Strict tariff classification and limitation principles governed IGST on imported health supplements; higher rate and extended period failed.

A specific tariff entry must be applied strictly to its own description, and the Revenue must prove that imported health supplements fall within the higher-rated goods listed in Schedule IV. In the absence of test reports or other evidence showing that the goods were protein concentrates, textured protein substances, or food flavouring material, they remained classifiable under the residuary entry in Schedule III and attracted IGST at 18%, not 28%. The extended limitation period could not be invoked where the imports and classification were disclosed in the bills of entry, no suppression was shown, and the matter was revenue neutral. The differential IGST demand was therefore barred by limitation.

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Issues: (i) Whether imported health supplements classifiable under CTH 2106 9099 were chargeable to IGST at 28% under Schedule IV or at 18% under Schedule III of Notification No. 1/2017-Integrated Tax (Rate). (ii) Whether the demand for differential IGST was barred by limitation.

Issue (i): Whether imported health supplements classifiable under CTH 2106 9099 were chargeable to IGST at 28% under Schedule IV or at 18% under Schedule III of Notification No. 1/2017-Integrated Tax (Rate).

Analysis: The relevant rate notification under Section 5(1) of the Integrated Goods and Services Tax Act, 2017 provides different schedules for different rates. The entry in Schedule IV relied upon by the department specifically names certain food preparations, while Schedule III contains the residuary entry for goods not specified elsewhere. The expression used in the entry was treated as restrictive and not as a general enlargement of the whole heading. The imported health supplements were not shown to answer the specific description in Schedule IV. The Revenue also failed to discharge the burden of proving that the goods were in fact protein concentrates, textured protein substances, or food flavouring material. In the absence of supporting test reports or other evidence, the goods remained classifiable as claimed by the importer.

Conclusion: The goods were chargeable to IGST at 18% under Schedule III and not at 28% under Schedule IV.

Issue (ii): Whether the demand for differential IGST was barred by limitation.

Analysis: The imports were declared in the bills of entry and the classification particulars were on record. There was no suppression of facts or positive act to justify invocation of the extended period. The demand was raised after a substantial lapse of time, and the case also involved revenue neutrality because any additional tax paid would have been available as input tax credit. On these facts, the extended period could not be sustained.

Conclusion: The demand for differential IGST was barred by limitation.

Final Conclusion: The impugned orders were set aside and the appeals succeeded with consequential relief.

Ratio Decidendi: A specific tariff entry must be applied strictly according to its description, the Revenue bears the burden of proving classification under a higher-rated entry, and the extended period cannot be invoked absent suppression or mala fide when the classification was disclosed and the matter is revenue neutral.

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