TaxTMI 
TaxTMI 
2022 (7) TMI 246
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt to the officers by the Risk Management System [RMS]. 2. In this case all bills of entry were self-assessed, and were subjected to post clearance audit. During post clearance audit, it was found that the appellant had classified the imported goods under 8505900 and paid basic customs duty [BCD] of 0% + 0% Social Welfare Surcharge [SWS] +18% integrated goods and services tax [IGST] availing the benefit of Sl. No. 1319 of Notification No. 46/2011-CUS dated 01.06.2011, as amended. The audit team sent an audit consultative letter dated 24.12.2019 stating that the imported goods are correctly classifiable under 85119000 Customs Tariff and the benefit of exemption of Notification No. 46/2011-CUS (Sl. No. 1319) is not available to the imported goods and accordingly the duty @ 15% BCD + 10% SWS + 28% IGST are payable and requesting the appellant to pay the differential duty. 3. Thereafter, a pre-notice consultation letter dated 23.02.2020 was also issued to the appellant under the pre-notice consultations regulations 2018 and an opportunity of hearing was granted to the appellant during which Shri Sanjay Kumar, Senior Engineer of the appellant appeared and submitted that the appellant ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ection ; (g) assuming without admitting that the impugned goods are classifiable under 85119000 concessional rate of duty under Sl. No. 1335 of Notification No. 46/2011-CUS dated 01.06.2011, as amended, is available to the appellant, which has been denied by the Adjudicating Authority ; (h) the Commissioner (Audit) of the Customs Audit Commissionerate is not the proper officer to issue show cause notice under Section 28 of the Customs Act, 1962 as the notification where under he is empowered to issue show cause notice itself is an invalid notification ; (i) When the demand of duty itself is not maintainable, interest thereon also cannot be recovered. 7. Learned Consultant for the appellant Shri Ved Prakash Batra, vehemently argued the above points. Learned Departmental Representative supported the impugned order and submitted that it calls for no interference. 8. We have considered the arguments on both sides and perused the records. The issues to be decided by us are: (a) Was Revenue correct in issuing a show cause notice under Section 28 demanding differential duty without first appealing against the Bills of Entry which were self assessed? (b) Has the Revenue not pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....within 15 days under Section 17 (5). Learned Consultant is also correct in his submission that the term "assessment" includes "self-assessment". An assessment, is a quasi-judicial function performed by the officer and any assessment of bill of entry by an officer can be appealed against before the Commissioner (Appeals) by either side. 12. There would be occasions, where duty is paid in excess of what was due or short of what was due. If duty is paid in excess, a claim for refund of the duty so paid in excess can be made under Section 27 by the person who paid the duty or who has borne the duty. The question before the Supreme Court in the case of Priya Blue Industries Ltd. versus Commissioner of Customs (Preventive) [2004 (172) E.L.T. 145 (S.C.)] and Collector versus FlocK (India) Pvt. Ltd. [2000 (120) E.L.T. 285 (S.C.)] was whether refund could be claimed in a manner so as to modify the assessment under Section 17. The Supreme Court held that refund claim is not an appeal proceeding and the officer sanctioning the refund claim cannot sit in judgment over an assessment made by the assessing officer. In other words, refund under Section 27 is a mechanical process of sanction....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mal period of limitation -normal or extended ; (iii) WHY - to recover the duty so paid, short levied, not paid and levied or erroneously refunded. 14. In view of the above, there is no force in the argument of the learned Consultant of the appellant that the demand under Section 28 cannot be issued without challenging the self-assessment by the appellant before Commissioner (Appeals). Reliance on the judgment of Supreme Court in ITC Ltd. by the appellant is completely mis-conceived as this is not a case of refund, but is a case of demand of duty under Section 28, which is fully permissible. 15. Learned Consultant of the appellant submitted that no demand for duty can be made by the Revenue without getting the classification under the self-assessment by the appellant modified by filing an appeal before Commissioner (Appeals). This submission cannot be accepted in view of the fact that Section 28 itself gives a power of reopening of assessment to the proper officer as has been held by the Hon'ble Supreme Court in Canon India. 16. Learned Consultant for the appellant argued that there is no proposal to amend the classification of the goods in the show cause notice. We find this is ....