2024 (6) TMI 717 - AT - Customs

Misinterpretation of DGFT Notification No.77(RE-2008)/2004-2009 - import of Round Ridge Cement Tiles declaring its value as US 6.98/- - to be allowed free or is to be considered as processed tiles / slabs of agglomerated / artificial stones and subjected to the restrictions prescribed under DFGT NN. 77(RE-2008)/2004-2009 dated 09.01.2009 - whether its importation can be allowed only if the value is US 50 and above per square meter? HELD THAT - It is found that after the objection of the Customs Department in assessing the Bills of Entry filed during the period March 2013 about applicability of the said notification to the imported goods, the appellant wrote to DGFT seeking for clarification on the stand of the Customs Department on the applicability of N/N. 77(RE-2008)/2004-2009 dated 09.01.2009 to imported Round Ridge Cement Tiles. The DGFT communicated its opinion through letter dated 27.12.2013 observing that the import of cement tiles under ITC(HS) Code No.68101990 is free for import and such cement tiles would not come within the ambit of N/N. 77(RE-2008)/2004-2009 dated 09.01.2009. It is found that in the impugned orders, the learned Commissioner(Appeals) did not have the opportunity to examine the said clarification issued by the DGFT after the order was passed, whereas in the subsequent order dated 22.01.2015 before the learned Commissioner(Appeals) the said opinion of the DGFT was placed by the Appellant. However, it was discarded by the learned Commissioner(Appeals) observing that in absence of issuance of any amendment or clarification to the said Notification, the opinion is not binding on the Department. Consequently, adopting the said opinion of DGFT on the applicability of the said Notification No.77(RE-2008)/2004-2009 dated 09.01.2009 and applying to the facts of the present case, it can safely be held that the appellants are entitled to import the Round Ridge Cement Tiles free and the restriction applicable to processed tiles as held in the impugned orders cannot be sustained. The impugned orders are set aside - appeal allowed.

Summary

Issues involved:
The issues involved in this judgment include the misinterpretation of DGFT Notification No.77(RE-2008)/2004-2009, the confiscation of goods under Section 111(d) of the Customs Act, 1962, the imposition of penalties under Sections 114A and 114AA, and the irregularity in confirming demands without finalizing assessments.

Appeal No.C/20091/2014:
The appellant imported Round Ridge Cement Tiles and declared a value of US$6.98 per square meter, which was below the required US$50 per square meter for free importation under DGFT Notification No.77(RE-2008)/2004-2009. The Customs Department proposed confiscation under Section 111(d) of the Customs Act, 1962. The appellant contested this, citing that the tiles were freely importable and not subject to confiscation. The DGFT clarified that the tiles were indeed free for import, contrary to the Customs Department's interpretation. The Tribunal held that the appellant was entitled to import the tiles free of restrictions, setting aside the impugned orders.

Appeal No.C/20562/2015:
This appeal involved past clearances of Round Ridge Cement Tiles where the declared value was below the required US$50 per square meter for free importation. The Customs Department proposed to enhance the value and recover differential duty under Section 28(1) of the Customs Act, 1962. The demand was confirmed, and penalties were imposed. The appellant argued that the demand confirmation was irregular as the assessment was not finalized before issuing the show-cause notice. The Tribunal considered the DGFT clarification that the tiles were free for import and allowed the appeals, setting aside the impugned orders.

Legal Arguments:
The appellant contended that the DGFT Notification did not apply to the imported tiles as they were not processed tiles of agglomerated or artificial stones. The Customs Department's interpretation was challenged, and the DGFT's clarification was deemed binding. The Tribunal referenced relevant judgments supporting the appellant's position. The Revenue's appeal regarding penalty calculation was also addressed, with the Tribunal ruling in favor of the appellant.

Conclusion:
After considering the arguments and the DGFT clarification, the Tribunal held that the Round Ridge Cement Tiles were freely importable and not subject to the restrictions imposed by the Customs Department. The impugned orders were set aside, and the appeals were allowed. The Tribunal emphasized the binding nature of the DGFT's interpretation on Customs Department decisions, as supported by legal precedents.