2019 (5) TMI 612 - AT - Customs

Time limitation of issuance of SCN - the period of importation of subject goods, i.e. High Allumina Balls was during period July, 2007; whereas, the notice was issued on 15/07/2008 - fraud/wilful suppression of facts or not - Change in classification - HELD THAT - The said notice was issued beyond the period of 6 months from the date of filing of the Bill of Entry, and was issued under the Section 28 of the Act. So far as Section 28 of the Act is concerned, the statute mandates that in case of non-payment or short payment of the duty amount, the department should issue Show Cause Notice within 6 months from the relevant date. The proviso clause appended to section 28 ibid provides that in case of non levy, short levy of duty, etc., on account of collusion or willful mis-statement or suppression of facts by the importer, the period of 6 months should be read as 5 years . In the instant case, it is not the case of Revenue that non-payment/ short-payment of duty by the appellant was owing to the reason of misstatement, suppression of facts, etc., in as much as the initial Show Cause Notices issued by the department clearly indicated the description of the goods imported by the appellant, classification of such goods under the CTH, and claim of exemption provided for such goods. Thus, under the circumstances of the case, the subsequent Show Cause Notice dated 15/07/2008 issued beyond the normal period should not stand for judicial scrutiny and accordingly, proceedings initiated based thereon cannot be sustained as barred by limitation of time. Change in classification of the subject goods - HELD THAT - Since classification made in the assessment order was not proposed in the Show Cause Notice, the said order cannot go beyond the scope and ambit of the Show Cause Notice and should only confine to the findings, whether the proposals made in the Show Cause Notices for different classification should sustain or not - Since the Adjudicating Order had entirely changed the classification of the product, as proposed in the Show Cause Notice from 69149090 to 69099090, without issuing any notice to the appellant, the differential duty confirmed under the changed classification should also not stand for judicial scrutiny. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Barred by limitation of time - Show Cause Proceedings
2. Change in classification of subject goods

Analysis:

Issue 1: Barred by limitation of time - Show Cause Proceedings
The appellant contended that the show cause proceedings initiated by the department were barred by limitation of time as the notice was issued beyond the prescribed time limit of 6 months. The appellant argued that since there was no collusion or willful misstatement to evade duty payment, the subsequent show cause notice should be confined to the normal period under section 28. The appellant relied on the judgment of the Hon'ble Supreme Court in a similar case. The Tribunal observed that the subsequent show cause notice issued beyond the normal period should not stand for judicial scrutiny as there was no evidence of misstatement or suppression of facts by the importer. The Tribunal held that the proceedings initiated based on the notice issued beyond the normal period were barred by limitation of time.

Issue 2: Change in classification of subject goods
The appellant raised concerns regarding the change in classification of the subject goods during adjudication proceedings. The Original Authority had classified the goods under a new chapter sub-heading not proposed in the show cause notice, without giving the appellant an opportunity to respond. The Tribunal noted that the adjudicating order had changed the classification without issuing a separate notice to the appellant. The Tribunal held that the order changing the classification of the product beyond the scope of the show cause notice was not proper and justified. Therefore, the differential duty confirmed under the changed classification was deemed not suitable for judicial scrutiny. The Tribunal concluded that the impugned order confirming the differential duty was not justified and allowed the appeals in favor of the appellant, setting aside the Commissioner's order.

In summary, the Tribunal found that the show cause proceedings were barred by limitation of time and the change in classification of the subject goods during adjudication was not proper. The appeals were allowed in favor of the appellant, and the impugned order passed by the Commissioner was set aside.