2018 (3) TMI 1501 - AT - Customs

Classification of imported goods - Bentonite Clay - classified under CTH 38029019 or under CTH 250810? - Held that - even if the Revenue s stand that the goods in question are Activated Bentonite is accepted even then the same has to be held as classifiable under CTH 250810 till the period 31.12.2006, as held by the Tribunal in the case of Komal Trading Co. v. CC 2014 (5) TMI 754 - CESTAT MUMBAI , where it was held that for the period prior to 1-2-2003 and from 1-1-2007 onwards, when there is no specific inclusion, in view of Note 1 to Chapter 25 which excludes products whose structure has undergone a change, the said product merits classification under CTH 3802 90 19. The issue was not free from doubt and was the subject matter of litigation before the Tribunal, in which no malafide can be attributed to the assessee. Otherwise also the goods were cleared by the Customs authorities after examination, in which case appellant cannot be held guilty of any suppression. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of imported goods under CTH 250810 or CTH 38029019, Time limitation for show-cause notice issuance.

Analysis:
1. The appellant imported Bentonite Clay during April 2003 to September 2007, classified under CTH 250810, which the department accepted. However, a show-cause notice in November 2008 alleged the goods were 'Toncil Optimum 210 FF,' classified under CTH 38029019. The appellant contested, stating they never imported 'Toncil Optimum,' challenging the notice's timing beyond the limitation period.

2. The Tribunal clarified that even if the goods were 'Activated Bentonite,' they should be classified under CTH 250810 until 31.12.2006, per a previous case ruling. The Tribunal noted an error in including activated Bentonite in CTH 250810 until 2006, rectified in 2007. Thus, for periods before 2003 and after 2007, activated Bentonite falls under CTH 38029019.

3. The Tribunal upheld the classification of 'Activated Bentonite' under Chapter 3802 post-01.01.2007. The Revenue's classification under Chapter 38 was accepted for the relevant period. However, the demand was challenged on limitation grounds due to the show-cause notice exceeding the prescribed period.

4. Considering the issue's complexity and past litigation, the Tribunal found no malafide intent from the appellant. Since the goods were cleared by Customs authorities post-examination, the appellant was not held liable for suppression. Consequently, part of the demand was deemed time-barred.

5. The impugned order was set aside, and the appeal was allowed with consequential relief, based on the Tribunal's classification rulings and the limitation aspect.