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TMI Blog2024 (3) TMI 1188X X X X Extracts X X X X X X X X Extracts X X X X ..... te that though different models of goods have been imported all are sought to be classified under one heading. Finally, it is also not disputed that the impugned goods are marketed and known in the trade as brush cutters as also seen from the product literature and the tender notices etc. enclosed with the appeal. In INDO-INTERNATIONAL INDUSTRIES VERSUS COMMISSIONER OF SALES TAX, UP. [ 1981 (3) TMI 77 - SUPREME COURT] , it has been held by the Apex Court that if any term or expression has been defined in the enactment then it must be understood in the sense in which it is defined but in the absence of any definition being given in the enactment the meaning of the term in common parlance or commercial parlance has to be adopted . The Appellant has stated that as per Note 4 to Section XVI, which covers chapter 84, for machines with a clearly defined function by one of the headings in Chapter 84 or 85, the whole falls to be classified in the heading appropriate to that function. It is found that both the disputed heading fall under chapter 84 and as per the discussions have been found to have a clearly defined function covered by CTH 8467. Revenue has thus been able to discharge its b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the tax is self-assessed. This is not a mere failure to pay duty. It is something more. The Appellant has deliberately sought to defeat the provisions of law. Thereby contravening the provisions of Section 46(4) ibid. Further there is nothing in the section to mean that because there is knowledge by the Department of the earlier mis-classification of the goods by the Appellant the willful misstatement in the Bill of Entry subsequently which stands established disappears. The Hon ble High Court of Madras in M/S. KING BELL APPARELS VERSUS THE COMMISSIONER OF CENTRAL EXCISE [ 2018 (10) TMI 267 - MADRAS HIGH COURT] held that the contention that once knowledge has been acquired by the department, there is no suppression and the ordinary statutory period of limitation would be applicable was rejected as a fallacious argument inasmuch as once the suppression is established, merely because the department acquires knowledge of the irregularity, the suppression would not be obliterated. A statutory penalty flows from a disregard of statutory provisions. With relaxation in procedure in the clearance of goods comes greater responsibility on the part of importers. This responsibility has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5330861/20.05.2016 Order-in-Original No. 73345/2020 dtd. 24.01.2020 Differential Duty demand Rs.67,15,462/- With equal penalty u/s 114A of the Customs Act, 1962 2.0 Brief facts which are common to all the appeals are that the assessee imported certain goods describing them as Agricultural Reaper of different models (some of which are listed at para 14 of the impugned order C/40178/2020) and parts thereof, and filed Bills-of-Entry by classifying the same under Customs Tariff Heading (CTH) 8433 9000, which were assessed at the rate of BCD as applicable, exemption for CVD was claimed under Notification No. 21/2012 (Sl. No. 2). 2.1 Revenue having observed that the imported goods being portable machines having self-contained internal combustion engine mounted on a light metal frame and equipped with cutting devices, felt that the goods were classifiable under CTH 8467 2900, which attracted CVD at the rate of 12.5%. After due process the original authority having considered the case of the importer, proceeded to confirm the proposals made by him in the Show Cause Notice classifying the goods under CTH 8467. Similarly, in the case of earlier orders, the Commissioner (Appeals) too has uph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stry in which they are used, regardless of their particular functions. (ii) CTH 8433 covers harvesting and post harvesting agricultural machinery and also includes machinery used in Lawns, Sports ground, and parks. (iii) The List in HSN Explanatory HSN provides list of items that may fall in 8467 and excludes items by their weight or size which cannot be used in hand. The impugned goods cannot be used in hand. (iv) Without prejudice, even assuming, without admitting, for the sake of argument that Sl. No. 19 covers the present items also, then unlike Sl. No 18 (which is excluded from 8433), Sl. No 19 is not excluded from 8433 in the Explanatory Notes. Thus, the item will fall both under 8433 and 8467. HSN Explanatory Note (D) to Chapter 84 states that in case machines fall under two or more headings principal use of the machine. Since the principal use is established as Agricultural, the goods will fall under 8433. 