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TMI Blog2025 (1) TMI 1459X X X X Extracts X X X X X X X X Extracts X X X X ..... oE's under CTH 15180039 and deny the benefit of availment of BCD @7.5%vide Sl. No. 262 of Notification No. 50/2017 dated 30.6.2017. After due process of law, the Ld. Adjudicating Authority confirmed the demand as proposed in the Show Cause Notice and also imposed fine and penalties. Hence this appeal. 3. Shri Arjun Raghavendra, Ld. Advocate appeared for the appellant and Shri Anoop Singh, Ld. Authorized Representative appeared for the respondent. 3.1 The Ld. Advocate for the appellant submitted a table showing all 16 shipments pertaining to the impugned goods, that were cleared during the disputed period arranged chronologically, given in their reply to the SCN and is reproduced below. (BoE 4230263 is not part of the impugned proceedings); Sl. No. BoE Number Date HSN CODE Assessable Value Duty Paid Date Total Duty 1 2478534 17.07.2017 38123990 Rs. 14,89,244 18.07.2017 Rs. 4,03,816 2 4230263 01.12.2017 38123990 Rs. 15,54,098 02.12.2017 Rs. 4,21,401 3 5331154 23.02.2018 38123990 Rs. 15,69,370 01.03.2018 Rs. 4,35,265 4 5986892 16.04.2018 38123990 Rs. 16,41,035 17.04.2018 Rs. 4,55,141 5 7028800 01.07.2018 38123990 Rs. 17,08,705 03.07.2018 Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... home consumption and hence the demand is time barred and the demand, confiscation and penalties are liable to be set aside since there is no collusion or any wilful mis-statement or suppression of facts etc. On merits he stated that the impugned ESBO is a collection of organic compounds obtained from the epoxidation of soybean oil. It is used as a secondary plasticizer and stabilizer in polyvinyl chloride (PVC) plastics. The mere fact that the precursor is Soyabean Oil - a vegetable oil - would not ipso facto make ESBO classifiable under chapter 15. Further, the notes to Chapter 15 at entry (f) specifically exclude goods which are classifiable under Section VI of the HSN. Since chapter 38 of HSN forms part of Section VI and it was and continues to be the bona fide belief of the Appellant that ESBO is classifiable under chapter 38, chapter 15 is not relevant in the instant matter. Further, ESBO is as an industrial product and merits classification under chapter 38-Miscellaneous Chemical Products. The Ld. Advocate prayed that the appeal may be allowed. 3.2 The Ld. AR stated that the appellant manufactures soft PVC compounds and masterbatches for extrusion and injection molding appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue). B) Whether the SCN dated 26.06.2022 was time-barred considering that the date of supplying all RUDs was 04.01.2023 or that the date of corrigendum to the SCN was 24.11.2022 as in both scenarios, the issue of SCN is beyond two years of date of clearance of BoE for home consumption. C) Abrupt change in classification as held in the impugned order without any change in facts or law is improper as the matter attained finality on assessment of BOE 854412 D) Classification adopted by Appellant is in the nature of a claim made on the basis of the belief entertained by the Appellant and therefore, cannot be said to be a misdeclaration. E) Confiscation and penalties are liable to be set aside since there is no collusion or any wilful mis-statement or suppression of facts or any intentional furnishing of false information. We shall take up the issues below. 5) Classification of imported 'Epoxidised Soya Bean Oil" 5.1) We find that ESBO has received an NOC from the Central Drugs Standard Control Organisation (Drugs Control Department) for manufacturing PVC compounds certifying the same to be as "Not for medical or human consumption". The appellant has declared the produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -Other vegetable oil and its fats 1518 00 31 ----Edible grade 1518 00 39 ----Other 1518 00 40 ---Other 5.3) The Hon'ble Supreme Court in its judgment in Commissioner of Customs and Central Excise, Amritsar (Punjab) Vs. D.L. Steels etc [2022 SCC OnLine SC 863], while approving the use of the HSN for the purposes of classification of goods for tax purposes stated; "9. The Harmonised System of Nomenclature, developed by the World Customs Organisation, has been adopted in India by way of the Customs Tariff Act, 1975, though there are certain entries in the Schedules to this Act which have not been assigned HSN codes. The Harmonised System is governed by the International Convention on Harmonised Commodity Description and Coding System, which was adopted in 1983, and enforced in January, 1988. This multipurpose international product nomenclature harmonises description, classification, and coding of goods. While the primary objective of the HSN is to facilitate and aid trade, the Code is also extensively used by governments, international organisations, and the private sector for other diverse purposes like internal taxes, monitoring import tariffs, quota controls, rules of orig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd predominant usage have also got to be taken into account while determining the classification of an item. 11. The afore stated aids and assistance are more important than the names used in the trade or common parlance in the matter of correct classification." (emphasis added) The judgment gives importance to Rules of Interpretation of the Tariff (RIT). Under Rule 3(a), it is provided that the heading which provides a specific description shall be preferred to a heading having a more general description. 