2026 (3) TMI 47 - AT - Customs

Classification of polyurethane fabrics as laminated places them under polyurethane textile heading, barring anti-dumping, valuation rejection and penalty.

Imported textile fabrics were classified under tariff heading 5903 20 90 as polyurethane-impregnated/laminated goods, rejecting classification under the ... Classification of goods - imported fabrics - classifiable under the Customs Tariff Item [CTI] 5903 20 90 as against CTI 5903 90 90 (polyester plain dyed fabric laminated with TPU width 58”) and CTI 6006 32 00 (Polyester knitted bonded fabric) - transaction value of the goods under Rule 12 of the Customs Valuation - Anti-dumping duty on the imported goods as per Anti-Dumping Notification no 14/2022-Customs (ADD) dated 20th May 2022 - sequential valuation under Rules 3 to 9 - penalty under section 114A for short-levy Classification of the goods - HELD THAT:- The goods fell within heading 5903 (textile fabrics impregnated, coated, covered or laminated with plastics). CRCL test reports and the Bills of Entry showed the fabrics were laminated/coated with polyurethane (PU). Heading 5903 is sub-divided by the plastic material used; fabrics with polyurethane fall under sub-heading 5903 20, and since the goods were not imitation leather of cotton, they properly fall under CTI 5903 20 90. CTI 5903 90 90 is for fabrics coated with plastics other than PVC or PU and thus was incorrect; classification under CTI 6006 32 00 was inconsistent with the established composition and tests. [Paras 6, 7, 8] Correct classification is CTI 5903 20 90. Scope of anti-dumping notification: PU coated versus PU laminated - HELD THAT: - The well-settled principle of interpretation is that when the same word is used at different places, it should be treated as having been used in the same sense. If different words are used, they should be treated as having been used in different senses. In Customs Tariff Heading 5903, four different words have been used impregnated, coated, covered and laminated. These four words must, therefore, be understood to have different meanings. These words have not been defined in the chapter notes or elsewhere in the chapter. However, the clarification issued by the CRCL specifically indicates that the goods in dispute were laminated. The charge levied by the Anti-Dumping Notification is on PU coated fabrics. It does not explicitly cover fabrics laminated with PU and therefore, it cannot be interpreted so to charge anti-dumping duty even on fabrics laminated with PU. The demand of anti-dumping duty in the impugned order, therefore, deserves to be set aside as there is no charge of this duty on fabrics laminated with PU. Rejection of transaction value under Rule 12 of the Valuation Rules - sequential valuation under Rules 3 to 9 - HELD THAT:- In view of Rule 6, the importer may choose the computed value without examining the feasibility of determining value through deductive methods. Rule 9 is a residual method which provides for determining the value where it cannot be determined under Rules 3 to 8. Rule 10, as already discussed, provides for some costs to be added to the transaction value if the valuation is done as per Rule 3. Rule 11 requires the importer to make a declaration. Rule 12 lays down the provision for rejection of transaction value. Rule 13 provides for interpretative notes for the Rules. The reason given for rejection of transaction value is that the specifications of the fabrics were different. A plain reading of the description of the goods in the Bills of Entry and the Reports of the CRCL about the nature of the goods recorded in Table C of the impugned order which we have reproduced in par 4 above would show that the Bills of Entry gave a general description of the goods and did not give any specifications. After testing, CRCL gave detailed specifications. Thus, there was no mis-match of specifications as held in the impugned order. If the assessing officer thought it necessary, he could have asked the appellant for more detailed specifications at the time of assessment. We do not find any discrepancy in the specifications. The impugned order also does not indicate what specifications, if any, were given in the Bills of Entry and how they differed from the specifications found after testing by CRCL. We, therefore, find that the rejection of transaction value was not as per Valuation Rule 12. Consequently, re-determination of the value also cannot be sustained. Penalty under section 114A for