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., the Bills of Entry were assessed by the officers and thereafter a show cause notice under Section 28 was issued by the officers of DRI. It was held that only 'the proper officer' can issue a show cause notice under section 28 because it is a case of review or reopening of an assessment already made and it can be done by only such officer who has assessed in the first place or his successor in office. The present case is different inasmuch as there was no assessment of Bills of Entry by any officer. In fact, in a very large number of cases, now the goods are cleared based on self assessment by the importer under section 17(1) of the Customs Act and the Group Appraising officer will not even have an occasion to review the self assessment under section 17(5). The present is one such case and there is no proper officer who had done the assessment. The reason for this arrangement is simple. With increasing international trade, if clearances have to be expedited not every consignment can be assessed by the officer. The RMS of the Customs EDI System selects some cases for assessment and others are cleared based on self- assessment. Thus, there is no proper officer doing the assessment. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the appellant. The appellant classified the imported goods under 85059000, while the Revenue classified it under 85119000 of the Customs Tariff. Tariff heading 8505 deals with electro-magnets including their parts while Tariff heading 8511 deals with the spark plugs and their parts. Undisputedly, the imported goods are a child part of spark plugs. The spark plugs have, as a part an electro-magnet of which the imported goods (magnetic iron core/core assembly) is a part. The case of appellant is that the core should be treated as a part of the electro-magnet and hence should be classified as such. The case of the Revenue is that the imported goods are not parts of any electro-magnets but are undisputedly parts of the spark plugs and hence they should be classified as such. 22. To decide this issue, it is important to examine the two headings and also the Rules of Interpretation of the Tariff which lay down how the classification should be decided in case of conflicting entries in the tariff. The relevant headings are reproduced below: 8505 Electro-Magnets; Permanent Magnets and Articles Intended To Become Permanent Magnets after Magnetisation; Electro-Magnetic or Permanent Magnet ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....p; - Ignition coils 8511 40 00 - Starter motors and dual Purpose starter- generators 8511 50 00 - Other generators 8511 80 00 - Other equipment 8511 90 00 - Parts 23. It often happens that while attempting to classify goods, there could be two or more entries into which the goods may fall. The Rules of interpretation lay down how to classify such goods. Rule 1 states that the Titles of Sections, Chapters and Sub-Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ar even though it cannot be used as such until it is completed by fixing the wheels. Similarly, if goods are imported in completely knocked down (CKD) condition or in semi-knocked down (SKD) condition, they are to be classified as that article even though they can be used only after they are fully assembled. 25. Rule of Interpretation 2(b) deals with mixtures. It states that reference to a substance shall include mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to the principles of rule 3. Goods such as chemicals and pharmaceuticals are often not 100% pure and are mixed with other substances. Despite the admixtures, they should be classified as the substance. If there is more than one substance in the imported goods and they are classifiable under separate headings, then Rule 3 resolves the conflict. 26. Rule 3 states that when by application of rule 2(b) or for any other reason, good....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ic core' are not goods in themselves under any of the headings. In fact, both the appellant and the Revenue classify them as parts only but under different headings. Section note 2(b) states that other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of heading 8479 or 8543) are to be classified with the machines of that kind or in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate. In this case, the disputed goods are child parts of the spark plugs and in our considered view, applying this rule, they should be correctly classified along with the spark plugs under 8511 which has a sub-heading for parts, viz., 85119000. 28. Although we find that Rule 1 of Interpretation read with Section Note 2 itself resolves the classification dispute, we have also examined some other Rules of interpretation to see if they would require a different view to be taken. Rule 2(a) is not relevant to this case as the imported goods are not an unfinished article but only a part. Rule 2(b) is also not relevant because the disputed goods are not mixture. Rule 3 deals with cas....