2024 (9) TMI 186 - AT - Customs

Classification of imported goods - SCRIPTANE PW 28/32H (Petroleum Hydro-treated Middle) - to be classified under CTH 2709 or not - benefit under Serial No. 487 of Notification No. 21/2002-Cus. dated 01.03.2002 - suppression of facts or not - Extended period of limitation - HELD THAT - In respect of the 17 Bills-of-Entry filed by the appellant during the period from February 2010 to September 2010, it is observed that the Bills of entry were assessed finally classifying the goods under Chapter Heading 2709. It is observed that the Department did not raise any doubt about the classification of the goods in respect of these 17 Bills-of-Entry when the goods were assessed finally. These final assessments were not challenged by the department and hence the assessment attained finality. The department cannot re-open the classification of the goods imported vide these 17 Bills of Entry later by invoking suppression clause. The appellant has not suppressed any information from the department when the goods were imported under these 17 Bills of entry and all the relevant facts were well within the knowledge of the Department. Thus, there is no suppression of facts with intention to evade payment of tax established in this case and hence, the Show Cause Notice issued on 26.12.2013 by invoking the extended period of limitation is not sustainable. The re-classification of the imported goods vide the 17 Bills of entry under CTH 2710, on the basis of Test Report received from IIT, Kharagpur, is not sustainable. Accordingly, the demands confirmed in the impugned order in respect of all these 17 Bills of Entry set aside. Regarding classification of the goods imported vide the two Bills of Entry, the Appellant submits that proper classification of these goods is also under Chapter Heading 2709 - in the present case, the classification of the imported goods is to be done as per the Tariff Entries, Section Notes and Chapter Notes of the Customs Tariff Act, 1975. Classification of the goods mentioned by the supplier in the Invoice is not relevant for determining the classification of the goods imported into the country. In this case, since the goods imported are extracted from Crude, it appropriately fit into the description of the Tariff Entry 2709. Accordingly, the impugned goods imported by the Appellant vide the two Bills of Entry as mentioned in paragraph 2.1 supra, are appropriately classifiable under Chapter Heading 2709 and they are eligible for the benefit of exemption as per Sl. No. 487 of Notification No. 21/2002-Cus. dated 01.03.2002. The classification of the goods under CTH 2710 in the impugned order in respect of all the 19 Bills of Entry is not sustainable and accordingly, the demand of differential duty confirmed in the impugned order in respect of all the 19 Bills-of-Entry by re-classifying the impugned goods under CTH 2710 is set aside. Since the demand raised against the Appellant itself is set aside, the question of demanding interest and penalty does not arise. The impugned order set aside - appeal allowed.

Summary

Issues: Classification of imported goods under Chapter Heading 2709, re-classification under CTH 2710, suppression of facts, extended period of limitation, reliance on test reports, imposition of penalty, demand of duty, redemption fine.

Classification of Goods under Chapter Heading 2709:
The Appellant imported goods classified under Chapter Heading 2709, which were assessed finally without any doubt raised by the Department. The Department attempted to reclassify the goods under CTH 2710 based on a test report from IIT, Kharagpur. However, the Tribunal held that the reclassification was not sustainable as there was no suppression of facts by the Appellant and all relevant information was known to the Department during the initial assessment. Therefore, the demands confirmed for the 17 Bills of Entry classified under CTH 2710 were set aside.

Re-Classification under CTH 2710:
Regarding two Bills of Entry, the Appellant argued that the goods should be classified under Chapter Heading 2709, supported by a flow chart of the manufacturing process. The Tribunal agreed, emphasizing that the goods were extracted from crude, fitting the description of Tariff Entry 2709. The reliance on the Chemical Examiner's report for classification under CTH 2710 was deemed inappropriate, as the Examiner can only opine on the nature of goods, not their classification. The Tribunal set aside the reclassification under CTH 2710 and confirmed the goods' classification under Chapter Heading 2709.

Suppression of Facts and Extended Period of Limitation:
The Appellant contended that there was no suppression of facts to evade tax payment, citing previous decisions. The Tribunal agreed, holding that the Show Cause Notice issued invoking the extended period of limitation was not sustainable due to the absence of intentional suppression of information by the Appellant.

Reliance on Test Reports:
The Appellant challenged the reliance on the test report from IIT, Kharagpur for reclassification, arguing that it did not serve as proper evidence and violated principles of natural justice. The Tribunal agreed, emphasizing that the Chemical Examiner's role is to determine the nature, not the classification, of goods. They held that the classification should be based on Tariff Entries and Chapter Notes, not the supplier's invoice classification.

Imposition of Penalty and Demand of Duty:
As the demands against the Appellant were set aside, the Tribunal ruled that no penalty or interest should be imposed. They found no grounds for penalty under Section 114A of the Customs Act, 1962. Consequently, the penalty of Rs.1,00,00,000 imposed by the Ld. Commissioner was set aside, and the appeal filed by the Appellant was allowed.

Redemption Fine and Operative Part of the Order:
The Tribunal also set aside the redemption fine imposed by the Ld. Commissioner and pronounced the operative part of the order in open court, ultimately allowing the appeal filed by the Appellant and setting aside the impugned order.