2024 (9) TMI 331 - AT - Customs

Mis-declaration and suppression of facts or not - invocation of extended period of limitation - Whether mis-declaration and suppression of facts is involved in this case? - HELD THAT - The obligation was on the part of the department to assess the imported goods. The Appellant had along with the Bills of Entry and invoices, furnished copies of inspection certificate as well. They had produced test certificate containing the composition of various alloys and the relevant invoice at the time of filing the Bills of Entry. In fact, the correct classification of the goods was arrived at by DRI on a perusal of the said documents submitted at the time of import. The goods were not mis-declared and the declaration in the Bills of Entry were as per invoice. Even in his statement reordered by DRI, Mr. M Jayaramachandar had stated that they used to procure the same goods indigenously and the Indian manufacturers also classified the same only under CTH 7211 as had been declared by them in the Bills of Entry. This has not been controverted by the Department. This being so the charge of mis-declaration and suppression of fact, fails. Since the onus of assessment was on the department and the Appellant had submitted the necessary documents to facilitate the same, they cannot be held responsible for suggesting a certain classification heading in the Bill of Entry. As held by the Hon ble Supreme Court in NORTHERN PLASTIC LTD. VERSUS COLLECTOR OF CUSTOMS CENTRAL EXCISE 1998 (7) TMI 91 - SUPREME COURT that mere claiming the benefit of exemption or a particular classification under the bill of entry does not amount to mis-declaration or suppression of facts. The demand has hence to be restricted to the normal period and the penalty needs to be set aside. The impugned order is modified on the said terms - Appeal disposed off.

Summary

Issues:
Classification of SCM 435 and C45E varieties of steel under customs regulations; Invocation of extended period for demanding duty and imposition of penalty under Section 114A of the Customs Act, 1962.

Analysis:
The appeal was filed against an Order-in-Appeal by the Commissioner of Customs regarding the classification of SCM 435 and C45E steel varieties. The officers found SCM 435 not eligible for exemption, leading to payment of differential duty. C45E was reclassified under Chapter 7211. The appellant contested the invocation of extended period for demanding duty and penalty under Section 114A. The appellant argued that subsequent show cause notices did not warrant extended period application. They maintained that correct documents were submitted during the pre-self-assessment period, shifting the onus of classification to the department. The appellant cited precedents to support their claim that incorrect classification does not equate to misdeclaration or suppression of facts.

The respondent argued that the appellant had all necessary details for correct classification, and no complex legal issues were involved. They contended that the extended period and penalty were justified due to potential duty evasion from misdeclaration and suppression of facts. The respondent supported the impugned order and urged the tribunal to reject the appeal.

The tribunal noted that the dispute centered on the invocation of the extended period and penalty, not the goods' classification. It analyzed whether the breach was intentional to evade tax through misdeclaration and suppression of facts. In the pre-self-assessment period, the department was responsible for assessing imported goods. The appellant had submitted relevant documents, and the goods were correctly classified based on those submissions. The tribunal found no misdeclaration or suppression of facts by the appellant. Citing legal precedents, the tribunal held that mere claiming a benefit or classification under a bill of entry does not constitute misdeclaration or suppression of facts.

Conclusively, the tribunal ruled in favor of the appellant, setting aside the penalty and restricting the demand to the normal period. The impugned order was modified accordingly, providing consequential relief to the appellant as per the law. The judgment was pronounced in open court on 13-2-2024.