Custom, Excise & Service Tax Tribunal
Raghav Industrial Products vs New Delhi(Icd Tkd)(Import) on 3 May, 2019
CUSTOMS, EXCISE & SERVICE TAX APPLELLATE TRIBUNAL,
NEW DELHI
PRINCIPAL BENCH COURT NO. IV
Customs Appeal No. 51889 / 2018
(Arising out of Order-in-Original No. 08-2018-RNS-Commr-IMP-ICD-TKD dated
20.03.2018 passed by the Principal Commissioner of Customs (Import), ICD,
TKD, New Delhi)
M/s. Raghav Industrial Products. Appellant
104, Pearl Omaxe, Tower No. 2, Netaji Subhash Palace
Ringh Road, Pitampura, Delhi-110034.
VERSUS
Principal Commissioner of Customs Respondent
(Import) ICD, TKD, New Delhi WITH Customs Appeal No. 52240 / 2018 Shri Arvind Kumar Sharma Appellant VERSUS Principal Commissioner of Customs Respondent (Import) ICD, TKD, New Delhi WITH Customs Appeal No. 52241 / 2018 Dilip Kumar Thakur Appellant VERSUS Principal Commissioner of Customs Respondent (Import) ICD, TKD, New Delhi APPEARNANCE:
Shri V V Gautam, Advocate for the Appellant Shri Sunil Kumar, Authorized Representative for the Respondent C/51889, 52240-52241/2018 CORAM : HON'BLE MR. C L MAHAR, MEMBER (TECHNICAL) HON'BLE MS. RACHNA GUPTA, MEMBER(JUDICIAL) FINAL ORDER NO. 50626 /2019 DATE OF HEARING : 10 /12/2018 DATE OF DECISION : _________ PER C L MAHAR :
The brief facts of the matter are that the appellant are engaged in import of Alkyl Ketene Dimer (AKD wax) since 2005 claiming the classification of product under the Customs Tariff Heading 38099200. The Department has undertaken post clearance audit of the record of the appellant of the Bills of Entry for the period May, 2011 to December, 2015. It has been the contention of the Department that the Bill of Entry for the period 2011-2015 were assessed by the importer as per the provisions of section 17 of the Customs Act, 1962 on self-assessment basis and the imported product namely AKD wax was classified by the importer the under CTH 38099200. The Department entertained a view that the correct classification of the product imported by the appellant is under Customs Tariff Heading 34049090, it was also felt by them that the appellant have mis-classified the imported product with a malafide intention to evade Customs duty.
2. The department has been of the view that heading 3809 provides as follows: Finishing agents, dye carriers to accelerate the dyeing or fixing of dyestuffs and other products and preparations (for example, dressings and mordants), of a kind used in the textile, paper, leather or like industries, not elsewhere specified or included.
Thus it is apparent that heading 3809 provides only for merchandise "not elsewhere specified or included" and is a generic heading.
2C/51889, 52240-52241/2018 On the other hand, heading 3404 provides as follows:
artificial waxes and prepared waxes. The item under import is Alkyl Ketene Dimer Wax and wax is classifiable under CTH 34049090 hence it appears that the importer has classified the imported goods under Chapter Heading 3809 with an intention to evade customs duty.
3. A Show cause notice No. VIII/ICD/TKD/6AG /519/2015 dated 29.11.2016 was issued to the importer appellant wherein Customs duty amounting to Rs. 1,46,64,845/- has been demanded under section 28 of the Customs Act by invoking the extended time proviso. The penal provision under section 112 and 114A have also been invoked. The matter got adjudicated vide the impugned order in original dated 29.3.2018 wherein the charges as invoked in the above mentioned Show cause notice have been confirmed by the adjudicating authority. The appellant are before us against the above mentioned Order-in-Original.
4. Learned Advocate appearing for the appellant have primarily assailed the finding of the Order-in-Original on following counts:-
(i) That the customs tariff heading 3809 specifically covers the sizing agents used in paper processing industry and the import item, namely AKD wax are the derivative of fatty acids which are used as sizing agents for surface treatment of paper. It has been contended by the learned advocate that in accordance with the Rule 1, Rule 4 and Rule 6 of the General Rules of Interpretation for first schedule of the imported tariff, the most appropriate sub-heading for classifying the AKD is CTH 38099200 as it includes functioning of agents and a kind used in paper industry and not elsewhere specified or included. Since the AKD is exclusively used as a sizing agent for manufacture of paper in the paper industry and therefore, the correct classification for the imported product is 3809. The learned advocate has produced certain literature of US Patent Technical Department in support of his claim. It has also been mentioned that the appellant have got the imported product namely, AKD chemically tested and 3 C/51889, 52240-52241/2018 analysed from a recognised chemical laboratory namely, Shriram Institute for Industrial Research, Delhi and Institute of Chemical Technology, Mumbai and both the technical reports has confirmed that the imported product are not artificial wax and therefore, same cannot be classified under Chapter 34 of the Customs Tariff Act and as per the end use of the product, the right classification for the product is under Chapter sub-
heading 3809.
