2025 (1) TMI 268 - AT - Customs

Classification of imported goods - Composite Long Rod Insulators - to be classified under Chapter Tariff Heading 85469090 of Customs Tariff? - benefit of the concessional rate of duty under Notification No. 12/2012-Cus. - extended period of limitation. HELD THAT - This matter can be disposed of on limitation without entering into the issue on merit. The appellant have filed the bill of entry on 9-2-2017 and declared the goods correctly as per the document i.e. Composite Long Rod Insulators, therefore, there is no mis-declaration. The issue was only of interpretation of the words composite and polymer , the word composite was used whether the goods imported falls under the description i.e. Polymer Long Rod Insulators as appearing in the Notification. Therefore, the issue involved is clearly an interpretation of the entry provided under the Notification - The appellant have very strong prima facie case on merit also as decided by the adjudicating authority. There is no change of circumstances from date of filing of bill of entry till the issue of show cause notice, therefore, nothing prevented the department to issue show cause notice within the normal period from the date of filing of bill of entry i.e. 9-2-2017. Therefore, there is no reason for invoking the extended period upto three years, when there is no change in the facts of the case. In the similar type of facts in various judgments, the Hon ble Supreme Court has taken a view that the extended period cannot be invoked - Relaince can be placed in Northern Plastic Ltd. v. Commissioner 1998 (7) TMI 91 - SUPREME COURT where it was held that 'the appellant had not misdeclared the imported goods either by making a wrong declaration as regards the classification of the goods or by claiming benefit of the exemption notifications which have been found not applicable to the imported goods. We are also of the view that the declarations in the Bill of Entry were not made with any dishonest intention of evading payment of customs and countervailing duty.' Conclusion - The extended period for demand under the Customs Act requires clear evidence of suppression or intent to evade duty, not merely an interpretative dispute. The show cause notice issued after almost three years is clearly barred by limitation. Appeal allowed.

1. ISSUES PRESENTED and CONSIDERED

The legal judgment primarily revolves around the following core issues:

Whether the appellant correctly classified the imported goods under the appropriate Customs Tariff Heading and availed the benefit of the concessional rate of duty under Notification No. 12/2012-Cus.
Whether the invocation of the extended period for raising the demand of differential duty was justified under the Customs Act, 1962.
Whether there was any mis-declaration or suppression of facts by the appellant that would warrant the imposition of penalties and confiscation of goods.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Classification and Concessional Duty Benefit

Relevant Legal Framework and Precedents: The appellant classified the imported goods under Chapter Tariff Heading 85469090, claiming a concessional duty rate under Serial No. 350 of Notification No. 12/2012-Cus. The dispute arose regarding whether the goods fell under the description 'Polymer Long Rod Insulators' as specified in the notification.
Court's Interpretation and Reasoning: The court did not delve deeply into the merits of classification due to the resolution of the case on the limitation issue. However, it noted that the interpretation of the terms 'composite' and 'polymer' was central to the dispute.
Key Evidence and Findings: The adjudicating authority initially found the appellant's classification and claim for concessional duty to be correct, supported by a recommendation from the Ministry of Power.
Application of Law to Facts: The court acknowledged the appellant's strong prima facie case on merits, as previously decided by the adjudicating authority.
Treatment of Competing Arguments: The appellant argued for the correct classification and entitlement to the concessional rate, while the Revenue contended that the goods did not meet the notification's specifications.
Conclusions: The court did not make a definitive ruling on this issue, focusing instead on the limitation aspect.

Issue 2: Invocation of Extended Period

Relevant Legal Framework and Precedents: Under Section 28(4) of the Customs Act, 1962, the extended period for demand can be invoked in cases of suppression, fraud, or misstatement. Precedents include judgments like Northern Plastic Ltd. and Continental Foundation Jt. Venture, which emphasize the need for deliberate intent to evade duty.
Court's Interpretation and Reasoning: The court found no evidence of mis-declaration or suppression by the appellant. The issue was deemed one of interpretation rather than intent to evade duty.
Key Evidence and Findings: The appellant correctly declared the goods as per the documentation, with no changes in circumstances from the filing of the bill of entry to the issuance of the show cause notice.
Application of Law to Facts: The court applied the principle that the extended period is inapplicable without evidence of suppression or intent to evade duty.
Treatment of Competing Arguments: The Revenue's argument for invoking the extended period was rejected due to the absence of any change in facts or evidence of suppression.
Conclusions: The extended period was improperly invoked, rendering the demand unsustainable.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: "The suppression of fact or wilful misstatement or fraud or collusion etc., cannot be invoked in the present case. Therefore, the show cause notice issued after almost three years is clearly barred by limitation."
Core Principles Established: The judgment reinforces the principle that the extended period for demand under the Customs Act requires clear evidence of suppression or intent to evade duty, not merely an interpretative dispute.
Final Determinations on Each Issue: The demand based on the extended period was set aside, and the appeal was allowed due to the lack of evidence supporting suppression or mis-declaration.

The judgment underscores the importance of clear evidence when invoking extended periods for duty demands and highlights the necessity for precise classification under customs notifications. The court's decision to focus on the limitation issue rather than the merits of classification reflects a strategic judicial approach to resolving the dispute efficiently.

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