2022 (9) TMI 1014 - HC - Customs

Extended period of limitation - suppression of facts or mis-declaration or not - unreasoned and non-speaking order or not - classification of imported goods - Neutral Pellets - to be classified under Custom Tariff Heading (CTH) 17029090 or not - HELD THAT - Section 28 of the Customs Act envisages that where any duty has not been levied or not paid, inter-alia, has been short-levied or short-paid by reasons of (a) collusion; (b) any willful misstatement and, (c) or suppression of facts, by the importer or the exporter, or the agent or employee, the proper officer shall, within five years from the relevant date, to serve notice on the person chargeable with duty or interest requiring him to show cause why he should not pay the amount specified in the notice. The principle laid down in the judgment in M/S. UNIWORTH TEXTILES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE. RAIPUR 2013 (1) TMI 616 - SUPREME COURT which essentially is that with a view to invoke the extended period of limitation, there ought to be a positive act and not merely a failure to pay duty which is not on account of any fraud, collusion or willful misstatement or suppression of facts. The CESTAT, in the present case, has clearly held that the respondent had been importing the goods under CTH 1702, which the learned counsel for the parties agree, attracted the same rate of duty, as the goods imported and falling under CTH 1704 and held that the department was very well aware of the said classification and that in the past, assessments were completed based thereupon. It was, thus, held that only because there was a change of view by the department, the respondent could not have been said to have either mis-declared or suppressed facts in classifying its goods at the time of its import under CTH 1702. Thus, it appears that had it been a case of a deliberate and willful attempt on the part of the respondent to suppress the facts or make any willful misstatement for purposes of evading the payment of duty, then it would have in the past, perhaps claimed the benefits by classifying it under CTH 1701, when it attracted a lower rate of duty or was completely exempt. Appeal dismissed.

Summary

Issues:
1. Whether the CESTAT was correct in setting aside the demand for an extended period of limitation despite holding the case in favor of the appellant-department on merits?
2. Whether the CESTAT passed an unreasoned and non-speaking order?

Analysis:
1. The appeal before the Bombay High Court involved a Custom Appeal under section 130 of the Customs Act, 1962, challenging an order passed by the Customs Excise and Service Tax Appellate Tribunal, Mumbai (CESTAT). The case concerned the classification of imported goods and the imposition of duty and penalties. The main issue was whether the demand for an extended period of limitation was justified. The CESTAT had confirmed the demand for duty but set aside the penalty imposed. The High Court analyzed the facts and legal principles to determine if the CESTAT's decision was appropriate.

2. The CESTAT held that the demand in Appeal No. 85493 of 2019 was barred by limitation as there was no suppression of facts or mis-declaration by the importer. The respondent consistently classified the goods under a specific heading, providing all necessary information to the department. The CESTAT found that the change in the department's view did not amount to mis-declaration or suppression of facts. The High Court examined relevant legal precedents, including the requirement of willful intent for misstatement or suppression, to uphold the CESTAT's decision on the limitation issue.

3. The appellant argued that the respondent willfully misstated and misclassified the imported goods to evade higher duty. However, the High Court found that the respondent's consistent classification under a particular heading, even when lower duty or exemptions were available under a different heading, did not indicate willful misstatement or suppression. The Court emphasized the importance of positive acts, not mere failures, to establish fraud or willful intent for invoking the extended period of limitation. The appellant's contentions were thus rejected, and the CESTAT's decision was upheld.

4. The High Court referred to various judgments, including those related to fraud, collusion, willful misstatement, and suppression of facts in tax matters, to support its analysis. The Court highlighted the need for deliberate and willful acts to establish evasion of duty. Considering the facts of the case and the consistent behavior of the respondent in classification, the Court concluded that the CESTAT's decision on the limitation issue was justified. Therefore, the appeal was dismissed, and no costs were awarded.

By analyzing the issues raised in the appeal and the detailed reasoning provided by the High Court, it is evident that the decision was based on a thorough examination of the facts, legal principles, and precedents related to customs law and taxation matters.