The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that mis-classification of goods is no ground of confiscation or imposition of penalty. No penalty is imposable when it is a matter of difference of opinion regarding classification of goods by the assessee and by the Department.
The bench of Binu Tamta (Judicial Member) and P.V. Subba Rao (Technical Member) has observed that the imported Searchlights were mis- classified under CTH85131090 and, therefore, the appellant is liable to pay short levy of duty amounting to Rs.15,89,326 with interest. The order of confiscation and penalty is set aside.
The appellant/assessee imported goods described as “Search Lights” through two Bills of Entry Nos.8004086 dated 11.09.2018 and 4234476 dated 02.12.2017 declaring the goods under CTH No.8511090, which covers “Other portable electric lamps designed to function by their own source of energy.”
The goods were described in the B/E as “10W Search Light (KB2922RF)”. The total value of the imported goods was Rs.1,00,99,940/-.
Following an audit, the customs authorities challenged the classification of the impugned goods under the declared CTH 8513 10 90 and issued a show cause notice dated 30.12.2020, proposing that the goods were more appropriately classifiable under CTH 9405 40 10, which specifically includes “Search Lights and Spotlights”.
The Adjudicating Authority held that the goods, being Search Lights fall under CTH 9405, regardless of the power source, and cited Rule 3(a) of the General Rules of Interpretation, which stipulates that a more specific heading prevails over a general one. The differential duty amounting to Rs.15,59,326 was sought to be recovered under Section 28(4) of the Customs Act along with interest under Section 28AA. The appeal filed by the appellant was rejected.
The tribunal held that mis-classification of a product is no ground to confiscate the goods or to impose penalty. The justification for penal action is maintainable only when an element of fraud collusion, willful statement or suppression of facts or violation of the provisions of the Act or Rules with an intent to evade payment of duty is present, which in the present case is not so.
Case Details
Case Title: M/s. Aska Equipments Ltd. Versus Commissioner of Customs(Import)
Case No.: Customs Appeal No.51182 of 2022
Date: 31.01.2025
Counsel For Appellant: Vaibhav Singh
Counsel For Respondent: Girijesh Kumar
