KARACHI: The Collector of Customs (Appeals) Zulfiqar Ahmed Malik has waived the fine and penalty imposed on a yarn importer by Adjudication, but upheld the additional demand created as it was short-paid due to mis-classification of the HS code.

According to the details of case, M/s Denim International imported a consignment of yarn for textile industry and sought clearance under HS Code 5402.4410 chargeable to 1.0 percent customs duty.

The consignment was selected for physical examination and samples were sent to Custom house laboratory. Based on the test results, it was found that subject goods were correctly classifiable under heading 5402.6000 chargeable to 10 percent Customs duty.

The adjudication established that the importer attempted to evade Rs0.774 million through mis-declaration and ordered to seize the goods with an option to redeem the good on payment of 20 percent redemption fine. A penalty of Rs100,000 was also imposed.

Dissatisfied with the order-in-original, the importer Collector Appeals submitting that decision arrived at on the basis of custom laboratory report is subjective while SRO 499(i)/2009 had been wrongly applied for the purpose of imposition of fine and penalties.

It added that point of view of the appellant was not given due consideration and test report furnished by SGS laboratory was not been considered adding that PCT Heading 5402.6200 is factually incorrect as the classification pertains to goods that are essentially polyester. The goods imported under the aforesaid GD essentially contain lycra and spandex which are classifiable under PCT heading 5402.4410. The test report also mentions spandex and lycra, and therefore, the appropriate classification is 5402.4410.

The Collector Appeals observed that it is a matter of record that importer sand the assessing officers have been Classifying this type of elastomeric yarn under heading 5204.4410 keeping in view the deseription as spandex yarn.

However, now it has been found on lab test that thought it is like spandex and lycra but has multiple filaments as such attracts classification under heading 5204.6000. Therefore assessment under heading 5204.6200 is upheld. However, malafide on the part of importers could not be established as there is host of data wherein customs had classified this yarn under 5204.4410, therefore fine and penalty imposed in the order is remitted.