Case Law Details
Commissioner of Customs (Port) Vs Punctual Sales Pvt Ltd (CESTAT Kolkata)
CESTAT Kolkata held that keeping in view the common parlance usage of material as bed sheets and the same can be sold in market as bed sheet, the goods are classified under Customs Tariff Heading 6304 and not under Customs Tariff Heading 54.07.
Facts- The Appellant imported one consignment of „Bed sheet‟, declared as made of “100% Polyester” vide Bill-of-Entry No. 9383337 dated 24/04/2017 with the quantity as 22176 pieces. The Revenue is of the view that the said consignment contains “Polyester Woven Fabrics” and the same is classifiable under CTH 5407 whereas the Appellant had classified the goods under CTH 6304.
Notably, the matter was adjudicated and the goods were held to be mis-declared and consequently confiscated; demand of duty was confirmed against the respondent by classifying the goods under CTH 5407 along with redemption fine of Rs.2,50,000/-, Customs Duty of Rs. 56,80,751/-and penalty of Rs.1,00,000/- imposed u/s. 112(a) of the Customs Act, 1962. Aggrieved from the said order, the Appellant has preferred the present appeal.
Conclusion- The overall nature and size of the goods would clarify that this can be sold as bed sheet. Admittedly, all the corners are not stitched or hemmed but this itself cannot take away the fact that as per the common parlance test, this can be sold in the market as bed sheet which has also been confirmed by the proprietor of the firm.
Held that that particularly keeping in view the common parlance usage of the material as bed sheets which can be deduced from their size, we take the view that the goods are classifiable under CTA 6304 as contended by the appellant and not under CTA 54.07 as has been held by the Revenue.
FULL TEXT OF THE CESTAT KOLKATA ORDER
The facts of the case are that the Appellant imported one consignment of „Bed sheet‟, declared as made of “100% Polyester” vide Bill-of-Entry No. 9383337 dated 24/04/2017 with the quantity as 22176 pieces.
2. The Revenue is of the view that the said consignment contains “Polyester Woven Fabrics” and the same is classifiable under CTH 5407 whereas the Appellant had classified the goods under CTH 6304.
Therefore, representative samples were drawn and thereafter, after completion of investigation, a Show Cause Notice was issued alleging that the appellant had mis-declared the goods. The matter was adjudicated and the goods were held to be mis-declared and consequently confiscated; demand of duty was confirmed against the respondent by classifying the goods under CTH 5407 along with redemption fine of Rs.2,50,000/-, Customs Duty of Rs. 56,80,751/-and penalty of Rs.1,00,000/- imposed under Section 112(a) of the Customs Act, 1962. Aggrieved from the said order, the Appellant is before us.
3. The appellant has challenged the impugned order wherein the classification adopted by them has been re-classified by the Revenue under CTH 5407 of the Customs Tariff Act.
4. The Learned Counsel, appearing on behalf of the appellant, submits that the Department has taken the stand that the imported goods are polyester woven fabrics based on Section XI Note No. 7. He submits that the Department has purely gone on the ground that no end stitching/hemming was done on the cloth to make them eligible for “made up” goods. They have failed to note that the bedsheets are of certain size 14 x 7, which is the normal double bedsheet size. Two double bedsheets are stitched loosely so that they can be removed and they can be sold separately as bedsheets. The Learned Counsel submits that the report given by ATIRA, Ahmedabad is not clarifying the issue as to whether the same would fall under the category of „fabric‟ or under the category of „bedsheet‟ while the test report of Textile Committee indicated the item as not “madeups” and that the same could be appropriately classified as “Polyester woven fabrics”. He states that the Reports are however inconclusive. They have not determined the actual strength. Hence, they cannot conclude that the imported goods are not useful as home textiles. Therefore, he submits that the Department is in error in placing their reliance on the Test Reports to come to a conclusion that they are textile fabrics. He submits that the authorities have ignored the fact that the goods imported can be used only as bedsheets. The size of the product imported would clarify that this is meant to be used as bedsheets as declared by the appellant in the Bill of Entry and in the invoice received by them from the overseas exporters.
