CESTAT New Delhi Upholds Classification Of ‘Twaron Para Aramid Pulp’ As Textile Flock Under CTI 5601 30 00; Sets Aside Penalty And Extended Limitation Demand
Pranav B Prem
The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, comprising Justice Dilip Gupta (President) and Mr. P.V. Subba Rao (Technical Member), has held that Twaron Para Aramid Pulp imported by the assessee is classifiable under Customs Tariff Item (CTI) 5601 30 00 as “textile flock and dust and mill neps”, and not under CTI 5601 22 00 as claimed by the importer. Consequently, the importers are liable to pay a higher rate of customs duty along with applicable interest. The appeals were filed by M/s Leakless Gasket India Pvt. Ltd. against orders passed by the Commissioner of Customs (Preventive), New Delhi and the Commissioner of Customs (ICD, Patparganj, New Delhi) confirming the demand of differential duty, interest, and penalties in respect of multiple Bills of Entry filed during 2018–2019. The impugned orders had classified the imported goods under CTI 5601 30 00 and imposed penalties under Section 114A of the Customs Act, 1962.
The appellant, engaged in the manufacture of gasket jointing sheets, had imported Twaron Para Aramid Pulp under several Bills of Entry and self-assessed the goods under CTI 5601 22 00, claiming them to be “wadding of textile materials of man-made fibres.” During examination, the Customs authorities found the goods to be a yellowish, cotton-like material packed in small quantities and detained them under Section 110 of the Customs Act.
The appellant argued that the imported goods were para-aramid pulp, a raw material used to manufacture non-asbestos gasket jointing sheets, and were functionally distinct from textile flock. It was submitted that the classification should be based on the functional character of the goods and that they could not be classified as textile flock merely because the fibre length was less than 5 mm. It was further contended that the goods were in pulp form, not in sheets or rolls, and that the extended period of limitation and penalty provisions were wrongly invoked.
The Revenue, however, maintained that the goods were correctly classifiable under CTI 5601 30 00 since they consisted of fibrillated man-made fibres not exceeding 5 mm in length, as confirmed by the manufacturer’s test report. It was argued that wadding, as defined in the HSN Explanatory Notes, refers to layers of fibres compressed into sheets or rolls, which was not the case here. Hence, the goods could not fall under CTI 5601 22 00. The department further submitted that the appellant had previously classified the goods under CTI 5601 30 00 but changed the classification without intimation, justifying the invocation of the extended limitation period under Section 28(4).
The Tribunal observed that the manufacturer’s product literature described Twaron Para Aramid Pulp as fibrillated fibres used for manufacturing gaskets and friction materials, and not as wadding. Referring to the HSN Explanatory Notes, the Bench clarified that “textile flock” comprises textile fibres not exceeding 5 mm in length obtained through cutting or grinding, whereas “wadding” refers to layered and compressed fibres. Since the test report showed that the imported material’s fibre length was below 5 mm, it clearly fell under the scope of textile flock. The Bench held: “The imported goods, as per the description in the literature of the manufacturer, are fibrillated fibres intended to manufacture gaskets and not textile wadding. Therefore, they squarely fall under CTI 5601 30 00.”
Accordingly, the Tribunal upheld the classification of the goods under CTI 5601 30 00 and confirmed the demand of differential duty with interest within the normal period of limitation. However, it found no justification for invoking the extended limitation period under Section 28(4), observing that there was no evidence of suppression or misstatement by the appellant, and that the change in classification constituted only a difference of interpretation.
The Tribunal further ruled that, since the conditions for invoking the extended limitation period were absent, the penalty under Section 114A could not be sustained. The penalties imposed were therefore set aside. In conclusion, the CESTAT upheld the duty demand to the extent of the normal period of limitation while granting relief to the appellant by setting aside the extended period demand and penalty. The matter was remanded to the adjudicating authority for computation of the differential duty and applicable interest.
Appearance
Counsel for Appellant/ Assessee: Dr. Prabhat Kumar and Shri Pralabh Mathur
Counsel for Respondent/ Department: Shri Mukesh Kumar Shukla
Cause Title: M/s Leakless Gasket India Pvt. Ltd. v. Commissioner of Customs
Case No: Customs Appeal No. 55311 Of 2023
Coram: Justice Dilip Gupta (President), Mr. P.V. Subba Rao (Technical Member)
