Trishaa Overseas vs Commissioner Of Customs (NS-III)

In this proceeding, M/s Trishaa Overseas assails order-in-original no. 84/2019-20/Commr/NS-III/GrIII/JNCH dated 3rd January 2020 of

Commissioner of Customs (NS-III), Nhava Sheva for having enhanced assessable value to Rs.45,74,066 from Rs.11,29,709 with consequential

demand of Rs.82,21,792 as duty instead of Rs.3,17,448 paid on self-assessment along with the determining of fine of Rs. 5,00,000 for redemption of

the impugned goods confiscated under section 111(m) of Customs Act, 1962 and the imposition of penalty of Rs.6,00,000 under section 112 of

Customs Act, 1962. The tale began with the appellant filing bill of entry no. 4232332/26.07.2019 with declared value of Rs.11,29,709 and claimed to

contain ‘baby garment woolen knitted top’ (38100 pieces priced at Rs.14.49 apiece for value of Rs.5,52,069), ‘baby garments woolen knitted

jacket’ (21000 pieces priced at Rs.20.89 apiece for value of Rs. 4,38,690), ‘men’s knitted glove’ (16800 pairs priced at Rs.4.59 a pair

for value of Rs. 77,112) and ‘baby knitted glove’ (18000 pairs priced at Rs.3.13 a pair for value of Rs. 56,340).

Their troubles began immediately as the clearance of the consignment, though self-assessed and duty discharged thereon, was put on hold for

further investigation. Two occurrences thereafter were to feature prominently in compounding their ill-fortune â€" physical examination and reference

of samples to the inter-ministerial Textile Committee designated, among other things, for ascertainment of prohibited dyes. During inventory, the

consignment was found to include ‘baby top sets’ (360 pieces with value of Rs. 9172.80 at Rs. 25.48 apiece) without corresponding declaration

in the bill of entry and there were only 20,700 pieces of ‘baby woolen garment jacket’ for a net excess of 60 pieces over the declaration of

93,900 pieces. Though free of prohibited dyes and conforming to declaration as far as ‘knitted gloves’ was concerned, the samples of ‘baby

woolen garment top’ and ‘baby woolen garment jacket’ were found to be composed of ‘polyester yarn’ and for girls/boys which

prompted the Textile Committee to advise that the classification be revised from tariff item no. 6111 30 00 to tariff item no. 6106 20 10 and tariff item

no. 6203 33 00 of First Schedule to Customs Tariff Act, 1975 respectively. As a consequence of the defect in description, the declared value of both

was rejected and subject to re-assessment at Rs. 36.81 apiece and at Rs. 145.32 apiece (Rs. 14,02,461 and Rs. 30,08,124 instead of Rs. 5,52,069 and

Rs. 4,38,690 respectively) adopted from that of comparable goods, under the authority of rule 5 of Customs Valuation (Determination of Value of

Imported Goods) Rules, 2007, which, in conjunction with the rate of duty corresponding to the revised description, enhanced duty liability to

Rs.10,70,248.05 and Rs. 71,05,606.20 from Rs. 1,43,538 and Rs.1,12,034 as self-assessed). The importer, though denying any complicity in the

consigning of the undeclared goods, acquiesced in the duty liability of Rs. 2577.55 arising thereon.

The cavil of the appellant is, thus, limited to the revision in classification. At this stage, it may not be out of place to note that the gap between the

proportion of enhancement of assessable value and that of the increase in duty liability is manifold. That is the effect of the structuring of rates of duty

owing to which any re-assessment in which unit price that is less than five times the threshold Rs. 25 and Rs.320 at specific rate is of no relevance.

Hence, if the re-determination of the tariff item finds justification, the dispute over valuation is academic.

Narrating the circumstances culminating in the present proceeding, Learned Counsel for appellant concedes that duty liability on the undeclared

goods is not in dispute but questions the finding that the importer had deliberately attempted to evade duties of customs. He contends that the

adjudicating authority had been less than diligent in the discharge of his obligation by subordinating his statutory responsibilities to the advisory

promptings of the Textile Committee; it was pointed out that even a superficial exercise of perusing the rival descriptions in the tariff had not been

undertaking for, if he had, the benchmarking of ‘baby garments’ in note 6 of chapter 61 of First Schedule to Customs Tariff Act, 1975 would

have been all too apparent. Though superfluous in the light of our caveat above, it was also argued that the importer had not been placed on notice of

the evidence, in the form of relevant bills of entry, for adoption of prices in other declarations for enhancement of value of the impugned goods.

Learned Authorized Representative drew our attention to the dereliction in declaring the contents of the consignment and pointed out that the

collegial expertise of the Textile Committee, entrusted with specific responsibility by the Central Government for that very reason, sufficed for

initiation of proceedings. It was argued by her that the appellant had misdeclared the composition of the garments owing to which the revised

classification, and rejection of declared value for assessment, was a natural consequence. She exhorted that the appeal deserves dismissal.

