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2021 (12) TMI 90 - HC - CustomsValidity of not considering the effect of earlier adjudication, pertaining to the same Assessee - extended period of limitation - correctness of demand of differential duty when the same is available to the appellant as Modvat Credit - Mis-description or suppression in the matter of classification - HELD THAT - If the challenge to the order of the Tribunal dated 13.12.2016 in Appeal No. C/723/04 passed by the CESTAT, Court No.II impugned in this appeal is considered, it is seen that the order passed by the Tribunal in Appeal Nos. C/499 and 620/2004 on 22.02.2005 as well as the order passed by the Tribunal in Appeal No. C/02/06 also on 13.12.2016 by Court No.1 have attained finality. As regards the aspect of classification of the product in question, its classification under CTH 3824.90 as directed by the Commissioner (Appeals) on 29.03.2004 was accepted by the Assessee by not pursuing Appeal No. C/499/04 preferred by it before the Tribunal. Similarly, classification of the same product by the Commissioner (Appeals) vide order dated 06.10.2005 under Chapter sub-head 3824.90 was not challenged further by the Assessee. The Revenue had challenged the observations pertaining to mis-description in Appeal No. C-02/06 before the Tribunal but that appeal was also dismissed on 13.12.2016. The classification of the product imported is thus under Chapter sub-head 3824.90 which does not require re-examination. Mis-description or suppression in the matter of classification - HELD THAT - The Tribunal (Court No.1) while passing this order dated 13.12.2016 found that the first appellate Court had relied upon the certificate issued by the supplier of the goods to come to the conclusion that the charge of mis- declaration did not arise. This order dated 13.12.2016 passed in Appeal No. C-02/06 has attained finality between the parties. It is also relevant to note that the allegation of mis-declaration is based on the same material and it is also not in dispute that the Assessee had declared the said goods as being coated with stearic acid 2T SA. The Tribunal in its impugned order has not assigned any independent reason for upholding the show-cause notice dated 30.01.2004. Once it is found that there was absence of mis-declaration or suppression facts which finding attained finality between the parties pursuant to the order dated 06.10.2005 passed by the Commissioner (Appeals) as affirmed by the Tribunal on 22.02.2005, there would be no occasion to invoke the provisions of Section 28(1) of the Act of 1962 for extending the period of limitation for issuing the show cause notice - It is thus found that the Tribunal while passing the impugned order failed to consider the appeal in its proper perspective and ignored the earlier adjudication dated 06.10.2005 when the Commissioner (Appeals) decided the appeal in favour of the Assessee by holding the goods to be classified under CTH 3824.90. A further finding was also recorded that there was no mis-declaration or suppression of correct description of the goods in question by the Assessee. The substantial questions of law are accordingly answered in favour of the Assessee. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Consideration of earlier adjudication effect 2. Applicability of the extended period of limitation 3. Confirmation of differential duty and availability of Modvat Credit Issue-wise Detailed Analysis: 1. Consideration of Earlier Adjudication Effect: The appellant-Assessee contended that the Tribunal erred by not considering the earlier orders pertaining to the same Assessee, where Calcium Carbonate described as 2T SA was classified under Head 3824.90. The Tribunal ignored the fact that since 13.07.1999, the goods were described as "surface coated" by the Assessee, a fact acknowledged by the Deputy Commissioner in an order dated 15.10.2004. The Tribunal's failure to consider the earlier adjudications and the binding nature of those findings on the Revenue was a significant oversight. 2. Applicability of the Extended Period of Limitation: The Tribunal upheld the extended period of limitation under Section 28 of the Act of 1962, citing mis-declaration and suppression of facts by the Assessee. However, the Assessee argued that the earlier findings, which had attained finality, indicated no mis-declaration or suppression. The Tribunal did not provide independent reasons for upholding the extended period of limitation and failed to consider the revenue-neutral situation, where the Assessee was entitled to claim MODVAT credit, negating any intent to evade duty. 3. Confirmation of Differential Duty and Availability of Modvat Credit: The Tribunal confirmed the differential duty, which the Assessee argued was available as Modvat Credit, making the entire exercise revenue-neutral. The Tribunal did not address this contention adequately. The Assessee cited precedents, including Northern Plastic Ltd. and Nirlon Limited, to support the argument that in a revenue-neutral situation, there is no intent to evade duty. The Tribunal's failure to consider this aspect rendered the impugned order unsustainable. Conclusion: The High Court found that the Tribunal failed to consider the appeal in its proper perspective, ignoring earlier adjudications that had attained finality. The absence of mis-declaration or suppression of facts negated the applicability of the extended period of limitation under Section 28(1) of the Act of 1962. Consequently, the substantial questions of law were answered in favor of the Assessee. The order passed by the CESTAT in Appeal No.C-723/2005 dated 13.12.2016 was set aside, and the show cause notice dated 30.01.2004 was dropped. The Customs Appeal No.1/2019 was allowed, with parties bearing their own costs.
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