2019 (5) TMI 485 - AT - Customs

Tribunal allows appeal, overturns Commissioner's order due to limitation. Extended period not applicable, penalties unsustainable.

The Tribunal allowed the appeal, setting aside the Commissioner's order on the ground of limitation. The extended period of limitation under the proviso ... Extended period of limitation - import of goods - SCN for demand of duty in respect of imports made vide bill of entries filed during the period 15.03.2000 to 18.10.2001 was issued on 11.03.2005 - HELD THAT:- The appellants have made the declaration on the Bill of Entries as per the description given in the invoices of the foreign supplier. Since the description as has been given by the foreign supplier declare on the Bill of Entries, the appellants cannot be held guilty for mis declaring the same. The classification declared by the appellants on the Bill Of Entry is as per their understanding and assessment, it is for the assessing officer to determine the correct classification and duty payable. It is not the case of the department that appellants have made any declaration which was contrary to the documents available with the importer at the time of filing of Bill of Entry. No evidence has been produced by the department to the effect that catalogue of the “DANLOAD 6000” was called for by the assessing officer and not produced by the appellants. The entire case of the revenue is based on the few statements recorded by the Custom officers. The statement of Mr Shrish were recorded on 20.02.2002, 11.06.2002, 25.08.2004 and 03.02.2005, Shri Fifadra on 03.04.2002 and of Shri Atul on 19.11.2003. Since all the facts including the catalogues relied upon in show cause notice were made available to revenue as early as in 2002, the delay in issuance of show cause notice could not be justified. Correction of clerical errors, etc. - Section 154 of Customs Act, 1962 - HELD THAT:- From plain reading of the Section it is evident that the Section is available for correction of arithmetical mistakes or clerical errors in the “decisions or orders” and not the Show Cause Notice. By applying the said Section for correction of the error in the Show Cause Notice, has gone beyond the scope of section. Appeal allowed - decided in favor of appellant. Issues Involved:1. Classification of imported goods.2. Demand of differential duty.3. Invocation of extended period of limitation.4. Imposition of penalties under Section 112(a) and Section 114A of the Customs Act, 1962.Issue-wise Detailed Analysis:1. Classification of Imported Goods:The appellants imported 'Danload 6000 Electronic Preset Flow Metering Equipment and Its Parts' and classified them under CTH 9026.80, 9026.90, and 8524.90. The Commissioner reclassified these under CTH 9032, attracting higher customs duty. The appellants argued that their classification was correct as per the HSN Explanatory Note for CTH 9026 and Chapter Note 6 to Chapter 85. The Tribunal did not make a specific ruling on the classification issue due to the decision on the limitation ground.2. Demand of Differential Duty:The Commissioner confirmed a duty demand of Rs. 49,49,505/- under Section 28(2) of the Customs Act, 1962, which was higher than the Rs. 33,55,461/- demanded in the show cause notice. The appellants contested this on the grounds that the Commissioner’s reliance on Section 154 of the Customs Act, 1962, to justify the higher demand was misplaced. The Tribunal agreed with the appellants, stating that Section 154 pertains to correcting clerical or arithmetical errors in decisions or orders, not in show cause notices.3. Invocation of Extended Period of Limitation:The show cause notice was issued on 11.03.2005 for imports made between 15.03.2000 and 18.10.2001. The appellants argued that the demand was barred by limitation as they had not suppressed any facts. The Commissioner invoked the extended period of limitation under the proviso to Section 28(1) of the Customs Act, 1962, alleging willful misstatement and suppression of facts. The Tribunal found that the Commissioner’s findings were contrary to the facts and could not be sustained. It was noted that the appellants had declared the goods as per the supplier’s invoices and there was no evidence of deliberate misdeclaration. The Tribunal cited several Supreme Court decisions, including Magus Metal P Ltd and Cemphar Drugs and Liniments, to support its view that the extended period of limitation was not invokable.4. Imposition of Penalties under Section 112(a) and Section 114A:The Commissioner imposed penalties of Rs. 49,49,505/- under Section 114A and Rs. 30,00,000/- under Section 112(a) of the Customs Act, 1962. The appellants argued that penalties under both sections could not be imposed simultaneously as per the fifth proviso to Section 114A. The Tribunal did not make a specific ruling on this issue due to the decision on the limitation ground.Conclusion:The Tribunal allowed the appeal, setting aside the Commissioner’s order on the ground of limitation. The extended period of limitation under the proviso to Section 28(1) was found to be inapplicable, rendering the demand for differential duty and the imposition of penalties unsustainable. The Tribunal did not make any observations on the issue of classification due to the decision on the limitation ground.