2025 (4) TMI 577 - AT - Customs

Classification of imported goods - Copper Rod Nominal Dia 8mm with ATSM B49 - to be classified under CTH 74071020 or under CTH 74081190? - rejection of the Certificate of Origin (COO) without verification - suppression of facts or not - extended period of limitation - HELD THAT - The goods which were in the coil form contrary to the definition of bars and rods contained in Customs Tariff Act 1985 which are supposed to be not in coils as culled out above in para 3.1 and 3.2 were still declared as bars and rods and not as a wire by the appellant. The statutory provisions being clear no doubt even from the literal interpretation in the minds of anyone could be left that the same were not to be treated as bars and rods . We therefore find that the certificate of origin as submitted was incorrect as the HSN is allied in most countries and could not have been different in South Korea. Therefore with such apparent mistake benefit has been correctly denied by the department. This is supplemented by the assertion of the party too when they state that CL in COO refers to coil.Tariff Heading 74081190 is appropriate heading as indicated by the department. Therefore exemption under CEPA notification was correctly denied and BCD @ 5% was correctly demanded in Show Cause Notice dated 19.06.2019. Extended period of limitation - HELD THAT - In the certificate of origin-CL is mentioned in the description portion which refers to coil. The department terms the same as cryptic reference to the coil trying to use the same as an alibi if there were caught. The intention is to be construed with overall facts and circumstances while the description is not available in the Bills of Entry which is a most reliable document in the International imports the same however is available in the packing list and in an cryptic manner in the certificate of origin. It is not coming out from records as to whether these documents specially the packing list were submitted by the importer as part of the documents attached with Bills of Entry while seeking assessment by the party or not - the adjudicating authority/assessing authority is directed to verify this aspect and construe the limitation accordingly. If the description of the goods being in coils was sufficiently reflected in the documents like packing list and the same was provided in the system then benefit on limitation which is beyond normal period can be permitted to the appellant. However if the benefit on limitation is decided as not being available to the party then extended period as well as penalty will sustain accordingly. Conclusion - i) The classification of goods under CTH 74081190 is correct the CEPA exemption denied. ii) The rejection of the COO without verification is upheld as the issue is misclassification not origin. iii) The imposition of penalties under Sections 114A and 114AA is justified due to intentional mis-declaration. iv) The extended period for issuing the SCN is applicable due to suppression of facts. The appeal Is partly allowed by way of remand for verification of whether the packing list was submitted with the Bills of Entry to determine the applicability of the extended period.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment include:

• Whether the goods imported by the appellant were correctly classified under the Customs Tariff Heading (CTH) 74071020 as "Copper Rods" or should have been classified under CTH 74081190 as "Copper Wire".
• Whether the appellant was entitled to the benefit of "NIL" Basic Custom Duty (BCD) under the India-South Korea Comprehensive Economic Partnership Agreement (CEPA).
• Whether the rejection of the Certificate of Origin (COO) without verification was justified.
• Whether the demand for BCD and imposition of penalties under Sections 114A and 114AA of the Customs Act were justified.
• Whether the extended period of limitation for issuing the Show Cause Notice (SCN) was applicable.

ISSUE-WISE DETAILED ANALYSIS

Classification of Goods

• Relevant Legal Framework and Precedents: The classification of goods under the Customs Tariff Act, 1985, specifically Chapter 74, which distinguishes between "Copper Bars and Rods" and "Copper Wire".
• Court's Interpretation and Reasoning: The court noted that Chapter Note 1(d) excludes goods in coil form from being classified as "Bars and Rods". Instead, such goods fall under the definition of "Wire" as per Chapter Note 1(f).
• Key Evidence and Findings: The goods were imported in coil form, as admitted by the appellant, which aligns with the definition of "Wire".
• Application of Law to Facts: The classification under CTH 74081190 was deemed appropriate, denying the exemption under CEPA for goods classified under CTH 7405 to 7407.
• Treatment of Competing Arguments: The appellant's argument that the goods were in coil form only for transportation was rejected, as classification depends on the form at importation, not intended use.
• Conclusions: The court upheld the classification under CTH 74081190, denying the CEPA exemption.

Rejection of Certificate of Origin

• Relevant Legal Framework and Precedents: Notification 187/2009 and CEPA provisions regarding the verification of COO.
• Court's Interpretation and Reasoning: Verification is required only when there is doubt about the origin of goods, not when there is misclassification.
• Key Evidence and Findings: The COO was not doubted for its authenticity or origin, but misclassification was the issue.
• Application of Law to Facts: The court found no requirement for verification of COO when the issue was misclassification, not origin.
• Treatment of Competing Arguments: The appellant's reliance on verification procedures was deemed misplaced as the dispute was not about the origin.
• Conclusions: The rejection of the COO without verification was justified.

Demand for BCD and Imposition of Penalties

• Relevant Legal Framework and Precedents: Sections 111(m), 111(o), 114A, and 114AA of the Customs Act.
• Court's Interpretation and Reasoning: Misclassification and mis-declaration led to the wrongful claim of exemption, justifying penalties.
• Key Evidence and Findings: The goods were mis-declared as "Bars and Rods" to claim exemption, and the description in documents was misleading.
• Application of Law to Facts: The penalties were applicable due to the intentional mis-declaration and submission of incorrect documents.
• Treatment of Competing Arguments: The appellant's claim of no willful misstatement was rejected based on document analysis.
• Conclusions: The imposition of penalties under Sections 114A and 114AA was upheld.

Extended Period of Limitation

• Relevant Legal Framework and Precedents: Section 28 of the Customs Act regarding the extended period for issuing SCN.
• Court's Interpretation and Reasoning: Suppression of facts justified the invocation of the extended period.
• Key Evidence and Findings: Mis-declaration in Bills of Entry and misleading description in documents indicated suppression.
• Application of Law to Facts: The extended period was applicable due to the suppression of facts.
• Treatment of Competing Arguments: The appellant's argument on time-bar was rejected based on the evidence of suppression.
• Conclusions: The extended period for issuing the SCN was justified.

SIGNIFICANT HOLDINGS

• The court held that the classification of goods under CTH 74081190 was correct, denying the CEPA exemption.
• The rejection of the COO without verification was upheld as the issue was misclassification, not origin.
• The imposition of penalties under Sections 114A and 114AA was justified due to intentional mis-declaration.
• The extended period for issuing the SCN was applicable due to suppression of facts.
• The appeal was partly allowed by way of remand for verification of whether the packing list was submitted with the Bills of Entry to determine the applicability of the extended period.