Clear Float Glass classified under CTH 70051090, eligible for customs exemption under Notification 46/2011-Cus, demands set aside

CESTAT Chennai held that Clear Float Glass (CFG) is classifiable under CTH 70051090, not CTH 70052990 as reclassified by the Department. Following precedent from Bagrecha Enterprises Ltd case, the Tribunal found CFG eligible for exemption under Notification 46/2011-Cus. The extended period of limitation was deemed non-invokable as assessments were finalized for over 5 years through provisional assessment procedures without suppression or misdeclaration by the appellant. Consequently, demands for differential customs duties, confiscation orders, and penalties under Sections 111(m), 114A, and 112(a) were set aside. Appeal allowed.

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Issues Involved:
1. Classification of imported Clear Float Glass (CFG).
2. Eligibility for Free Trade Agreement (FTA) benefit under Notification No. 46/2011-Cus.
3. Invocation of extended period for demand and penalties.

Detailed Analysis:

Issue 1: Classification of Imported Clear Float Glass (CFG)
The primary dispute was whether the imported CFG should be classified under CTH 70051090 (as claimed by the appellant) or CTH 70052990 (as reclassified by the Department). The appellant argued that the CFG is non-wired, non-tinted, and has a thin tin absorbent layer on one side, meeting the criteria for CTH 70051090. The Department, however, based on an audit objection, reclassified the CFG under CTH 70052990, denying the exemption benefit.

The Tribunal examined the relevant tariff headings and Chapter Note 2(c) to Chapter 70, which defines an "absorbent, reflecting or non-reflecting layer" as a microscopically thin coating of metal or a chemical compound. The Tribunal found that the CFG, having a tin layer, meets this definition. The Tribunal also noted that the Department's own test reports confirmed the presence of the tin layer, which is absorbent and non-reflective.

The Tribunal referred to previous rulings, including those by the Kolkata and Chennai Tribunals, which held that CFG with a tin layer is classifiable under CTH 70051090. The Tribunal concluded that the classification adopted by the appellant under CTH 70051090 is correct and the Department's reclassification under CTH 70052990 is unsustainable.

Issue 2: Eligibility for FTA Benefit under Notification No. 46/2011-Cus
The appellant claimed the benefit of the FTA under Notification No. 46/2011-Cus by providing the required Certificate of Origin (COO). The Department denied this benefit based on the reclassification of the CFG.

The Tribunal held that since the CFG is correctly classifiable under CTH 70051090, the appellant is entitled to the FTA benefit under Sl. No. 934 of Notification No. 46/2011-Cus, subject to the production of a valid COO. The Tribunal emphasized that the benefit cannot be denied solely based on the classification mentioned in the COO if the goods meet the criteria for the exemption.

Issue 3: Invocation of Extended Period for Demand and Penalties
The Department invoked the extended period under Section 28(4) of the Customs Act, 1962, alleging willful misclassification and intention to evade duty. The appellant contended that the classification was bona fide and based on available test reports and legal provisions.

The Tribunal found that the appellant had been consistently classifying CFG under CTH 70051090, and the Department had accepted this classification in previous assessments. The Tribunal noted that the Department's change in stance was based on an audit objection and not due to any suppression or misdeclaration by the appellant. The Tribunal held that invoking the extended period was not sustainable as there was no evidence of willful misclassification or intention to evade duty.

Conclusion:
The Tribunal set aside the Order-in-Original No. 102161/2023 dated 05.06.2023, confirming the classification of CFG under CTH 70051090 and granting the FTA benefit under Notification No. 46/2011-Cus. The Tribunal also ruled that the extended period for demand and penalties was not invokable, and consequently, the order of confiscation, fine, and penalties were set aside. The appeal was allowed with consequential relief as per the law.

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