Commissioner of Customs Vs Kitex Garments Ltd (CESTAT Bangalore)
Introduction: The Commissioner of Customs vs. Kitex Garments Ltd case, heard at the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Bangalore, centers around the classification of imported snap fasteners. Kitex Garments imported these items in 2008, claiming tariff benefits under Notification No. 21/2002. However, the dispute arose when the Original Authority contested this classification.
Detailed Analysis:
Claim and Denial: Kitex Garments classified the imported snap fasteners under Customs Tariff Heading 9606 1010, availing benefits under Notification No. 21/2002. The dispute arose when the Original Authority rejected this classification, arguing that the imported items did not align with the description in Sl. No. 140.
Appellate Authority’s Decision: Aggrieved by the Original Authority’s decision, Kitex Garments appealed before the Commissioner (Appeals), who, in turn, set aside the Original Authority’s order. The Revenue, dissatisfied with this decision, filed the present appeals, leading to a thorough examination of the matter by CESTAT Bangalore.
Legal Standpoint: The crux of the dispute lies in whether snap fasteners can be considered as buttons under the purview of Notification No. 21/2002. The Revenue contends that the items fall under Sl. No. 167, 167A, and 167B, subject to quantitative restrictions. The appellant argues that snap fasteners, being parts of buttons, deserve classification under Sl. No. 140.
Judicial Precedents: The appellant cites the Final Order of the Tribunal in the matter of Sunil Traders Vs. CC, Nhava Sheva and emphasizes the clearance of snap fasteners as snap buttons under Sl. No. 141. The Hon’ble High Court of Kerala, in a previous case, upheld the Tribunal’s decision, emphasizing that the notification must be interpreted to achieve its objective of aiding exporters.
Conclusion: In a series of legal battles, Kitex Garments emerges victorious as CESTAT Bangalore dismisses the Revenue’s appeals. The Tribunal upholds the Commissioner (Appeals)’s decision, affirming that snap fasteners can be considered as buttons under Notification No. 21/2002. The legal journey, marked by precedent-setting decisions, solidifies the position that the benefit of the notification is rightfully extended to Kitex Garments for the import of snap fasteners.
FULL TEXT OF THE CESTAT BANGALORE ORDER
The issue in the present appeal is regarding classification of imported goods. The appellant had imported snap fasteners under various Bills of Entry in 2008 and classified the goods under Customs Tariff Heading 9606 1010 by claiming the benefit of Notification No. 21/2002 Sl. No. 140 as Buttons. However, Original Authority denied the benefit of the said Notification on the ground that the imported items are not as per the description given in Sl. No. 140. Aggrieved by the said order of the adjudicating authority, the Respondent had filed an appeal before the Commissioner (Appeals) and Learned Commissioner (Appeals) vide impugned orders set aside the order passed by the Original Authority. Aggrieved by the said orders, the present appeals are filed by the Revenue.
2. When the matter came up for hearing, the Learned Authorized Representative submitted that the issue in the present appeals is not covered by the Final Order of this Tribunal in earlier matter as held by the Appellate Authority. As per the grounds of appeal, the appellant claims that the issue involved in the earlier matter was only whether the entry “Buttons” covered the parts of snap buttons also. However, in the present case the goods imported by the respondent are snap fasteners and not the same as buttons falling under Sl. No. 140. Snap fasteners are covered under Sl. No. 167, 167A, 167B of the said Notification and import of the said goods are conditional subject to quantitative restrictions. Hence the respondent’s claim for clearance of snap fasteners as snap buttons under Sl. No. 141 was not agitated before the Tribunal in earlier proceedings. Moreover, the issue is now clarified by the Board vide Circular No. 44/2007 dated 18.12.2007. To support the above contention, the learned Authorized Representative relied on the Final Order of the Tribunal in the matter of Sunil Traders Vs. CC, Nhava Sheva: 2018 (364) ELT (1017) (Tri. Mumbai).
