Misclassification of imported Natural Rubber Latex: GIR-based classification, burden on revenue, and time-bar result in demand set aside.

Classification of imported natural rubber latex must follow the General Rules for Interpretation of the Customs Tariff; where GIR 1 does not suffice, Rules 2-6 apply sequentially. Tariff headings specifically referencing Hevea may give rise to genuine divergence in legal interpretation, and the burden to prove reclassification rests on the revenue. An importer's ACP/AEO facilitation and prior compliances require careful scrutiny before alleging misconduct; wilful misstatement requires proof of a positive act and intent. Because the department failed to discharge its burden and no culpable intention was shown, the show-cause notice was time-barred and the impugned demand set aside.

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Issues: Whether the show cause notice and consequential demand and penalty issued against the importer for alleged misclassification of imported Natural Rubber Latex are time-barred such that the impugned order must be set aside.

Analysis: The applicable limitation under Section 28(4) of the Customs Act, 1962 and the legal effect of the post-clearance audit and self-assessment regime (as introduced by the Finance Act, 2011 and implemented through the Bill of Entry (Electronic Declaration) Regulations, 2011) were examined. The classification framework under the First Schedule to the Customs Tariff Act, 1975 (GIR) was considered only to the extent necessary to assess whether the demand could validly be raised within the limitation period. The Tribunal noted factual timelines of the relevant Bills of Entry, the existence of earlier departmental clearances for similar consignments, the importer's ACP/AEO facilitation status, and the absence of evidence demonstrating wilful misstatement by the importer. Authorities establishing that where a demand is time-barred there is no occasion to decide merits were applied.

Conclusion: The show cause notice and consequent demand and penalty are time-barred. The impugned order is set aside and the appeals are allowed on the ground of limitation; the appellant is entitled to consequential relief as per law.

Ratio Decidendi: A departmental demand based on post-clearance audit is liable to be set aside if it is issued beyond the statutory limitation period under Section 28(4) of the Customs Act, 1962 and the revenue fails to discharge the burden of proving wilful misstatement or suppression of facts that would justify extended period invocation.

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