2007 (6) TMI 131 - AT - Customs

Natural justice Assistant commissioner rejected the refund claim of duty paid by appellant at the time of import of goods which is not leviable without issuing any SCN, it is violation of principal of natural justice Allowed the refund claim of appellant

Summary

Issues:
Classification of imported goods under Customs Tariff Act, 1975.
Alleged violation of Principles of Natural Justice.
Correct application of Section Note XV and Chapter Notes for classification.
Exemption under Section 25 of Customs Act, 1962 for duty-free clearances.

Classification of imported goods under Customs Tariff Act, 1975:
The case involved the classification of Jelly filled Copper Cable Scrap imported by the respondents. The Assistant Commissioner initially classified the goods under CH 8544 CTA and later under CH 7404.90 of CTA/CET for the purpose of levying duty. The Commissioner (Appeals) allowed the appeal of the respondents based on the violation of the Principles of Natural Justice. The Revenue contended that all goods, including scrap, are classifiable under the Customs Tariff Act for duty imposition. The Tribunal upheld the classification under CH 7404 by the Assistant Commissioner, stating that the classification was correct based on the harmonized system despite misalignment in the 10-digit ITC classification.

Alleged violation of Principles of Natural Justice:
The Revenue argued that there was no violation of the Principles of Natural Justice as the Assistant Commissioner had issued letters to the respondent and granted a personal hearing before deciding the issue. However, the Commissioner (Appeals) found a lack of show cause notice issued to the appellants before rejecting their refund claim, leading to a violation of the Principles of Natural Justice. The Tribunal agreed with the Commissioner (Appeals) that the mere issuance of a letter seeking reasons did not satisfy the Principles of Natural Justice, especially when the Assistant Commissioner revised the classification without a show cause notice, thereby upholding the Orders-in-Appeal as legal and proper.

Correct application of Section Note XV and Chapter Notes for classification:
The Assistant Commissioner's correct application of Section Note XV and Chapter Notes to decide the classification under CTA 7404 was upheld by the Tribunal. It was emphasized that once the classification is decided under CH 7404, all relevant duties must be paid, supporting the Assistant Commissioner's decision in this regard.

Exemption under Section 25 of Customs Act, 1962 for duty-free clearances:
The Revenue argued that duty-free clearances can only be permitted when an exemption is granted under Section 25 of the Customs Act, 1962. The Tribunal did not find merit in this argument and rejected the Revenue's appeals, emphasizing the correct classification under CH 7404 and the absence of violation of Principles of Natural Justice in the case.

In conclusion, the Tribunal dismissed the Revenue's appeals, upholding the Orders-in-Appeal based on the correct classification of the imported goods under the Customs Tariff Act, 1975, and the finding of a violation of the Principles of Natural Justice due to the lack of a show cause notice. The judgment highlighted the importance of adhering to procedural fairness in administrative decisions and the significance of accurate classification for duty imposition under the Customs Act.