2024 (12) TMI 959 - AT - Customs

Appropriateness of classification for split air conditioners split air conditioners incorporating refrigerating unit with dual function (cooling and heating) - challenge against assessment in bill of entry without the benefit of speaking order prescribed in section 17(5) of Customs Act, 1962 - HELD THAT - An assessing officer may choose to be guided by the proposals of investigating agency is not surprising but that an assessing officer should insist upon the importer opting for classification as proposed by investigating agency is inappropriate. It runs contrary that the prescription of self-assessment and orders of re-assessment in section 17 of Customs Act, 1962. It goes without saying that, between the time of filing of bill of entry under section 36 of Customs Act, 1962 and its final disposal in terms of section 48 of Customs Act, 1962, goods exist entirely in the control of customs authorities and overreach in persuading to conform is not to be ruled out. The very fact that the assessment was challenged immediately thereafter is an indication of lack of concurrence and enforced conformity. In these circumstances, it was incumbent upon the first appellate authority to ensure compliance with law on the part of proper officer which, not having been done, taints the orders now impugned with the same stain of lack of legality. The affirmation of the impugned order would be tantamount to participation in breach of law. That suffices to merit setting aside the impugned order and to restore the bills of entry before the original authority for compliance with the procedure set out in section 17 of Customs Act, 1962 and, in particular, section 17(5) therein. The appeals are, thus, allowed by way of remand.

Summary

Issues:
Appropriateness of classification for split air conditioners incorporating refrigerating unit with dual function (cooling and heating) for duty exemption under specific tariff items.

Analysis:
The judgment involves 33 appeals by M/s Daikin Airconditioning India Pvt Ltd concerning the appropriateness of the classification for split air conditioners incorporating refrigerating unit with dual function for duty exemption. The dispute arose from assessments in bill of entry filed between October 203 and February 2014, where the claim for duty rate corresponding to a specific tariff item was revised to a different tariff item. The issue revolves around the eligibility of the claimed exemption as per the correct classification.

The Tribunal referred to a previous decision in Daikin Air-Conditioning India P Ltd v. Principal Commissioner of Customs, where the classification issue was discussed. The Authorised Representative highlighted a Supreme Court decision related to classification disputes, emphasizing the importance of pending appeals and proper disposal by the Tribunal.

The judgment highlighted that the dispute stemmed from investigations in July 2013, leading to the re-determination of classification for imports between 2009-10 and 2013-14. The assessing authorities had been adopting the proposed classification, and the current appeals relate to imports post-investigation but pre-show cause notice issuance.

The Tribunal noted the importance of following proper procedures in classification disputes, citing relevant Supreme Court cases emphasizing the burden of proof on the Revenue and the necessity for a speaking order in re-assessment contrary to self-assessment by the importer.

The judgment criticized the first appellate authority for affirming the revised classification without proper evidence or a speaking order, contrary to the requirements of the Customs Act. It highlighted the obligation of the proper officer to issue a speaking order in case of overruling self-assessment, which was not adhered to in this case.

The Tribunal emphasized the importance of compliance with the law and set aside the impugned order, remanding the bills of entry to the original authority for proper compliance with the procedures outlined in the Customs Act, particularly section 17(5).

In conclusion, the appeals were allowed by way of remand, emphasizing the necessity for adherence to legal procedures and proper classification in customs matters.