5.1 The impugned goods as given by them in their appeal booklet is reproduced for easy reference:- 6. We have gone through the appeal papers and have heard the rival parties carefully. Being a matter of classification of goods the burden of proof is on Revenue to show tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Dunlop India Ltd. v. Union of India [1976 (2) SCC 241] have settled this proposition. How is the product identified by the class or section of people dealing with or using the product is also a test when the statute itself does not contain any definition and commercial parlance would assume importance when the goods are marketable as was held in Atul Glass Industrial (Pvt.) Ltd. v. CCE [1986 (3) SCC 480] and Indian Aluminium Cables Ltd. v. Union of India [1985 (3) SCC 284]. In Asian Paints India Ltd. v. CCE [1988 (2) SCC 470] which was a case of emulsion paint, at para 8, it was said: It is well settled that the commercial meaning has to be given to the expressions in tariff items. Where definition of a word has not been given, it must be construed in its popular sense. Popular sense means that sense which people conversant with the subject matter with which the statute is dealing, would attribute to it. (emphasis added) Further in Commissioner of Customs and Central Excise, Amritsar (Punjab) Vs. D.L. Steels etc [2022 SCC OnLine SC 863] the Hon ble Apex Court stated that the Harmonised System of Nomenclature, developed by the World Customs Organisation, has been adopted in Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cipal use is established as Agricultural, the goods will fall under 8433. We do not find much substance in this argument by the Appellant as portable brush-cutter are specifically covered under CTH 8467 and as per the rule of construction a general description if at all must yield to those of a special one. 11. The impugned order states that the said goods weigh 10-12 Kgs and are portable machines designed to be handled by a single operator and carried in hand. In terms of the Explanatory Notes to HSN the machines of CTH 8433 are used in place of hand tools for agricultural operations. The machines for working in hand are thus excluded from CTH 8433. CTH 8467 specifically deals with tools for working in the hand. The Appellant during oral arguments, on the other hand, avers that the impugned goods cannot be used in hand in the sense of in the palm of the hand . 11.1 The usage of the phrase in hand is very much idiomatic and has to be understood very broadly. No hard and fast meaning can be attributed to it. So, there will be a limit as to how far one can rationalise it with any particular meaning. Metaphorically in hand in one of its meanings is understood as an extension of a gras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12. The Appellant has stated that as per Note 4 to Section XVI, which covers chapter 84, for machines with a clearly defined function by one of the headings in Chapter 84 or 85, the whole falls to be classified in the heading appropriate to that function. We find that both the disputed heading fall under chapter 84 and as per the discussions have been found to have a clearly defined function covered by CTH 8467. Revenue has thus been able to discharge its burden and the impugned orders merit to be upheld. 13. Since the classification of the goods is found to be falling under CTH 8467, hence in terms of Note 2(b) of Section XVI, parts of brush cutter will be classifiable under CTH 84679900. 14. The Appellant is also aggrieved by the imposition of penalty under Section 114A of the Customs Act. The matter, they say, has been in dispute since 2012. They have pointed out that as recorded in the SCN they had paid tax under protest under CTH 8467 and that it was the Department which directed the Appellant to switch back to the Classification of CTH 8433. The impugned order on the other hand has stressed on the willful misstatement of the CTH of the goods which were described as brush cut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Several agricultural tools are explicitly classified under various other heading such as 8201, 8208, 8424, 8428 and so on. The use of any machinery / tools for agriculture purpose alone cannot be assumed to be the sole criteria to determine classification. (emphasis added) 15. The learned Adjudicating Authority went on to impose a penalty under section 114A of the Customs Act 1962 for the blame worthy act. The relevant portion of the Section reads as under; 114A. Penalty for short-levy or non-levy of duty in certain cases. :- Where the 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 willful 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 (2) of section 28 shall also be liable to pay a penalty equal to the duty or interest so determined: . . . . The Appellant has submitted that when the demand is itself not sustainable the penalty is also liable to be dropped. Further they have stated that a penalty under section 114A ibid can be impose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cially in an era of self-assessment. 