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2018 (1) TMI 1458 - CGOVT - CustomsDuty Drawback - classification of exported goods - women narrow fabric elastics - whether classified under Heading No. 5806 or otherwise? - Held that - The revenue authorities have accepted that the product of the applicant is made by using these raw materials and with the technique of warp and weft. Considering all these facts it is apparent that the woven fabric elastics exported by the applicant were narrow woven fabrics falling under S. No. 5806 01 and not under 5604 as held by the Deputy Commissioner and the Commissioner (Appeals - the Deputy Commissioner and the Commissioner (Appeals) have not offered any reason in their orders and have not discussed any detail on the basis of which the applicant s products can be classified under 5604. Considering the nature of the product its size its contents and its manufacturing techniques the Government feels that the applicant s product exported under shipping bill No. 1945690 dated 27-9-2012 are not classifiable under 5604 which only covers rubber thread and cord textile covered textile yarn and strip and the goods of Heading 5404 or 5405 impregrated coated covered or sheathed with rubber or plastics and not the goods like narrow woven fabrics exported by the applicant. Accordingly the applicant is eligible to avail drawback of duty at the rate applicable to the goods of S. No. 5806 of Drawback Schedule which was originally claimed by the applicant. Revision application allowed.
Issues: Classification of exported goods for duty drawback under the Customs Act.
Detailed Analysis: 1. Facts Leading to Revision Application: The applicant exported women narrow fabric elastics and claimed drawback of duty under S. No. 580601 of Duty Drawback Schedule 2011-12. Customs Officers opined that the goods were mis-declared to avail higher duty drawback. Despite explanations and technical reports submitted by the applicant, a show cause notice was issued disallowing duty drawback and imposing a penalty under the Customs Act. The Deputy Commissioner rejected the applicant's case based on the test report, concluding the goods were classifiable under S. No. 5604 instead of S. No. 5806. The Commissioner (Appeals) upheld this decision. 2. Grounds for Revision Application: The applicant filed a revision application before the Central Government seeking to set aside the Commissioner (Appeals)'s order and restore the originally claimed duty drawback. The applicant argued that their product should be classified under S. No. 5806 as narrow woven fabrics, not under 5604 as determined by the lower authorities. 3. Analysis of Lower Authorities' Orders: The Deputy Commissioner and the Commissioner (Appeals) rejected the classification under S. No. 5806 solely based on the presence of both warp and weft in the goods. However, they failed to consider the applicant's explanations and technical literature supporting their classification under S. No. 5806. The orders were found to be flawed as they did not appreciate the facts and submissions made by the applicant. 4. Interpretation of CTH 5806: The applicant argued that CTH 5806 has two parts separated by a semi-colon, and their product falls under the first part as narrow woven fabrics. By analyzing technical literature and legal precedents, the Government agreed with the applicant's interpretation. The description of CTH 5806 covers both narrow woven fabrics and fabrics consisting of warp without weft. The applicant's product, being narrow woven elastics, satisfied the criteria for classification under S. No. 5806. 5. Conclusion and Decision: The Government set aside the Commissioner (Appeals)'s order, allowing the revision application. It was determined that the applicant's product should be classified under S. No. 5806 for duty drawback purposes, as originally claimed by the applicant. The lower authorities' failure to consider all relevant aspects led to the erroneous classification of the goods under S. No. 5604. In summary, the judgment focused on the correct classification of the exported goods for duty drawback, highlighting the importance of considering all relevant factors and submissions by the applicant in such cases under the Customs Act.
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