2026 (4) TMI 167 - AT - Customs

Strict construction of customs exemption notification denies concession for Boronated Calcium Nitrate; Section 28 recovery notice remains valid.

Customs recovery proceedings under Section 28 of the Customs Act, 1962 could proceed for non-levy or short-levy of duty even without a separate challenge ... Validity of the show cause notice for recovery of customs duty, issued without challenging the bill of entry or out-of-charge order - boronated Calcium Nitrate imported - Strict interpretation of exemption notifications - entitlement to the concessional benefit under Notification No. 50/2017-Cus. - Burden of Proof on Assessee - Assessment Review Under Section 28 - Essential Character - Trade Parlance - Whether the appellant is entitled to the benefit of Entry No.225(I)(b) of Notification No.50/2017-Cus dated 30.06.2017 for their product “YARALIVA Nitrabor Calcium Nitrate with Boron (double salt of calcium nitrate with boron)” imported under various Bills of Entries during the period from 22.04.2019 to 08.08.2019. Show cause notice without appeal against assessment - Power under Section 28 to modify assessment - HELD THAT: - The Tribunal held that the proper officer could invoke Section 28 to demand duty short-levied without first seeking revision of the clearance order. Relying on Jain Shudh Vanaspati Limited [1996 (8) TMI 108 - SUPREME COURT], Jenefa India Vs. Commissioner of Customs, Tuticorin [2019 (2) TMI 1802 - CESTAT CHENNAI] and Vivo Mobile India Pvt. Ltd. Vs. Principal Commissioner of Customs, New Delhi [2024 (2) TMI 1508 - CESTAT NEW DELHI] it held that assessment can be disturbed through statutory demand proceedings and that the appellant's objection based on finality of assessment was misplaced. [Paras 5] The objection to the validity of the show cause notices was rejected. Exemption for water-soluble fertilizers - Distinct identity of boronated calcium nitrate - Strict construction of exemption entry - HELD THAT: - The appellant contends that the product imported by them has Calcium Nitrate as a major constituent and the same has also been classified under CTH 31026000 which covers Calcium Nitrate. Since, Notification extends concessional duty benefit to Calcium Nitrate, hence, the appellate authority has wrongly disallowed them the benefit of above Notification. His another ground is that Revenue has not challenged out of charge order given by the concerned officer and therefore, re-assessment of Bills of Entry is not permissible. The Tribunal found that under the Fertiliser (Control) Order, 1985, Calcium Nitrate and Boronated Calcium Nitrate are treated as separate products under different categories, with different prescribed composition and solubility requirements. Since the imported product was Boronated Calcium Nitrate and not Calcium Nitrate as specified in Entry No. 225(I)(b) of Notification No. 50/2017-Cus., the appellant failed to establish eligibility to the exemption. Applying the rule of strict interpretation of exemption notifications as stated in Commissioner of Customs (Import), Mumbai Vs. Dilip Kumar & Company [2018 (7) TMI 1826 - SUPREME COURT (LB)] and Krishi Upaj Mandi Samiti Vs. CCE, Alwar [2022 (2) TMI 1113 - SUPREME COURT] the Tribunal held that any claimed ambiguity could not be resolved in favour of the importer. [Paras 5] The benefit of concessional duty under Notification No. 50/2017-Cus. was denied and the duty demand with interest was sustained. Final Conclusion: The Tribunal held that the show cause notices were legally maintainable under the Customs Act and that Boronated Calcium Nitrate could not be treated as Calcium Nitrate for the purpose of the concessional entry. The impugned appellate orders were upheld and all three appeals were dismissed. Issues: (i) Whether a show cause notice for recovery of customs duty could be issued without challenging the bill of entry or out-of-charge order; (ii) whether Boronated Calcium Nitrate imported by the appellant was entitled to the concessional benefit under Notification No. 50/2017-Cus. dated 30.06.2017.Issue (i): Whether a show cause notice for recovery of customs duty could be issued without challenging the bill of entry or out-of-charge order.Analysis: The relevant legal framework permitted recovery proceedings under Section 28 of the Customs Act, 1962 for non-levy or short-levy of duty. The order records that assessment could be reviewed through statutory proceedings under Section 28, and that the absence of a separate challenge to the bill of entry or out-of-charge order did not bar issuance of notice. The appellant's reliance on finality of assessment was held not to assist it on this point.Conclusion: The issue was decided against the appellant and in favour of the Revenue.Issue (ii): Whether Boronated Calcium Nitrate imported by the appellant was entitled to the concessional benefit under Notification No. 50/2017-Cus. dated 30.06.2017.Analysis: The notification granted concessional duty only to calcium nitrate as a specified water-soluble fertilizer. The imported product was treated as Boronated Calcium Nitrate and was found to be a distinct product from calcium nitrate, with different composition and characteristics under the Fertilizer (Control) Order, 1985. The exemption notification was required to be strictly construed, and the burden to establish eligibility rested on the claimant of exemption. Since the product did not squarely fall within the notified entry, the benefit could not be extended.Conclusion: The issue was decided against the appellant and in favour of the Revenue.Final Conclusion: The appeals were not maintainable on the appellant's exemption claim and the duty demand was sustained, resulting in dismissal of all connected appeals.Ratio Decidendi: A customs exemption notification must be strictly construed, the claimant must prove clear entitlement to the concessional entry, and a product that is materially distinct from the notified commodity cannot claim the exemption by implication; recovery proceedings under Section 28 of the Customs Act, 1962 may also proceed notwithstanding the absence of a separate challenge to the bill of entry or out-of-charge order.