Custom, Excise & Service Tax Tribunal
Signet Chemical P Ltd vs Mumbai(Air Cargo Import) on 25 September, 2020
1
CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, MUMBAI
REGIONAL BENCH - COURT NO. I
Customs Appeal No. 89829 of 2018
(Arising out of Order-in-Appeal No. 755/Gr.I/2018(JNCH)/Appeal-II
dated 21.08.2018 passed by the Commissioner of Customs (Appeals),
Mumbai-II)
M/s Signet Chemical Pvt. Ltd. .... Appellant
A-801, Crescenzo, C/38-39, G-Block,
Behind MCA Club, BKC, Mumbai - 400051
Versus
Commissioner of Customs, NS-1, Mumbai-II . Respondent
JNCH, Nhava Sheva, Uran, Raigad - 400707 WITH Customs Appeal No. 85493 of 2019 (Arising out of Order-in-Original CAO No. CC-VA/17/2018-19 Adj.(I), ACC dated 09.11.2018 passed by the Commissioner of Customs (Import),ACC, Sahar, Mumbai) M/s Signet Chemical Pvt. Ltd. .... Appellant A-801, Crescenzo, C/38-39, G-Block, Behind MCA Club, BKC, Mumbai - 400051 Versus Commissioner of Customs (Imp.), Mumbai ... Respondent Air Cargo Complex, Sahar, Andheri (E), Mumbai - 400099 Appearance:
Shri V. Sridharan, Sr. Advocate with Shri T. Viswanathan, Advocate for the Appellant Md. Shamshad Alam, ADC, Auth. Representative for the Respondent CORAM:
HON'BLE DR. D.M. MISRA, MEMBER (JUDICIAL) HON'BLE MR. P. ANJANI KUMAR, MEMBER (TECHNICAL) FINAL ORDER NO. A/85786-85787/2020 Date of Hearing: 07.01.2020 Date of Decision: 25.09.2020 2 Per: Dr. D.M. Misra These two appeals are filed against respective orders; since the issue involved is common, hence are taken up together for disposal.
2. Appeal No. C/89829/2018 The facts of the case are that on the basis of Audit, it came to the notice of the Department that the appellants were importing Sucrose (pharmaceutical grade) and classifying the same under CTH 17029090 of Customs Tariff Act (CTA), 1975. On further verification it was found that during the period October, 2015 to December, 2015 they have filed 07 Bills of Entry declaring the product as "S-124-1 Sucrose (Pharmaceutical Grade)" against two Bills of Entry dated 10.12.2015 and "Pellets Neutral" for remaining Bills of Entry classifying all the declared products under sub-heading 17029090 of CTA,1975. Consequently, a show-cause notice was issued to the appellant proposing re-classification of the goods under CTH 17019990 and recovery of the differential duty of Rs.27, 11,272/- along with interest. On adjudication, the Joint Commissioner of Customs confirmed the classification of the goods declared as Sucrose and Non-Pareil Seeds Mesh Sugar Sphere (Pharmaceutical Grade) under CTH 17019990 and also confirmed the differential duty with interest; held that the goods liable for confiscation under Section 111(m) of the Customs Act, 1962, however, as the goods were not available did not impose redemption fine; imposed penalty of Rs.5.00 lakhs under Section 112(a) of the Customs Act, 1962. Aggrieved by the said order, 3 they filed appeal before the learned Commissioner (Appeals), who in turn, upheld the adjudication order and rejected their appeal.
3. Appeal No. C/85493/2019 On the basis of intelligence, investigation was initiated by the Department recording statements of the appellant with regard to import of "Neutral Pellets" during the period March, 2012 to February, 2015 through International Airport, Sahar, Mumbai. On completion of investigation, a show-cause notice was issued to the appellant on 17.3.2017 alleging that the classification declared by the appellant against 20 Bills of Entry filed during the period March, 2012 to February, 2015 for import of "Neutral Pellets" under CTH 17029090 was incorrect and the correct classification proposed was 17019990; the differential duty of Rs.1,44,84,424/- was proposed to be recovered under Section 28 of the Customs Act, 1962 with interest and proposedpenalty under Section 112(a) and 114A of the Customs Act, 1962. On adjudication, the Commissioner of Customs (Import), Mumbai confirmed the demand with interest and imposed penalty of equal amount under Section 114A of the Customs Act, 1962.Hence, the present appeals.
4. At the outset, learned Sr. Advocate Shri V. Sridharan for the appellants has submitted that the appellants are engaged in the trading of goods meant for pharmaceutical industry. The imported goods in question are: "Sugar Sucrose" or "Neutral Pellets" or "Non-pareil seeds" which are in the form of tiny spherical balls. These goods are made from maize starch (IP 4 grade), water and sucrose. Explaining the process of manufacture by the overseas supplier, he has submitted that a tiny pearl of sugar crystal is taken as a base and these are continuously coated with a solution containing starch and water, through the panning process. The starch is added to act as a binder and also for the slow release of the API (Active Pharmaceutical Ingredient). Providing the composition of the product, the learned Advocate submitted that it consists of -
(i) Sucrose (80 - 91%)
(ii) Maize starch (8.5% to 20%
(iii) Water (< 1.5%)
These goods are used in pharmaceutical industry. He has further submitted that similar sugar spheres not conforming to the pharmacopeias are used in confectionary industry and both the types of sugar spheres are manufactured by the supplier. In confectionary, these types of spheres are sprinkled on top of cake/donut icings. In pharmaceutical industry, these are used as a spherical base for coating the API (Active Pharmaceutical Ingredient) on it for administering the API where sustained release or controlled release of the API is needed. He has submitted that the appellants are importing these goods since 2009 from Germany and as the imported goods are composed of sucrose along with other ingredients; they classified the product under Heading 17.02 of the CTA, 1975 declaring the same as Pellet Neutral or Non-Pareil Seeds mentioning the same as pharmaceutical grade.
4.1 Referring to the heading 17.01, the learned Advocate submitted that broadly stated it covers Cane Sugar in solid form 5 (with or without added flavouring/colouring mater), Beet Sugar in solid form (with or without added flavouring/colouring matter) and chemically pure Sucrose in sold form. He submits that the manufacturing process adopted by the foreign supplier shows that the imported goods are not obtained by adopting the processnecessary in obtaining refined sugar. On the contrary, it is started with refined sugar as basic raw material; therefore, the goods are not refined sugar as contended by the Department, but sugar preparations. Learned Advocate has further submitted that following are the reasons that the imported goods do not fall under Heading 1701 but 1702 of CTA,1975 as ''other sugars'': -
• The goods in question are "Sugar Preparations". It consists of (a) sucrose (b) starch and (c) water. Hence, Heading 17.01 just not applies to these goods as these goods are not simplicitor sugar.
• As per the Tariff entry and as per HSN Explanatory Notes to Heading 17.01, what is permitted to be present in the sugar are (a) colouring or (b) flavouring matters. Starch does not fall in these two categories of ingredients.
• The addition of starch is intentional and purposeful. Starch is added to sucrose with a particular end-use in mind, namely for use in pharmaceuticals. The sucrose gives the properties such as sustained release of the drug and also withstands mechanical strength during coating of API. It also acts as a binder.
• The raw materials and the sugar spheres are conforming to pharmacopeia and are figuring in these pharmacopeia as monograph. Hence, the imported goods are not classifiable as "coloured sugar" or "flavoured sugar".6
• The other submission to buttress the point that these are not treated as sugar in the international market is also based on the price at which these goods are imported into India. The international market price for sugar/sucrose, during the period of import, was Euro 0.33/Kg to Euro 0.27/Kg. whereas, the price at which the imported goods were bought is Euro 4.17 /kg to Euro 7.41 /kg. This shows that these goods are not treaded or marked as refined sugar or sucrose. The 20 times higher the price is attributable to the cost of manufacture in order to comply with the pharmacopeia. Even if the price of the price of sugar (of pharmacopeia grade), even then the price of sugar spheres are far higher than it.
4.2 He has further submitted that the reasoning advanced by the Commissioner in the impugned order dated 09.11.2018 is that the goods are not sugar confectionary; hence they do not fall under heading 17.04. There is no discussion as to how the goods fall under heading 1701 has been recorded. In the notice, it is alleged that the essential character is given by sucrose and it is predominant in the product. He has submitted that it cannot be a valid reason to classify the product under heading 1701 as these goods are not sugar simplicitor; the test of essential character under the General Interpretation Rule (GIR-3) can be applied only when the imported goods are mixtures. Here the imported sugar spheres are not mixtures but a 'preparation of sugar', hence Heading 1701 is not applicable. Assailing the impugned finding of the lower authorities in classifying the product following the doctrine of "essential character", he has argued that the learned Commissioner (Appeals) has though 7 held that the imported goods are nothing but "chemically pure sucrose" but failed to appreciate that as per HSN Explanatory Notes, chemically pure sucrose cannot have any other ingredients present in them, unlike in the case of refined sugars.
The case of the Department has always been that the goods is refined sugar.
4.3 The learned Advocate has also submitted that the imported goods are alternatively classifiable under Heading 1704 of the CTA, 1975 which includes sugar confectionary. Referring to the HSN Explanatory Notes of heading 1704, he has submitted that the sugar preparations are collectively called as confectionary, thus, the imported goods are sugar products i.e. confectionary classifiable under heading 17.04. The imported products also known as "non-pareils", a popular confectionary preparation used as a decoration for chocolates, cakes, donuts etc. 4.4 Further, he has submitted that the manufacturer of the product in Germany exports the goods to the Appellant classifying the product under heading 17.04 following a binding Customs Tariff Information Ruling dated 25.2.2015 issued by European Commission, which too has after detailed examination, classified the imported products as Sugar Preparation under Heading 1704. Further, he has submitted that the imported products are most akin to various examples cited in EU Explanatory Notes to Heading 17.04. Further, the HSN Explanatory Notes of Heading 17.04 provides various examples of products that can be covered under Heading 17.04. Referring to clause 5 of the List of examples, the learned Advocate 8 submitted that the term "confectionary" does not apply only to sweets and toffees but other products also. Hence, the imported goods also could rightly be referred as confectionary. He has further submitted that the classification under Heading 1704 is supported by the clarification of German supplier, export documents issued by supplier to other countries and opinion of Institute of Chemical Technology and Certificate from Protein Foods and Nutrition Development Association. 4.5 The learned Advocate has further submitted that the show- cause notice issued on 17.3.2007 relating Appeal No. C/85493/2019 demanding differential duty for goods imported during the period 19.3.2012 to 23.02.2015 is barred by limitation. He has submitted that the grounds stated in the notice for invoking the extended period stating that the goods have been mis-classified with intention to evade the higher rate duty is incorrect and baseless. The appellant imported the goods describing the description of the goods correctly in the respective Bill of Entry filed with the department. On many occasions, the goods have been examined and confirmed the description given in the Bill of Entry by the assessing officers. Further, the appellants were called upon by the Department to justify their claim under Heading 17.02. Such an exercise has been done by the officers under Section 17 of the Customs Act, 1962 as part of the assessment proceeding. Besides, the classification adopted by the appellant has been consistently under Heading 17.02 even when the rate of duty applicable for goods to heading 17.01 was lower/completely exempted. The plea of time bar though emphatically submitted before the adjudicating authority, 9 but is not considered and the demand was confirmed alleging mis-classification with intent to evade payment of duty. Hence, invoking the extended period of limitation under Section 28(4) of CA, 1962 and imposition of penalty is uncalled for and unjustified. In support they referred to the judgment of the Tribunal in Northern Plastic Ltd. Vs. CCE - 1998 (101) ELT 549(SC), Graphite India Ltd. Vs. CC - 2015 (325) ELT 777(Tri- Kolkata), Reliance Communications Infrastructure Ltd. Vs. CC(I) Nhava Sheva - 2015 (320) ELT 306(Tri-Mum).
