2021 (4) TMI 1294 - AAR - Customs

Classification of imported goods - tunnel boring machine and its components - eligibility of the said goods for exemption from Customs duty - time limit of 3 months for pronouncing the advance ruling as provided under sub-section (6) of Section 28-I of the Act had already expired on 4-1-2021, the day the CAAR, Mumbai came into existence - HELD THAT - The request for advance ruling was filed in the secretariat of the erstwhile AAR, New Delhi on 14-10-2019. No pronouncements were made on the said application within three months as required under the provisions of sub-section (6) to Section 28-I of the Act for the reason for non-constitution of the requisite Bench. It is found difficult to agree with the assertion of the applicant that the limitation prescribed under law is a mere procedural requirement. I am mindful of the fact that the limitation of three months for pronouncing an advance ruling is prescribed in the Act itself and not in any delegated piece of legislation. If the line of argument advanced by the applicant is to be accepted, it would lead to the conclusion that the limitation provided under Section 28(8) of the Act for adjudication of a show cause notice is merely procedural. In that event, the legal stipulation that if the show cause notice is not adjudicated within the time allowed, the result would that no notice has actually been issued, would become redundant. It is a settled proposition of law that any interpretation of law which leads to a manifest absurdity has to be eschewed. It is clear from a plain reading of Section 2(2) of the Act that assessment includes provisional assessment and since the questions involved in the present proceedings are already pending in the applicant s case before an officer of Customs, the proviso (a) to sub-section (2) of Section 28-I of the Act does not allow me to pronounce any advance ruling as requested. It is settled law that assessment is a quasi-judicial proceeding requiring application of mind and speaking decisions. I am, therefore, not convinced with the argument that no independent proceeding is pending before any officer of Customs, as argued by the applicant. Also, one of the questions raised in the application, i.e., eligibility for nil rate of duty under Entry No. 446 of the Notification No. 50/2017-Cus., dated 30-6-2017 has lost relevance in view of the amending Notification No. 2/2021, dated 1-2-2021. Application dismissed.

Summary

Issues:
1. Lapsed application due to expiry of time limit for pronouncing advance ruling.
2. Change in circumstances affecting the application for advance ruling.
3. Interpretation of the time limit for pronouncing advance rulings.
4. Eligibility for exemption from Customs duty under specific notifications.

Issue 1: Lapsed application due to expiry of time limit:
The applicant filed an application for advance ruling before the Authority for Advance Ruling (AAR) in 2019, which was transferred to the Customs Advance Ruling Authorities (CAAR) in Mumbai in 2021. The Secretary to CAAR, Mumbai noted that the time limit of 3 months for pronouncing the ruling had expired before the CAAR came into existence. The applicant was informed that their original application had lapsed, but the application fee was waived as no ruling was given. The applicant affirmed the validity of the original application and requested to process it further.

Issue 2: Change in circumstances affecting the application:
During the hearing, it was revealed that the applicant had completed imports for a project and had similar imports planned for future projects. Changes in the law regarding duty exemptions were also highlighted. The applicant was questioned about not updating their application with these changes and why their application should not be rejected. The applicant sought time for additional submissions.

Issue 3: Interpretation of the time limit for pronouncing advance rulings:
The applicant argued that the time limit for pronouncing the ruling is procedural and does not cause the application to lapse. They mentioned that provisional assessment was requested due to the pending ruling application. The judgment emphasized that the limitation is prescribed in the Act itself and not merely procedural. It rejected the argument that the application did not lapse due to the time limit, citing the express mandate of the statute.

Issue 4: Eligibility for exemption from Customs duty:
The application sought classification of goods and eligibility for exemption from Customs duty. The judgment noted that the act of import was complete, precluding the possibility of pronouncing a ruling. As the questions were pending before a Customs officer and the law had changed regarding duty exemptions, the application was rejected without delving into its merits. The judgment emphasized the importance of assessment as a quasi-judicial process and the impact of legal amendments on the application's relevance.

In conclusion, the judgment rejected the application for advance ruling due to the expiry of the time limit, changes in circumstances affecting the application, the interpretation of the time limit under the law, and the impact of legal amendments on duty exemptions.