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TMI Blog2023 (1) TMI 998X X X X Extracts X X X X X X X X Extracts X X X X ..... extent of the submissions by the learned counsel. The submission of the learned counsel that the scope of the Tribunal s order gets circumscribed by the appellant s submissions during the proceedings cannot be accepted. The Commissioner was correct in examining whether the goods were preparations and such an examination was within the scope of the remand order. Retail packages- scope - HELD THAT:- Both sides agree that retail packing is not defined in the tariff. Both sides refer to different Rules of the Legal Metrology Rules to interpret the term. According to the learned counsel for the appellant, the goods were not in packings meant for consumer and hence were not retail packings in terms of Rule 2(k) of the Legal Metrology Rules. According to the learned authorised representative for the Revenue, since only packages of more than 25 kg or 25 litres are excluded as per Rule 3 of the Legal Metrology Rules, the packages in question, being of up to 25 kg do qualify as consumer packings - while it is true that all packings over 25 kg are clearly excluded from the Legal Metrology Rules, it does not necessarily mean that all packings up to 25 kg are included from them and further tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preparation. Since the brassinolide is in the form indicated in CTH 3808 by being preparation, it is not excluded by Chapter Note 1 (a) (2). Therefore, it falls under CTH 3808. Extended period of limitation - HELD THAT:- As far as the description of the goods, quantity, etc. are concerned, the importer is bound to state the truth in the Bill of Entry. Thus, simply claiming a wrong classification or an ineligible exemption notification is not a mis-statement. Assessment, including self-assessment is a matter of considered judgment and remedies are available against them. While self-assessment may be modified by through re-assessment by the proper officer, both self-assessment and the assessment by the proper officer can be assailed in an appeal before the Commissioner (Appeals) or reviewed through an SCN under section 28. Therefore, any wrong classification or claim of an ineligible notification or wrong self-assessment of duty by an importer will not amount to mis-statement or suppression. Extended period of limitation can be invoked in case of collusion or any willful mis-statement or suppression of facts. According to the Revenue, the appellant had wrongly declared the imported g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso found that section 111(m) does not apply. Consequently, penalties under section 112 cannot be sustained - The penalties under sections 114A and 112 imposed on the appellants are not sustainable and need to be set aside. Appeal disposed off. X X X X Extracts X X X X X X X X Extracts X X X X ..... ,78,750/-) are within the normal period of limitation. 2. The appellant importers imported the goods described as "0.1 per cent natural brassinolide fertilizer" and classified it as fertilizer under various headings of Chapter 31 of Customs Tariff as discussed above. The Bills of Entry were assessed by proper officers. In many cases, the officers also called for literature from the appellants, examined it and thereafter assessed the Bills of Entry. Thereafter, on receiving intelligence from the Directorate of Revenue Intelligence [DRI] the Commissionerate investigated the matter, sought expert opinion, recorded statements and came to the conclusion that natural brassinolide is not a fertilizer at all but it is a plant growth regulator classifiable under CTH 3808. Accordingly, show cause notices [SCN] were issued to the appellant importers proposing to re-classify the consignments imported by them under CTH 3808 and recover the differential duty along with interest. It further proposed a penalty of equal amount under section 114A on the appellant importers. It was also proposed to impose personal penalties under section 112 upon the Directors/ authorized signatories. Extended perio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith that of competent authorities of Central Insecticides Board & Registration Committee, Insecticides Act etc. are to be examined by the Original Authority. The applicability of limitation as strongly contended by the appellant, as well as liability of the penalty, may also be decided afresh. 8. Keeping in view of the above observation, the appeals are allowed by way of remand." 4. Thereafter, the Commissioner passed the orders impugned in these appeals again confirming the demands along with interest and imposing penalties. Several issues were raised by the learned Counsel for the appellants which were countered by the learned authorised representative for the Revenue which we proceed to discuss below. A. Show Cause Notice under section 28 was issued without assailing the assessment 5. Learned counsel for the appellant submitted that one of the grounds which was taken by him before the adjudicating authority was that the SCN issued under section 28 is not sustainable at all because the assessments were finalized and as per the judgment of the larger bench of the Supreme Court in the case ITC Ltd. Vs. Commissioner of Central Excise Kolkata IV 2019 (368) ELT 216 (SC) all asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant and therefore the allegation of suppression of fact made on 29 May, 2015 are not sustainable. Therefore, the proceedings are hit by limitation. We therefore hold that the impugned order is neither sustainable on merits nor sustainable on point of limitation. We, therefore, set aside the impugned order and allow both the appeals." (ii) Commissioner of C. Ex. Aurangabad vs. Vediocon Appliance 2009 (235) ELT 513 (Tri.