2017 (1) TMI 133 - AT - Customs

Classification of imported goods - polyester fabrics - classified under CTA 540761.90 or under CTA 54076900 extending the benefit of Notification No. 36/03-Cus (SI.53)? - scope of SCN - Held that - the classification arrived at by the adjudicating authority after due process of law is incorrect inasmuch as it is traveling beyond the show-cause notice issued to the appellant for the classification of the imported goods. It is settled law that if an order is passed beyond the scope of show-cause notice it is liable to be set aside as held by the Hon ble Supreme Court in the case of CC v. Toyo Engineering India Ltd. 2006 (8) TMI 184 - SUPREME COURT OF INDIA - On this point itself the entire impugned order is liable to be set aside. As regards the appeal filed by an individual the appeal abates due to sad demise of the appellant during the pendency of the appeal; even otherwise since we are holding that the impugned order is travelling beyond the show-cause notice issued question of imposing penalty on the individual does not arise.

Summary

Issues:
Classification of imported products under different headings, provisional assessment of bills of entry, demand confirmation under Sections 28(1) and 18(2) of the Customs Act, 1962, validity of penalties imposed, abatement of appeal due to appellant's demise.

Detailed Analysis:
The judgment pertains to three appeals against an order-in-original dated 30.12.2005. The main issue revolves around the classification of imported polyester fabrics by the main appellant under CTA 540761.90, which was later challenged through a show-cause notice seeking classification under CTA 54076900. The adjudicating authority confirmed the demand under Section 28(1) of the Customs Act, 1962, imposing penalties on the main appellant and partner. The appellant contended that subsequent testing reports from various laboratories were unreliable due to small sample quantities and inconsistency with the initial assessment. The Counsel argued that the order-in-original wrongly classified the product under Chapter Heading No. 54075210, not proposed in the show-cause notice, citing precedents where such misclassifications were deemed incorrect.

The appeal by the Revenue contended that the bills of entries were provisionally assessed, and the show-cause notice aimed at reclassification under Section 18(2) of the Customs Act, 1962, whereas the demand was confirmed under Section 28. The Counsel highlighted the procedural error and misapplication of sections in the confirmation of demands. In response, the Counsel for the appellant argued against the findings of the lower authorities, emphasizing the procedural discrepancies and misinterpretation of legal provisions in the confirmation of demands.

Upon reviewing the submissions and records, the Tribunal found that the adjudicating authority's classification went beyond the scope of the show-cause notice, contravening established legal principles. Citing precedents, including a Supreme Court case and Tribunal judgments, the Tribunal concluded that any order exceeding the show-cause notice's scope is liable to be set aside. Consequently, the impugned order was set aside solely on this ground, with no further findings recorded on other submissions. The individual's appeal abated due to the appellant's demise, and since the impugned order was invalidated, the question of imposing penalties did not arise. The Revenue's appeal was deemed infructuous as the impugned order was set aside entirely. Therefore, all appeals were disposed of accordingly.

In summary, the judgment addressed issues of incorrect classification beyond the show-cause notice, procedural errors in confirming demands under different sections of the Customs Act, penalties imposition, abatement of appeal due to appellant's demise, and the dismissal of the Revenue's appeal. The Tribunal's decision was based on legal precedents and adherence to the scope of show-cause notices in customs proceedings.