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2024 (3) TMI 869 - AT - CustomsClassification of imported goods - fish protein - to be classified under Customs Tariff Heading 3504 0099 or under chapter heading 0511 9190? - suppression of the correct description of the goods/ misdeclaration of goods - invocation of Extended period of limitation. Whether the imported item is fish protein as declared by the appellant or is it processed/demineralised fish scales at as per the test reports? - HELD THAT:- There is no dispute that the Fish Scales have undergone the process called Decalcification or demineralization. The resultant product essentially consists of protein and moisture, with traces of inorganic substances (i.e. crude ash) and other impurities. The decalcified Fish Scale contains various types of proteins of which Collagen Protein Type I is the major ingredient and the Proteins are made up of diverse amino acids, out of them the main amino acids that make collagen are Proline, Glycine and Hydroxy proline and this type of Protein is called as Collagen and Collagen Protein is the most abundant of the Protein in the Fish Scale are not at all in dispute. Demineralisation is considered as the primary procedure for preparation of the scale for the extraction of collagen. Based on the above it is very clear that the product imported by itself is not a protein but the protein is extracted only after further processing is being undertaken by the appellant - It is also admitted that after certain processes the protein is extracted and then exported. Therefore, the question arises whether the item is classifiable as demineralised fish scale under chapter heading 0511 or as protein under CTH 3504. Whether the product is to be classified under chapter heading 0511 9190 based on the description is demineralised fish scales allowed to be classified under chapter heading 3504 0099 as claimed by the appellant? - HELD THAT:- In the present case, the test reports and the technical literature clearly establish that the product imported is demineralised fish scale. As observed by the apex court in the above case the content of protein cannot establish the product as a protein instead it is only a source of protein. More over there is a specific entry for fish waste and it is a settled issued that specific entry will be preferred over other entries and the chapter notes, headings and the explanatory notes clearly establish the product is rightly classifiable under Chapter 5. In view of the above, the products imported by the appellant are rightly classifiable under Chapter Heading 0511 9090. As rightly stated by the Learned Senior Counsel for the Revenue in physical appearance and smell, the goods were nothing but fish scales, the only process that raw fish scales had undergone is removal of calcium from the outer layer of the fish scales, which was only a preparatory process for further extraction of protein called collagen. It is also an admitted fact that the item imported is not protein but a rich source of protein the processes undertaken by the appellant in their factory clearly bring out this aspect. Classification is based on the description at the time of import and not on the basis of its content as claimed by the appellant. Whether the appellant had mis-declared the description of the product in order to claim the benefit of advance authorization? - HELD THAT:- The question of disallowing the benefit of advance authorisation scheme during this period is not sustainable in as much as the goods were declared as fish protein and item was cleared as fish protein as per the advance authorisation scheme. Moreover, these imported goods were actually used in the manufacture of export goods and exported as per the notification 96/2009 is also not under dispute. The fact remains that all the conditions of the notification were satisfied and accordingly all the bills of entry serial number 1 to 42 are to be allowed as per the advance authorisation scheme since the above test reports holds good for all imports made during this period where no fresh samples were drawn or tested. The advance authorisation license obtained by them for fish protein is a misdeclaration and therefore the imports made by the appellants are not in accordance with the provisions of the Foreign Trade Policy. The import of these products shall be allowed only against a sanitary import permit to be issued by this department as per the procedure laid down in the first schedule annexed to this Notification. For the reasons discussed above the benefit of Advance authorisation is to be denied only prospectively for the consignments where samples were drawn and thereafter. Accordingly, the demand is upheld for 6 bills of entry from Sl.no 43 to 48. The other 9 bills of entry which are provisionally assessed are to be reassessed by reclassifying the same under Chapter Heading 0511. Whether the appellant had made any willful mis-declaration of the description of the goods which attracted invocation of extended period under the provisions of the Customs act 1962 which warranted imposition of various penalties? - HELD THAT:- Since it is a classification issue and the question of benefit of the scheme is allowed for 42 consignments and the other 9 consignments are under provisional assessments, the question of redemption fine or penalty does not arise. Appeal allowed in part.
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