Ponchos Classified As Capes, Not Scarves; CESTAT Chandigarh Upholds Customs Reclassification, Higher Duty Applicable

The Chandigarh Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that imported ponchos are correctly reclassified under CTH 6102 as capes, rejecting the assessee's claim of them being scarves. S.S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) opined that when the expert has given a report on the impugned goods, the same cannot be brushed aside without any substantial evidence to counter the same. In the case at hand, the assessee/appellant imported a consignment, declared as “Women Knitted Scarves, Shawl Assorted and others” and classified under Customs Tariff Heading (CTH) 61171040. The department found that out of the declared goods, 5896 pieces of 'ponchos' and 1350 pieces of 'capes' were mis-declared as “Women Knitted Scarves, Shawl Assorted”. The Textiles Committee, Ludhiana, on being asked to examine the goods, confirmed that the goods were indeed 'ponchos' and 'capes', not shawls or scarves. The goods were seized under Section 110 of the Customs Act, 1962 and a Show Cause Notice (SCN) was issued proposing to confiscate goods under Section 111(m) and re-classify the same under CTH 61023010/61023020. The Adjudicating Authority passed an order confirming the differential duty of ₹38,78,650 and imposing a redemption fine of ₹2,00,000 and a penalty of ₹50,000. The assessee submitted that the impugned goods are actually different styles of shawls and scarves and not ponchos as considered by the department; even the ponchos are being cleared as scarves in other customs stations under CTH 6117. The department submitted that the goods are mis-declared as shawls, whereas they are confirmed to be ponchos/capes, as per the report given by the Textiles Committee, an expert body under the Ministry of Textiles' HSN Explanatory Notes and Customs Tariff explicitly include 'ponchos' under 'capes' in CTH 6102. The assessee's reliance on trade parlance or marketability is irrelevant when the tariff provides a specific definition. The bench noted that the assessee has not produced any substantiated evidence to consider that the said report of the Textile Committee is incorrect. There is nothing on record to indicate whether the assessee has challenged the said report. The Tribunal stated that the impugned goods have been examined by the experts and reported. It is not the case of the assessee that similar goods have been cleared under CTH 61171040n, even if there was a report by the Textile Committee contrary to the declaration. The assessee has not submitted any copies of the bills of entry and the reports, if any. Under the circumstances, it is to be held that the claim of the assessee is bereft of merit. In view of the above, the Tribunal partly allowed the appeal by upholding the classification as arrived at by the impugned order and reducing the redemption fine to Rs. 20,000 and the penalty to Rs. 5000. Case Title: Anil Kumar, Proprietor of Gajraj Hosiery Factory v. Commissioner of Customs, Ludhiana Case Number: Customs Appeal No. 60100 of 2018 Counsel for Appellant/ Assessee: Anil Kumar, Proprietor Counsel for Respondent/ Department: Anurag Kumar Click Here To Read/Download Order

Ponchos Classified As Capes, Not Scarves; CESTAT Chandigarh Upholds Customs Reclassification, Higher Duty Applicable

Mehak Dhiman

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