2014(10)LCX0103

IN THE CESTAT, WEST ZONAL BENCH, MUMBAI

S/Shri P.R. Chandrasekharan, Member (T) and Ramesh Nair, Member (J)

Goan Hotels & Clubs P. Ltd.

Versus

C.C. (EXPORTS), NHAVA SHEVA

Final Order No. A/1657/2014-WZB/C-I (CSTB), dated 21-10-2014 in Appeal No. C/383/2012-Mum

Cases Quoted -

Union of India v. Pesticides Manufacturing & Formulators Association of India
- 2002(10)LCX0205 Eq 2002 (146) ELT 0019 (S.C.) - Relied on [Paras 3.1,5.3]

Advocated By -

Shri J.C. Patel, Advocate, for the Appellant. Shri A.K. Singh, Additional Commissioner (AR),for the Respondent

[Order per : P.R. Chandrasekharan, Member (T)]. -

The appeal arises from Order-in-Original No. 77/2012, dated 31-3-2012 passed by the Commissioner of Customs (Exports), JNCH, Nhava Sheva.


2. Vide the impugned order, the adjudicating authority has held that the goods imported by the appellant, M/s. Goan Hotels and Clubs Pvt. Ltd., Goa vide Bill of Entry Nos. 952097 and 952094 both dated 22-3-2010 and 956066, dated 24-3-2010 under EPCG scheme vide EPCG licences Nos. 0330024096, dated 23-10-2009, 0330024302, dated 13-11-2009 and 0330025462, dated 12-3-2010 would be classifiable under Customs Tariff Heading 6802 29 00. However, he has denied the benefit of exemption Notification 103/2009-Cus. and has ordered confiscation of the said goods valued at ? 1,02,23,909/- under Section 111(d) of the Customs Act, 1962 with an option to redeem the same on payment of ? 20 lakhs. He has also imposed a penalty of ^ 10 lakhs on the appellant under Section 112(a) of the Customs Act, 1962. Aggrieved of the same, the appellant is before us.

2.1 This is the second round of litigation. When the issue had come up earlier before this Tribunal, vide order No. A/380/12/CSTB/C-I, dated 14-5-2012 [2012(05)LCX0238 Eq 2013 (292) ELT 0442 (T)], this Tribunal had allowed the appeal and held that the appellant is entitled to classify the product under importation under CTH 6802 2900 for Customs Tariff purposes as well as ITC (HS) Policy and, therefore, the appellant would be entitled for the benefit of Notification No. 103/2009-Cus. under the EPCG scheme. The said order was challenged by the Revenue before the Hon'ble High Court of Bombay in Customs Appeal No. 13 of 2013. The Hon'ble High Court held that:

"the arguments of the Revenue is that the Customs Tariff Heading No. 6802 29 00 under which the goods are classifiable, then, whether there is any restriction in terms of the applicable policies or not ought to have been exam-ined. Whether the Commissioner was right in making a reference to the Customs Tariff Heading 6802 22 00 should have been then considered. If that was permissible, the Tribunal was obliged to not only a reference to the relevant finding of the Commissioner to uphold them in their entirety or otherwise. If these findings were not tenable as urged on behalf of the Respondent/original appellant, then, the Tribunal should have held accordingly. We do not find any discussion much less a conclusive finding on this aspect on the matter."

Accordingly the order was set aside and the matter remanded to the Tribunal for de novo consideration.