- Mumbai). Paragraph 8 reads as follows: "8. It is fact the Bills of Entry were finally assessed by the authorities and duty liability was discharged by the respondent. Subsequently, short levy demand under Section 28 has been raised from the appellant, which is unsustainable on the ground that the assessment of the said B.O. Entry has not been challenged by the authorized. We find that the decision of the Hon'ble Supreme Court in the case of Priya Blue Industries (Supra) squarely covers the issue before us." 6. Learned authorised representative, on the other hand, supports the impugned order and says that ITC Ltd. pertained to only refunds which cannot be sanctioned unless the refund arises out of the assessment itself. The reason for this is that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revised under Section 130. *** 7. We have considered the submissions on both sides on this issue. 8. The short question which needs to be answered is whether SCN under section 28 can be issued after the assessment is finalized (either through self assessment or through assessment by an officer) without first appealing against the assessment. The answer to this question lies in the judgment in Priya Blue Industries paragraphs 6,7 and 8 are reproduced below: "6. We are unable to accept this submission. Just such a contention has been negatived by this Court in Flock (India) case (2000) 6 SCC 650. Once an order of assessment is passed the duty would be payable as per that order. Unless that order of assessment has been reviewed under Section 28 and/or modified in an appeal, that order stands. So long as the order of assessment stands the duty would be payable as per that order of assessment. A refund claim is not an appeal proceeding. The officer considering a refund claim cannot sit in appeal over an assessment made by a competent officer. The officer considering the refund claim cannot also review an assessment order. 7. We also see no substance in the contention that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clearance of goods for home consumption is issued, the assessment can be modified either through an appeal by either side before the Commissioner (Appeals) or through an SCN under section 28. While the option of appeal is open to both sides to assail the assessment on any ground, the scope of an SCN under section 28 is limited by WHO, WHEN and WHY. Only 'the proper officer' can issue the SCN, within the normal period of limitation or the extended period of limitation of five years (as the case may be), and 'only to collect the duties not levied, short levied, not paid, short paid or erroneously refunded'. It has been made clear by Supreme Court in Priya Blue, Flock India and further in ITC Ltd. that the assessments can be modified by either of these two methods. It was also clarified by the Supreme Court in Jain Shuddh Vanaspati that a notice under section 28 can be issued without modifying the order permitting clearance of goods for home consumption under section 47. 12. Learned counsel for the appellant draws attention to paragraph 43 of ITC Ltd. which is as follows: "43. As the order of self-assessment is nonetheless an assessment order passed under the Act, obviously it woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, it has been conferred by Section 28 and other related provisions. The power has been so conferred specifically on "the proper officer" which must necessarily mean the proper officer who, in the first instance, assessed and cleared the goods i.e. the Deputy Commissioner Appraisal Group. Indeed, this must be so because no fiscal statute has been shown to us where the power to re-open assessment or recover duties which have escaped assessment has been conferred on an officer other than the officer of the rank of the officer who initially took the decision to assess the goods." 15. Thus, the power to issue SCN under section 28 is the power of review of the assessment which is specially conferred by law and through this SCN and the consequent adjudication, assessment can be modified. The assessment can also be modified through an appeal process. The submission by the learned counsel that an SCN under section 28 can be issued only after an appeal is filed and the assessment is modified by the Commissioner (Appeals) is not correct. In Jain Shudh Vanaspati Ltd. also the Supreme Court had categorically affirmed this position. The decisions of coordinate benches of this Tribunal in P G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us decision of its own or of a court of co-ordinate jurisdiction which covered the case before it, in which case it must decide which case to follow; or when it has acted in ignorance of a House of Lords decision, in which case it must follow that decision; or when the decision is given in ignorance of the terms of a statue or rule having statutory force. A decision should not be treated as given per incuriam, however, simply because of a deficiency of parties, or because the court had not the benefit of the best argument, and as a general rule, the only cases in which decisions should be held to be given per incuriam are those given in ignorance of some consistent statue or binding authority. Even if a decision of the Court Appeal must follow its previous decision and leave the House of Lords of rectify the mistake." 