3. The learned counsel for the respondent submits that Buttons means Knob or Disc intended to fasten together two or more flaps in a garment. Disc could be either a single piece which is passed through a button hole or a multi piece held together by built in device as in the case of snap fasteners imported by the appellant. Further, he submits that the exemption under Sl. No. 140 of the Exemption Notification is extended to the bona fide exporters to cut down the cost of manufacture of exported goods. In that contest, no preference can be laid down between single piece stud button and multi piece press button or snap fasteners as they are interchangeably called as buttons or snap fasteners. Both categories of buttons are for the same purpose in the contest of manufacture of readymade garments for export. Learned counsel for the respondent further submits that the issue is no more res integra, the issue has attained finality as per the Final Order No.673/2009 dated 29.05.2009 of this Tribunal. The appeal filed by the Department before the Hon’ble High Court of Kerala and was dismissed vide judgment dated 25.07.2011 in C.A No. 3/2010. The Hon’ble High Court held that:
“During hearing of this appeal, the respondent’s counsel produced before us the parts of button imported, and on examining the same we notice that four parts of button make a full operational press button on the cloth. In fact, the button operationally consists of two parts, one male and the other female. Each such part is made up of two items, which are riveted from both sides of the cloth to make one part. The corresponding one is fixed on the other part of the cloth, which also has two parts and the fixing is done by riveting. Obviously press button as such cannot be fixed on cloth but only on being fixed on cloths the four parts fixed make into an operational press button. Therefore, in our view the Tribunal rightly assigned the meaning of buttons in the notification covering parts of buttons, which when fixed on the garment turn to be full button. The Department has no case that the respondent has not utilised the parts of buttons while making the garments for use as full buttons in the garments so made. So much so, benefit of notification cannot be declined to the assessee merely because import was button in parts and not in made up form. In our view notification has to be interpreted in such a way as to achieve it’s objective and not to defeat it. Duty free import of various items are permitted to help exporters to sell their products at competitive prices in the international market. We, therefore, uphold the order of the Tribunal and dismiss the Departmental Appeal.”
4. Further, the SLP filed against the above order was also dismissed by Hon’ble Supreme Court vide order dated 26.03.2012 in SLP No. 10900/2012.
5. Learned counsel further submits that this issue was again considered by this Tribunal and this Tribunal vide Final Order No. 23095 – 23096/2017 dated 8.12.2017 allowed the appeal of the respondent. He also referred to the Order-in-Original No. COC-Custom 000-Com-042-15-16 dated 29.01.2016 where similar issue was considered by the respondent and held that “it can thus be seen that the higher appellate forum are of the unanimous opinion that the item imported by the noticee is part of a set consisting of four components of which two such components when reverted together made the male and female part of the whole set and these set were eligible for exemption vide Sl. No. 140 of the exemption Notification No. 21/2002 dated 01.03.2002. In accordance with the decision of higher judicial forum, I drop all proceedings initiated against M/s. Kitex Garments.
6. Heard both sides. The only issue to be decided is whether snap fasteners imported by the appellant can be considered as buttons for the benefit of the Notification No. 21/2002 dated 01.03.2002. This issue is no longer res integra as the Hon’ble High Court of Kerala and the Tribunal have clearly held that the benefit of the Notification for snap fasteners is to be allowed. It is also on record that the department had accepted these orders and allowed the benefit of the Notification as is seen from the following orders:
(i) Order-in-Original No.COC-CUSTM-000-COM-29-16-17 dated 6.9.2016 passed by the Commissioner of Customs, Cochin.
(ii) Order No.99/2016-17 dated 27.02.2017 passed by the Dy. Commissioner of Custom, Cochin.
7. We are of the view that the Commissioner (Appeals) has rightly allowed the appeal filed by the respondent extending the benefit of the notification.
8. Hence, appeals filed by the Revenue are dismissed.
(Order pronounced in open court on 03.11.2023.)
