2018 (11) TMI 1304 - AT - Customs

Penalty u/s 112 and Section 14A of Customs Act - classification of imported goods - consignment of readymade garments for men/boys, jackets of various types - no misdeclaration/suppression of facts - assessment not challenged by Revenue - principles of natural justice. Held that - In this case the import was made in the year 2004. The applicant filed the bill of entry along with the invoices and related documents claiming appropriate tariff heading as per their appreciation. The goods were examined and the samples were also drawn, which is evident from the examination report on the bills of entry. As the goods were examined before the clearance and the same was found as per the declaration, no allegation of suppression of fact can be made against the appellant - It is also fact that the department has not appealed against the assessment order which was done at the time of clearance of goods by filing the bills of entry. As no appeal was filed against the assessed bill of entry, the same cannot be reopened after period of more than three years. Penalty do not sustain - appeal allowed - decided in favor of appellant.

Issues:
1. Proper classification of imported goods under Tariff Heading.
2. Allegation of mis-declaration and suppression of facts.
3. Compliance with provisions of Customs Act.
4. Time-barred demand of duty.
5. Violation of principles of natural justice.

Issue 1: Proper classification of imported goods under Tariff Heading:
The appellant imported readymade garments and declared them under Tariff Sub-Heading No. 6201.99.90, availing a lower rate of duty. However, the Customs alleged that the goods should have been classified under Tariff Heading 6204.33.00, attracting a higher duty rate. The appellant argued that the goods were correctly classified by the proper officer based on visual inspection and design, and that the assessment was completed without mis-declaration regarding quantity and value. The Tribunal found that the goods were appropriately declared in the Bills of Entry, examined before clearance, and no appeal was made against the assessment order at the time of importation. Therefore, the Tribunal concluded that there was no basis for reclassification and upheld the appellant's classification under Tariff Sub-Heading No. 6201.99.90.

Issue 2: Allegation of mis-declaration and suppression of facts:
The show cause notice alleged suppression of facts by the appellant for not declaring the full description of the imported readymade garments. The appellant contended that they had appropriately declared the goods in the invoices and related documents, and no mis-declaration had occurred. The Tribunal observed that the goods were examined, found in accordance with the declaration, and no suppression could be established. Additionally, as the Customs did not appeal against the assessed bill of entry at the time of clearance, the Tribunal ruled that no suppression could be alleged against the appellant after a lapse of more than three years.

Issue 3: Compliance with provisions of Customs Act:
The appellant argued that the impugned order was passed without following the provisions of Section 129 D of the Customs Act, which governs appealable orders on bills of entry. The Tribunal referenced legal precedents, including the case of Priya Blue Industries Ltd. vs. CCE, to support the appellant's argument that the demand of duty and penalty should not be imposed without setting aside the original assessment order in a review proceeding. The Tribunal found that the impugned order did not comply with the procedural requirements of the Customs Act, leading to a violation of the appellant's right to appeal.

Issue 4: Time-barred demand of duty:
The demand of duty was issued after a significant lapse from the importation dates, raising concerns about the applicability of Section 28 of the Customs Act regarding time limitations for duty demands. The appellant contended that the demand was time-barred under Section 28(1B) of the Act due to the lapse of more than two years since importation. The Tribunal agreed with the appellant's argument, emphasizing that the proviso to the section could not be invoked as the appellant had made full disclosure of the imported goods without mis-declaration.

Issue 5: Violation of principles of natural justice:
The appellant raised concerns about the impugned order being passed in violation of principles of natural justice. The Tribunal did not delve deeply into this issue in the summary provided, but it can be inferred that the appellant's argument about procedural fairness and due process was considered in the overall analysis of the case.

This judgment by the Appellate Tribunal CESTAT KOLKATA addressed various critical issues related to the proper classification of imported goods, allegations of mis-declaration and suppression of facts, compliance with the Customs Act, time limitations for duty demands, and violations of natural justice. The Tribunal ultimately ruled in favor of the appellant, emphasizing the importance of correct classification, procedural compliance, and the appellant's right to appeal without facing undue time-barred demands or procedural irregularities.

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