2019 (1) TMI 731 - HC - Customs

Absence of SCN - the fourth respondent has not issued any demand for payment of differential duty along with interest - Held that - It is seen that the matter is now pending investigation and that the petitioner is co-operating with the investigation, more so in the light of the stand taken in the letter dated 14-3-2018. Even assuming that the fourth respondent comes to the conclusion that they have certain other evidence for not adopting the classification as 9022 30 90, a demand cannot be issued by the fourth respondent to the petitioner and at best, a show cause notice could have been issued - However, no such show cause notice has been issued to the petitioner. In any event, the third respondent cannot insist for a no objection certificate from the fourth respondent. The third respondent, who functions under a different Statute governed by separate set of circulars and instructions issued by the Central Board of Excise and Customs, has to independently consider the request made by the petitioner vide their letter dated 17-3-2018 - the writ petition is disposed of by directing the third respondent to take an independent decision on the petitioner s letter dated 17-3-2018 without insisting upon a no objection certificate from the fourth respondent

Issues:
1. Import of true beam radiotherapy system under the EPCG Scheme.
2. Classification of imported goods under Tariff Items.
3. Investigation initiated by the fourth respondent.
4. Request for amending the ITC-HS Code in the EPCG Authorization.
5. Demand for payment of differential duty.
6. Circular issued by the Central Board of Excise and Customs.
7. Requirement of a no objection certificate from the fourth respondent by the third respondent.

Analysis:
1. The petitioner imported a true beam radiotherapy system under the Export Promotion Capital Goods (EPCG) Scheme. The EPCG authorization was issued by the third respondent, setting an export obligation of USD 8,224,093.96. The petitioner was required to fulfill this obligation within six years by providing services to foreign patients. The petitioner imported six equipment based on this authorization.

2. The fourth respondent initiated an investigation into the import of the true beam radiotherapy system, claiming that the goods were wrongly classified under Tariff Item 9022 90 30 instead of 9022 14 90. The petitioner cooperated with the investigation and clarified their intention to comply with the EPCG Scheme obligations, denying any mala fide intent to evade customs duty.

3. The petitioner requested the third respondent to amend the ITC-HS Code in the EPCG Authorization to 9022 14 90. In response, the third respondent asked the petitioner to pay the differential duty with interest or obtain a no objection certificate from the fourth respondent. The petitioner challenged this requirement before the court.

4. The court noted that the fourth respondent had not issued a demand for payment of differential duty yet and the investigation was ongoing. It emphasized that no show cause notice had been issued to the petitioner. The court also referred to a circular allowing corrective action by the Central Board of Excise and Customs.

5. The court ruled that the third respondent cannot insist on a no objection certificate from the fourth respondent. It directed the third respondent to independently consider the petitioner's request for amending the ITC-HS Code and make a decision without requiring the certificate. The third respondent was instructed to pass orders within three weeks while ensuring the ongoing investigation by the fourth respondent is not hindered.

6. The judgment concluded by disposing of the writ petition without any costs and allowing the fourth respondent to proceed with the investigation in accordance with the law. The court's decision aimed to balance the interests of the petitioner and the regulatory authorities involved in the matter.

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