2025 (1) TMI 996 - AT - Customs

Benefit of exemption from payment of CVD under N/N. 4/2006-CE dated01.03.2006 as amended - declaration of goods as Rutile Sand/Rutile in the Bill of Entry and claimed classification under Heading No.26.14 of the Customs Tariff - Extended period of limitation. HELD THAT - The appellant-company had been importing the said goods by declaring the same as Rutile Sand/Rutile all along in the Bills of Entry filed by them. At the time of importation they have submitted all the necessary documents such as invoices packing lists test certificates certificates of origin bills of lading marine insurance etc. The said goods were thereafter examined by the Customs authorities and after being satisfied about the correctness of the appellant s claim the Customs authorities duly assessed the bills of entry. The Customs authorities duly allowed the exemption as claimed under the said notifications and no C.V.D. was charged in the assessed bills of entry. The appellant has paid the duty according to the assessed bills of entry and cleared the said goods. The appellant has been importing the said goods and declared the same as Rutile sand/Rutile even on earlier occasions. The Test reports attached to the earlier imports indicate that the same have 90% to 96% of Titanium Dioxide. Upon due examination the appellant was allowed such exemption in respect of all their imports right from the year 2007 up to September 2012. Along with the bill of entry the appellant always submitted copy of test certificate of the foreign supplier which mentioned the Titanium Dioxide content in the Rutile Sand as 95% and above. The goods imported by the appellant in the years 2007 to 2010 has enclosed the Certificate of Analysis which shows the Titanium Di Oxide percentage ranging above 95%. The said goods were declared by the appellant-importer as Rutile sand/Rutile and the Customs authorities had duly allowed the exemption as claimed under the said notifications and no C.V.D. was charged in the assessed bills of entry. Extended period of limitation - HELD THAT - In the instant case in respect of all the four Bills of entry the appellants have made the correct declaration at the time of importation of the said goods as Rutile Sand/Rutile and correctly claimed classification under the Heading 26.14 of the Customs Tariff and also rightly claimed exemption from payment of C.V. Duty under the said notifications. Thus the allegations of mis-declaration in all the four Bills of Entry in the instant case are not sustainable - the demands of differential duty along with interest confirmed in the impugned order by invoking the extended period of limitation is not sustainable. Conclusion - i) The goods imported by the appellant in the years 2007 to 2010 has enclosed the Certificate of Analysis which shows the Titanium Di Oxide percentage ranging above 95%. The said goods were declared by the appellant-importer as Rutile sand/Rutile and the Customs authorities had duly allowed the exemption as claimed under the said notifications and no C.V.D. was charged in the assessed bills of entry. ii) The demands of differential duty along with interest confirmed in the impugned order by invoking the extended period of limitation is not sustainable. Appeal allowed in part.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment include:

Whether the appellant mis-declared the imported goods as Rutile Sand/Rutile instead of Titanium Dioxide (Rutile) Ore concentrate, thereby wrongfully availing exemption under the relevant notifications.
Whether the demands for differential duty and associated penalties were justified and sustainable under the law.
Whether the extended period of limitation could be invoked for the recovery of duty.
Whether the goods were liable for confiscation and whether the redemption fine imposed was justified.
Whether the penalties imposed on the appellant-company and its directors were sustainable.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Mis-declaration of Goods

Relevant Legal Framework and Precedents: The Customs Act and the relevant notifications under which the exemption was claimed were central to this issue. The insertion of Note 4 in Chapter 26 of the C.E. Tariff by the Finance Act, 2011, which defined the conversion of ores into concentrates as manufacture, played a pivotal role.
Court's Interpretation and Reasoning: The court observed that the appellant had consistently declared the goods as Rutile Sand/Rutile and provided necessary documentation, including test certificates, which were accepted by customs authorities in previous transactions. The court found no evidence of mis-declaration.
Key Evidence and Findings: The appellant submitted test certificates and other documents at the time of importation, which indicated the goods as Rutile Sand with Titanium Dioxide content varying from 90% to 96%. The court noted that no mis-declaration was alleged in earlier transactions.
Application of Law to Facts: The court applied the customs notifications and tariff classifications to the facts, concluding that the appellant's declarations were consistent with the documentation provided and previous imports.
Treatment of Competing Arguments: The court considered the Department's reliance on information from the supplier's website but found it insufficient to prove mis-declaration, especially given the consistent historical treatment of the imports.
Conclusions: The court concluded that the allegations of mis-declaration were not sustainable.

Issue 2: Justification of Demands and Penalties

Relevant Legal Framework and Precedents: The Customs Act provisions regarding the recovery of duties and penalties were examined, particularly the invocation of the extended period of limitation.
Court's Interpretation and Reasoning: The court found that the demands for differential duty were not sustainable due to the lack of evidence of mis-declaration and the consistent treatment of imports.
Key Evidence and Findings: The appellant had paid duties and taken CENVAT Credit for subsequent imports, indicating a revenue-neutral situation.
Application of Law to Facts: The court applied the principles of revenue neutrality and limitation to the facts, finding the extended period of limitation inapplicable.
Treatment of Competing Arguments: The court rejected the Department's arguments for penalties, noting the lack of evidence for mis-declaration or intent to evade duty.
Conclusions: The court set aside the demands and penalties, except for the amounts already paid by the appellant.

Issue 3: Confiscation and Redemption Fine

Relevant Legal Framework and Precedents: The Customs Act provisions on confiscation and redemption fines were relevant.
Court's Interpretation and Reasoning: The court found that since mis-declaration was not established, the goods were not liable for confiscation, and the redemption fine was unwarranted.
Conclusions: The court set aside the redemption fine imposed.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: "Thus, we hold that in the instant case in respect of all the four Bills of entry, the appellants have made the correct declaration at the time of importation of the said goods as Rutile Sand/Rutile and correctly claimed classification under the Heading 26.14 of the Customs Tariff and also rightly claimed exemption from payment of C.V. Duty under the said notifications."
Core Principles Established: Consistent historical treatment of imports and documentation provided at the time of importation are crucial in determining the correctness of declarations. Revenue neutrality can impact the applicability of the extended period of limitation.
Final Determinations on Each Issue: The court set aside the demands for differential duty, penalties, and the redemption fine, except for the amounts already paid by the appellant, which were appropriated.

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