5. Per contra, the learned AR for the Revenue reiterates the orders passed by the respective Commissioners. He has submitted that the appellant kept on changing their stand before the authorities below and initially claimed that due to oversight they have classified sugar spheres under CTH 17.02 whereas the impugned goods are claimed to be classifiable under CTH 17.04. Before the Commissioner (Appeals) they had claimed classification under Heading 1701 and submitted APEDA registration in support of such a claim. He has submitted that higher rate of duty under CTH 1701 was the main reason behind mis-classification of the sugar spheres by the appellant under CTH 1702 and a subsequent claim under CTH 1704. He has submitted that Chapter Note 1701 read with Explanatory Notes to HSN does not exclude sugar which is added with any other substances to it; therefore, classification by the Department applying General Interpretation Rules 3(b) to determine classification of the impugned goods is correct. 10 5.1 Referring to Chapter 1701, the learned AR has submitted that the cane sugar and beet sugar whether containing added substances or not and chemically pure sucrose in solid form are covered under Heading 1701. Also, the HSN Notes clearly mention that it includes chemically pure sucrose in solid form. Besides, the HSN Notes also prescribes that cane and beet sugar fall under this heading only, when it is in the solid form (including powders); such sugar may contain added flavouring and colouring matter. So it is very clear that all beet and cane sugar of other specific Heading be classified in a residual entry under CTH 17019990, which is double dash entry for single dash "other" of Heading 1701.It is his contention that the Heading 1701 also includes not only raw sugar but also sugar preparations. In support, they have referred to the Board's Circular No. 879/17/08-CX dated 5.9.2008 issued under section 37B of the Central Excise Act, 1944 which is based on the judgment of the Hon'ble Supreme Court in the case of State of Gujrat Vs. Sakarwala Brothers. The said Circular has been extensively considered by the Tribunal in the case of Triveni Udyog Vs. CCE, Jaipur-I - 2017 (358) ELT 950 (Tri-Del.) in classifying the sugar preparations under Heading 1701 against the claim of Heading 1704 as confectionary. He has further submitted that the appellant himself accepted that the impugned goods are not other sugar classifiable under heading 1702 and as per HSN subheading note; cane and beet sugar in solid form can only be classified under 1701. The HSN Notes makes it clear that the sucrose obtained from cane or beet sugar falls under Heading 1701 even it if contains some other substances. In their case, the sugar spheres are found to contain not less than 11 62.5% and more than 91.5% of sucrose. Therefore, the impugned goods are correctly classifiable under CTH 1701. Referring to Chapter sub-heading 1702, the learned AR has submitted that the sucrose is excluded from the scope of CTH 1702 since it is covered under Heading 1701; it cannot find place with the residual category of "other sugars" mentioned in heading 1702.
5.2 Learned AR for the Revenue referring to the meaning of 'sugar confectionary' as per Food and Agriculture Organization of the United Nations (FAO) submitted that it refers to large range of food items, commonly known as sweets, boiled sweets, toffees, marshmallows and fondant etc. Sweets are non- essential commodity, but are consumed by people from most income groups. The variety of product is enormous ranging from cheap individually-wrapped sweets to those presented in boxes with sophisticated packaging. Thus, from the aforesaid meaning, it is abundantly clear that the sugar confectionary is essentially a food product commonly known as sweets in terms of the definition of FAO. Admittedly when the application of neutral pellets is in the pharmaceutical industry where such spheres of predominantly sugar (sucrose), have to be coated or perhaps infused with pharma compounds to turn the neutral spheres into specific pharmaceutical products, then it cannot be anybody's case that the neutral spheres can be considered as food or sweets (even in common parlance) by any stretch of imagination. Further, referring to Unites States International Trade Commission Rules and Harmonized Tariff Scheme, the learned AR has submitted that neutral pellets cannot be 12 classified under Chapter heading 1704 since it pertains to sugar confectionary and the present products are composed of sucrose and starch. Sucrose is specified under Heading 1701 and the product is predominantly composed of sucrose which provides essential character of the product. Applying Rule 3(b) of the General Rules for Interpretation of the First Schedule to the Customs Tariff Act, 1975, it ought to be classified under CTH 1701. Further, import data taken from NIDB, Zuba.com and Cyberex Exim Solution (P) Ltd. also confirms the facts that the sugar spheres (Pharmaceutical grade) is correctly classifiable under CTH 1701.