37. In Babu Parasu Kaikadi (Dead) by Lrs. vs. Babu (Dead) Through Lrs. (2004) 1 Supreme Court Cases 681, the Supreme Court observed: "14. Having given our anxious thought, we are of the opinion that for the reasons stated hereinbefore, the decision of this Court in Dhondiram Tatoba Kadam having not noticed the earlier binding precedent of a coordinate Bench and ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter investigation and seeking expert opinion, Revenue found that the imported goods were not fertilisers but were plant growth regulators. Revenue also found that although the importers classified the good as fertilisers in Bills of Entry, they had been selling it to its customers as plant growth regulator. The Show Cause Notice was issued proposing to classify the goods as Plant Growth Regulator under Chapter heading 3808. 18. During the first round of litigation, learned counsel for the appellant did not dispute that the imported good was Plant Growth Regulator but contested classification under Chapter 38 on a new ground that the imported goods were not in retail packages and hence were not classifiable under Chapter 38 in view of Chapter Note 1(a) (2). The note reads as follows: 1. This Chapter does not cover: (a) separate chemically defined elements or compounds with the exception of the following : (1) artificial graphite (heading 3801); (2) insecticides, rodenticides, fungicides, herbicides, anti-sprouting pro-ducts and plant-growth regulators, disinfectants and similar products, put up as described in heading 3808; xxxxxx 19. The matter was remanded by this Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and analysis, we note that the matter has to go back to the Original Authority to re-decide based on the observations made above. The applicability of chapter note and also the instructions issued by the Board along with that of competent authorities of Central Insecticides Board & Registration Committee, Insecticides Act etc. are to be examined by the Original Authority. The applicability of limitation as strongly contended by the appellant, as well as liability of the penalty, may also be decided afresh." 20. Chapter heading 3808 mentions three forms in which the goods under the heading could be. It reads as follows: "3808 Insecticides, Rodenticides, Fungicides, Herbicides, Anti-Sprouting Products and Plant-Growth Regulators, Disinfectants and Similar Products, put up in Forms or Packings for Retail Sale or as Preparations or Articles (For Example, Sulphur-Treated Bands, Wicks And Candles, And Fly-Papers)." 21. As may be seen, this heading covers products which are put up in forms or packings for retail sale OR as preparations OR articles. The Commissioner has, in the impugned order, found that the imported goods were put in packings for retail sale and also that the importe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Based on enquiries on some e-commerce sites, the learned Principal Commissioner, in paragraph 5.4.2 of the impugned order observed that the goods imported by the Appellants in 20 Kg. drum or 25 packets of 1 Kg. each are available for retail sale and are in retail packages. (ii) These enquiries were made behind the back of the Appellants and were neither relied upon in the SCN nor were disclosed to the Appellants at any stage during the proceedings, therefore, reliance on the same is in gross violation of the principles of natural justice. (iii) Without prejudice to the above, the said finding of the learned Principal Commissioner is based on a total misconstruction of the factual position. Mere availability of the goods on the e-commerce sites cannot be taken to mean that it is for retail sale and are in retail packages, unless, the requirement of these being for sale to the ultimate consumer for consumption by an individual or a group of individuals is also satisfied. The impugned order discloses no evidence that any consumer requires and actually purchased the goods in the packages of 25 kg or 25 packets of 1 kg each. (iv) This finding is also contrary to Department's own ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28. We agree with the learned counsel for the appellant that the Commissioner has erred in collecting data and information in the form of enquiries through internet to come to the conclusion that the imported goods were not in retail packings. This evidence was never provided to the appellants to give them an opportunity to refute. 29. Both sides agree that 'retail packing' is not defined in the tariff. Both sides refer to different Rules of the Legal Metrology Rules to interpret the term. According to the learned counsel for the appellant, the goods were not in packings meant for consumer and hence were not retail packings in terms of Rule 2(k) of the Legal Metrology Rules. According to the learned authorised representative for the Revenue, since only packages of more than 25 kg or 25 litres are excluded as per Rule 3 of the Legal Metrology Rules, the packages in question, being of up to 25 kg do qualify as consumer packings. We find that while it is true that all packings over 25 kg are clearly excluded from the Legal Metrology Rules, it does not necessarily mean that all packings up to 25 kg are included from them and further that all such goods get covered by the definition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ood is 0.1% Brassinolide. The rest are other inert material