(ii) Learned Advocate has assailed the demand of Customs duty under section 28(4) of the Customs by invoking the extended time proviso arguing that there is no wilful mis-declaration / mis-classification on the part of the appellant. It is argued that this is merely a case of interpretation and the classification of the product AKD. The classification of the product namely, AKD declared by the appellant under Chapter sub heading 38099022 is based on chemical analysis report by Shriram Institute of Industrial Research and Institute of Chemical Research, Mumbai and Institute of Chemical Technology. As both the reports have confirmed that the impugned goods are nothing but paper sizing agents and not artificial wax.
(iii) It has also been contended by the learned advocate that Department has tried to change the classification of the impugned product without having any concrete evidence or chemical test report for changing the classification to Chapter sub-heading 34049090 . It has further been added that extended time period cannot be invoked in their case as the department was aware of the matter since 2012 itself, knowing it fully well that the appellant have been claiming the classification of this product i.e. AKD under CTH 3809 9200. It has been submitted that a Bill of entry No. 7353695 dated 10.7.2012 was filed by the appellant wherein the Department has disputed the classification of AKD under CTH 38099220 and the appellant was asked to change the classification from Chapter heading 3809 to 3404. It has further been 4 C/51889, 52240-52241/2018 mentioned that the appellant have paid the differential duty of Rs. 1,29,010/- as Additional Customs duty, as became due on changing the classification from CTH 3809 to 3404 . The appellant mentioned that they were stopped from preferring an appeal against reclassification of their product in 2012 as no reassessment order or any speaking order was passed or provided to them by the Department as required under Section 17 of the Customs Act, 1962. It has further been added that the Revenue cannot rely on reassessment made in the past as a ground to allege wilful mis-statement or mis-representation rather it goes in favour of the appellant that the Department was fully aware of the nature of the product imported by the appellant. It has further been argued that a Show cause notice for the same imports demanding differential Customs duty dated 18.12.2015 had already been issued to the appellant covering the Bill of Entries from 18.12.2014 to 16.06.2015. It has therefore, been submitted by the learned advocate that since the Department was aware of the matter since 2012 and they have already issued a Show cause notice in the month of November, 2015, the elements of invoking the extended time proviso under Section 28 of the Customs Act, 1962 are not present in the instant case. It has, therefore, demanded that the show cause notice is barred by period of limitation and thus legally not sustainable. Learned Advocate has also contended that though the Bills of Entry are self assessed, there have been order of examination before the clearance of import consignments and had there been any doubt in the mind of Department, they could have drawn sample and got it tested and the classification could have been decided on the basis of such test reports.
(iv) Learned Advocate has cited several decisions in support of his arguments that in the given facts and circumstances of the case, the extended time proviso under section 28 (4) is not invokable in their case. The case relied upon by the learned advocate are as follows:
5C/51889, 52240-52241/2018
1. Cosmic Dye Chemcial vs. Collector of Central Excise, Bombay [1995 (75) ELT 721 (SC)];
2. Anand Nishikawa Co. Ltd. Vs. CCE, Meerut [2005 (188) ELT 149 (SC)];
3. CCE, Aurangabad vs. Bajaj Auto Ltd.
[2010 (260) ELT 17 (SC)];
4. Pushpam Pharmaceuticals Co. Vs. CCE, Bombay [1995 (78) ELT 401(SC)];
5. Orissa Bridge & Construction Corpn. Ltd. Vs. CCE, Bhubaneswar [2011 (264) ELT 14 (SC)];
6. Aban Loyd Chiles Offshore Ltd. Vs CC, Maharashtra 2006 (200) ELT 370 (SC)];
7. CCE, Indore vs. Synocom Formulation (I) Ltd. 2004 (172) ELT 77 (Tri-Del)]; and
8. Gammon India Ltd. Vs CCE, Goa [2002 (146) ELT 173 (Tri-Mumbai)].
(v) It has further been argued that the classification being matter of interpretation and the appellant having valid ground to classify their product under Chapter 38 as the end use of the product was for the paper industry, they were entitled to adopt the classification which was more appropriate as per the test reports given by Technical Institutes as well as the supplier of the product. The Department merely trying to classify the import product under a different Chapter sub heading does not mean that the appellant have mis-declared their product at the time of import. Since the classicisation is a matter of interpretation and all the facts have been before the Department since very beginning, the extended time proviso for demanding duty after re-assessment of the product under a different Chapter heading is not legally sustainable, the learned advocate has cited certain decisions in support 6 C/51889, 52240-52241/2018 of his argument, namely, Commissioner of Customs (Import), Nhava Sheva, vs. Amrit Corporation Ltd. [2016 (333) ELT 340 (Tri- Mum) and S Rajiv and Co. Vs CC Mumbai [ 2014 (303) ELT 412 (Tri-Mum)].
