2017 (12) TMI 292 - AT - Customs

Classification of goods - combine harvester parts - whether classified under CTH 84339000 or otherwise? - appellant filed one bill of entry declaring the goods as combine harvester parts which have been imported - Held that - All the goods mentioned in both the invoices parts of the combine harvester. The parts are numbered and if all these parts used altogether then harvester system which has been imported by the appellant in SKD condition can be manufactured otherwise not. The report of the chartered engineer is not conclusive evidence for the Revenue to hold that the goods in question are of general use. In fact chartered engineer has opined that the goods appeared to be of general use also other than those use in harvester combine which clearly shows that as per opinion of the chartered engineer, the goods in question can be used harvester combed as part thereof - the goods are parts of harvester combine. The goods are classifiable under the heading which occurred last in numerical order among those which equally merit consideration - Chapter heading 84339000 is proper classification of the goods in question - the appellant has correctly classified the goods in question. Whether confiscation of goods, redemption fine and penalty justified? - Held that - it is a case of classification of the goods and the adjudicating authority has changed the classification relying upon the report of the chartered engineer. In that circumstance, as it is case of interpretation of classification, therefore, the goods are not liable for confiscation and no redemption fine is imposable on the said goods - penalty also set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Classification of imported goods.
2. Imposition of differential duty.
3. Imposition of redemption fine and penalties.
4. Interpretation of Chapter and Section Notes under Customs Tariff Act.
5. Applicability of Interpretative Rules for classification.

Detailed Analysis:

1. Classification of Imported Goods:
The appellant filed a bill of entry for combine harvester parts under heading 84339000. The authorities reclassified some parts under different headings based on a Chartered Engineer's report, which suggested that some parts could be of general use. The appellant argued that the parts, when combined, form a harvester and should be classified under the original heading. The Tribunal noted that the Chartered Engineer's report was not conclusive evidence to support the reclassification and held that the parts were indeed specific to the combine harvester.

2. Imposition of Differential Duty:
Based on the reclassification, differential duty was imposed on the appellant. The Tribunal observed that the goods were imported under a single bill of entry and were parts of a combine harvester. Therefore, the original classification under heading 84339000 was appropriate, negating the need for differential duty.

3. Imposition of Redemption Fine and Penalties:
The adjudicating authority imposed redemption fines and penalties based on the alleged misclassification. The Tribunal held that since the classification issue was interpretative and not due to mis-declaration, the goods were not liable for confiscation. Consequently, no redemption fine or penalties should be imposed.

4. Interpretation of Chapter and Section Notes under Customs Tariff Act:
The appellant cited Chapter Note 2(d) of Chapter 40 and Section Note 1(f) of Section XV, arguing that parts specific to mechanical appliances should not be classified under general headings. The Tribunal agreed, emphasizing that the parts were specific to the combine harvester and should be classified under heading 84339000.

5. Applicability of Interpretative Rules for Classification:
The Tribunal discussed the application of General Interpretative Rules, particularly Rule 1 and Rule 3. Rule 1 prioritizes classification according to the terms of headings and relevant Notes. Rule 3(a) states that the most specific description should be preferred. The Tribunal concluded that heading 84339000 provided the most specific description for the goods in question.

Conclusion:
The Tribunal set aside the impugned order, holding that the appellant correctly classified the goods under heading 84339000. The goods were not liable for confiscation, and no redemption fine or penalties were imposable. The appeal was allowed with consequential relief.

(Pronounced in the open court on 30.11.2017)