2024 (8) TMI 1346 - AT - Customs

Classification of imported goods - Clear Float Glass (CFG) - to be classified under CTH 70051090 adopted by the Appellant or under CTH 70052990? - denial of the benefit of Notification No. 46/2011-Cus dated 01.06.2011 - demand of differential Customs duties in respect of imports of CFG during the period from 13.09.2017 to 01.04.2022, arising on account of short levy, under Section 28(4) of the Customs Act, 1962 along with applicable interest under Section 28AA of Customs Act, 1962 - confiscation of subject import goods u/s 111(m) of the Act - penalty u/s 114A/112(a) of Customs Act, 1962. Whether the imported Clear Float Glass, is classifiable under CTH 70051090 as declared/self- assessed by the Appellant or under CTH 7005 2990 as re-classified/re-assessed by the Department in terms of Chapter Note 2(c) to Chapter 70 of Customs Tariff Act, 1975? - HELD THAT - The issue of classification of CFG is no more res integra since the issue and identical arguments submitted by litigants were already elaborately dealt with in the Orders of the Kolkata Tribunal in the case of M/s. Bagrecha Enterprises Ltd. Vs. Commissioner of Custom, Chennai 2024 (5) TMI 943 - CESTAT CHENNAI wherein it was held that the Clear Float Glass is more appropriately classifiable under CTH 7005 1090 of the Customs Tariff Act, 1975. Whether Extended Period is invokable or not considering the evidence and facts in this appeal? - HELD THAT -After finalisation of assessments for over 5 years, it is not open for the Department to invoke the larger period of limitation as these assessments have undergone the rigours of provisional assessment and subsequent finalisation for the same product and for the same reason, the appellant has not suppressed or mis-declared any fact and the proposal to reclassify was only on the basis of interpretation made in the CRA objection and not on account of any shortcoming on the part of the appellant. Therefore, invoking extended period in these proceedings, either for demand of duty or for imposition of mandatory penalty is not at all sustainable. So, the issue of limitation is decided in favour of the appellant and consequently the order of confiscation and imposition of fine and penalties are set aside. The imported Clear Float Glass is more appropriately classifiable under Customs Tariff Heading 7005 1090 of the Customs Tariff Act, 1975 and thus is eligible for exemption of the benefit of the N/N. 46/2011-Cus dated 01.06.2011 (Sl.No. 934) and the impugned Order-in-Original No. 102161/2023 dated 05.06.2023 is ordered to be set aside. Appeal allowed.

Summary

Issues Involved:
1. Classification of imported Clear Float Glass (CFG).
2. Eligibility for Free Trade Agreement (FTA) benefit under Notification No. 46/2011-Cus.
3. Invocation of extended period for demand and penalties.

Detailed Analysis:

Issue 1: Classification of Imported Clear Float Glass (CFG)
The primary dispute was whether the imported CFG should be classified under CTH 70051090 (as claimed by the appellant) or CTH 70052990 (as reclassified by the Department). The appellant argued that the CFG is non-wired, non-tinted, and has a thin tin absorbent layer on one side, meeting the criteria for CTH 70051090. The Department, however, based on an audit objection, reclassified the CFG under CTH 70052990, denying the exemption benefit.

The Tribunal examined the relevant tariff headings and Chapter Note 2(c) to Chapter 70, which defines an "absorbent, reflecting or non-reflecting layer" as a microscopically thin coating of metal or a chemical compound. The Tribunal found that the CFG, having a tin layer, meets this definition. The Tribunal also noted that the Department's own test reports confirmed the presence of the tin layer, which is absorbent and non-reflective.

The Tribunal referred to previous rulings, including those by the Kolkata and Chennai Tribunals, which held that CFG with a tin layer is classifiable under CTH 70051090. The Tribunal concluded that the classification adopted by the appellant under CTH 70051090 is correct and the Department's reclassification under CTH 70052990 is unsustainable.

Issue 2: Eligibility for FTA Benefit under Notification No. 46/2011-Cus
The appellant claimed the benefit of the FTA under Notification No. 46/2011-Cus by providing the required Certificate of Origin (COO). The Department denied this benefit based on the reclassification of the CFG.

The Tribunal held that since the CFG is correctly classifiable under CTH 70051090, the appellant is entitled to the FTA benefit under Sl. No. 934 of Notification No. 46/2011-Cus, subject to the production of a valid COO. The Tribunal emphasized that the benefit cannot be denied solely based on the classification mentioned in the COO if the goods meet the criteria for the exemption.

Issue 3: Invocation of Extended Period for Demand and Penalties
The Department invoked the extended period under Section 28(4) of the Customs Act, 1962, alleging willful misclassification and intention to evade duty. The appellant contended that the classification was bona fide and based on available test reports and legal provisions.

The Tribunal found that the appellant had been consistently classifying CFG under CTH 70051090, and the Department had accepted this classification in previous assessments. The Tribunal noted that the Department's change in stance was based on an audit objection and not due to any suppression or misdeclaration by the appellant. The Tribunal held that invoking the extended period was not sustainable as there was no evidence of willful misclassification or intention to evade duty.

Conclusion:
The Tribunal set aside the Order-in-Original No. 102161/2023 dated 05.06.2023, confirming the classification of CFG under CTH 70051090 and granting the FTA benefit under Notification No. 46/2011-Cus. The Tribunal also ruled that the extended period for demand and penalties was not invokable, and consequently, the order of confiscation, fine, and penalties were set aside. The appeal was allowed with consequential relief as per the law.