In Customs Appeal NO. 51191 of 2020 -CESTAT- CESTAT upholds importer's classification of ‘Snow Goggles’ for Indian Army under CTH 90049090, sets aside demand & penalty
Members Binu Tamta (Judicial) & P.V. Subba Rao (Technical) [09-08-2023]

Read Order: Aureole Inspecs India Pvt Ltd V. Principal Commissioner, Customs - New Delhi

Chahat Varma

New Delhi, August 25, 2023: The Principal bench of the Customs, Excise and Service Tax Appellate Tribunal has upheld Aureole Inspecs India Pvt. Ltd.’s (appellant) classification of ‘snow goggles’ under CTH 90049090. The Tribunal held that the snow goggles were not sunglasses, as they were designed to protect the eyes in snowy conditions, as opposed to the purpose of sunglasses, which was to protect the eyes from sunlight.

The factual matrix of the case was that the appellant had imported snow goggles and subsequently supplied them to the Indian Army in compliance with their contractual commitment. The appellant submitted a Bill of Entry for the clearance of the snow goggles, classifying them under CTH 90049090, which incurs a basic customs duty (BCD) of 10%. However, the revenue disagreed with this classification and believed they should fall under CTH 90041000, attracting a higher BCD of 20%. In response, the Principal Commissioner of Customs issued a show cause notice, which led to the impugned order in question.

The two-member bench of Binu Tamta (Judicial) and P.V. Subba Rao (Technical) observed that the contract at hand did not mention sunglasses nor use the terms 'sun glasses' and 'snow goggles' interchangeably. Considering trade terminology and the knowledge of those dealing with imported goods, the bench found that the items were rightly categorized as 'snow goggles' instead of sunglasses. These goods were designed for eye protection in snowy conditions, unlike sunglasses, which primarily shield from sunlight. Therefore, the bench concluded that the assertion in the disputed order, which considered the snow goggles as sunglasses, was not accurate.

Upon careful examination of the contract between the appellant and the Army, the bench stated that it was evident that they weren't sunglasses; instead, they were snow goggles. Consequently, the goods in question couldn't be classified under 90041000 (sunglasses) but should be categorized under 900490 as 'Other.'

The bench further remarked that due to their decision in favour of the appellant regarding the classification, the demand should be set aside. Consequently, as the demand itself was being set aside, the fine imposed on the appellant also warranted reversal based on this premise alone.

The bench also held that wrong classification or misinterpretation of an exemption notification in the Bill of Entry, even if proven incorrect, do not invoke Section 111(m) of the Customs Act or the consequent penalty under Section 112.