Sumit Arora Vs Commissioner of Customs (CESTAT Chandigarh)
CESTAT Chandigarh held that steel balls are classifiable under the Chapter Heading 8482 9900 and not under Chapter Heading 8714 as contended by revenue. Accordingly, duty demand set aside.
Facts- The appellants are engaged in the import of “Steel Balls”. The appellant classified the impugned goods under Chapter Heading 84829900 whereas Revenue is of the opinion that they are rightly classifiable under CTH 8714 9990. Officers of DRI have initiated investigation of the imports made by the appellant and have seized goods lying in their godowns. A show-cause notice was issued proposing re-classification under CTH 8714 9990; recovering differential duty and imposition of penalty on the company and two Directors. The proposals of the show-cause notice was confirmed vide OIO. Hence, this appeal.
Conclusion- Held that the impugned goods can only be classified under CTH 8482 which is a specific heading; moreover, other Notes of Section XVI or Chapter 84 do not exclude the classification of Steel Balls under CTH 8482. Further, the appellants have submitted that the appellants and other importers are importing from various Ports and all other Customs stations have accepted the classification under CTH 8482 whereas only the Commissionerate of Ludhiana have raised the issue. We are of the opinion that Customs being one Department need to have to maintain uniformity in respect of commodities imported at various stations. Giving a differential treatment to the appellants and supporting the same by stating that the classification arrived at other Customs stations has no bearing on the impugned case, is not acceptable.
Thus, held that the impugned order is not legally sustainable and hence liable to be set aside. When the classification and duty demanded in the show-cause notice are set aside, there is no way that the penalty on the appellant’s company and their directors can survive. Accordingly, penalties also are liable to be set aside.
FULL TEXT OF THE CESTAT CHANDIGARH ORDER
The appellants, M/s Unistar Technoplast Pvt. Ltd., are engaged in the import of “Steel Balls”; the appellant classified the impugned goods under Chapter Heading 84829900 whereas Revenue is of the opinion that they are rightly classifiable under CTH 8714 9990. Officers of DRI have initiated investigation of the imports made by the appellant and have seized goods lying in their godowns and goods imported vide Bill of Entry No.5314957 dated 16.10.2019; statements of concerned persons of the appellant, some bicycle manufacturers, were recorded and a certificate of a Chartered Engineer has been obtained by the officers. A show-cause notice dated 06.09.2022 was issued proposing re-classification under CTH 8714 9990; recovering differential duty and imposition of penalty on the company and two Directors Shri Amit Arora and Sumit Arora; the proposals of the show-cause notice was confirmed vide OIO dated 18.11.2022. Hence, this appeal.
2. Shri Naveen Bindal assisted by Shri Aman Garg, learned Counsel for the appellants, submits that CTH 8482 9900 is a specific entry which covers “Steel Balls”, whereas CTH 8714 is a general heading which covers parts and accessories of motor vehicles; in view of Clause (a) of Rule 3 of General Rules for Interpretation, specific entry should be preferred over a general entry. He submits that heading 8482 applies to “Polished Steel Balls”, the maximum and minimum diameters of which do not differ from the nominal diameter by more than 1%, or by more than 0.05MM, whichever is less; other steel balls are classifiable under CTH 7326; as per the inspection report dated 10.2022, the impugned goods are established to be Polished Steel Balls and within the tolerance limit; therefore, they are classifiable under CTH 8482 only; as per Chapter Note 6 to Chapter 84, Steel Balls can either be classified under CTH 8482 or CTH 7326 but not under CTH 8714.
3. Learned Counsel further submits that Section Note 2(a) to Chapter (XVI) of Customs Tariff Act specifies that “parts which are included in any of the headings of Chapter 84 or 85 (other than headings 8409,8431,8448,8466,8473,8487,8503,8522,8529,8538 and 8548) are in all cases to be classified in their respective headings. Further, Section Note 2(e) to Chapter 16 provides that:
“Parts” and “Parts and accessories” do not apply to the following articles, whether or not they are identifiable as for the goods of this section.
(e) “machines and apparatus of heading 8401 to 8479, or parts thereof, other than the radiators for the articles of this Section, article of heading 8481 or 8482 or, provided they constitute integral parts of engines or motors, articles of heading 8483‟.
4.Learned Counsel further submits that the Department‘s reliance on Chartered Engineer Certificate issued by Shri Rajesh John is misplaced; his report was qua the query raised by the Department; he had no expertise and has given the report on the basis of the market survey from cycle industries; such survey does not require any expertise; even then, the report says that the impugned Steel Balls are generally used in the cycle industry; as a corollary, it is inferred that the other uses of the impugned Steel Balls is not ruled out; the Adjudicating Authority has not allowed the cross-examination of the Chartered Engineer. Learned Counsel submits that in fact, the impugned goods are also usable in the ceiling fans, ball bearings, automotive sub-assemblies, valves, LPG regulators, skating shoes, spray paint cans, drawer‘s slide, door locks, toys, agitators, sewing machines etc., as is evident by the report obtained by them from another Chartered Engineer, Shri Prateek Virmani.
5. Learned Counsel submits also that the appellants are importing from Customs station at Sonepat and Delhi; however, no dispute has been raised on the classification; also, no dispute was raised against other importers all over the country. Interestingly, DGCEI, New Delhi issued a show-cause notice dated 20.09.2016 to M/s Mahavir Associates wherein identical goods have been sought to be classified under CTH 8482 in place of CTH 8714 claimed by the assessee. Learned Counsel submits that the issue involved is of classification and as such, suppression with intent to evade payment of duty; therefore, extended period cannot be invoked and penalty cannot be imposed. He relies on the following cases:
