TaxTMI 
TaxTMI 
2023 (1) TMI 998
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....signments imported between 13.12.2012 to 16.05.2015 by M/s Midas Fertchem Impex Pvt Ltd. and 60 consignments imported by M/s Midas Import Corporation between 04.12.2010 to 27.01.2015. Smt. Rashmi Jain and Shri Manish Jain are the Directors of M/s Midas Fetchem Impex Pvt Ltd. and are assailing the penalty of Rs. 4 Lakhs on each imposed under section 112 (a) of the Customs Act, 1962. Smt Rashmi Jain, is also the authorized signatory Midas Import Corporation and she is assailing the penalty of Rs. 6 lakhs imposed on her under section 112(a) of Customs Act, 1962. The details of these appeals and impugned orders and the show cause notices are as below: Issue Classification of "0.1 % Natural Brassinolide Fertilizer", whether under CTI 3101 00 99 or under CTI 3105 10 00 or under CTI 3105 90 90 (as claimed by the Appellants) or under CTI 3808 93 40 (as claimed by the Department) Particulars Midas Fertchem Impex Pvt. Ltd. Midas Import Corporation Show Cause Notice No. and Date 16/Commissioner/ACC/Import/ 2015 dated 16.11.2015 15/Commissioner/ACC/Import/2015 dated 16.11.2015 Period of Dispute 13.12.2012 to 16.05.2015 04.12.2010 to 27.01.2015 Quantity imported, name of supplier(....
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....lassify the consignments imported by them under CTH 3808 and recover the differential duty along with interest. It further proposed a penalty of equal amount under section 114A on the appellant importers. It was also proposed to impose personal penalties under section 112 upon the Directors/ authorized signatories. Extended period of limitation was invoked in both SCNs and only three Bills of Entry in case of Midas Fertchem Impex Pvt Ltd. and four Bills of Entry in case of Midas Import Corporation were within the normal period of limitation. 3. The Principal Commissioner passed orders-in-original confirming the demands of duty along with interest and imposing penalties. On appeal, all these matters were remanded to the Commissioner by the Final Order dated 19.02.2018 [2018 (14) GSTL 260 (Tri.-Del)] by this Tribunal. Before the Tribunal, the appellants had not disputed that the brassinolide was a plant based regulator but raised a new ground which was not raised before the original authority. It was argued that in terms of section 1(a)(2) of Chapter 38 of the Customs Tariff, separately defined chemicals are not classifiable under CTH 3808 unless they were put up in packings for ret....
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....ds which was taken by him before the adjudicating authority was that the SCN issued under section 28 is not sustainable at all because the assessments were finalized and as per the judgment of the larger bench of the Supreme Court in the case ITC Ltd. Vs. Commissioner of Central Excise Kolkata IV 2019 (368) ELT 216 (SC) all assessments including self-assessments can be appealed against before the Commissioner (Appeals) by either side. Having not appealed against the assessments, Revenue could not have issued a notice under section 28. He submits that in the impugned order, the Commissioner did not agree with this submission holding that the ITC Ltd. pertained to refunds and not to demands under section 28. According to the learned counsel, this view was not correct and the judgment equally applies to demands under section 28 and having not assailed the assessments before Commissioner (Appeals), no SCN under Section 28 could have been issued. He placed reliance on the following decisions of the Tribunal: (i) P V Electroplast Ltd. vs. Pr. CC, Noida, 2020 (373) ELT 415 (Tri.-All.) paragraph 7 of which reads: "7. We have carefully gone through the record of the case and submissions....
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....in the case of Priya Blue Industries (Supra) squarely covers the issue before us." 6. Learned authorised representative, on the other hand, supports the impugned order and says that ITC Ltd. pertained to only refunds which cannot be sanctioned unless the refund arises out of the assessment itself. The reason for this is that the officer sanctioning the refund cannot sit in judgment over or modify the assessment or sanction refund so as to effectively modify the assessment. This legal position was clarified by the Supreme Court in Priya Blue Industries vs Commissioner of Customs 2004 (172) E.L.T. 145 (SC) and Collector of Central Excise, Kanpur v. Flock (India) Pvt. Ltd., 2000 (120) ELT 285 (SC). This was reaffirmed by the Supreme Court in ITC Ltd. further clarifying that no refund can be sanctioned so as to modify the assessment even in cases of self-assessment. According to the learned authorized representative, a demand under section 28 is a completely different quasi-judicial process which involves demanding duty not levied, short levied, not paid, short paid or erroneously refunded. The officer adjudicating the SCN revises the assessment already made which is within the framew....
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....rder of assessment. A refund claim is not an appeal proceeding. The officer considering a refund claim cannot sit in appeal over an assessment made by a competent officer. The officer considering the refund claim cannot also review an assessment order. 7. We also see no substance in the contention that provision for a period of limitation indicates that a refund claim could be filed without filing an appeal. Even under Section 11 under the Excise Act, the claim for refund had to be filed within a period of six months. It was still held, in Flock (India)'s case (supra), that in the absence of an appeal having been filed no refund claim could be made. 8. The words "in pursuance of an order of assessment" only indicate the party/person who can make a claim for refund. In other words, they enable a person who has paid duty in pursuance of an order of assessment to claim the refund. These words do not lead to the conclusion that without the order of assessment having been modified in appeal or reviewed a claim for refund can be maintained." 9. It needs to be noted that in Priya Blue Industries the Supreme Court had reaffirmed the law laid down in Flock India. This decision in Priya....
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....rder permitting clearance of goods for home consumption under section 47. 12. Learned counsel for the appellant draws attention to paragraph 43 of ITC Ltd. which is as follows: "43. As the order of self-assessment is nonetheless an assessment order passed under the Act, obviously it would be appealable by any person aggrieved thereby. The expression 'Any person' is of wider amplitude. The revenue, as well as assessee, can also prefer an appeal aggrieved by an order of assessment." 13. According to the learned counsel for the appellant, since both sides can appeal against self-assessment, it means that no SCN under section 28 can be issued without first appealing against the assessment. This submission cannot be accepted. Firstly, the above paragraph only says that both sides can appeal against self-assessment and does NOT say both sides can ONLY appeal against self-assessment. It does not state that such an appeal and modification of the self-assessment is a pre-condition for issuing a notice under section 28. Secondly, such an interpretation may lead to absurd consequences. After a notice under section 28 is issued, it is followed by adjudication by either Commissioner or ....
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.... SCN under section 28 can be issued only after an appeal is filed and the assessment is modified by the Commissioner (Appeals) is not correct. In Jain Shudh Vanaspati Ltd. also the Supreme Court had categorically affirmed this position. The decisions of coordinate benches of this Tribunal in P G Electroplast Ltd. and Videacon Appliances relied upon by the learned counsel are contrary not only to this legal provision but also are contrary to the judgments of the Supreme Court in Priya Blue, Flock India, ITC Ltd. And Cannon India and hence are per incuriam which is an exception to the principle of stare decisis. In M/s Case New Holland Construction Equipment (I) Pvt. Ltd vs Commissioner, Ujjain EXCISE APPEAL NO. 52867 OF 2018 decided on 23 August 2021, this Tribunal examined the principle of per incuriam as a relaxation to the rule of stare decisis. Relevant portions of this decision are as follows: 34. The principle of per incuriam has been developed in relaxation to the rule of stare decisis. While referring to exception to the rule of stare decisis, it has been observed in 'Precedent in England Law' by Rupert Cross, 1961 Edition: "No doubt any court would decline to follow a c....
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....(2004) 1 Supreme Court Cases 681, the Supreme Court observed: "14. Having given our anxious thought, we are of the opinion that for the reasons stated hereinbefore, the decision of this Court in Dhondiram Tatoba Kadam having not noticed the earlier binding precedent of a coordinate Bench and having not considered the mandatory provisions as contained in Section 15 and 29 of the Act had been rendered per incuriam. It, therefore, does not constitute a binding precedent." 38. In Yeshbai vs. Ganpat Irappa Jangam AIR 1975 Bom 20: (1974) 76 BOMLR 278, a Division Bench of the Bombay High Court observed: "27. Now, a precedent is not binding if it was rendered in ignorance of a statute or a rule having the force of statute. The rule apparently applies even though the earlier court knew of the statute in question. If it did not refer to and had not present to its mind, the precise terms of the statute. Similarly, a court may know of the existence of a statute and yet not appreciate its relevance to the matter in hand; such a mistake is again such incuriam as to vitiate the decision. These are the commonest illustrations of decision being given per incuriam. In order that a case can be ....