5.3 Learned AR for the Revenue further submitted that the demand notice for the period 6.11.2015 to 19.12.2015 was issued on 5.4.2016, hence, within time. The demand notice issued for the period 2012 to 2015 invoking extended period is justified in the sense that the appellant had suppressed the correct classification of the imported goods even though they are fully aware that the same could not be classified under CTH 1702 of CTA, 1975. They could not able to address anomaly of mis- classification of the goods under CTH 1702 through cogent argument to justify that the declared classification was inadvertent error. They were fully aware of the fact that the goods were classifiable under CTH 17019990 with BCD @ 60% but classified the same under CTH1702 only with an intention to evade payment of duty. In support of his submission the Ld. AR for the revenue referred to the judgement of this tribunal in the case of M/s Xsis Vs. C.S.T & S.T, Ahmedabad - 2019 (50)TMI590 13 and Bombay High Court in the case of Mckinsey & Company Inc. Vs. CCE - 2019 (20) GSTL 198 (Bom.).
6. Heard both sides and perused the records.
7. The issue involved in the present appeals centres mainly around classification of "Non-pareil seeds 40-60 Mesh Sugar sphere (pharmaceutical grade) which are also described as "Sugar Spheres" or "Neutral Pellets" or "Non-pareil seeds".
8. In Appeal No. C/89829/2018, the classification of the goods against 7 Bills of Entry was disputed by the Department; out of which in 2 Bills of Entry the product declared was 'S-124- 1-Sucrose (pharmaceutical grade)', these are not contested by the appellant before the Tribunal; whereas in Appeal No. C/85493/2019 the goods imported against 20 Bills of Entry involve the goods "Neutral Pellets" or "Non-pareil seeds 40-60 Mesh Sugar sphere (pharmaceutical grade).
9. The contention of the Revenue is that the imported sugar spheres or Non-pareil seeds 40-60 Mesh Sugar sphere (pharmaceutical grade) are classifiable under CTH 17019990 whereas the appellant while filing the Bill of Entry declared classification under CTH 17029090, but later during the appellate/adjudication proceedings claimed its classification alternatively under 17049090 of Customs Tariff Act, 1975. The Ld. Advocate for the Appellant also has not pressed the classification under Heading 17.02. of CTA,1975. Therefore, the competing entries 1701 and 1704 are reproduced as below: - 14
Tariff Item Description of goods Unit Rate of duty (1) (2) (3) (4) 1701 Cane or beet sugar and chemically pure sucrose, in solid form
- Raw sugar not containing added flavouring or colouring matter 1701 12 00 -- Beet sugar kg. 100% 1701 13 -- Cane sugar speicified in sub-heading Note kg. 100% 2 to this Chapter 1701 13 10 --- Cane jaggery kg. 100% 1701 13 20 --- Khandsari sugar kg. 100% 1701 13 90 --- Other kg. 100% 1701 14 -- Other can sugar 1701 14 10 --- Cane jaggery kg. 100% 1701 14 20 --- Khandsari sugar kg. 100% 1701 14 90 --- Other kg. 100%
- Other 1701 91 00 -- Refined sugar containing added flavouring kg. 100% or colouring matter 1701 99 -- Other 1701 99 10 --- Sugar cubes kg. 100% 1701 99 90 --- Other kg. 100% 1704 Sugar Confectionery (including white Chocolate), not containing Cocoa 1704 10 00 - Chewing gum, whether or not sugar coated kg. 45% 1704 90 - Other 1704 90 10 --- Jelly confectionary kg. 30% 1704 90 20 --- Boiled sweets, whether or not filled kg. 30% 1704 90 30 --- Toffees, caramels and similar sweets kg. 30% 1704 90 90 --- Other kg. 30%
10. The claim of the appellant is that the heading 1701 covers only chemically pure sugars in solid form and does not include sugar preparation. Further, it is their contention that the classification of raw sugar containing added flavouring or colouring matter are only considered under the said heading derived from cane or beet sugar. It is vehemently argued that the said Heading cannot include sugar added with other materials like starch and water since addition of other material is restricted only to flavouring or colouring matter. The Revenue's contention, on the other hand, is that the imported products undoubtedly contain 'chemically