5. He submits that the issue is no more res integra. Similar issue had come up before this bench in the case of C & F, C, INC and many other importers (as a batch petition) which are all decided by CESTAT, Kolkata. The issue was that of polyester quilt cover received by the importers which has been stitched from two or three sides and one side folder and then these stitches were found to be loosely done on two sides lengthwise making it resemble as quilt cover. In these cases, the Department also raised the issue of valuation and other matters. The Tribunal has held that they should be treated as quilt covers only and not as fabric and allowed all the Appeals. Accordingly, he relies on the Final Order number 75827- 75840/2024 dated 30/04/2024.
6. He submits that this issue also had come up before this Bench wherein Department had filed an Appeal against Shilpha Finevest Pvt. Ltd. in Customs Appeal No. 75811 of 2018. The Tribunal held as under:
2. The facts of the case are that the respondent imported one consignment of „Bed sheet‟, declared as made of “100% Polyester” vide Bill-of-Entry No. 9383329 dated 20.04.2017 with the quantity as 22,100 pieces.
6.1 In the Bill-of-Entry, the respondent has described the goods as “Bed sheet (100% Polyester)” and that too in numbers. Chapter 63 deals with the following goods: –
“Other made up textile articles; sets; worn clothing and worn textile articles; rags”
while Chapter Heading 6304 deals with: –
“63.04 – Other furnishing articles, excluding those of heading 94.04.
– Bedspreads : …”
Admittedly, the goods in question are Bed spreads i.e., Bed sheets. Although made of 100% polyester yarn, it does not mean that the article loses its identity as Bed spreads / Bed sheets, which are properly classifiable under Customs Tariff Heading 6304.
6.2 However, the Revenue has sought to re-classify the above goods under Customs Tariff Heading 5407, which classifies: –
“54.07 – Woven fabrics of synthetic filament yarn, including woven fabrics obtained from materials of heading 54.04”
7. We admit that the articles which have been imported by the respondent are woven fabric of synthetic filament yarn, but they are Bed spreads / Bed sheets and quantity of the goods in numbers has been described by the respondent. In the circumstances, the merit classification of the impugned goods is under CTH 6304 of the Customs Tariff Act. Therefore, we classify the impugned goods as „Bed spreads‟ (Bed sheets) classifiable under CTH 6304 of the Customs Tariff Act. In view of this, we hold that the impugned goods have been correctly classified by the respondent and the same are not liable for confiscation. We further hold that the respondent is liable to pay duty by classifying the impugned goods under CTH 6304 of the Customs Tariff Act and no penalty is imposable on the respondent. No redemption fine is payable by the respondent.
In view of the submissions, he prays that the present appeal may be allowed.
7. The Learned AR submits that the criteria given under Section 7, for made up articles of textile is not satisfied. Here in this case, both the sides of the fabrics are not stitched or hemmed. Therefore, these cannot be treated as made-up fabrics. Therefore, this will fall correctly under the category of „polyester woven fabrics‟ under CTH 5407. He justifies the Adjudicating Authority’s findings. Accordingly, he prays that the appeal may be dismissed.
8. Heard both sides and perused all the relevant documents and the appeal papers.
9. It would be relevant to go through the facts as contained in the OIO. It is seen therefrom that one bale is measuring 14 feet x 7 feet, two such sheets are loosely stitched and they can be simply pulled apart to make two different sheets each measuring 14 feet x 7 feet approximately. Admittedly, the end portion is neither hemmed nor stitched but the size and look of the material would clarify that these are meant to be sold in the market as bed sheet only. The same point has been reiterated by the proprietor of the firm when he was questioned by the Department officials.
10. On the other hand, if we go through the Test Reports, as noted in the order, we find that the test reports are not conclusive in their findings. In fact, it states that wefts are getting broken and weft yarns used in making the fabric cannot be determined. The Report says that the fabric contains 100% polyester but they are not even denying the fact that this cannot be a made-up bed sheet product – report of the Textile Committee. Overall, both the Test Reports are not conclusive and they do not give any definitive idea that the imported goods will fall under the category of fabrics under CTH 5407. On the other hand, the overall nature and size of the goods would clarify that this can be sold as bed sheet. Admittedly, all the corners are not stitched or hemmed but this itself cannot take away the fact that as per the common parlance test, this can be sold in the market as bed sheet which has also been confirmed by the proprietor of the firm. He has stated that the balance stitching is done by the traders themselves, if required.
