2014 (12) TMI 689 - HC - Customs

Court rules in favor of cement company in coal classification dispute, upholding self-declaration rights

SHREE CEMENT LIMITED Versus UNION OF INDIA

The court ruled in favor of the petitioner, a cement company, in a case concerning the classification of imported coal as steam coal or bituminous coal. ... Demand of differential duty on subsequent clearance of goods where the provisional assessment in earlier case is pending for finalization - Classification of goods - Classification of coal - Bituminous coal or Steam coal - wrong declaration filed - Held that:- respondents shall not demand duty without final adjudication if the past consignments have been cleared on provisional clearances and shall not raise demand without adjudication when the clearances have been made, otherwise than provisional basis and shall not detain the future consignments merely on the basis of past demands which have yet not been crystalised in law. It is clarified that it would be open for the Department to impose suitable conditions as may be permissible under the law, if the petitioner requests for provisional release. - Petition disposed of. Issues:1. Classification of imported coal as steam coal or bituminous coal2. Demand for differential duty by the Department without finalizing assessments3. Alleged coercion by the Department for customs duty payment without due process4. Clarification on the nature of communication as a demand noticeClassification of Imported Coal:The petitioner, a cement company, imports coal for its manufacturing plant, claiming it to be steam coal. However, a dispute arises with the Department over whether the imported coal should be classified as steam coal or bituminous coal. The Department insists on the petitioner filing a declaration classifying the coal as bituminous coal, which the petitioner contests, stating that the Department cannot compel a different declaration if the coal is indeed steam coal. The Department's stand is that the imported coal is bituminous coal, but they fail to cite any provision allowing them to mandate a change in the petitioner's self-declaration.Demand for Differential Duty:The petitioner raises concerns about the Department's actions of raising substantial duty demands without following due process and withholding clearance of imported coal consignments. The respondents clarify that no duty will be collected without a final adjudication order, and no coercion will be exerted for duty payment without due process. A communication requesting duty payment is explained not to be a demand notice but a request for payment based on the Department's calculations. The court directs that the Department process Bills of Entry with the petitioner's declaration without insisting on changes and clarifies that show cause notices may still be issued for proper classification.Alleged Coercion and Due Process:The court notes the respondents' assurances that duty demands will not be made without final adjudication for past consignments cleared provisionally and that future consignments will not be detained based on unresolved past demands. The Department is allowed to impose conditions for provisional release upon the petitioner's request. The court emphasizes that any dispute regarding coal classification should consider revenue neutrality after a certain date, and the Department is expected to consider this in future clearance requests.Nature of Communication and Disposition:The court clarifies that a specific communication was not a demand notice and proceeds to dispose of the petition. It directs the Department to process Bills of Entry without insisting on declaration changes by the petitioner and ensures that duty demands will only be raised after proper adjudication. The petition is disposed of based on the above terms, addressing the grievances raised by the petitioner regarding coal classification, duty demands, and due process concerns.