pure sucrose' in the range of 61% to 92%. Content of starch added to it is a binding agent; water added to chemical pure sucrose cannot in any manner change the character of sucrose present in the composition. It is also the Revenue's argument that the heading 1701 cannot be 15 confined to raw sugar or chemically pure sucrose only with flavouring or colouring matter, but also will cover in its scope, sugar preparation in solid form. In support, they have referred to the Board's Circular No. 879/17/08-CX dated 5.9.2008 issued under section 37B of the Central Excise Act, 1944. It is their contention that the said Circular was issued to bring out uniformity in the classification of various sugar preparation, viz. Bura, Batasha, Misri and Makhana prepared from duty paid sugar which claimed to be classifiable as confectionary under heading 1704 instead of 1701. The said Circular has been considered by this Tribunal in the case of Triveni Udyog Vs. CCE, Jaipur-I - 2017 (358) ELT 950 (Tri-Del.) Referring extensively to the said Circular, this Tribunal observed that these products are classifiable under central excise Tariff sub heading 17019900 and not as confectionary under chapter heading 1704.
11. We find that in confirming the classification under Chapter heading 1701, the learned Commissioner (Appeals) in the impugned order held that chemically pure sucrose as mentioned under the Tariff Heading cannot be construed that it should consist of chemically pure sucrose only; but the chemically pure sucrose could also be in mixture with other materials like starch and water as in the present case. It is his reasoning that what is to be seen in classifying the mixture is the essential character of the product i.e. among all the elements the one that provides the essential character to the said product. He has observed that in the present case, it is sucrose, which is present in the range of 80 to 90% provides the essential character to the imported product Non-pareil seeds 40-60 Mesh Sugar sphere 16 (pharmaceutical grade). In arriving at the said conclusion the Ld. Commissioner (Appeals) referred to rule 3(b) of General Rules of Interpretation, applicable to classification of products in mixture.
12. We find merit in the observation of the learned Commissioner (Appeals). The argument of the appellant that the product chemically pure sucrose specified under chapter heading 1701 if mixed with any other ingredients except with flavouring or colouring agent, it would fall outside the scope of the said heading. We doubt the correctness of the said argument in view of the Circular issued by the Board and the judgment of this Tribunal in Triveni Udyog's case laying emphasis on the fact that it is not the raw sugar alone but preparation in different forms merit classification under the heading 17.01 and not under 17.04 of CTA, 1975.The principle laid down in the said judgement may be in the context of different preparations of sugar; however same is applicable to the facts of the present case. In the present case, it is the classification of chemically pure sucrose mixed with starch and water. It is the mixture of three items. The contention of the appellant that chemically pure sucrose mixed with other items would fall outside the scope of the said heading as it is not designed to bring within its scope other than pure sugar except when added with colouring or flavouring agent therefore devoid of merit.
13. Also, the Ld. Commissioner (Appeals) in determining the classification of the chemically pure sucrose mixed with starch and water, correctly applied Rule 3(b) of General Rules of Interpretation. He has observed that the classification of 17 principal constituent in the mixture which provides essential character to the product be adopted for the mixture. In the present case chemically pure sucrose is the main constituent and provides the essential character to the mixture as neither the starch which acts as binder nor water which is used in the process can be called as the essential item to be used in the pharmaceutical industry, the purpose for which the mixture is manufactured.
