2016 (5) TMI 1113 - AT - Customs

Imported goods correctly classified as 'Pharmaceutical Reference Standards' not CRM. Appellants exempt from duty.

M/s. LGC Promochem India Pvt. Ltd., BR Suryanarayana Rao, New India Shipping Services And SS Prasad Partner Versus Commissioner of Customs and Service Tax Bangalore

M/s. LGC Promochem India Pvt. Ltd., BR Suryanarayana Rao, New India Shipping Services And SS Prasad Partner Versus Commissioner of Customs and Service Tax ... Issues Involved:1. Classification of imported goods.2. Eligibility for exemption under Notifications No. 21/2002-Cus. and No. 12/2012-Cus.3. Compliance with Chapter Notes 2(A) and 2(B) of Chapter 38.4. Validity of extended period for demand of differential duty.5. Imposition of penalties on the appellants.Issue-wise Detailed Analysis:1. Classification of Imported Goods:The main appellant classified the imported chemicals as 'Pharmaceutical Reference Standards' under Customs Tariff Heading No. 3822 00 90. The Department argued that the goods were 'Certified Reference Materials' (CRM) and should be classified based on their chemical composition under respective Chapter Headings. The adjudicating authority rejected the appellant's classification and reclassified the goods under respective chapters based on chemical composition.2. Eligibility for Exemption under Notifications No. 21/2002-Cus. and No. 12/2012-Cus.:The appellant claimed the benefit of the said notifications, which provide reduced duty rates for 'Pharmaceutical Reference Standards.' The Department contended that the goods did not qualify for the exemption as they were CRM and did not meet the conditions stipulated in Chapter Notes 2(A) and 2(B) of Chapter 38. The adjudicating authority denied the benefit of the notifications and confirmed the demand of differential duty.3. Compliance with Chapter Notes 2(A) and 2(B) of Chapter 38:The adjudicating authority held that the imported goods did not comply with Chapter Notes 2(A) and 2(B) of Chapter 38, which define CRM and their classification precedence. The appellant argued that the goods were not claimed as CRM and thus did not need to comply with these Chapter Notes. The Tribunal found that the goods imported were indeed 'Pharmaceutical Reference Standards' and not CRM, and therefore, the Chapter Notes 2(A) and 2(B) were not applicable.4. Validity of Extended Period for Demand of Differential Duty:The adjudicating authority invoked the extended period for demanding differential duty, alleging intentional mis-declaration by the appellant. The Tribunal found that the appellant had declared the goods as 'Pharmaceutical Reference Standards' and provided all necessary documents, which were accepted by the Customs authorities during clearance. The Tribunal held that the extended period was not applicable as there was no suppression of facts or mis-declaration by the appellant.5. Imposition of Penalties on the Appellants:The adjudicating authority imposed penalties on the main appellant and other appellants under various sections of the Customs Act, 1962. The Tribunal, having set aside the demand for duty liability on merits and limitation, also set aside the penalties imposed on the appellants.Conclusion:The Tribunal concluded that the imported goods were 'Pharmaceutical Reference Standards' and not CRM, making them eligible for the benefit of the exemption notifications. The demand for differential duty was set aside, and the extended period for demand was held to be invalid. Consequently, the penalties imposed on the appellants were also set aside. All appeals were allowed with consequential relief.