Custom, Excise & Service Tax Tribunal
Biocon Limited vs Chennai( Port Import) on 10 August, 2018
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
C/369 & 370/2009
(Arising out of Order-in-Appeal Nos. 573-575/2009 dated
29.06.2009 passed by the Commissioner of Customs (Appeals),
Chennai).
M/s. Biocon Limited : Appellants
Vs.
CC (Port-Import), Chennai : Respondent
Appearance Shri N. Anand, Advocate, for the Appellant Shri A. Cletus, ADC (AR), for the Respondent.
CORAM :
Hon'ble Shri Madhu Mohan Damodhar, Member (Technical) Hon'ble Shri P. Dinesha, Member (Judicial) Date of Hearing: 03.07.2018 Date of Pronouncement:10.08.2018 FINAL ORDER No. 42264-42265 / 2018 Per Madhu Mohan Damodhar Both the appeals relating to the same appellant and involving the same disputed issue, they are taken up together and disposed of by this common order.2
2. The issue in dispute concerns the classification of certain goods imported by the appellants. The goods declared as 'MIGLITOL' imported by the appellants. In the first instance the appellants had imported the goods declared as MIGLITOL vide a Bill of Entry dated 403838 dated 30.06.2007 claiming Customs Tariff Heading 2942 0090 under the broad heading of "other organic compounds". The appellants had also imported the goods declared as "MIFEPRISTONE" under Bill of Entry No. 403765 dated 30.0-6.2007 claiming the same CTH. However, the department took the view that both the goods require to be correctly classified under CTH 3003 9090 under the broad heading of "Medicaments". The effect of the classification insisted upon by the department was that the appellants had to discharge the Basic Customs Duty of 10% against 7/5% in respect of CTH 2942 0090, since the latter Customs Tariff Heading got exemption benefit under Notification No. 21/2002- Cus. The appellant preferred an appeal against the assessment insisted upon by the department. The Commissioner (Appeals) vide the impugned order dated 29.06.2009, interalia, upheld the classification of MIGLITOL AND MIFEPRISTONE under CTH 3003 9090 and rejected the appeals. Hence appellants are before this forum.
3. Today when the matter came up for hearing, on behalf of the appellants, Ld. Advocate Shri N. Anand makes oral submissions which are broadly summarized as under:- 3
i) The appellants have been regularly importing these goods except or the present consignments the earlier and subsequent imports were all under CTH 2942 0090.
ii) Ld. Advocate took us to pages 45 to 48 of the appeal paper book in appeal C/369/2009 to point out that other Indian importers like Cipla Ltd., Hetero Labs Pvt Ltd. etc., also imported the very same goods all from China under CTH 2942 0090 only.
iii) Once the department has been consistently assessing these goods earlier under CTH 2942 0090, they cannot summarily change the classification. For this contention, Ld. Advocate relies upon the judgment of the Hon'ble Apex Court in the casse of Birla Corporation Ltd. Vs. CCE - 2005 (186) ELT 266 (S.C.) and Jayaswals Neco Ltd. Vs. CCE - 2006 (195) ELT 142 (S.C) for inclusion under CTH 3003, the goods should be interalia consisting of two or more constituents..
iv) Ld. Advocate also takes us to the HSN notes submitted by him during the hearing to point out that the CTH heading 3003 insisted upon by the department would interalia cover only those preparations obtained by mixing together two or more substances. Whereas the Product Data Sheet filed along with the appeal papers mentioned that the impugned imported products are only single compound goods with the clear empirical formula given therein.
v) Ld. Advocate further contends that the reliance on Wikipedia by the appellate authority is not an authentic source 4 for gathering information, which view is supported by placing reliance of the judgment by the Apex Court in the case of Ponds India Ltd. Vs. CTT, Lucknow - 2008 (227) ELT 497 (S.C.).
4. On the other hand, Ld. AR Shri A. Cletus, ADC, makes submissions which are summarized as under:-
i) The argument that the same goods have been classified on earlier or subsequent occasions differently will not help the case of the appellants in this matter.
ii) The Commissioner (Appeals) has analysed he entire composition of both these products and also clearly found that each of them consists of more than one constituent.
iii) The appellate authority has also upheld the classification only after careful analysis on the basis of the product material supplied by the importer themselves, and information obtained from Wikipedia.