14. Further, we find that in eliminating the claim of alternative classification proposed by the appellant under sub-heading 1704, the learned Commissioner (Appeal No. 85493/2019) in the adjudication order referred to the meaning and scope of Sugar Confectionary provided by FAO. He has observed that the heading 17.04 covers sugar confectionary which is essentially a food product in terms of the definition given by FAO; whereas the Neutral Pellets/sugar spheres are used in the Pharmaceutical Industry where such spheres consist of predominantly sugar (sucrose) and have to be coated or perhaps infused with pharma compounds to turn the neutral spheres into specific pharmaceutical products, therefore, it cannot be said that the neutral spheres are to be considered as food or sweets used directly by the consumers. The contention of the appellant that the size of neutral spheres meant for confectionary being similar to the product in question, therefore, its classification cannot be ruled out under Chapter 1704 as confectionary, in our view cannot be acceptable. Further, they have laid emphasis on the fact that the overseas manufacturers export the said product in two other European countries classifying it as confectionary 18 under Chapter heading 1704. This argument also would not be relevant to determine the classification under Customs Tariff Act, 1975 as the Revenue also placed reliance on the classification of such products adopted in USA, where similar products are classified under Heading 1701.
15. We find that the HSN Explanatory notes under sub-heading 1704 makes it further clear that the products to fall under this heading are generally used for immediate consumption. It reads as:
"this heading covers most of the sugar preparations which are marketed in a solid or semi solid form generally suitable for immediate consumption and collectively referred to as sweet meet confectionary or candies".
16. The products enumerated in the said Explanatory Notes clearly indicates that confectionary are mostly for immediate consumption and sometimes added with therapeutic value classified under Chapter 30 as pharmaceutical products. Also, applying the common parlance test, it cannot be claimed that the imported sugar spheres/neutral pellets are used by a common man like the use of a confectionary even if the same manufacturer manufactures both these items. The use of the imported pellets is in pharmaceutical industry not as confectionary by the common man. Revenue has also produced data relating to contemporaneous imports of other importers who classified similar product under CTH 17019990. Therefore, it can safely be concluded applying the aforesaid tests that the imported product in question common in both the Appeals fall under CTH 17019990. Consequently, demand of duty and 19 interest in Appeal No. 89829/2018 confirmed for the normal period is upheld. However, we are of the view that since the issue relates to classification of goods between two competing Headings being a question of interpretation of law, hence, imposition of penalty is uncalled for and unwarranted, accordingly set aside.
17. The next question relates to the claim of the appellant that the demand in the case of Appeal No. C/85493/2019 is barred by limitation. The appellant during the period March, 2012 to February, 2015, admittedly from time to time filed Bills of Entry declaring their product under CTH 17029090. They have submitted that the product in question had been physically examined by the department; also the assessing officer on few occasions called for the literature on the composition, process of manufacture etc. to complete the assessment under the declared heading. It is their contention that at no point of time the description of the goods was mis- stated or mis-declared by the appellant or any facts relating to the said product suppressed from the department. They classified the product according to their best understanding and Department was well aware of the said classification, and assessments were completed accordingly. Hence, on a change of view by the department, allegation of mis-declaration or suppression of facts in classifying the product at the times of its import under CTH 17029090 is incorrect and cannot be sustained. The Revenue, on the other hand, argued that in the era of self-assessment, it is burden of the assessee to classify and discharge duty properly, hence, failure of classifying the product under correct sub-heading amounts to mis- 20 declaration. Hence, invoking the extended period of limitation is justified.
18. We do not see substance in the argument of the Revenue inasmuch as the appellant have been continuously declaring classification of the product under Heading 1702 after providing full and description of the goods in their Bills of Entry; duly filed all literatures on process of manufacture, its usage etc. as and when called for by the department during assessment proceedings. In such circumstance, allegation of suppression of facts or mis-declaration solely on the basis that the correct classification which according to the Department would fall under different Tariff Heading i.e. 1701 attracting higher rate of duty during the period under dispute cannot be sustained. This is the principle of law laid down by the Tribunal and courts in a series of cases. Consequently, the demand confirmed in the impugned Order invoking extended period relating to Appeal No. C/85493/2019 is set aside on the ground of limitation.
19. Appeals are disposed of in the above terms.
(Pronounced in court on 25.09.2020) (Dr. D.M. Misra) Member (Judicial) (P. Anjani Kumar) Member (Technical) Sinha