2026 (2) TMI 679 - AT - Customs

Beneficial clarifications apply where no effective hearing was afforded; differential IGST demand set aside on regularisation grounds.

Whether post-adjudication CBIC clarificatory circulars regularising past classifications at a lower IGST rate applied to imports; Tribunal found the ... Classification of imported goods - entitlement to benefit of the post-adjudication clarificatory CBIC circulars and related GST Council recommendations - regularisation on 'as is where is basis' - retrospective application of beneficial clarificatory circulars - binding effect of departmental circulars on adjudicating officers - audi alteram partem / right to be heard - HELD THAT:- The order passed by the Commissioner does not reveal on which date the appeal was listed for hearing and was heard at least from side of the Department but going by the written submissions of the appellant available on record, it is noticeable that contrary to what is recorded in the Commissioner’s order at para 19.2, there were two notices issued to them (not three) out of which hearing on 23.08.2023 could not take place as Commissioner was unavailable on that day and appellant could not attend the hearing on 20.08.2024 but emailed on the next day seeking another date for such hearing and thereafter, order was passed. This being so, it cannot be pleaded by the Department that circular came after issue of show-cause and adjudication since by the time adjudication happened, it was already on place. Further, in the context as to if retrospectively can be attached to the said circular and if it has got biding effect on the officers, it would be worthwhile to refer to the relied upon judgment in the case of Ranadey Micronutrients Vs. Collector of Central Excise [1996 (9) TMI 124 - SUPREME COURT], that dictates that such circulars should have been treated as issued u/s. 37B of the Central Excise Act 1944 (similar to provision contained in Section 151A of the Customs Act.) even though the said provision is not recited in the circular and such circulars are not advisory in nature but binding on the Central Excise officers who can not plead that such circular was not valid. Apart from this, it has also been clearly directed in the other judgments cited by appellant in the case of Suchitra Components Ltd. [2007 (1) TMI 4 - SUPREME COURT], beneficial circular is to be applied retrospectively but when circular is against the assessee, they have a right to claim prospective application but in the instant case, this circular has in clear and unequivocal language has clarified in para 4.3 as to how past cases are to be regularised onward. Therefore, we are of the considered view that appellant had duly discharged CGST on the parts of Poultry keeping machinery @12% imported during the period between September 2017 and December 2021, for which the order passed by the Commissioner is unsustainable both in law and facts. Hence the order. Appeal is allowed. Issues: Whether the Appellant is entitled to benefit of the post-adjudication clarificatory CBIC circulars and related GST Council recommendations (regularising past cases on an 'as is where is' basis) so as to treat IGST at 12% as properly discharged and to set aside the Commissioner's order confirming differential IGST, interest, redemption fine and penalties.Analysis: The appeal concerns classification and applicable IGST rate for parts of poultry-keeping machinery imported between September 2017 and December 2021 and the effect of subsequent departmental clarifications. The legal framework includes the IGST rate Notification No. 1/2017-IGST (Rate) dated 28.06.2017 (Schedules and serial entries), provisions under the Customs Act relied upon by the adjudicating authority (Section 28(4), Section 28AA and penal provisions), and later CBIC clarificatory communications (CBIC Circular No. 229/23/2024-GST dated 15.07.2024 and CBIC Circular No. 236/30/2024-GST dated 11.10.2024) which regularised certain past classifications and clarified that payment at the lower rate may be treated as proper payment for the regularised period. The Tribunal examined whether the appellant was given an effective opportunity of hearing before adjudication and whether the clarifications, being beneficial, could be applied to the appellant's past imports. Having reviewed the record and cited authorities on retrospective application of beneficial circulars and the binding nature of departmental clarifications, the Tribunal found that the clarificatory material was in existence and relevant by the time adjudication had effectively occurred and that the appellant was not afforded effective hearing on those developments; consequently the Commissioner's order confirming differential demand is unsustainable.Conclusion: The appeal is allowed and the Commissioner's order confirming the differential IGST, interest, redemption fine and penalties is set aside; the decision is in favour of the assessee.