iv) As correctly held by the Commissioner (Appeals), chemical composition of Mifepristone furnished by the appellants as well as seen in the Wikipedia website shows that it has several constituents, viz. CH3 group, OH group, as well as the elements oxygen and nitrogen as constituents, other than the cyclic compound itself. Perusal of the definition above also indicates that the drug is a steroid compound; hence it is undoubtedly a combination of two or more constituents. 5
5. We have heard the submissions made by both sides and have gone through the facts.
6.1 The main grievance of the appellant is that when the department has been consistently assessing the impugned goods earlier under CTH 2942 0090, they cannot summarily change the classification to CTH 3003 9090. The Ld. Counsel has also averred that the appellants have been regularly importing these goods under the said CTH classification 2942 0090, prior and subsequent to the present consignment without any controversy. Even for the present consignments the appellants have declared the goods under CTH 2942 0090. However, the department insisted upon classifying the goods under CTH 3003 9090. 6.2 The impugned goods have been imported in June and July, 2007. We find that the appellant in the appeal paper book at pages 45 to 48 have given details of contemporaneous imports of their own as well as of other companies viz., Cipla Ltd., Hetero Labs Pvt. Ltd., etc. It is seen that the very same "Mifepristone'' with shipment date 15.04.2007, by Cipla Ltd., Chennai has been done under classification CTH 2942 0090. So also "Mifepristone'' imported by Hetero Labs Pvt. Ltd., through Chennai Air Cargo, with shipment date 15.04.2007, has been allowed clearance under CTH 2942 0090.
6.3 When such established practice, not only in respect of the present appellant importer, but also in respect of other 6 importers, was to classify the impugned goods only under CTH 2942 0090, there cannot be any peremptory change of classification insisted upon by the customs department, without due and adequate reasons and that too only after giving notice to the importer to show cause why such change in classification should not be effected.
6.4 Manufacturer-importers like the appellant herein, who import such goods on regular basis, would surely be entitled for some consistency and permanence in matters of classification since the same would have a bearing on the customs duty payable, and thus on the landed cost. They cannot be subjected to such inconsistencies which could have adverse ramifications on their business strategy and compliance cost. 6.5 We are also unable to fathom, why during the same contemporaneous period, other manufacturer-importers were allowed to import the very same items under CTH 2942 0090, when the same allowance was not extended to the importers herein, that too only for the impugned consignments. 6.6 Even in a case where the department has sufficient reasons or grounds to change the established classification, natural justice demands that the affected importer should be put to notice as to the intention of the department and the reasons there for. This has not been done in the present case. 7 6.7. In the event, even on this very ground, without going into the merits, we hold that the summary change in classification in the instant case is unjustified and cannot be sustained. 6.8 We further find that the case laws relied upon by the Ld. Advocate fully support his contentions, in particular the judgments of the Hon'ble Apex Court in Birla Corporation Ltd. Vs. CCE - 2005 (186) ELT 266 (SC) and Jayaswals Neco Ltd. Vs. CCE - 2006 (195) EKT 142 (SC).
6.9 We also find that the Hon'ble High Court of Madras, the jurisdictional High Court for this forum in Bush Boake Allen (I) Ltd. Vs. UOI - 1995 (77) ELT 529 (Mad.) held that classification is not reversible unless there is change in the circumstances. The Tribunal in Subramanyam Iyer Ratnam Vs. CC, Bangalore - 2002 (150) ELT 504 (Tri.-Bang.) interalia, held that the customs authorities cannot change their mind from time to time. The Tribunal also referred to the "Principle of Legitimate Expectation"
as laid down in Halisburry Law of England, relied upon by the Hon'ble High Court of Madras and referred to as " .....A person may have a legitimate expectation of being treated in a certain way by an administrative authority though he has no legal right in private law to receive such treatment the legitimate expectation arises either from a representation or promise made by the authority including and implied representation or from consistent past practice.
(underlining supplied) Ref. Sunshine International & Another v. Collector of Customs, Madras [1993 (42) ECC 282 (Mad)]"8
6.10 In Galaxy Knives Pvt. Ltd. Vs. CC, Mumbai - 2000 (119) ELT 88 (Tri.), the Tribunal similarly held that the department cannot make any abrupt change in the established practice.
7. In view of the discussions herein above and also following the ratio of the decisions cited supra, we hold that the arbitrary change of classification without notice to the appellant in respect of the impugned consignments is bad in law and the impugned order upholding the same cannot then sustain and will require to be set aside, which we hereby do so. Accordingly, appeal is allowed with consequential benefits, if any, as per law.
(Order pronounced in the open Court on 10.08.2018) (P.DINESHA) (MADHU MOHAN DAMODHAR) MEMBER (JUDICIAL) MEMBER (TECHNICAL) BB