(vi) Learned advocate has also contested the imposition of penalty under Section 112 A and Section 114 A in the given circumstances as unwarranted and legally not sustainable as the appellants have not resorted to any mis-declaration, fraud, suppression etc. with an intent to evade payment of duty.
5.. We have also heard the learned DR who has supported the findings given in the Order-in-Original.
6. Having heard both the sides and after perusal of the record of the appeal in detail, we feel that before deciding the matter of classification of the product on merits it will be more appropriate to examine whether in the given facts and circumstances of this case, the extended time proviso under section 28(4) of the Customs, Act, 1962 has rightly been invoked or not. We note that the demand in the Order-in-Original for the differential amount of Customs duty has been confirmed for the period covering May, 2011 to December, 2015, the classification of the import product namely, the AKD wax was first disputed by the Department in 2012 when the Bill of entry No. 73353695 dated 10.07.2012 was re-assessed by the concerned officer under CTH 34049090 and the differential duty was recovered from the appellant. The appellant have paid the differential amount of duty and cleared his consignment. It is a matter of record that the importer has been importing this product namely, AKD since 2005 and in 2012 when the Bill of Entry was re- assessed, we find that the department took no action for recovering the differential amount of duty by re-classifying the product from Chapter 3809 to 3404 for the past period. It is also found from the record of the appeal that between May, 2011 to December, 2015 all the Bill of Entries were not cleared under RMS system (Risk Management System) rather it is a matter of record that 7 C/51889, 52240-52241/2018 some of the Bill of Entries were assessed by the Department which clearly proves that the classification of the product under Chapter 3809 9200 has been accepted by the Department.
7. We also feel that, had the department had any doubt about the correct classification of the product as claimed by the importer and if they wanted to change the same, they should have drawn the required samples and got the same tested from recognised laboratories to get ascertain the true nature of import product and its appropriate classification and so could have changed the classification from CTH 3809 to 3404 if they possessed any concrete evidence to support it. However, we find that the Department has not taken any corrective action during the period from May, 2011 to 18 December, 2015. We further find that Show cause notice cum demand notice has also been issued to the appellant vide F No. VIII/ICD/TKD/6AG/519/2015 dated 18 December, 2015 wherein differential amount of duty has been demanded on the Bills of Entry covering the period from 18.12.2014 to 16.06.2015, wherein the differential amount of Customs duty amounting to Rs16,14,391/- has also been demanded for wrong classification of the product under Chapter 3809.
8. From the above facts, it is very clear that all the facts regarding importation, description of the product and its classification were in the knowledge of the Department. The Audit which was conducted after the clearance of the import consignment also raised this issue of classification based on the facts which were there before the Department and therefore, in our view, we find that the charges of mis-declaration, fraud, misrepresentation etc. with an intent to evade payment of duty are not present in the present case. We find that the Hon'ble Supreme Court in the case of Continental Foundation Joint Venture vs CCE, Chandigarh I reported as [2007 (216) ELT 177 (SC)] has held that when the facts are known to both the parties, the omission by one party that might have been done, will not amount to suppression.
8C/51889, 52240-52241/2018
9. Further the Hon'ble Supreme Court in the case of Nizam Sugar Factory vs. Collector of Central Excise, AP [2006 (197) ELT 465 (SC)] has held that as all the relevant facts are in knowledge of Department, when the first show cause notice was issued, the issue of subsequent show cause notice on the same facts could not be taken for invoking the charges of suppression of facts etc., for invoking the extended time proviso, we find this matter was already in the knowledge of the department since year 2012 itself. Thereafter another show cause notice for normal period have been issued by them on 18 December, 2015 and thereafter issuing the impugned show cause notice again on 29.11.2016 by invoking the extended time proviso in our opinion is not legally sustainable. In view of the above, we hold that the demand in the show cause notice is barred by limitation and therefore, same is legally not sustainable. Hence, the order-in-original confirming the charges of the show cause notice is barred by time and therefore, we set aside the same and appeal is allowed on the point that extended time proviso under Section 28 of Customs Act, 1962 is not invokable in this case.
10. As a result, the appeal is allowed.
(order pronounced in the Court on 03/05/2019 ) ( Rachna Gupta ) ( C L Mahar ) Member (Judicial) Member (Technical) ss 9