2023 (9) TMI 826 - AT - Customs

Re-determination of classification of imported goods - DB 49-213270-000F 15 DC LCD display - Diebold AUO Q150 Go3 V2 5621,USA - to be classified under tariff item 8473 50 00 of First Schedule to Customs Tariff Act, 1975 or 8528 5900 of First Schedule to Customs Tariff Act, 1975?. The appellant claims that the goods find use in more than one equipment and, owing to such adaptability, fits within the generality of the claimed classification. Revenue relies upon the specificity of monitors in heading 8528 of First Schedule to Customs Tariff Act, 1975 to justify overwhelming precedence over the claimed heading. HELD THAT - The impugned order has discarded the validity of section notes which is relevant only when rule 3(3) of General Rules for Interpretation of the Tariff is brought to bear on a classification dispute. In the light of the claim of the appellant on the classification approved by the Hon ble Supreme Court in re Secure Meters Ltd 2015 (5) TMI 241 - SUPREME COURT , qualification of the substituted classification to be at par with claimed classification, and amenable to choice by recourse to rule 3(3) of General Rules for Interpretation of the Tariff is questionable. There are too many gaps, despite the abundance of material in the order of lower authorities, that has grown beyond the brief proposal in the show cause notice to enable determination at the second appellate level that the impugned goods would be covered by description corresponding to a particular heading, sub-heading and tariff item. The importer proposed one in accordance with their lights and to their benefit. The adjudicating authority who is expected to independently justify the proposed heading has not adhered to that responsibility. That requires rectification. The show cause notice restored before the original authority to render a fresh decision that would be in conformity with the decisions of the Hon ble Supreme Court on the adversarial engagement in classification disputes and on the distinction, if any, between LCD and monitor to justify the appropriateness of the proposed classification. Appeal is, thus, allowed by way of remand.

Summary

Issues Involved:
1. Classification of imported goods.
2. Applicability of duty based on classification.
3. Interpretation of relevant tariff headings and notes.
4. Burden of proof in classification disputes.

Summary:

1. Classification of Imported Goods:
The dispute centers on the classification of imported goods, specifically 430 units of 'DB 49-213270-000F 15€� DC LCD display' and 40 units of 'Diebold AUO Q150*Go3 V2 5621,USA'. The appellant declared these as 'parts of ATM machines' under tariff item 8473 50 00, while customs authorities reclassified them as 'other monitors' under tariff item 8528 5900.

2. Applicability of Duty Based on Classification:
The appellant argued that the goods, being 'displays' used in ATM assembly, do not resemble 'monitors' as perceived by customs. The appellant cited several Supreme Court decisions to support their classification. Conversely, the customs authorities argued that the goods were more appropriately classified under heading 8528, which attracted a different duty rate.

3. Interpretation of Relevant Tariff Headings and Notes:
The Tribunal noted that both parties overlooked the significance of the structural hierarchy and the General Rules for Interpretation of the Import Tariff. The appellant claimed that the goods' adaptability for multiple uses justified their classification under 8473 50 00, while the customs authorities emphasized the specificity of 'monitors' under heading 8528.

4. Burden of Proof in Classification Disputes:
Citing judicial precedents, the Tribunal emphasized that the burden of proof lies with customs authorities to establish the appropriateness of an independent classification. The Tribunal found that the original authority's justification was insufficient and lacked a detailed examination of the technical capabilities of the goods.

Conclusion:
The Tribunal set aside the impugned order and restored the show cause notice to the original authority for a fresh decision. The original authority is directed to render a decision in conformity with Supreme Court decisions on classification disputes and to clarify the distinction between 'LCD' and 'monitor'. The appeal is allowed by way of remand.