5.5) Further, the Hon'ble Supreme Court in its recent judgment dated 18.12.2024, in Commissioner of Central Excise, Salem Vs M/s. Madhan Agro Industries (India) Private Ltd., Civil Appeal No. 1766 of 2009, held that the HSN Explanatory Notes would be binding once the entry in the HSN corresponds to the description in the First Schedule. The Apex Court held that once the entries are aligned and reflect the same position, the General/Explanatory Notes in the HSN would be applicable and cannot be ignored while classifying goods. The relevant paras of the decision are extracted below: "17. To sum up, the First Schedule to the Act of 1985 is based on the HSN, which is an interna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able fats and oils and their fractions, boiled, oxidized, dehydrated, sulphurised, blown, polymerized by heat in vacuum or in inert gas or otherwise chemically modified, excluding those of heading 1516 ; This part covers animal or vegetable fats and oils and their fractions which have been subjected to processes which modify their chemical structure thereby improving their viscosity, drying power (i.e. the property of absorbing oxygen when exposed to the air and forming elastic films) or modifying their other properties, provided they retain their original fundamental structure and are not more specifically covered elsewhere, e.g. (1) . . . (2) . . . (3) . . . (4) . . . (5) . . . (6) The other modified oils in the heading include: a. Maleic oils obtained by treating e.g. soya-bean oil with limited amounts of maleic anhydride at a temperature of 200˚C or more, in conjunction with sufficient polyhydric alcohol to esterify the extra acid groups. Maleic oils so obtained have good drying properties. b. Drying oils (such as linseed oil) to which have been added in the cold small quantities of driers (e.g. lead borate, zinc naphthenate, cobalt resinate) to increase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to show-cause notice would date back to the notice itself. This plea is hence rejected. 6.3) As regards the date of supplying all RUDs, the appellant has stated that although the SCN mentioned that the relied upon documents were enclosed as Annexure A along with a detailed worksheet as Annexure B, these documents were not enclosed as stated. Repeated requests were made for service of the complete show cause notice vide their letters dated 09.08.2022, 07.09.2022, 03.11.2022 and 24.11.2022. It was only on 04.01.2023 that the missing annexures were mailed to the them by the department. The said documents were quintessential to submit a reply showing cause to the claims made in the notice. We have gone through the correspondence. We find that the omission is not a minor one. The entire set of documents at Annexure A & B, not merely a few documents, were not provided to the appellant. Hence, we agree with the legal grievance made out by the appellant as the issue of SCN is not an empty formality and is an opportunity for the noticee to deny his guilt and establish his innocence. [See Commissioner of Central Excise, Nagpur Vs Ballarpur Industries Ltd. - 2007 (215) E.L.T. 489 (S.C.)]. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee, the incidence of tax is borne by the final consumer or recipient of goods or services and not by the primary manufacturer/ trader/ service provider who collects and deposits the tax to the government account. Thus, correcting a wrong classification and rate of duty may only lead to a temporary difficulty for the primary taxpayer as he has the benefit of setting off the duty against the credit accumulated due to a lower tax out flow on the final product and further of passing on the tax burden downstream. 7.5) Hence a healthy balance needs to be maintained between the need for uniformity in assessment of similar goods belonging to different assessee, correcting any deviation when necessary and the need to maintain certainty and predictability of taxes over a long period of time against frivolous allegations as per the doctrine of consistency or the precedential value of the earlier pronouncement. No blanket principle is possible and the judgements cited by the appellant are peculiar to the facts of the individual cases. Hence, while once the department has adopted a classification, it should not ordinarily be permitted to take a different stand, it may however be necessary if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , when the second consignment i.e. BoE No 4230263 dated 01.12.2017 was assessed provisionally and for the second time when the BoE No 8854412 dated 14.11.2018 was assessed finally after raising queries about the same issue of classification. The question of their providing factually incorrect data was false and is a wild allegation. Hence the question of suppression mis-declaration etc., does not arise. 8.2) The question before us is whether the importer acted dishonestly and in a non-bonafide manner while making the self-assessment of the impugned goods at the time of import, by mis-declaring the classification heading. Bona fide is a Latin term signifying good faith. Honesty is the core of Good Faith. Its connotation is pure purpose free of taint or deception or dishonest design. Section 52 of the Indian Penal Code defines "good faith" as, "Nothing is said to be done or believed in 'good faith' which is done or believed without due care and attention." Perhaps the appellants action would fail this test. However, the question is whether the lack of bona fide alone would permit for the issue of SCN invoking the extended time limit. We feel that something more than is neces ..... X X X X Extracts X X X X X X X X Extracts X X X X
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