2019 (7) TMI 400 - AT - Customs

Validity of Demand u/s 28 of the Customs Act, 1962 without challenging bill of entry - Import of Computer Radiography System - classification of goods - classified under 90189099 or under 90229099? - case of appellant is that the assessment order in the subject bill of entry was not challenged by the department before the appropriate forum and therefore no demand under Section 28 of the Customs Act, 1962 is maintainable - applicability of decision in the case of Priya Blue 2004 (9) TMI 105 - SUPREME COURT and COLLECTOR OF CENTRAL EXCISE, KANPUR VERSUS FLOCK (INDIA) PVT. LTD. 2000 (8) TMI 88 - SUPREME COURT ? HELD THAT - The judgment of Priya Blue and Flock India of the Hon ble Apex Court are on the point of refund claim by the assessee without challenging the assessment order in the bill of entry. The present case is different. It is a case where after assessment and clearance of the goods is completed by issue of order under Section 47 of the Customs Act, 1962, within the normal period of limitation, the Deputy Commissioner has raised a demand under Section 28. While raising the demand he issued a show cause notice proposing re-classification of the imported goods and gave an opportunity to the respondent to present their case and considered their submissions - This is not the ratio laid down by the Hon ble Apex Court in the case of Priya Blue or Flock India. Cases pertaining to issue of demand under Section 28 after clearance of the case under Section 47 are covered by the judgment of the Hon ble Apex Court in the case of Jain Shudh Vanaspati Ltd., 1996 (8) TMI 108 - SUPREME COURT which clearly held that a demand can be raised under Section 28 even after clearance of the case under Section 47. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of imported goods under Customs Tariff Heading, demand for differential duty under Section 28 of Customs Act, 1962, applicability of case laws regarding refunds and demands, authority to raise a demand after clearance under Section 47.

Analysis:
The case involved a dispute regarding the classification of imported goods under Customs Tariff Heading. The respondent imported a 'Computer Radiography System' and classified it under 90189099. However, the Assistant Commissioner reclassified the goods under 90229090, leading to a demand for differential duty of ?1,20,201. The First Appellate Authority agreed with the reclassification but held that the demand under Section 28 was not maintainable as the assessment order in the bill of entry was not challenged by the department. The Authority relied on judgments related to refund cases, questioning the validity of the demand.

The Revenue contested the Authority's decision, arguing that the demand under Section 28 was justified after due process and notice to the party. They emphasized the distinction between refund cases and demands under Section 28, citing relevant case laws. The Revenue highlighted the precedent set by the Apex Court in Jain Shudh Vanaspati Ltd., which clarified that a demand can be raised under Section 28 post-clearance under Section 47.

Upon review, the Tribunal found that the First Appellate Authority erred in applying the judgments related to refund cases to the present scenario. The Tribunal noted that the case fell under the purview of the precedent set by Jain Shudh Vanaspati Ltd., allowing demands under Section 28 post-clearance under Section 47. Consequently, the Tribunal set aside the Authority's decision, concluding that the demand for differential duty was valid. The appeal was allowed, and the impugned order was overturned.

In summary, the Tribunal clarified the authority's right to raise a demand under Section 28 post-clearance under Section 47, distinguishing between refund cases and demand cases. The decision aligned with established legal precedents and upheld the validity of the demand for differential duty in this particular case.