Tribunal affirms classification of imported goods as 'ponchos' and 'capes,' reduces financial penalties due to importer hardships.
In a notable decision by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), the case of Anil Kumar, Proprietor of Gajraj Hosiery Factory, against the Commissioner of Customs, Ludhiana, has been resolved with significant implications for importers and customs regulations. The tribunal, comprising Mr. S.S. Garg, Member (Judicial), and Mr. P. Anjani Kumar, Member (Technical), delivered a judgment on December 19, 2025, addressing the contentious issue of mis-declaration of imported goods.
The appellant, Anil Kumar, had declared a consignment as "Women Knitted Scarves, Shawl Assorted" under Customs Tariff Heading (CTH) 61171040. However, upon examination by the Special Intelligence and Investigation Branch (SIIB), Customs, Ludhiana, it was found that the goods consisted of 'ponchos' and 'capes,' requiring reclassification under CTH 61023010. The Textile Committee's expert report confirmed this classification, asserting that the goods were neither shawls nor scarves.
The tribunal upheld the decision to classify the goods as 'ponchos' and 'capes,' based on the Chapter notes, HSN Explanatory Notes, and the Textile Committee's guidelines, noting that expert reports hold substantial weight unless countered by significant evidence. Despite the appellant's argument that similar goods were cleared under CTH 6117 at other ports, the lack of evidence led to the rejection of this claim.
In terms of financial penalties, the tribunal demonstrated leniency considering the delay and hardship faced by the importer. The original redemption fine of Rs. 2,00,000 was reduced to Rs. 20,000, and the penalty of Rs. 50,000 was reduced to Rs. 5,000, serving the interest of justice by acknowledging the financial burdens placed on the appellant.
This case underscores the importance of accurate classification of goods under the Customs Tariff Act and the significant role of expert reports in customs disputes. The decision also highlights the tribunal's capacity to exercise discretion in reducing penalties to alleviate undue hardship on importers.
Bottom Line:
Mis-declaration of imported goods - Classification under Customs Tariff Act - Expert report by the Textile Committee holds substantial weight in determining classification of goods.
Statutory provisions: Customs Act, 1962 Section 111(m), Customs Act, 1962 Section 112(a), Customs Tariff Act, 1975 Chapter 61