11. Coming to the issue of Section XI, Note 7 while the Revenue relying on (d), it is also possible to take the view that (b) would be applicable in view of the usage of the impugned goods. The relevant provisions are extracted below:-
7. For the purposes of this Section, the expression “made up” means:
(b) produced in the finished state, ready for use (or merely needing separation by cutting dividing threads) without sewing or other working (for example, certain dusters, towels, table cloths, scarf squares, blankets);
(d) hemmed or with rolled edges, or with a knotted fringe at any of the edges, but excluding fabrics the cut edges of which have been prevented from unraveling by whipping or by other simple means;
12. The Delhi Tribunal in the case of CCE, Madras Vs. Binny Ltd. [B & C] Mills-2003 (158) ELT 835 (Tri.-Delhi) has held as under:-
4.We have considered the submissions of both the sides. We observe that the product in question manufactured by the respondent does have a dividing thread and as contended by the ld. Advocate, a predetermined towel of a particular size and shape could be seen. It has a cross border and it cannot be used for any other purposes other than as towels. Note 5 to Section XI makes it very clear that if any product is separated by cutting, dividing threads, it will remain within the ambit of made up articles classifiable under Chapter 63 of the Tariff. We are not convinced by the submission of ld. DR that the dividing thread in the product of the manufacturer is not a dividing thread but it is a continuous fabrics. We also observe that by cutting the dividing thread, the towel is, therefore, ready for use. If it is hemmed, it will not take it away from the purview of made up article because it can be used as a towel without such sewing. In these facts and circumstances, we do not find any reason to interfere with the impugned order in appeal. Accordingly, the appeal filed by the Department is rejected.
Since by usage, the goods have the contours of bedsheet, we take the view that Note 7 (b) of Section XI would be applicable.
13. On going through the case file of C & F. INC which has been decided by this Bench, we find that several factors are common. In that case also, the fabric was loosely stitched which could be pulled out to make two quilts, and the imported item was claimed to be quilt covers. In that case, further additional allegations were made on account of valuation issues. The relevant portion of the OIO in their case is reproduced below:
25. The classification of the goods has been claimed under CTH 63041990. On examination of the samples, drawn from the consignment and forwarded by the Dock officers, it is seen that the samples consist of a folded polyster sheet of fabric of size 235CMx 230 CM. The two sides of the folded sheet have been temporarily stitched i.e. with long stitch intended to be removed. It appears from the sample as if the fabric has been temporarily stitched to give it a look of a cover and it has been stitched in such a manner that stitch can be removed easily without any difficulty. In fact, these are two double bed sheets of polyester of size 235 CM x 230 CM each. Accordingly, it appears that the importer have mis-declared the description of the goods.
14. Thus, in both the cases, the issue is more or less similar though not identical. The Tribunal in the case of C. F. Inc., A Unit of Surinder Kumar & Sons (HUF) vide its Final Order Number 75827-75840/2024 dated 30/04/2024 has come to the following conclusion:-
7. As per the said opinion, it is clearly stated that appropriate classification of the said goods is Polyester woven printed quilts and the imported goods have been presented by the appellants as „Polyester woven Quilt Cover‟. If the same are detached then it will look like bed sheet, which is not the correct view of the Revenue and in similar set of facts, this Tribunal has examined the issue in the case of M/s. Annapurna Industries & Others vide Final Order No.FO/77308-77315/2017 dated 30.08.2017 and held the goods in question are to be classified as Polyester woven printed quilts. Therefore, we hold that the goods imported by the appellants are only “Polyster Quilt Cover‟.
15. Going by the factual details above, particularly keeping in view the common parlance usage of the material as bed sheets which can be deduced from their size and the decided case laws discussed above, we take the view that the goods are classifiable under CTA 6304 as contended by the appellant and not under CTA 54.07 as has been held by the Revenue.
16. The order of the lower authority is upheld and the appeal filed by the Revenue dismissed. Cross Objection filed also get disposed of in aforesaid terms.
(Order pronounced in the open court on Sep. 23, 2024.)
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