Demand of customs duty beyond normal period of limitation on the ground of change in classification of goods

2024 (1) TMI 590 - CESTAT AHMEDABAD

Background

The importer appealed against the change in classification of goods they imported. They initially sought classification under heading 8708 and filed a bill of entry dated August 19, 2016. The Revenue Management System (RMS) queried the Maximum Retail Price (MRP) of the goods for Countervailing Duty (CVD) calculation under Section 4A of the Central Excise Act 1944. The goods were reassessed, and CVD was demanded based on the MRP. The Revenue sought reassessment of past bills of entry cleared by the appellant without declaring the MRP, leading to a customs duty demand and invocation of interest and penalty provisions.

Appellant's Arguments

1. Classification Dispute: The appellant argued that the parts they imported are not vehicle parts but air conditioner (AC) parts, which should not fall under Sr. No. 108 of Notification No. 49/2008.
2. MRP Determination: They contested the basis for MRP determination, asserting that the Revenue must show the basis for MRP calculation in accordance with the Central Excise Act rules.
3. Non-Mention of MRP: It was argued that non-mention of MRP is at best a mutual mistake and does not amount to suppression or misdeclaration.
4. Penalty Provisions: The appellant contested the applicability of Section 114(AA) for penalties, arguing that there was no intentional false declaration.
5. Nature of Goods: They argued that the imported goods are accessories, not parts, based on the Tribunal's decision in Banco Products Ltd.

Court's Observations and Decision

1. MRP-Based Assessment: The Court found that the appellant did not initially declare the MRP. However, it was later provided, and a show cause notice was issued for CVD based on this MRP.
2. Classification of Goods: The Court disagreed with the appellant, stating that the goods (radiators, evaporators, condensers, compressors) are essential parts of the refrigeration system, not mere accessories.
3. Penalty Justification: The Court found no suppression or misdeclaration of goods by the appellant, but still imposed a penalty of Rs. 50,000 under sections 114 AA and 112(a) of the Customs Act 1962.
4. Extended Period of Limitation: The Court held that the extended period of limitation should not have been invoked since no suppression was evident.

Conclusion

The appeal was allowed on the grounds of limitation, implying that the demand based on extended limitation was not justified. 

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2024 (1) TMI 590 - CESTAT AHMEDABAD