In a recent ruling, the Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) rejected the reclassification of wooden logs as the department failed to prove precise cutting to satisfy the CTH criteria. The Tribunal ruled that the goods were incorrectly classified under the Customs Tariff Heading (CTH) 44.07 by the department and instead should be classified under CTH 44.03.
This case consists of Variety Lumbers P Ltd. and several other appellants, and the issue arose when the Customs Department detained the imported logs, alleging misclassification. The department asserted that the logs, imported for construction purposes, were not roughly squared as claimed but were cut into standard lengths with extremely accurate dimensions, warranting their classification under CTH 44.07. This classification would impose higher customs duties.
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The counsel on behalf of the appellant contended that in the present case, the logs required further sawing to obtain accurate dimensions and that the straightening was done for ease of transportation & removal of rotten and node portions of the logs
The bench observed that no expert opinion was obtained by the department regarding the accuracy of dimensions or the process involved in making the logs obtain the shape of cuboids. 10% logs apparently having the bark.
The CESTAT, after hearing arguments from both sides and examining the evidence, found that the department failed to prove that the logs met the criteria for classification under CTH 44.07, which applies to sawn wood with precise dimensions.
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The bench, comprising of Raju (Technical Member), held that the logs, though cut, were not in a condition to be used without further machining or planing and thus should fall under CTH 44.03, which covers roughly squared wood.
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