The appellant had, in the bill of entry, sought coverage under

‘of synthetic fibres’

within

‘Babies’ garments and clothing accessories, knitted or crocheted’

corresponding to tariff item no. 6111 30 00 while, on the expert guidance of the Textile Committee, the adjudicating authority found it appropriate to

bring the ‘baby garments top’ under

‘of synthetic fibres’

within

‘Women’s or girls’ blouses, shirts and shirt-blouses, knitted or crocheted’

corresponding to tariff item no. 61062010 of the First Schedule to Customs Tariff Act, 1975. Insofar as ‘baby garments jackets’ is concerned,

the adjudicating authority, apparently inspired by the expertise of the Textile Committee, decided that the description

‘of synthetic fibres’

under

‘Jackets and blazers’

within

‘Men’s or boys’ suits, ensembles, jackets, blazers, bib and brace overalls, breeches and shorts (other than swimwear)’ corresponding to

tariff item no. 6203 33 00 of the First Schedule to Customs Tariff Act, 1975 to be more appropriate.

One cannot help but recall Alexander Pope rendering that sage caution that

‘A little learning is a dangerous thing; drink deep, or taste not the Pierian spring; there shallow draughts intoxicate the brain, and

drinking largely sobers us again.’

while conjuring the imagery that William Saroyan intended in penning that

‘The tax collector’s letters are invariably mimeographed, and all they say is that you still haven’t paid [your levy]’

With due deference to the professional competence of the Textile Committee and the vast knowledge that the adjudicating authority has endowed his

office with, we wonder if our anguish could find more succinct, and evocative, articulation.

Cross-border transactions stand on the bedrock of the certainty assured by statutes that enact, and policies that promulgate, internationally

negotiated consensus; and to subject such transactions to proceedings that, donning the mantle of legal authority, care not a whit for legislative

sanction is anathema to public interest. Tax, where due, must be collected with no respect to the cost borne by the payer; tax, though rendered unto

Caesar, is not for Caesar. The polity would have been well served had the Textile Committee only restricted its advice to its remit and the adjudicating

authority summoned sufficient enthusiasm to fit the known, and ascertained facts, within the rubric of the Customs Tariff Act, 1975. We do not

propose to further dwell on this abdication of responsibility as we proceed to ascertain the correctness of the advice that was acted upon.

The classification for ‘baby woolen tops’ and ‘baby woolen jackets’, adopted by the importer, appeared to have been discountenanced

by the Textile Committee for two reasons: that the articles were made of polyester fibre, and not of wool as described in the bill of entry, and that

visual examination by the Textile Committee found these to be intended not for babies but for girls and boys. The ‘boys’ jackets’, found not

to be knitted, was sought to be fitted within chapter 62 of First Schedule to Customs Tariff Act, 1975. On these bare facts, the defensibility of the

conclusions may not offer cause for quarrel. The tariff schedule, however, is no streetside smorgasbord.

Chapter 61 and 62 of the First Schedule to Customs Tariff Act, 1975 enumerate groupings of apparels designed for human wear and, under the

broad categorisation as ‘knitted/crocheted and’ those that are not, save for a single exception which is not material to this dispute, as mutually

exclusive. In both, distinction of gender is the consistent dichotomy; the stages of human life though, are reduced to three in the interest of eliminating

controversy. The physical disparities among the human beings across regions, as well as within, and the tyranny of culture over attire compels the

imposition of an artificial construct for universally acceptable categorisation; some benchmark of measurement must separate boys/girls from babies

â€" a distinguishment relevant, and sufficing, for the tariff. Note 6 in chapter 61 of First Schedule to Customs Tariff Act, 1975, intending that, for the

purpose of heading 6111;

‘(a) the expression “babies’ garments and clothing accessories†means articles for young children of a body height not

exceeding 86 cm;

(b) articles which are, prima facie, classifiable both in heading 6111 and in other headings of this Chapter are to be classified in heading

6111.’

(and replicated as note 4 in chapter 62 of First Schedule to Customs Tariff Act, 1975 in relation to heading 6209) brooks no room for expertise or

visual acuity in determining the tax liability on import of ‘babies garments’; length is the sole, and exclusive, test for conformity therein. The

Textile Committee appears to have glossed over the size of the samples which had been measured for tabulation (Table-III) and well within the

prescription of the said note. On the size thus evidenced in the samples, classification could be limited only to heading 6111 or 6209 of the First

Schedule to Customs Tariff Act, 1975 and, as the latter had not been proposed ever in the proceedings before the adjudicating authority, we are, as

the impugned order should also have been, concerned only with former. In these circumstances, it was also incumbent on the adjudicating authority to

disabuse the Textile Committee of the competence to arrive at classification for assessment of duties of customs.

The claim of the importer for coverage of the imported goods under tariff item 6111 30 00 may not, necessarily, have been in conformity with the

description in the bill of entry. Nevertheless, it is in consonance with the composition as indicated by testing of the samples; the claimed classification

pertains to garments made ‘of synthetic fibres’ which, though wool may not be, ‘polyester’ is nothing but. There was, thus, no reason to

allege misdeclaration, either on the count of size or of composition, with the detrimental consequences of revising the rate of duty and the assessable

value.

As the declaration is not in question as far as the goods for which bill of entry had been filed is concerned, the order for recovery of differential

duty and confiscation of goods as well as imposition of penalty does not have the authority of law and must be set aside. Insofar as the 360 pieces of

‘baby garments top and bottom pyjama set’ is concerned, the numbers are not materially significant and there is no evidence of the involvement

of the importer in any attempted smuggling; other than the liability of duty thereon, all other detrimental consequences are not warranted.

Consequently, except for the duty liability of Rs. 2557.55, the impugned order a set aside in its entirety.

(Pronounced in Open Court on 18/06/2021)