3. The learned Counsel for the appellant submits that the adjudicating authority has held that 'calcareous stone' imported by the appellant is classifiable under Customs Tariff heading 6802 29 00 for the purpose of levy of import duty. However, he has come to the conclusion that for the purpose of ITC (HS), the imported goods were covered by HSN 6*802 22 00, the equivalent of which in the Customs Tariff was 6802 29 00. In respect of the said entry, the import was per mitted freely provided the CIF value was US $ 50 and above per square meter. In the present case, the appellant had declared the value much less than US $ 50 per square meter and, therefore, the appellant needed a licence or import permit to undertake the transaction. Since the goods are prohibited items under the ITC (HS) Policy, benefit of Notification No. 103/2009-Cus. could not be extended since EPGC authorisations are not valid for import of restricted goods as per the Foreign Trade Policy and consequently, benefit of aforesaid exemption also would not be available. This finding of the adjudicating authority is clearly in-correct for the reason that, at the time of importation in 2010, there was no entry 6802 22 00 under ITC (HS) which had been omitted vide Notification 94 (RE-2008)/2004-2009, dated 2-3-2009. Since ITC (HS) is aligned with the Customs Tariff completely, there cannot be different classifications, one for the purpose of Customs Duty and the other for the purpose of importability under Foreign Trade Policy. Therefore, for the purpose of ITC (HS), the goods should have been classified under entry 6802 29 00, the same as per the Customs duty tariff. Import Policy relating to entry 6802 29 00 is 'free' and, therefore, there is no value restriction or any other restriction placed on imports of goods falling under entry 6802 2900. Secondly, the goods were eligible to be imported under EPCG scheme and the benefit of Notification 103/2009-Cus should have been extended to the appellant and, therefore the impugned order is bad in law.

3.1 The learned Counsel also relies on the decision of the Hon'ble Apex Court in the case of Pesticides Mfg. & Formuhilars Association of India - 2002(10)LCX0205 Eq 2002 (146) ELT 0019 (S.C.) wherein the Hon'ble Apex Court held that the classification under Indian Customs Tariff and ITC (HS) has to be identical after alignment of the ITCH (HS) classification with the Harmonized System of Nomenclature effective from 1-4-2002. Accordingly, he submits that the finding of the learned adjudicating authority in the impugned order is clearly not sustainable in law and there-fore, he prays for allowing the appeal.


4. The learned Additional Commissioner (AR) appearing for the Revenue reiterates the findings of the adjudicating authority and prays for upholding the impugned order.


5. We have carefully considered the submissions made by both the sides. It would be useful at this juncture to reproduce the relevant entries both under the Indian Customs Tariff and also under the ITC (HS) Policy as it stood at the relevant time. If this is done, the issue would become crystal clear. We give below a comparative position of the Indian Customs Tariff as also ITC (HS) in respect of the products covered for the purpose of classification.



Customs Tariff ITC (HS)
Tariff Heading Description of Goods EXIM Code Description of Goods Policy
6802 21 Marble, travertine and alabaster : 6802 21 Marble, travertine
and alabaster :
6802 21 10 Marble blocks or tiles 6802 21 10 Marble blocks/tiles Free
6802 21 20 Marble monumental stone 6802 21 20 Marble monumental block Free
6802 21 90 Other 6802 21 90 Other Free
6802 22 00
6802 23 Granite : 6802 23 Granite : Free
6802 23 10 Granite blocks or tiles 6802 23 10 Granite blocks/tiles Free
6802 23 90 Other 6802 23 90 Other I'TCV
6802 29 00 Other stone 6802 29 00 Other stone Free

From the above table it is clear that in respect of goods falling under 6802 29 00 under the Customs Tariff, the ITC (HS) Policy relating to corresponding entry is free under EXIM code 6802 29 00 and there are no value restrictions attached to the goods. Therefore there is merit in the contention of the appellant that there was no policy restriction at the time of import either as to value or on account of other reasons.

5.1 Further, we find that the EXIM classification of the export and import items were aligned with the Customs Tariff w.e.f. 1-4-2002, in terms of notification issued by the Department of Commerce and Industry under the EXIM Policy. In the said policy, it was clearly stated as follows :

"The last five years have seen a paradigm shift in the import policy regime. All the quantitative restrictions (QRs) maintained on account of Balance of Payment (BoP) reasons have now been removed. This change in the import policy obviated the need for detailed commodity classification at 10 digit level. There was a felt need for harmonization of the commodity classification used for imposition of custom duty, determination of the import policy and collection of import statistics. To put it in simple words, a common classification was required for these purposes. Such a common classification is also a sine-qua-non for effective computerization and electronic data interchange (EDI).

