Importer's classification of goods under CTH 7211 upheld as no mis-declaration found despite reclassification by authorities

The CESTAT Chennai held that no mis-declaration or suppression of facts occurred when the appellant classified imported goods under CTH 7211 in Bills of Entry. The appellant had provided all necessary documents including inspection certificates and test certificates showing alloy composition. The correct classification was determined by DRI using these same documents submitted at import. The department failed to prove mis-declaration since the appellant declared goods as per invoice and even domestic manufacturers used the same classification. Following Supreme Court precedent in Northern Plastic Ltd., merely claiming particular classification does not constitute mis-declaration. The demand was restricted to normal limitation period and penalty was set aside.

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Issues:
Classification of SCM 435 and C45E varieties of steel under customs regulations; Invocation of extended period for demanding duty and imposition of penalty under Section 114A of the Customs Act, 1962.

Analysis:
The appeal was filed against an Order-in-Appeal by the Commissioner of Customs regarding the classification of SCM 435 and C45E steel varieties. The officers found SCM 435 not eligible for exemption, leading to payment of differential duty. C45E was reclassified under Chapter 7211. The appellant contested the invocation of extended period for demanding duty and penalty under Section 114A. The appellant argued that subsequent show cause notices did not warrant extended period application. They maintained that correct documents were submitted during the pre-self-assessment period, shifting the onus of classification to the department. The appellant cited precedents to support their claim that incorrect classification does not equate to misdeclaration or suppression of facts.

The respondent argued that the appellant had all necessary details for correct classification, and no complex legal issues were involved. They contended that the extended period and penalty were justified due to potential duty evasion from misdeclaration and suppression of facts. The respondent supported the impugned order and urged the tribunal to reject the appeal.

The tribunal noted that the dispute centered on the invocation of the extended period and penalty, not the goods' classification. It analyzed whether the breach was intentional to evade tax through misdeclaration and suppression of facts. In the pre-self-assessment period, the department was responsible for assessing imported goods. The appellant had submitted relevant documents, and the goods were correctly classified based on those submissions. The tribunal found no misdeclaration or suppression of facts by the appellant. Citing legal precedents, the tribunal held that mere claiming a benefit or classification under a bill of entry does not constitute misdeclaration or suppression of facts.

Conclusively, the tribunal ruled in favor of the appellant, setting aside the penalty and restricting the demand to the normal period. The impugned order was modified accordingly, providing consequential relief to the appellant as per the law. The judgment was pronounced in open court on 13-2-2024.

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