which predominate by weight. However, undisputedly, the essential character of the product is that of Brassinolide; and it was declared as such and was also sold as such. 35. We find that the statement of Smt. Rashmi Jain dated 06.05.2015, which is enclosed as Relied Upon Document 18 to the SCN dated 16.11.2015, clarified that the imported goods were in the form of powder which can be dissolved 1 gram in 10 litres of water and sprayed. The relevant portion of the statement is as follows: "On being asked specifically about the product 0.1% Natural Brassinolide Fertilizer, mentioned at Sl. No. (v) above, I stated that it is a natural extracted product from Cole Pollen and the 0.1% Natural Brassinolide Fertilizer is water soluble and a ready to use fertilizer. On being asked specifically about the description of the 0.1% Natural Brassinolide Fertilizer, I state as per the best of my knowledge, 01.% Natural Brassinolide is an extract of cole pollen which is a part of cole plant (rape seed of Brassica Napus). On being asked about the composition of the 01.% natural brassinolide, I state that it is (22R, 23R, 24S)-2alpha-3a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding to produce the ready-for-use insecticides, fungicides, etc. are also classified here, provided, they already possess insecticidal, fungicidal, etc. properties." ……. 38. It is undisputed that the imported goods were brassinolide. Its strength is only 0.1% and the rest is not made up of impurities but other inert material. It has been stated in the statement of Smt. Rashmi Jain referred to above, that it should be mixed in the proportion of 1 gram in 10 litres water and sprayed which makes it clearly a preparation of Brassinolide. Even if the submission of the learned counsel that it is sold to other companies which prepare further preparations is considered, the imported goods will be intermediate preparations which are also squarely covered by CTH 3808 as per the explanatory notes to HSN 3808. We thus find that the imported good was clearly a preparation of Brassinolide and was not excluded from CTH 3808 by Chapter note 1(a)(2) to Chapter 38. E. On merits of classification 39. The imported goods were described as '0.1% Natural Brassinolide Fertilizer' and the appellant classified them under Chapter 31 of CTH as fertilisers. However, the appellant had sold it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regulator, it is still not classifiable under 3808 in view of the Chapter Note 1(a) (2) to Chapter 38 and to examine this claim, the matter was remanded to the original authority because this defence was not taken before the original authority. The Chapter Note excludes specially defined chemicals from Chapter 38, except when they are put up in forms described in 3808 viz., as retail packings, as preparations and as articles. Of these, there is no dispute that the imported brassinolide were not articles which leaves with retail packings and preparations. We have already found that the imported brassinolide was a preparation. Since the brassinolide is in the form indicated in CTH 3808 by being preparation, it is not excluded by Chapter Note 1 (a) (2). Therefore, it falls under CTH 3808. F. Extended period of limitation 43. The SCN invoked extended period of limitation under section 28 which can be invoked when the duty was not levied, not paid, short levied, short paid or erroneously refunded by reasons of (a) any collusion; (b) any willful mis-statement; or (c) suppression of facts 44. The SCN invoked extended period of limitation on the ground that the appellant had malaf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the department was aware of the facts. This misrepresentation and suppression of facts at the time of assessment comes within the purview of sub section 4 of Section 28 of the Customs Act warranting invocation of extended period of limitation. The documents submitted by the importer are accepted on their face value being correct however suppression and misrepresentation of facts could only be detected upon detailed investigation which included search of the premises examining incriminating records and other aspects which in this case has led to detection of fraud and the malafide intent of the importer." 46. Learned counsel submitted even if the matter is decided on merits against the appellant, extended period of limitation cannot be invoked as none of the three elements essential to invoke extended period of limitation were present. The appellant imported the goods which were exported by the Chinese supplier as 'brassinolide fertilizer'. All documents including invoice, packing list, etc. described the imported goods the same way and hence the Bills of Entry were filed accordingly classifying the goods under CTH 31010099. The officers assessing the Bills of Entry sought additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch declaration, produce to the proper officer the invoice, if any, and such other documents relating to the imported goods as may be prescribed. *** Section 17. Assessment of duty. - (1) An importer entering any imported goods under section 46, or an exporter entering any export goods under section 50, shall, save as otherwise provided in section 85, self-assess the duty, if any, leviable on such goods. (2) The proper officer may verify the the entries made under section 46 or section 50 and the self assessment of goods referred to in sub-section (1) and for this purpose, examine or test any imported goods or export goods or such part