The task of harmonization was taken up by a group comprising representatives from the Customs, DGFT and DGCI&S. The working group has finalized a common classification to be used by the three organizations. With the publication of this book, we have adopted the draft developed by this working group. DGCI&S & Customs shall also be adopting the same in the near future, after the completion of prescribed procedures. Hopefully this would be a major step towards elimination of classification disputes and consequently, bring reduction in transaction time and cost."

5.2 From the provisions of the policy, it is evident that the classification under Indian Customs Tariff and the ITC (HS) have been aligned completely with each other effective from 1-4-2002. If that be so, the Customs cannot classify the goods under a different entry other than 6802 29 00 in respect of the goods under importation.

5.3 The Hon'ble Apex Court's decision in the case of Pesticides Mfg. & Fornuilators Association of India (supra) also supports this position, as can be seen from Para 25 of the said order.

"25. The HS of Commodity Classification which was developed by the World Customs Organisation, Brussels, was adopted by India also in the ITC (HS) Classification of Export and Import Items. 2002-2007 which was issued by the Government under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 read with paragraph 2.1 of the Export and Import Policy, 2002-2007. The ITC (HS) like the Schedule to the 1985 Act, also contains several chapters which correspond exactly with the Schedule to the 1985 Act at least as far as the relevant parts of Chapter 38 are concerned. Chapter Note 1(a)(2) and the Heading 38.08 of the ITC (HS) are identical with the Schedule to the 1985 Act. In the ITC (HS), under the several subheadings to Heading 38.08, the different forms of insecticides, pesticides etc. have been provided for from which it is clear that insecticides etc., in their concentrated bulk forms are covered by the Heading 38.08 at least for the purposes of the Import/Export Policy. For example sub-heading 3808.10.11 mentions 'Aldrin' as a form of insecticide. Against that sub-heading, it is provided that it is freely importable/exportable 'if registered and not prohibited for import under Insecticides Act, 1968 and formulations thereof. Similarly, 3808.90.10 provides for 'pesticides, not elsewhere specified.' It is treated as a free item under the policy 'if registered and not prohibited for import under the insecticides Act, 1968 and formulations thereof. Undeniably insecticides, pesticides etc. in whatever form are covered by the Insecticides Act. The description demonstrates that bulk concentrates and formulations are covered by the sub-heading 'Aldrin'. The use of the same words in the Tariff Heading in the Schedule to the 1985 Act as has been used for the purposes of the Import Trade Control Policy is an additional reason for holding that insecticides, pesticides concentrates in bulk forms are includible within the Tariff Heading. See Dunlop India Ltd. v. Union of India and Ors., [1976] 2 SCC 241."

In view of the above factual and legal position, it is clear that there cannot be two classifications, one under entry 6802 29 00 for Customs duty purposes and another under 6802 22 00 for ITC (HS) purpose.

5.4 In fact, the adjudicating authority overlooked the fact that entry 6802 22 00 had been omitted from the ITC (HS) Policy effective from 2-3-2009. Inasmuch as there is no restriction on the import of goods under ITC (HS) in respect of goods falling under entry 6802 29 00, the question of denying the benefit of Notification 103/2009-Cus. would not arise at all and the appellant would be entitled to the benefit of the aforesaid Notification. Further, inasmuch as the goods were freely importable, the question of the goods being liable to confiscation under Section 111(d) also would not arise. Therefore, the confiscation of the goods with option to redeem the same on payment of fine also would not arise.


6. In view of the factual and legal position, as stated above, the appeal succeeds and is allowed with consequential relief, if any, in accordance with law.
(Operative part of the order pronounced in Court)

Equivalent 2015 (317) ELT 0327 (Tri. - Mumbai)