2020 (3) TMI 856 - AT - Customs

Refrain from imposition of penalty - classification of imported goods - colour data projectors - whether classifiable under 8528 61 00 as projectors of a kind solely or principally used in an ADP system of Heading 8471 or under 8528 69 00? - Benefit of the Notification dated 1 March, 2005 - extended period of limitation - Section 28(4) of the Customs Act. Whether the colour data projectors imported by Sony India are classifiable under 8528 61 00 as projectors of a kind solely or principally used in an ADP system of Heading 8471 or under 8528 69 00? - HELD THAT - The colour data projectors imported by Sony India are classifiable under Heading 8528 61 00 - reliance can be placed in the case of ACER INDIA (P) LTD. VERSUS CC 2009 (11) TMI 931 - CESTAT AHMEDABAD and COMMR. OF CUS. C. EX., HYDERABAD-II VERSUS AVECO VISCOMM PRIVATE LTD. 2010 (9) TMI 436 - CESTAT, BANGALORE . Entitlement of benefit of the Notification dated 1 March, 2005 - HELD THAT - This Notification automatically grants exemption from payment of the whole of the Customs duty if the product is covered by the description specified in Column (3). All goods falling under 8528 61 are specified in Column (3) of the Table. It is only when there is any ambiguity in the Exemption Notification, that the Notification is required to be interpreted in favour of the Revenue - There is no ambiguity in the Exemption Notification dated 1st March, 2005 and indeed none has been pointed out by the Commissioner in the impugned order. Whether the extended period of limitation under Section 28(4) of the Customs Act could have been invoked in the present case? - HELD THAT - It is not necessary to examine the contention raised by the Learned Counsel for the Appellant about the invocation of the extended period of limitation. Whether the Commissioner was justified in refraining from imposing penalty? - HELD THAT - The reason given by the Commissioner is that the penal provisions under the relevant sections of the Customs Act were not invoked in the show cause notice - Revenue has not been able to place any portion of the show cause notice which calls upon Sony India to show cause why penalty should be imposed under particular sections of the Customs Act. The show cause notice is the foundation and unless an assessee is put to notice penalty cannot be imposed. Thus, no penalty could have been imposed upon the Appellant. Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Classification of colour data projectors.
2. Invocation of the extended period of limitation under Section 28(4) of the Customs Act.
3. Justification for refraining from imposing penalties.

Detailed Analysis:

First Issue: Classification of Colour Data Projectors
The primary issue was whether the colour data projectors imported by Sony India should be classified under Heading 8528 61 00 or 8528 69 00. Sony India argued that these projectors are "of a kind solely or principally used in an ADP system of Heading 8471," thus falling under 8528 61 00 and qualifying for exemption from Customs Duty. The Revenue contended that these projectors should be classified under 8528 69 00, making them ineligible for the exemption.

The Tribunal referred to several precedents, including Acer India Pvt. Ltd., Aveco Viscomm Pvt. Ltd., and M/s. Epson India Pvt. Ltd., all of which concluded that colour data projectors should be classified under 8528 61 00. The Tribunal emphasized that these projectors, despite having additional ports like HDMI and S-video, are principally used with ADP systems. The Tribunal also noted that the Supreme Court had dismissed Civil Appeals challenging these classifications, thereby affirming the Tribunal's decisions.

The Tribunal rejected the Revenue's argument based on the Harmonised System of Nomenclature (HSN) and Explanatory Notes, which suggested that projectors should be classified under 8528 69 00. The Tribunal concluded that the projectors imported by Sony India are classifiable under Heading 8528 61 00 and are entitled to exemption from Customs Duty under the Notification dated 1 March 2005.

Second Issue: Extended Period of Limitation
The Commissioner invoked the extended period of limitation under Section 28(4) of the Customs Act, alleging that Sony India had suppressed facts by misclassifying the projectors. Sony India argued that they had informed the Department about the change in classification via a letter dated 11 August 2011.

The Tribunal found that the Commissioner failed to provide sufficient evidence that Sony India had suppressed facts with the intent to evade duty. The Tribunal noted that the classification change was communicated to the Department and that the Department had accepted this classification for subsequent imports. Therefore, the invocation of the extended period of limitation was not justified.

Third Issue: Justification for Refraining from Imposing Penalties
The Commissioner refrained from imposing penalties, stating that the penal provisions under the relevant sections of the Customs Act were not invoked in the show cause notice. The Department appealed against this part of the order.

The Tribunal upheld the Commissioner's decision, noting that the show cause notice did not call upon Sony India to show cause why penalties should be imposed under specific sections of the Customs Act. The Tribunal emphasized that penalties cannot be imposed unless the assessee is put on notice.

Conclusion:
The Tribunal allowed the appeal filed by Sony India, setting aside the order confirming the demand for short-paid Customs Duty with interest. The Tribunal dismissed the Department's appeal against the Commissioner's decision to refrain from imposing penalties. The Tribunal reiterated the importance of adhering to binding judicial precedents and criticized the Commissioner's deviation from established decisions.

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