2026-VIL-1897-CESTAT-MUM-CU
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CUSTOMS CESTAT Cases

Customs - Classification of Brown Rice Protein Powder - Tariff Items 3504 0099 and 2106 1000 - The Appellant imported Brown Rice Protein Powder with protein content of approximately 80% and self-assessed it under Tariff Item 3504 0099. The Respondent re-classified the goods under Tariff Item 2106 1000, relying on the HSN Explanatory Notes, the 90% protein condition and foreign customs rulings. The Appellant relied on a technical clarification of an Institute of Technology that Glutelins and Prolamins are the major proteins in the goods - Whether the goods are classifiable under Tariff Item 3504 0099 or Tariff Item 2106 1000 - HELD - The onus of establishing classification under a different entry rests on the Revenue, which must adduce cogent evidence to displace the classification declared. As per Explanatory Note (B)(1) to heading 3504, cereal proteins, being Glutelins and Prolamins, are covered irrespective of protein content. The Respondent brushed aside the technical clarification without any inquiry, testing or counter-expert opinion, and substituted his own subjective technical perception. Explanatory Note (6) to heading 2106 refers only to textured protein substances, whereas the goods are imported in powder form. The 90% protein condition applies only to protein isolates under Explanatory Note (B)(6), and the expression generally used therein shows that it is not a sine qua non. Under Rule 3(a) of the General Rules of Interpretation, heading 3504 is the more specific description, and even under Rule 3(c) it occurs last in numerical order. Rule 4 could not be applied without ruling out Rules 1 to 3. Foreign customs rulings are at best persuasive, and being divergent they carry no persuasive value. The Revenue failed to discharge its onus - The goods are classifiable under Tariff Item 3504 0099 as declared and the re-classification is set aside - Extended period - Section 28(4) of Customs Act, 1962 - The Respondent invoked the extended period on the ground that the bills of entry were self-assessed and that mis-classification was adopted with fraudulent intention to claim a lower rate of duty - Whether the extended period under Section 28(4) can be invoked for a dispute of classification - HELD - The goods were correctly described in the bills of entry and were cleared without the classification being disputed. Assessment under a particular tariff item as per the understanding of the importer does not give rise to the extended period when the goods are correctly described. The issue is complex and based on interpretation of law, as the Respondent himself examined chapter headings, Explanatory Notes and rulings. Suppression of facts or wilful misstatement cannot be alleged - The invocation of the extended period is vitiated in law - Confiscation, redemption fine and penalty - Sections 111(m), 114A and 125 of Customs Act, 1962 - The goods were held liable to confiscation under Section 111(m) on the sole ground of mis-classification, and redemption fine and penalty under Section 114A were imposed. The goods were not available for confiscation - Whether confiscation, redemption fine and penalty can be sustained on the ground of incorrect classification - HELD - It is not the case of the Revenue that the value or description of the goods was mis-declared. A classification claimed in the bill of entry is only a self-assessment as per the importer's understanding, and an incorrect claim does not render the goods liable to confiscation under Section 111(m). Redemption fine cannot be imposed when the goods are not available for confiscation. Penalty and confiscation on the ground of mis-classification, devoid of any mala fide, are not justified - The confiscation, redemption fine and penalty are set aside and the appeal is allowed.
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