2023 (8) TMI 1244 - AT - Customs

Jurisdiction - Levy of IGST on import of goods - classification pumps and pump filters imported for for washing machines and dishwashers - extent of intervention permissible to officer of customs under the authority of Customs Act, 1962 for re-determination of rate of duty in a levy empowered by section 3(7) of Customs Tariff Act, 1975 - discharge of onus - HELD THAT - The appellant was placed on notice of recovery under section 28 of Customs Act, 1962 on the ground that the classification claimed by them did not quite fit the bill as the pumps were not to be used exclusively for handling water and that the classification claimed by them for the purpose of section 12 of Customs Act, 1962 was for parts which called for levy of integrated tax at 18%. There was, however, no proposal for reclassification of the impugned goods under the appropriate sub-heading in chapter 84 of First Schedule to Customs Tariff Act, 1975 thus demonstrating unacceptable inconsistency. In ORTHO CLINICAL DIAGNOSTICS INDIA PVT LTD. VERSUS COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI 2022 (9) TMI 1109 - CESTAT MUMBAI , the Tribunal had examined the extent and scope of empowerment as well as prejudicial effect on exchequer insofar as levy under section 3(7) of Customs Tariff Act, 1975 is concerned and it was held that Instead of deliberating on the validity, and appropriateness, of a tariff item in the First Schedule to Customs Tariff Act, 1975 other than that claimed in the bills of entry after due notice to the importer, the adjudicating authority adopted a process of elimination of the enumeration of descriptions in the Schedules to the integrated tax rate notification, and ignoring the scheme of its presentation, with the erroneous assumption of jurisdiction to place goods within the ambit of the residuary entry in Schedule III of the integrated tax rate notification. Thus, essential onus devolving on customs authorities for re-classification has not been discharged in the impugned proceedings. Consequently, and respectfully following the order of the Tribunal in Ortho Clinical Diagnostics Pvt Ltd, the impugned order is set aside to allow the appeal. Appeal allowed.

Summary

Issues Involved:
1. Levy of Integrated Goods and Services Tax (IGST) on imports between July 2017 and January 2019.
2. Authority of customs officers under the Customs Act, 1962 for re-determination of the rate of duty.
3. Classification of imported goods under the appropriate tariff item.

Summary:

Levy of Integrated Goods and Services Tax (IGST):
The dispute centers on the levy of IGST on imports by M/s IFB Industries Ltd between July 2017 and January 2019. The appellant contested the rate of IGST applied to their imports of various types of pumps and pump filters for washing machines and dishwashers.

Authority of Customs Officers:
The core issue was the extent of intervention permissible to customs officers under the Customs Act, 1962 for re-determination of the rate of duty empowered by section 3(7) of the Customs Tariff Act, 1975. The Tribunal referenced the Ortho Clinical Diagnostics India Pvt Ltd case, emphasizing that the scheme of rule 3(7) of the Customs Tariff Act, 1975 imposes IGST on imported goods at a rate prescribed under section 5 of the IGST Act, 2017, and only central tax officers have the jurisdiction to dispute the rate claimed by an importer.

Classification of Imported Goods:
The appellant claimed classification under tariff item 8413 9190 of the First Schedule to the Customs Tariff Act, 1975. The adjudicating authority disallowed this claim for most consignments, except for some specific types of pumps, and confirmed liability under section 28 of the Customs Act, 1962. The Tribunal found that the adjudicating authority failed to provide specific and detailed discussion on each type of imported article and inappropriately adopted a process of elimination based on the integrated tax rate notification schedules.

The Tribunal concluded that the essential onus for re-classification set out by the Hon'ble Supreme Court had not been discharged by the customs authorities. Consequently, the Tribunal set aside the impugned order and allowed the appeal, holding that the declared classification of the imported goods prevails and that there was no prejudice to the interests of revenue. The charge of misdeclaration of goods did not sustain, leading to the setting aside of confiscation and penalty.

Conclusion:
The Tribunal ruled in favor of the appellant, M/s IFB Industries Ltd, setting aside the order of the Commissioner of Customs and allowing the appeal, emphasizing the limitations of customs officers' authority in re-determining the rate of duty under the IGST Act and the necessity of proper classification procedures.