Canned pineapple Slices Fall under CTH of Fresh Or Dried Fruit: CESTAT [Read Order]

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that Canned pineapple Slices Fall under CTH of Fresh Or Dried Fruit. It was noted that the appellant had themselves quoted that it was their CHA who filed their Bills of Entry under the wrong CTH 20082000 without taking instructions from them regarding the correct classification, which would be CTH 08119010.

The impugned Order passed by the Commissioner of Customs (Import), was challenged by M/s Holyland Marketing Pvt. Ltd., Delhi (the appellant) under Section 28(4) of the Customs Act, 1962.

The Adjudication Authority, held that Canned Pineapple Slices are classifiable under Customs Tariff Heading No. 0804 3000 and confirmed a duty demand of Rs. 50,95,196/- against the five (05) Bills of Entry cleared from ICD Tughlakabad during 2020-21 along with a differential Customs Duty amounting to Rs.33,46,770/- with applicable interest and penalty of Rs.33,46,770/- on the appellant under Section 114A of the Customs Act, 1962.

Intelligence was received that the appellant was importing "Canned Pineapple Slices" from the Philippines & Thailand and claiming exemption from Basic Customs Duty available to imports from ASEAN countries in terms of Customs Notification No. 46/2011-Cus dated 01.06.2011, as amended. However, it was alleged that the said 'Canned Pineapple Slices’ are classifiable under Customs Tariff Heading No. 0804 3000 and consequently the benefits of Exemption Notification No. 46/2011Cus dated 01.06.2011, as amended, are not available.

The premises of the appellant was searched on 17.03.2021, in the presence of independent witnesses and Mr Harith Budhraja, Director of the appellant. The process of canning such sliced pineapples was explained by him and he named the ingredients of 'Canned Pineapple Slices', in descending (maximum to minimum) order as under: (a) Pineapple Slices (b) Water (c) Sugar and (d) Acidity Regulator (INS 330) (Citric acid).

He submitted that the fresh fruits (Pineapple) are received, graded, washed, peeled, cut, core, sliced and then put in sterile cans (sterilized by passing under steam); boiling Sugar syrup is added to balance the natural sugar content of the fruit and prevent it from draining out; sugar is added to maintain taste and palatability of the fruit and it is not a preservative; the Hot syrup (water+ sugar pre-mixed) is heated till boiling point to kill any ambient bacteria that may be present and to create a vacuum in the cans thus completing the preservation process due to the isolation from atmospheric contact and vacuum.

Thereafter, such cans are cooled and released to market. He also stated that there is no basic difference between fresh pineapple and canned pineapple slices is pineapple itself. He also stated that the recommended range of temperature for storage of the product is 10 Degrees Celsius to 40 Degrees Celsius at max, as long as the Hermetical seal is intact. However, as soon as the Can is opened, the shelf life of the product is only as good as that of pineapple fruit and needs to be refrigerated in a glass or SS container and the same is recommended to be consumed within 24 to 48 hours after the opening of the can.

He also added that the Canned Pineapple slices are not frozen products and do not require any freezing during storage based on the investigations the department issued a show cause notice and thereafter the impugned order was passed.

A two-member bench comprising Dr Rachna Gupta, Member(Judicial) And Ms Hemambika R Priya, Member(Technical)  observed that the classification of the canned pineapple slices would have to be decided as per the HSN explanatory notes and would therefore be appropriately classifiable under CTH 0804 only.

It was noted that the appellant had themselves quoted that it was their CHA who filed their Bills of Entry under the wrong CTH 20082000 without taking instructions from them regarding the correct classification, which would be CTH 08119010.

The counsel has submitted that the Country of Origin Certificates issued by the Designated Committee of the Thailand Government have been questioned by the Revenue however there were no follow-up investigations carried out after the import, to deny the exemption benefit. Therefore, such unilateral rejection of the exemption benefits is not tenable.

The Tribunal found that the appellant in his statement has accepted that they have wrongly classified their product under CTH 0811 by suppressing the non-frozen character of the impugned goods, to avail the benefit of Notification no 46/2011 – Cus dated 01.06.2011. The material incriminates the petitioner in contravention of the provisions of the Customs Act. Such material can certainly be used to connect the petitioner to the contravention. Therefore, we do not find any infirmity in the impugned order which has relied on the statement of the appellant. 

The CESTAT held that the classification of the canned pineapple slices would be CTH 0804. However, the demand for differential duty is limited to the normal period only. The interest would accordingly be reduced proportionately. The penalty under section 114A is set aside. The impugned order is modified to the extent indicated above and the appeal is partly allowed.  

To Read the full text of the Order CLICK HERE

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