2024 (10) TMI 908 - AT - Customs

Department appeal dismissed for printing paper exemption under N/N. 11/97-Cus due to contradictory test reports

Commissioner of Customs-New Delhi (ICD TKD) Versus Navshakti Industries Pvt. Ltd.

Commissioner of Customs-New Delhi (ICD TKD) Versus Navshakti Industries Pvt. Ltd. - TMI Issues Involved:1. Alleged mis-declaration of imported goods as 'printing paper' instead of 'newsprint.'2. Validity and reliability of test reports from CRCL, Pusa, and CPPRI, Saharanpur.3. Invocation of the extended period of limitation.4. Legality of the Show Cause Notice issued after a significant delay.5. Final assessment and release of goods based on initial test reports.6. Procedural irregularities and violation of principles of natural justice.Detailed Analysis:1. Alleged Mis-declaration of Imported Goods:The department alleged that the importer mis-declared the imported goods as 'printing paper' under Customs Tariff Heading (CTH) 4802 to avail exemption benefits, whereas the goods were actually 'newsprint' classifiable under CTH 4801. This mis-declaration was purportedly to circumvent restrictions imposed on traders post-amendment in 1997, which allowed only end-users to import newsprint. The department's case relied heavily on test reports from CPPRI, Saharanpur, which contradicted the initial findings from CRCL, Pusa.2. Validity and Reliability of Test Reports:The core of the dispute revolved around conflicting test reports. The initial test reports from CRCL, Pusa, Delhi, indicated that the goods were 'printing paper,' supporting the importer's declaration. These reports led to the release of the goods by January 1998. However, the department later relied on CPPRI, Saharanpur reports, which suggested the goods were 'newsprint.' The tribunal found the Saharanpur reports to be an afterthought, obtained without following due procedure and without the importer's knowledge, thus lacking credibility.3. Invocation of Extended Period of Limitation:The department invoked the extended period of limitation under Section 28(4) of the Customs Act, alleging suppression of facts by the importer. However, the tribunal noted that the provisional assessments were finalized based on CRCL, Pusa reports, and the goods were released. The extended period was deemed unjustified as there was no evidence of continued mis-declaration after the goods were assessed and released.4. Legality of the Show Cause Notice:The Show Cause Notice was issued in July 2002, nearly four and a half years after the goods were released. The tribunal highlighted the lack of justification for this delay and noted that the notice did not mention any reasons for the prolonged period between the receipt of the CPPRI, Saharanpur reports and the issuance of the notice. This delay, coupled with the absence of any new evidence, rendered the notice legally unsustainable.5. Final Assessment and Release of Goods:The tribunal emphasized that the goods were assessed and released based on CRCL, Pusa reports, which were obtained following due process. The department's subsequent reliance on the Saharanpur reports, obtained without the importer's participation, was found to be procedurally flawed. The tribunal upheld the final assessment based on the initial reports, which classified the goods as 'printing paper.'6. Procedural Irregularities and Violation of Principles of Natural Justice:The tribunal observed significant procedural lapses, including the department's failure to provide the importer with the CRCL, Pusa reports and the lack of transparency in obtaining the CPPRI, Saharanpur reports. The adjudicating authority's reliance on the Saharanpur reports without considering the importer's submissions violated the principles of natural justice. The tribunal also noted that the department's actions appeared to be an attempt to circumvent a decree by the Delhi High Court, which had ruled in favor of the importer regarding demurrage charges.Conclusion:The tribunal dismissed the department's appeal, finding no merit in the allegations of mis-declaration or procedural propriety in the issuance of the Show Cause Notice. The order under challenge was upheld, and the appeal filed by the department was dismissed. The tribunal's decision reinforced the importance of adhering to procedural fairness and the principles of natural justice in customs adjudication.