thereof as may be necessary. Provided that the selection of cases for verification shall primarily be on the basis of risk evaluation through appropriate selection criteria. (3) For the purposes of verification] under subsection (2), the proper officer may require the importer, exporter or any other person to produce any document or information, whereby the duty leviable on the imported goods or export goods, as the case may be, can be ascertained and thereupon, the importer, exporter or such other person shall produce such document or fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imported but sometimes they may not. The importer is required to make a true declaration of the goods which are actually imported and not just the goods declared in the import documents. Thus, if the goods actually imported are more or different from what is declared in the Bill of Entry, the importer would have made a mis-declaration. 52. Extended period of limitation can be invoked in case of collusion or any willful mis-statement or suppression of facts. According to the Revenue, the appellant had wrongly declared the imported goods as fertilizers and they were also declared so in the invoices, packing lists, etc. supplied by the Chinese suppliers. The appellants were fully aware that the imported goods were plant growth regulators and were also selling the goods as plant growth regulators. Therefore, according to the Revenue, the appellant has willfully mis-stated the nature of the imported goods in the Bills of Entry as fertilizers and hence extended period of limitation was correctly invoked. 53. We find Revenue is correct in submitting that the appellants had sold the imported goods as plant growth regulators and hence must have been aware that they were not fertilizers a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty has not been levied or has been short-levied or the interest has not been charged or paid or has been part paid or the duty or interest has been erroneously refunded by reason of collusion or any wilful mis-statement or suppression of facts, the person who is liable to pay the duty or interest, as the case may be, as determined under sub-section (8) of section 28 shall also be liable to pay a penalty equal to the duty or interest so determined: Provided that where such duty or interest, as the case may be, as determined under sub-section (8) of section 28, and the interest payable thereon under section 28AA, is paid within thirty days from the date of the communication of the order of the proper officer determining such duty, the amount of penalty liable to be paid by such person under this section shall be twenty-five per cent of the duty or interest, as the case may be, so determined: Provided further that the benefit of reduced penalty under the first proviso shall be available subject to the condition that the amount of penalty so determined has also been paid within the period of thirty days referred to in that proviso : Provided also that where the duty or intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the penalty so determined;] (iii) in the case of goods in respect of which the value stated in the entry made under this Act or in the case of baggage, in the declaration made under section 77 (in either case hereafter in this section referred to as the declared value) is higher than the value thereof, to a penalty not exceeding the difference between the declared value and the value thereof or five thousand rupees, whichever is the greater; (iv) in the case of goods falling both under clauses (i) and (iii), to a penalty not exceeding the value of the goods or the difference between the declared value and the value thereof or five thousand rupees], whichever is the highest; (v) in the case of goods falling both under clauses (ii) and (iii), to a penalty not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or five thousand rupees, whichever is the highest." 57. As may be seen the ingredients necessary for imposing a penalty under section 114A are identical to the ingredients necessary to invoke extended period of limitation. We have found that extended period of limitation cannot be invoked in these cases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set aside. H. Quantum of penalty cannot take into account Additional Duty of Customs and SAD because these are levied under the Customs Tariff Act,1975 and not under the Customs Act, 1962 and the provisions of penalty under Customs Act, were not made applicable to these levies. 61. The alternative submission of the learned counsel for the appellants is that if penalties are upheld then they need to be re-determined only based on the basic customs duty and not considering the additional duty of customs or the Special Additional Duty of Customs. As we have found that the penalties themselves cannot be sustained, it is not necessary to examine this alternative submission. 62. In view of the above, all five appeals are disposed of as below: a) Customs Appeal 52239 of 2021 filed by M/s. Midas Fertchem Impex Pvt. Ltd. is partly allowed and partly rejected upholding the classification of the imported goods under CTH 3808 in the impugned order and upholding the confirmation of demand of differential duty for the normal period only along with applicable interest. The demand of duty for extended period of limitation is set aside. The penalty under section 114A imposed on the appellant i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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