2024 (5) TMI 1005 - AT - Customs

IGST exemption - classification - validity of demand without challenging the assessment of bill of entry - extended period of limitation - Imports broom sticks - interest - penalty - benefit of Notification No. 2/2017-integrated tax (Rate), prescribed Nil rate of duty - Whether goods fall under the category of Muddhas made of sarkanda, Brooms or brushes, consisting of twigs or other vegetable materials, bound together, with or without handles or not - revenue classified under CTH 9603 1000 under Sr. no. 260 of Notification No. 01/2017 attracting 5% IGST. SR no. 144 of Notification No. 02/2017-IGST. RAJU - HELD THAT - It is seen that the Commissioner (Appeals) has not dealt with the primary issue, if the goods imported by the appellant are also covered by Sr. no. 144 of Notification no. 2/2017 or only by Sr. no. 260 of Notification no. 1/2017. Thus, it is apparent that the main issue has not been dealt with by the Commissioner (Appeals) In this circumstances, we alert with no option but set aside the impugned order and remand the matter back to Commissioner (Appeals) to decide a fresh. SOMESH ARORA - It is clear that from 22nd September, 2017 brooms were divided into two categories, and term Broomsticks also came to be divided into two categories i.e. Brooms or brushes consisting of twigs or other vegetable material bound together with or without handles and brooms and Broomsticks which were other types i.e. material other than vegetative materials etc. In which category, the plastic brooms will normally get included. It is thus clear that Broomsticks which are made up of plastic and do not use a vegetable material alone are taxable w.e.f 22.09.2017 in Notification No. 01/2017 since after amendment, the Broomsticks fall under Serial No. 260 of Notification No. 01/ 2017 have to be of other than Chapter Heading No. 96031000 and therefore have to be Broomsticks of other than twigs and such vegetable materials. Since, the show cause notice has not taken note of development through above stated amendments, therefore in the instant case, learned Commissioner (Appeals) while deciding classification should keep above discussion in mind while working into demand period and related statutory changes. It should first decide about the nature of Broomsticks/brooms and its classification with statutory changes. Matter is accordingly remanded back to decide the nature of goods. Party in any case shall be free to raise any other point on merits, limitation if desired. Appeal allowed by way of remand.

Issues Involved:
1. Whether the department can initiate proceedings under Section 28 of the Customs Act, 1962, without challenging the assessment made under the Bills of Entry.
2. Whether the extended period of limitation is invokable and whether the appellant is liable for penalty under Section 117 or 114A of the Customs Act, 1962.
3. Classification of the imported goods under the appropriate tariff heading and applicable notifications.

Issue-wise Detailed Analysis:

1. Initiation of Proceedings under Section 28 of the Customs Act, 1962:
The appellant argued that the department should have challenged the final assessment of the bills of entry if they were aggrieved by it. The department failed to appeal the assessment order, thus it attained finality. The appellant relied on the Hon'ble Apex Court's decision in ITC Limited 2019 (368) ELT 216 (SC), which supports that in the absence of a challenged assessment, the department cannot reopen the assessment under Section 28 of the Act. The learned counsel also pointed out that the proceedings were initiated based on an audit by Customs revenue audit, which is not sustainable for goods already cleared as per Section 99A of the Customs Act, 1962.

2. Extended Period of Limitation and Penalty Liability:
The appellant contended that they were under a bona fide belief that the exemption benefit was available to them under Notification No. 02/2017-IGST dated 28.06.2017. They argued that the goods were described as 'broom sticks' in the bill of entry but were bound together, qualifying for the exemption. The appellant relied on a clarification issued by CBEC Mitra Helpdesk, which stated that broom sticks in bound condition do not attract IGST. Therefore, they claimed that the penalty under Section 114A cannot be imposed due to their bona fide belief.

3. Classification of Imported Goods:
The primary issue revolves around whether the imported goods fall under the category of "Muddhas made of sarkanda, Brooms or brushes, consisting of twigs or other vegetable materials, bound together, with or without handles" as per Sr. No. 144 of Notification No. 02/2017-IGST dated 28.06.2017, or under Sr. No. 260 of Notification No. 01/2017-IGST dated 28.06.2017, which attracts 5% IGST. The learned counsel for the appellant argued that the goods were bound together and thus eligible for exemption. However, the Commissioner (Appeals) did not address whether the goods are classifiable under Sr. No. 144 or Sr. No. 260, which is crucial for determining the applicable IGST rate.

Judgment and Remand:
The tribunal found that the Commissioner (Appeals) did not address the primary issue of classification of the goods under the appropriate tariff heading and applicable notifications. The impugned order was set aside, and the matter was remanded back to the Commissioner (Appeals) to decide afresh on the classification of the goods. The first issue to be decided is whether the goods fall under the category of "Muddhas made of sarkanda, Brooms or brushes, consisting of twigs or other vegetable materials, bound together, with or without handles". All other issues, including the invocation of the extended period of limitation and penalty liability, are to be addressed only after this primary issue is resolved.

Concurring Opinion:
The concurring member emphasized the need to decide the classification of the goods first before addressing other issues. The member elaborated on the different types of broomsticks and their classification under the relevant notifications. The member noted that broomsticks made from plastic and not using vegetable material are taxable under Serial No. 260 of Notification No. 01/2017 post-amendment on 22.09.2017. The learned Commissioner (Appeals) should consider the statutory changes and amendments while deciding the classification and related demand period.

Conclusion:
The appeal was allowed by way of remand, directing the Commissioner (Appeals) to decide the nature of the goods and their classification with statutory changes in mind. The party is free to raise any other points on merits and limitation if desired. The order was pronounced in the open Court on 17.05.2024.

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