2010 (6) TMI 368 - AT - Customs

Waiver of pre-deposit - demand confirmed without issue of SCN - only demand notice iisued classifying the item under CTH No. 5607 90 - authorities came to doubt the correctness of the classification declared subsequent to the clearance of the goods - order based on notice which classified the goods under heading 5607 90 different from the heading confirmed, is prima facie not sustainable - waiver of pre-deposit of the dues

Summary

Issues:
- Waiver of pre-deposit of duty and interest confirmed against the appellant.
- Denial of exemption claimed by the appellant for imported goods.
- Classification of goods under different headings leading to a demand notice.

Analysis:
1. The appellant, M/s. Hindustan Aeronautics Ltd. (HAL), filed an application seeking waiver of pre-deposit of duty amounting to Rs. 3,92,467/- and applicable interest confirmed against them. The dispute arose from HAL's import of 'Cargo Sling' under specific customs and excise notifications for helicopter parts. The impugned order denied the exemption claimed by HAL and demanded the exemption availed by them.

2. The appellant argued that the demand was confirmed without the issuance of a show cause notice, which is essential for principles of Natural Justice. The counsel contended that HAL was only served with a demand notice classifying the item differently from the exemption they availed. The appellant emphasized the procedural irregularity and lack of opportunity to present their case adequately.

3. The respondent, represented by the Senior Departmental Representative (SDR), defended the classification of goods under a different heading, asserting that the goods were cleared without thorough examination by the department. The SDR highlighted the procedure where importers declare goods correctly and the subsequent doubt raised by authorities regarding the classification. The appellant was given an opportunity to present their case before adjudication, leading to the reclassification under a new chapter heading.

4. Upon reviewing the case records and submissions, the Tribunal noted that no show cause notice proposing revision of the classification was issued to HAL. The notice served classified the goods under a specific heading, different from the one confirmed later. The Tribunal emphasized the importance of a show cause notice as the foundation of any demand. As the impugned order lacked a proper show cause notice, it was deemed prima facie unsustainable. Consequently, the Tribunal found in favor of the appellant, granting a waiver of pre-deposit of the dues adjudged and staying the recovery pending the appeal decision.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, Bangalore highlights the key issues surrounding the waiver of duty, denial of exemption, and classification dispute, providing a comprehensive overview of the legal proceedings and the Tribunal's decision.