Show cause notice quashed for light green tinted float glass classification under section 28(4) Customs Act

The HC quashed a show cause notice issued under section 28(4) of the Customs Act regarding classification of imported light green tinted float glass. The petitioner had consistently classified the goods under CTH 70051010 since 2011, which was accepted in earlier assessments and appellate orders. The court found that invoking the extended five-year limitation period was erroneous as there was no evidence of collusion or willful mis-statement. The department failed to consider the petitioner's replies to the audit consultative letter and wrongly recorded no response was received. The court directed customs to clear goods under CTH 70051010, subject to verification and pending any reversal of favorable appellate orders.

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Issues Involved:
1. Classification of imported light green tinted float glass under CTH 70051010 or CTH 70052110.
2. Validity of invoking the extended period of limitation under Section 28(4) of the Customs Act.
3. Compliance with pre-notice consultation requirements.
4. Jurisdiction and propriety of issuing the show cause notice.

Issue-wise Detailed Analysis:

1. Classification of Imported Light Green Tinted Float Glass:
The petitioner classified light green tinted float glass under CTH 70051010, which pertains to non-wired glass with an absorbent, reflecting, or non-reflecting layer. The respondents, however, issued a show cause notice asserting that the goods should be classified under CTH 70052110, which pertains to float glass colored throughout the mass (body tinted), opacified, flashed, or merely surface ground.

The petitioner provided test reports showing the presence of an absorbent tin layer, which they argued justified the classification under CTH 70051010. Previous appellate orders had accepted this classification. The respondents' show cause notice was based on a recent test report that also identified an absorbent tin layer but interpreted it as inherent to the production process and not qualifying for CTH 70051010.

2. Validity of Invoking the Extended Period of Limitation:
The show cause notice invoked the extended period of limitation under Section 28(4) of the Customs Act, alleging that the petitioner had misclassified the goods with the intent to evade duty. The court found that the petitioner had consistently imported the goods under the same classification for over a decade without any fraud, collusion, or willful misstatement. Previous final assessments and appellate orders had accepted the classification under CTH 70051010, and these were not challenged by the respondents.

3. Compliance with Pre-Notice Consultation Requirements:
The petitioner received an audit consultative letter in May 2022, which they responded to, but the respondents did not consider these replies when issuing the show cause notice. The court noted that the audit consultative letter was issued under Section 28(1) of the Customs Act, and the subsequent show cause notice under Section 28(4) did not provide adequate reasons for invoking the extended period of limitation.

4. Jurisdiction and Propriety of Issuing the Show Cause Notice:
The court referred to the principle that a subordinate authority must act in accordance with the conclusions of an appellate authority unless successfully challenged. The respondents' actions in issuing the show cause notice were seen as an attempt to reopen an issue already settled by the appellate authority, which violated judicial discipline as established in Kamalakshi Finance and Vicco Laboratories.

Conclusion:
1. W.P.No.28456 of 2023: The show cause notice dated 07.08.2023 was quashed.
2. W.P.No.28462 of 2023: The respondents were directed to clear goods labeled as Light Green Float Glass (tinted non-wired type) under CTH 70051010, subject to verification and unless the appellate orders accepting this classification are reversed in further appeal.
3. W.P.No.28465 of 2023: The petition seeking a declaration that the classification adopted by the petitioner is correct was dismissed, as such a declaration would require detailed examination not suitable for proceedings under Article 226.

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