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2023 (12) TMI 1080 - AT - CustomsClassification of goods - Bulk Reishi Gano Powder 100% Ganoderma - Bulk Ganocelium Powder 100% Gano Mycelium - whether the products are classifiable as Ayurvedic medicaments under chapter 3003.9011 of the First Schedule to the Central Excise Tariff Act, 1985 (CETA) as contended by the appellant or as food supplements under CTH 2106999 of CETA? - Invocation of the extended period of limitation under section 28(4) of the Act - Confiscation of goods under section 111 (m) and (o). Classification - HELD THAT - The said issue is no longer rest-integra and has been decided by the Chennai Bench in DXN Manufacturing India Private Ltd. vs. Commissioner of Central Excise and Service Tax, Pondicherry 2017 (11) TMI 608 - CESTAT CHENNAI , where the Tribunal reconsidered the matter at length on being remanded by the Supreme Court 2015 (8) TMI 1418 - SUPREME COURT and concluded that both the impugned goods fail both the twin test for being considered as Ayurvedic medicament and therefore the products in question are nothing but food supplements promoted mainly for general health or well-being and therefore merit classification under 2108 of the CETA and more specifically under 2108.99, as it stood at the relevant time and assessed accordingly under section 4A of the Act for discharge of duty liability. The issue of classification was thus decided in favour of the revenue and against the assessee. There are thus no hesitation in concluding the issue of classification of the products in question under CTH 21069099 as food preparation - the issue of classification on merits stands affirmed in favour of the revenue and against the appellant. Invocation of the extended period of limitation under section 28(4) of the Act - HELD THAT - In view of the proceedings which was pending since 2012 and the department itself had preferred an appeal, it cannot be said that the department was not aware of the classification of the products as declared in the instant bills of entry by the appellant and therefore no fault can be found on the part of the appellant as 9 out of the 10 bills of entries were filed before the final order was passed by the Tribunal on 10.01.2018 and the Order-in-Appeal by the Commissioner (Appeals) was holding the field. The law on invocation of extended period of limitation is well settled. Mere omission or merely classifying the goods/services under incorrect head does not amount to fraud or collusion or wilful statement or suppression of facts and therefore the extended period of limitation is not invocable. The Supreme Court in PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY 1995 (3) TMI 100 - SUPREME COURT has categorically laid down that where facts are known to both the parties, the omission by one to do what he might have done, and not that he must have done, does not render it suppression. Thus when all the facts are before the department as in the present case then there would be no wilful mis-declaration or wilful suppression of facts with a view to evade payment of duty - the revenue cannot invoke the extended period of limitation under section 28(4) of the Act, hence the show cause notice dated 2.07.2018 is barred by limitation for the period beyond the normal period. Imposing penalty under section 114A of the Customs Act - HELD THAT - As it is held that it is not a case of willful suppression, mis-statement or misdeclaration by the appellant, the ingredients required for invoking the penalty being the same, the penal action under the provisions of section 114A as imposed by the impugned order is not justifiable and is hereby set aside - the appellant cannot be held liable for penalty under section 114 AA of the Customs Act and the reasoning given by the Principal Commissioner that at the time of presenting the bill of entry, the importer made and subscribed to false declaration against the contents of bills of entry, in contravention to section 46(4) of the Act is unsustainable Confiscation of goods under section 111 (m) and (o) - HELD THAT - The findings in the impugned order that section 111(m) can be invoked for misdeclaration of any material particular, in respect of the goods and not necessarily only the value of the goods stands quashed and the issue stands decided in favour of the appellant that there cannot be any confiscation of goods under section 111(m) in the case of wrong classification - it is a simple case of mis-classification/incorrect classification and not mis-declaration of goods on the part of the appellant, the logical inference would be that the appellant has not wrongly claimed the exemption benefit and therefore there can be no confiscation under Section 111(o) of the Act. The appeal is remanded to the Adjudicating Authority for the limited purpose of computing the differential duty to be demanded in respect of normal period only - the appeal is partly allowed by way of remand.
Issues Involved:
1. Classification of goods. 2. Invocation of extended period of limitation. 3. Imposition of penalties under sections 114A and 114AA of the Customs Act. 4. Confiscation of goods under sections 111(m) and 111(o) of the Customs Act. Summary: 1. Classification of Goods: The primary issue was whether "Bulk Reishi Gano Powder-100% Ganoderma" and "Bulk Ganocelium Powder-100% Gano Mycelium" should be classified as Ayurvedic medicaments under CTH 30039011 or as food supplements under CTH 21069099. The Tribunal referred to previous decisions, including the Chennai Bench's ruling in DXN Manufacturing India Private Ltd. vs. Commissioner of Central Excise and Service Tax, Pondicherry, and the Principal Bench's decision, which classified the products as food supplements. The Tribunal concluded that the products are classified under CTH 21069099 as food preparations, affirming the classification in favor of the revenue. 2. Invocation of Extended Period of Limitation: The Tribunal examined whether the extended period of limitation under section 28(4) of the Customs Act was applicable. It was noted that the classification issue was known to the department, and the appellant had filed bills of entry based on the Commissioner (Appeals) order, which was binding until the Tribunal's final order on 10.01.2018. The Tribunal held that there was no willful suppression or mis-statement by the appellant, and the extended period of limitation could not be invoked. The show cause notice dated 2.07.2018 was thus barred by limitation for the period beyond the normal period. 3. Imposition of Penalties: The Tribunal addressed the imposition of penalties under sections 114A and 114AA of the Customs Act. It was held that since there was no willful suppression or mis-statement by the appellant, the penalties were not justifiable. The Tribunal referred to previous decisions, including Incredible Unique Buildcon Private Ltd. and the Supreme Court's judgment in Nizam Sugar Factory, to support its conclusion that mere mis-classification does not amount to fraud or suppression of facts. 4. Confiscation of Goods: The Tribunal considered the confiscation of goods under sections 111(m) and 111(o) of the Customs Act. It was held that section 111(m) does not provide for confiscation in cases of mis-classification, and the goods were not liable for confiscation. Similarly, the invocation of section 111(o) was not sustainable as the benefit of the exemption notification was availed in accordance with law. The Tribunal concluded that there could be no confiscation of goods under these sections. Conclusion: The appeal was partly allowed, with the following modifications: a) The goods were re-classified as food preparations under CTH 2106 9099. b) The extended period of limitation could not be invoked, and the show cause notice was barred by limitation except for the normal period. c) The demand for differential duty was limited to the normal period (03.07.2013 to 19.05.2015). d) Interest under section 28AA of the Customs Act was to be charged for the normal period of demand. e) No order of confiscation under sections 111(m) or 111(o) was made. f) No penalties under sections 114A or 114AA were imposed. The appeal was remanded to the Adjudicating Authority for computing the differential duty for the normal period only. The appeal was partly allowed by way of remand.
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