2025 (3) TMI 789 - AT - Customs

CESTAT sets aside IGST demand finding show cause notice time-barred for goods reclassification from Chapter 86 to CTH 8709 1100

M/s. Madhepura Electric Locomotive Pvt. Ltd. Versus Principal Commissioner of Customs (Port) Kolkata

CESTAT Kolkata allowed the appeal, setting aside the demand for differential IGST, interest, redemption fine and penalty. The tribunal held that the show ... Demand of differential I.G.S.T., along with interest and imposing redemption fine and penalty - rejection of classification adopted by the appellant on the imported goods - to be re-classified under CTH 8709 1100 or not - extended period of limitation - HELD THAT:- It is a fact on record that the import took place during the period from November, 2017 to January, 2018 and the goods were cleared for home consumption by assessment of the Bills of Entry. Therefore, we observe that the Show Cause Notice issued on 29.07.2020 is highly barred by limitation. The same view has been taken by this Tribunal in the case of M/S. DIC INDIA LIMITED VERSUS COMMISSIONER OF CUSTOMS (PORT) , KOLKATA [2024 (9) TMI 186 - CESTAT KOLKATA] wherein it has been observed that 'the re-classification of the imported goods vide the 17 Bills of entry under CTH 2710, on the basis of Test Report received from IIT, Kharagpur, is not sustainable.' The extended period of limitation is not invokable in the case. Consequently, the proceedings against the appellant are not sustainable. Conclusion - Classification under Chapter 86 upheld. The extended period of limitation is not invokable in the case. Consequently, the proceedings against the appellant are not sustainable. The impugend order is set aside - appeal allowed. ISSUES PRESENTED and CONSIDEREDThe core legal issues considered in this judgment include:Whether the classification of the imported goods under Chapter 86 of the Customs Tariff Act was appropriate or if they should be reclassified under Chapter 87.Whether the extended period of limitation under Section 28(4) of the Customs Act, 1962, was applicable for issuing the Show Cause Notice.Whether the demand for differential Integrated Goods and Services Tax (IGST), along with interest and penalties, was justified.ISSUE-WISE DETAILED ANALYSISClassification of Imported GoodsRelevant legal framework and precedents: The classification of goods under the Customs Tariff Act is guided by the specific headings and the General Interpretative Rules. The appellant argued for classification under Chapter 86, while the Department proposed reclassification under Chapter 87, citing Section Note 4(a) to Section XVII of the Tariff Schedule.Court's interpretation and reasoning: The Tribunal considered the nature and use of the imported goods, which were intended for shunting locomotives and metro trains, not for short-distance transport in factories or warehouses. The Tribunal found the appellant's classification under Chapter 86 appropriate.Key evidence and findings: The appellant provided documentation and argued that the goods were not designed for dual road and rail use as per the Department's assertion.Application of law to facts: The Tribunal applied the relevant tariff headings and concluded that the goods were correctly classified under Chapter 86 based on their intended use and characteristics.Treatment of competing arguments: The Tribunal rejected the Department's argument for classification under Chapter 87, finding no basis for reclassification as proposed in the Show Cause Notice.Conclusions: The Tribunal upheld the appellant's classification under Chapter 86.Extended Period of LimitationRelevant legal framework and precedents: Section 28(4) of the Customs Act allows for an extended period of limitation in cases of suppression of facts or wilful misstatement. The appellant cited precedents where classification disputes did not constitute suppression.Court's interpretation and reasoning: The Tribunal noted that the import occurred between November 2017 and January 2018, and the Show Cause Notice was issued on July 29, 2020. The Tribunal found the notice to be time-barred.Key evidence and findings: The Tribunal referenced past decisions, particularly DIC India Ltd. v. Commissioner of Cus. (Port), Kolkata, where similar circumstances led to the conclusion that the extended period was not applicable.Application of law to facts: The Tribunal determined that there was no evidence of suppression or misstatement by the appellant, thus the extended period could not be invoked.Treatment of competing arguments: The Tribunal dismissed the Department's invocation of the extended period, finding no justification for its application.Conclusions: The Tribunal concluded that the Show Cause Notice was issued beyond the permissible period, rendering the proceedings unsustainable.Demand for Differential IGST, Interest, and PenaltiesRelevant legal framework and precedents: The demand for differential IGST and penalties was based on the reclassification of goods and the invocation of the extended period of limitation.Court's interpretation and reasoning: The Tribunal found that since the reclassification was not justified and the extended period was not applicable, the demand for differential IGST, interest, and penalties could not stand.Key evidence and findings: The Tribunal emphasized the lack of suppression or misstatement by the appellant, as well as the finality of the initial assessments.Application of law to facts: Without valid grounds for reclassification or the extended period, the Tribunal ruled that the demand for differential IGST and penalties was invalid.Treatment of competing arguments: The Tribunal rejected the Department's position, supporting the appellant's compliance with the law.Conclusions: The Tribunal set aside the demand for differential IGST, interest, and penalties.SIGNIFICANT HOLDINGSPreserve verbatim quotes of crucial legal reasoning: 'We observe that the appellant has not suppressed any information from the department when the goods were imported under these 17 Bills of entry and all the relevant facts were well within the knowledge of the Department.'Core principles established: Classification disputes do not inherently constitute suppression or misstatement; the extended period of limitation requires clear evidence of such actions.Final determinations on each issue: The Tribunal upheld the appellant's classification under Chapter 86, found the Show Cause Notice time-barred, and invalidated the demand for differential IGST, interest, and penalties.