2024 (2) TMI 823 - AT - Customs

Violation of principles of natural justice - Change in classification of export goods REFORMATE without putting the Appellant to Notice - classification changed from 27101219 to CTH 27101990 - benefit of N/N. 12/2012-Cus dated 17 March 2012 and N/N. 12/2012-CE dated 17 March, 2012 denied - time limitation - HELD THAT - It cannot be seen as to how the Commissioner (Appeals) has ignored the Appellant‟s letter dated 20/05/2015 seeking amendment/rectification of Bill of Entry and subsequent amendment/rectification of the same on 01/07/2015 while coming to a conclusion that the date of assessment of Bill of Entry is 11/04/2015. After holding that the Bill of Entry was assessed on 11/04/2015, he has dismissed the Appeal on the ground of time bar. This is not only a gross error but reeks of injustice on his part to pass an Order against reputed Public Sector Undertaking, which on its own had voluntarily sought re-assessment seeking to reverse the benefit received by them under the said Notifications. It is found from the records that the Appellant has filed the Appeal before the Commissioner (Appeals) within about 50 days from the date of re-assessed Bill of Entry. Therefore, dismissal of the Appeal on account of time bar is erroneous and the impugned OIA is set aside. Re-assessment taken up by the Assessing Officer - HELD THAT - AO has arbitrarily changed the classification from CTH 27101219 to 27101990 without putting the Appellant to Notice. Principle of natural justice requires that whenever the classification is sought to be modified, the importer/assessee is required to be given a notice for the proposed change in the CTH, which has not been done in this case. After going through the Shipping Bill, it is seen that export of the same product Reformate is being done under CTH 27101219. This shows that the Customs Department has adopted two different stands by classifying the imported goods under one classification and subsequently the exported goods under different classification - there exists no logic towards the same. Matter remanded to the Assessing Authority who should issue the Show Cause Notice seeking to modify the CTH along with the ground towards the same. The Appellant should be given opportunity to make their submissions in defence of their case and principles of natural justice should be followed. Appeal allowed by way of remand.

Summary

Issues involved:
The issues involved in this case include the classification of goods under Customs CTH, exemption claimed under specific notifications, modification of Bill of Entry, time bar for filing an appeal, re-assessment of Bill of Entry, unilateral change in CTH by the authority, lack of notice for re-classification, discrepancy in classification for imported and exported goods, and the application of principles of natural justice.

Classification of goods and exemption claimed:
The Appellants filed a Bill of Entry classifying "REFORMATE" under Customs CTH 27101219 and claimed exemption under Notification No. 12/2012-Cus and Notification No. 12/2012-CE. Subsequently, they realized the exemption was not applicable, sought rectification, and paid the relevant duty. The Bill of Entry was modified to remove the exemptions and change the CTH to 27101990. The Commissioner (Appeals) dismissed the appeal based on the date of the original Bill of Entry, ignoring the subsequent modification.

Time bar for filing an appeal:
The Appellant filed an appeal within 50 days of the re-assessed Bill of Entry, well within the 60-day time limit. The Commissioner (Appeals) erred in dismissing the appeal solely on the grounds of time bar without considering the subsequent modifications to the Bill of Entry.

Unilateral change in CTH and lack of notice:
The authority unilaterally changed the CTH from 27101219 to 27101990 without notifying the Appellants. This change came as a surprise to the Appellants, who were exporting the product under CTH 27101219, as evidenced by a Shipping Bill. The lack of notice and discrepancy in classification for imported and exported goods raised concerns about procedural fairness and consistency in classification.

Application of principles of natural justice:
The Tribunal found that the Assessing Officer had reclassified the goods without following the principles of natural justice, which require giving notice to the importer/assessee before modifying the classification. The Tribunal remanded the matter to the Assessing Authority, directing them to issue a Show Cause Notice for modifying the CTH, allowing the Appellant to defend their case and ensuring adherence to principles of natural justice.

Conclusion:
The Tribunal set aside the Commissioner (Appeals)'s decision, noting the error in dismissing the appeal on the grounds of time bar. They directed the Assessing Officer to complete the proceedings within four months, emphasizing the importance of following natural justice principles in classification matters.