17. The 'Self-Assessment' procedure has been introduced in respect of Customs clearance of imported goods under Section 17 of Customs Act,1962, with effect from 08.04.2011. It is a provision resting on utmost good faith. Section 17(1) read as under at the relevant time: 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. Assessment means determination of the tax liability as set out by the legislature, in the Act provided for the same. The Customs assessment process includes determining the import permissibility in terms of the EXIM policy and any other laws regulating imports/exports, determining the classification, valuation and duties leviable on the goods to arrive at the duty liability, which is required to be paid by the importer (Basic, Additional, Anti-dumping, Safeguards etc.) Assessment is hence the procedure whereby the duty leviable on the imported goods can be ascertained. Classification of goods is an important step in thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollector 2006 (197) E.L.T. 465 (S.C.): The facts of the case was that the Department had issued a Show Cause Notice to the assessee demanding duty for the period 1978 to 1982 alleging that the assessee had cleared carbon dioxide without payment of duty to another unit in contravention of the Central Excise Rules, 1944 and without obtaining licence for manufacture of carbon dioxide in their factory; without filing Classification/Price List and without maintaining accounts. Assessee contended that impure carbon dioxide was not exigible to duty. The case was heard and thereafter no further action was taken in the matter. Subsequently the assessee was served with a second SCN alleging that the appellant was supplying carbon dioxide to another unit; that they had not taken necessary licence; had not followed the procedure prescribed under the rules; and had not discharged duty liability. The Hon ble Supreme Court held that the allegation of suppression of facts against the appellant cannot be sustained, since when the first SCN was issued all the relevant facts were in the knowledge of the authorities. Later on, while issuing the second and third show cause notices the same/similar fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o dithered in finalizing the matter after issue of the first Show Cause Notice or after having done so in a particular manner chose to change the decision reopening the matter on the plea of suppression of facts. Here the cause of action in evoking section 114A is the deliberate misclassification resorted to by the Appellant in the Bill of Entry in spite of an order classifying the goods which is contrary to law and the self-declaration given in the Bill of Entry and are hence distinguished. A Division Bench of the Rajasthan High Court in Lalji Moolji Transport Company v. State of Rajasthan, [DBCWP No. 324/2002., dated: 10.4.2002 / [2002] 127 STC 365], after considering the judgments of the Hon ble Supreme Court in R.S. Joshi v. Ajeet Mills, [AIR 1977 SC 2279], and State of Rajasthan v. D.P. Metal, 2001 (124) STC 611 (SC) has gone to the extent of stating that it would not be correct to protect a tax evader saying that there was absence of mens rea. The Court further held as under: - The requirement of law is meant to be strictly construed, particularly in areas of evasion of tax. We cannot lose sight of the fact that of the there are attempts to avoid statutory obligation or requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an accepted phenomenon. The binding force of a decision which is arrived at by a taxing authority acting within the limits of the jurisdiction conferred upon it by law cannot be made dependent upon the question whether its decision is correct or erroneous . For, that would create an impossible situation. Therefore, though erroneous, its decision must bind the assessee. Further, if the taxing law is a valid restriction the liability to be bound by the decision of the taxing authority is a burden imposed upon a person's right to carry on trade or business. This burden is not lessened or lifted merely because the decision proceeds upon a misconstruction of a provision of the law, which the taxing authority has to construe. Therefore, it makes no difference whether the decision is right or wrong so long as the error does not pertain to jurisdiction. (emphasis added) Hence if an order or judgment has been passed on a lis between the department and an assessee, he is bound to follow that order, until it is upset in appeal by a higher judicial forum. The responsibility is more when the tax is self-assessed. This is not a mere failure to pay duty. It is something more. The Appellant ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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