TaxTMI 
TaxTMI 
2026 (7) TMI 1467
X X X X Extracts X X X X
X X X X Extracts X X X X
....enying the benefit of Notification No. 24/2005-Cus. 2. The fact in brief is that the appellant imported various models of Panasonic Facsimile Machines and parts from M/s Panasonic Asia Pacific Singapore during the years 2009-10 and 2010-11. At the time importation, Bills of Entry were filed declaring the goods under CTH 8443 3260 as "Facsimile machine" capable of connecting to automatic data processing machine or to a network and exemption under Notification No. 24/2005 - Cus. was claimed. The Bills of Entry were assessed by the proper officers of Customs after examination of imported goods and the consignment were allowed clearance. 3. Subsequently, the Director of Revenue intelligence initiated investigation and entertained the view that the imported Facsimile Machines were not capable of connecting to an automatic data processing machine or to a network within the meaning of Heading 8443 3060. According to the Department, the goods merited classification under Heading 8443 3970 and the parts under Heading 8443 9960, thereby rendering the exemption inadmissible. 4. A Show Cause Notice was therefore issued proposing recovery of differential Customs Duty under Section 28 o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in the statement that the Facsimile machines can be connected to a network if an ATA is attached to the Facsimile machines and then this ATA is attached to the network is to be treated as no admission of charge of mis-declaration. Even, otherwise when penalty is imposed on the appellant firm, no further penalty is imposable on the Managing Director. Learned Counsel relied on Commissioner of Central Excise, Vapi Vs, Bhavani Smelters Pvt Ltd., [2009 (236) E.L.T. 176 (Tri.-Ahmd.)]. 9. The Learned Authorized Representative supports the impugned order, inter alia, that HSN Explanatory notes clearly envisage machines processing all necessary components for direct connectivity. According to the Revenue, the imported Facsimile Machines requires an additional external ATA device before network connectivity becomes possible. Consequently, they cannot be regarded as machines "capable of connecting" to a network within the meaning of Heading 8443 3260. 10. Learned Authorized Representative has placed reliance upon the recent judgment of Hon'ble Supreme Court in Commissioner of Customs Vs Ms. Welkin Foods [2026 (1) TMI 348 (SC)] and submit that tariff entries and exemption notifications r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ment accepted mechanically; it was an assessment undertaken after physical verification by the Department itself. 18. The Show Cause Notice subsequently seeks to reclassify the same goods on the premise that they are incapable of connecting to a network. Such a finding, in the opinion of this Tribunal, required the Department to produce convincing technical evidence demonstrating that the imported models lacked the capability contemplated under the tariff. On careful examination of the records, we find that no such conclusive evidence has been produced. On the contrary the investigation itself records that the machines can be networked through an Analogue Telephone Adopter (ATA) or similar interface devices. The appellant has consistently relied upon this very evidence to contend that the machines are network-connectable. Thus, the Department's, own investigation acknowledges that the imported machines are capable of functioning in a network environment, albeit through an interface device. Once this factual position emerges from the record itself, the burden resting upon the Revenue to prove that the machines fall under Heading 8443 3970 remains un discharged. 19. The princip....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d that tariff entries and exemption notifications require strict construction and that HSN-based interpretation should prevail. There can be disagreement with the principles enunciated by the Hon'ble Supreme Court. The decision reiterates that classification has to be determined in accordance with the statutory tariff and that exemption notifications cannot be expanded beyond their language. Those propositions are well settled. However, the said judgment does not dispense with the foundational requirement that the Department must first establish, on facts, that the imported goods satisfy every ingredient of the tariff entry sought to be applied. A precedent laying down principles of interpretation cannot receive the Revenue of its burden to prove the factual applicability of the competing Heading. In the present case, the dispute is not about enlarging the scope of exemption notification. The threshold issue is whether the imported Facsimile Machines are, as a matter of fact, capable of connecting to an automatic data processing machine or to a network. Since, the Department's own material acknowledges network connectivity through an ATA device, the factual premise necessary to sus....
X X X X Extracts X X X X
X X X X Extracts X X X X
....onsequently, the subsequent change of opinion on classification cannot, by itself, constitute suppression of facts or wilful misstatement. Tribunal Kolkata in Pearl Enterprises Vs Commissioner of Customs (Port), Kolkata, [2006 (203) ELT 71], wherein, held that a bonafide claim of classification cannot be equated with misdeclaration so as to attract denial consequences. The Tribunal observed that merely because the importer claimed classification under a tariff heading belief to be applicable, it does not follow that there was deliberate misdeclaration attracting confiscation or penalty. We respectfully agree with the above proposition. In the present case, the appellant disclosed the goods as Facsimile machines, produced the relevant invoices, catalogues and technical literature and claimed classification under the tariff heading which, according to it, correctly described the goods. Such conduct is wholly inconsistent with any allegation of fraud or deliberate suppression. 24. The Show Cause Notice seeks to invoke the extended period under Section 28(4) of the Customs Act alleging suppression of facts. It is therefore, necessary to examine whether the statutory ingredients requ....