribunal further reasoned that deliberate misdescription and documentary evidence of influence over supplier corroborated deliberate misdeclaration, supporting confiscation/penalty measures. Redemption under s.125 was allowed for available goods with fine fixed by the adjudicating authority. Ratio vs. Obiter: Ratio - an importer's renunciation of the originally declared classification can substantively affect the allocation of burden and permits the customs authority to proceed on the basis of the renounced classification for reassessment and imposition of penalties/confiscation where misdeclaration is established. Obiter - procedural observations on how customs officers may not have expertise to distinguish certain agricultural products (contextual). Conclusion: The Tribunal held the appellant's revision did not preclude reassessment or enforcement measures; consequences of misdeclaration (differential duty, confiscation subject to redemption, and penalties) were properly imposed. Issue 3 - Applicability and binding effect of an advance ruling rendered in favour of another entity and reliance on CAG report Legal framework: Statutory scope of advance rulings (binding nature limited to the applicant and the jurisdictional officers in respect of that applicant per section governing applicability of advance ruling); relevance of administrative reports as evidentiary material. Precedent treatment: The Tribunal relied on the statutory limitation that an advance ruling binds only the applicant and the concerned customs authorities in respect of that applicant, and is not directly binding on other importers. Interpretation and reasoning: The Tribunal examined the advance ruling relied upon and the CAG report and concluded the advance ruling was applicable only to its specific applicant; factual differences between the consignments in the advance ruling and the present consignments (the goods here being 'dried black currants') meant that the ruling and the report did not compel acceptance of the appellant's classification. The CAG report was non-conclusive by its own terms and did not override factual findings about the nature of the goods. Ratio vs. Obiter: Ratio - advance rulings are not binding on other importers; their persuasive value depends on identical facts and binding statutory effect is limited. Obiter - reliance on the CAG report described as inconclusive (illustrative). Conclusion: The advance ruling and the CAG report did not bind or compel acceptance of the appellant's classification; they were insufficient to counter the factual and technical findings against the declared description. Issue 4 - Applicability of cited authorities on limitation, classification-based confiscation and penalties to the facts Legal framework: Principles governing invocation of extended period, criteria for confiscation and penalties, and precedents clarifying when such measures are inappropriate (e.g., where declaration error is bona fide and no tax effect arises). Precedent treatment: The appellant relied on Tribunal decisions to challenge extended period invocation and penalties; Supreme Court authorities require Revenue to discharge burden when seeking classification different from that claimed by assessee. Interpretation and reasoning: The Tribunal distinguished the cited decisions on the ground of factual disparity. Unlike cases where the Revenue failed to discharge burden or where declarations were genuine errors with no tax effect, here the importer had renounced the declared classification and documentary evidence suggested deliberate misdescription. The Tribunal concluded the cited authorities were not applicable as their factual matrices differed materially. Ratio vs. Obiter: Ratio - precedents immunising importers from confiscation/penalty or restraining extended period cannot be mechanically applied where the importer's own conduct (renunciation, documentary evidence, deliberate misdescription) supports reassessment and punitive measures. Obiter - observations regarding percentage of world grape production dried (contextual, not foundational). Conclusion: The Tribunal found no merit in the appellant's reliance on those authorities and held the facts justified reassessment, confiscation subject to redemption and imposition of penalties; appeal was dismissed.