2009(08)LCX0047

In the Customs, Excise & Service Tax Appellate Tribunal, Chennai

Ms. Jyoti Balasundaram, Vice President and Dr. Chittaranjan Satapathy, Member (Technical)

Menon Technical Services Pvt. Ltd.

Versus

Commissioner of Customs, Chennai

Final Order No. 941/2009 dt. 4.8.2009 certified on 14.8.2009 in Appeal No. C/258/2008/MAS

Advocated By -

Shri Hari Radhakrishnan, Adv. for Appellants Shri V.V. Hariharan, JCDR for Respondent

Per Dr. Chittaranjan Satapathy:

Heard both sides.


2. Shri Hari Radhakrishnan, Ld. Advocate appearing for the appellants states that the dispute involved in this case relates to the issue of classification of the impugned goods as well as valuation of the same. He states that the impugned goods were imported temporarily for testing purpose and subsequently the same has been sent back to Belgium. As regards the issue of classification, the department has classified the impugned machinery under sub-heading 8478.10 as tobacco processing machine. Ld. Advocate states that the appellants have claimed classification of the impugned import under Heading 84.33 as sorting machine as the same does not do any processing but sorting. He substantiates his claim with the help of relevant literature for the machinery as well as the Explanatory Notes to HSN Headings 8433 and 8478. He states that the adjudicating Commissioner was not correct in classifying the impugned machinery as tobacco processing machine merely because of one sentence in the product literature which reads as:-

"Day in and day out, tobacco processing plants create harsh conditions due to humidity, dust, vibrations, high temperatures....HELIUS ensures maximum efficiency in any of these conditions thanks to hermetically sealed optics, creating a clean room environment and eliminating any need for calibration."

He further states the impugned sorting machine is used in a tobacco processing plant but does not do any processing of tobacco. He also states that at the point of export from Belgium the classification of the impugned machinery has been correctly indicated under Heading 84.33 which is also ignored by the adjudicating Commissioner.


3. As regards the valuation, the Ld. Advocate shows from the invoice copy that the invoiced terms were DDP Guntur, and hence the adjudicating Commissioner is wrong in assuming the same to be FOB price and adding ocean freight and ocean insurance to the declared value.


4. Heard Ld. JCDR appearing for the Revenue who supports the impugned order.


5. After hearing both sides and perusal of the records including the product literature and the Explanatory Notes to the HSN, we find that the impugned machinery is a sorting machine which sorts tobacco and separates non tobacco related material based on colour, structure and size. Apart from conventional sorting, it can also do sorting based on biological characteristics invisible to the human eye. We are of the view that the adjudicating Commissioner should not have merely based his finding on classification on the references to "tobacco processing plant" in the literature for "HELIUS LASER SORTER". Moreover, the Heading 84.78 is a residuary heading covering machinery not specified or included elsewhere in Chapter 84 for preparing or making up tobacco which includes machinery for stripping tobacco as well as cutting machines and cigarette making machines but not sorting machines. As such, we accept the submission made by the ld. Advocate that the impugned machinery requires to be classified under Heading 84.33 rather than under Heading 84.78.


6. As regards the issue relating to valuation, the invoice terms are very clear. Since the terms are "DDP Guntur", the value includes not only ocean freight and insurance but also the expenses incurred within India to deliver the goods after customs clearance in Guntur. By no stretch of imagination, the same can be considered to be FOB price. It is expected that the officials of a major Custom House who are particularly dealing with customs valuation should be familiar with 'INCOTERMS' like FOB', 'CIF DDF etc. In fact, the appellants would have been within their right to claim assessment at a lower price since deriving the CIF price from the invoice value on DDP basis would require deductions towards cost incurred in India subsequent to import. However, since no such claim for deduction has been made by the appellants, we accept the claim of the appellants for assessment at the declared price.


7. In view of the foregoing, we set aside the impugned order and allow the appeal with consequential relief to the appellants.

Dictated and pronounced in open Court.

Equivalent 2009 (095) RLT 0411 (CESTAT-Che.)

Equivalent 2010 (249) ELT 0383 (Tri. - Chennai)