short-levy - HELD THAT:- Section 114A provides for imposition of penalty equal to the duty sought to be evaded if the non-payment or short payment of duty is by reason of any collusion, wilful mis-statement or suppression of facts. Since we have found in favour of the appellant on the question of duty both on re-determination of value and on charging of anti-dumping duty, it must be held that there was no short payment of duty, let alone, short payment by reason of collusion, wilful mis-statement or suppression of facts. The penalty imposed under section 114A, therefore, needs to be set aside. Final Conclusion: The impugned order is set aside: the goods are classifiable under CTI 5903 20 90; anti-dumping duty demand on the PU laminated textiles is unsustainable; rejection of transaction value under Rule 12 and re-determination under Rule 9 is unwarranted; and penalty under section 114A is quashed. The appellant is entitled to consequential relief. Issues: (i) Whether the imported fabrics are classifiable under CTI 5903 20 90 instead of CTI 5903 90 90 and CTI 6006 32 00; (ii) Whether anti-dumping duty under Notification No. 14/2022-Customs (ADD) dated 20th May 2022 is chargeable on the imported PU laminated textiles; (iii) Whether the transaction value declared by the importer could be rejected under Rule 12 of the Customs Valuation Rules, 2007 and re-determined under Rule 9; (iv) Whether penalty under Section 114A of the Customs Act, 1962 is leviable.Issue (i): Classification of the imported fabrics under CTI 5903 20 90 instead of CTI 5903 90 90 and CTI 6006 32 00.Analysis: The goods fall under Customs heading 5903 for textile fabrics impregnated, coated, covered or laminated with plastics; CRCL reports and bills of entry show PU as the polymeric material; heading 5903 sub-heading 5903 20 covers fabrics with polyurethane and CTI 5903 20 90 covers items other than imitation leather of cotton; no factual basis for classification under CTI 5903 90 90 or CTI 6006 32 00.Conclusion: CTI 5903 20 90 is the correct classification. This conclusion is against the appellant's claimed CTIs.Issue (ii): Applicability of anti-dumping duty under Notification No. 14/2022-Customs (ADD) dated 20th May 2022 to the imported goods.Analysis: The notification imposes anti-dumping duty on PU coated fabrics as described in the notification; the imported goods were found to be laminated rather than coated according to CRCL clarification; anti-dumping notifications impose a charge and must be strictly construed, with any ambiguity resolved in favour of the importer.Conclusion: Anti-dumping duty under Notification No. 14/2022-Customs (ADD) dated 20th May 2022 is not chargeable on the PU laminated textiles. This conclusion is in favour of the appellant.Issue (iii): Rejection of the transaction value under Rule 12 of the Customs Valuation Rules, 2007 and re-determination under Rule 9.Analysis: Rule 12 permits rejection of declared transaction value only where the proper officer has reasonable doubt as to truth or accuracy after inquiry and on grounds such as mis-declaration or manipulated documents; the record shows no established mismatch between bills of entry and CRCL specifications that would justify reasonable doubt; no adequate inquiry or specification-based discrepancy recorded to sustain rejection.Conclusion: Rejection of the transaction value under Rule 12 and re-determination under Rule 9 is not sustainable. This conclusion is in favour of the appellant.Issue (iv): Imposition of penalty under Section 114A of the Customs Act, 1962.Analysis: Section 114A penalises short-levy or non-levy of duty caused by collusion, wilful mis-statement or suppression of facts; because anti-dumping duty demand and re-determination of value have been set aside, there is no established short payment attributable to collusion or wilful mis-statement.Conclusion: Penalty imposed under Section 114A is set aside. This conclusion is in favour of the appellant.Final Conclusion: The impugned order is set aside and the appeal is allowed; the importer is entitled to consequential relief.Ratio Decidendi: Anti-dumping notifications that impose a charge must be strictly construed; where the notification specifies charging of 'PU coated' fabrics and the goods are established to be laminated, the notification does not extend to such laminated goods; rejection of transaction value under Rule 12 requires demonstrable reasonable doubt based on specified grounds and cannot be sustained absent such doubt.