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....n of the following : (1) artificial graphite (heading 3801); (2) insecticides, rodenticides, fungicides, herbicides, anti-sprouting pro-ducts and plant-growth regulators, disinfectants and similar products, put up as described in heading 3808; xxxxxx 19. The matter was remanded by this Tribunal by order dated 19.02.2018 and the operative part of the order is as follows: "5. We have heard both the sides and perused the appeal record. The point under dispute is the correct classification of Brassinolide. The appellant claimed the same as fertilizer. The Department contends the product to be plant growth regulator. We note that there is only a fine distinction between 'fertilizer' and a 'plant growth regulator'. While fertilizer is generally for promoting the growth of plant or crop for desired increased harvest, the plant growth regulators work on specific areas resulting in modified growth or even retardation of certain growth. Without further going into the technicalities, we note that the experts who are dealing with the products of Indian market namely, Central Insecticides Board & Registration Committee and also the statutory provisions of Insecticides Act clearly recog....
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....dles, And Fly-Papers)." 21. As may be seen, this heading covers products which are put up in forms or packings for retail sale OR as preparations OR articles. The Commissioner has, in the impugned order, found that the imported goods were put in packings for retail sale and also that the imported goods were preparations. There is no dispute that they were not articles. Learned counsel's submission is that although Chapter heading 3808 covers all three categories of goods mentioned above and the remand order required the Commissioner to examine whether the goods fall under 3808 or they were excluded by the Chapter Note 1(a) (2) to Chapter 38, since the remand order was given on his submission that the goods were not in retail packings, the Commissioner should not have examined if they were preparations and hence fall under Chapter heading 3808. 22. Learned authorised representative for the Revenue, on the other hand, submits that the order of remand by this Tribunal nowhere restricted the Commissioner to examine only if the goods were in retail packings and forbid the Commissioner from examining if they were preparations or articles. Therefore, the Commissioner was correct in exam....
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....consumer for consumption by an individual or a group of individuals is also satisfied. The impugned order discloses no evidence that any consumer requires and actually purchased the goods in the packages of 25 kg or 25 packets of 1 kg each. (iv) This finding is also contrary to Department's own investigation with the buyers of the Appellants who clearly disclosed using the impugned goods as raw material for further manufacture of their products. (v) He relies on Rule 2(i) and 2(k) of Legal Metrology (packing commodities) Rules 2011 to assert that the imported goods were not in retail packings. These read as follows: "Rule 2. Definition. (j) "retail dealer" in relation to any commodity in packaged form means a dealer who directly sells such packages to the consumer and includes, in relation to packages as are sold directly to the consumer, a wholesale dealer who makes such direct sale to the consumer. (k) "retail package" means the packages which are intended for retail sale to the ultimate consumer for the purpose of consumption of the commodity contained therein and includes the imported packages." (vi) Relying upon Rule 2(k) above, he submits that the appellant's prod....
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....25 kg do qualify as consumer packings. We find that while it is true that all packings over 25 kg are clearly excluded from the Legal Metrology Rules, it does not necessarily mean that all packings up to 25 kg are included from them and further that all such goods get covered by the definition of retail packings. There could be substances of much higher value, such as saffron or spices which will be sold even in wholesale in much smaller packings than 25 kg. Therefore, it needs to be seen if there is sufficient evidence on record to suggest that the goods which were imported were in retail packings. We do not find sufficient evidence to hold so, if we exclude the survey on internet and e-commerce websites conducted by the Commissioner after concluding the hearing and before passing the impugned order which we already have found cannot be used against the appellant. D. Preparations 30. Learned counsel for the appellant submits that the finding of the Commissioner in the impugned order that the goods were a form of a preparation is without any factual or legal basis or any expert opinion and without any supporting evidence and the same is also beyond the terms of the remand order o....
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....Brassinolide Fertilizer, I state as per the best of my knowledge, 01.% Natural Brassinolide is an extract of cole pollen which is a part of cole plant (rape seed of Brassica Napus). On being asked about the composition of the 01.% natural brassinolide, I state that it is (22R, 23R, 24S)-2alpha-3alpha, 22, 23 tetrahydroxy-24 methyl-B-Home-7 Oxa-5 alpha-Cholestan-6-one. As stated above that product at Sl No. (v) is used for the growth of plant. On being asked about the manner in which the said product is used for the growth of plant, I state that we have to dilute 1 gm in 10 ltr of water and foliar spray directly on the plant. I am submitting the write up of the functions of our said product to your goodself." 36. According to the learned counsel for the appellant the imported goods were not preparations. As is commonly understood, a preparation is a mixture of the chemical/drug with other substances so as to make it ready to use directly or after a few steps such as dissolving in water. In pharmaceutical industry, any drug is first manufactured as bulk drug which is then converted into preparations such as tablets, capsules, syrups and injections which can be used either by the p....
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....H 3808 by Chapter note 1(a)(2) to Chapter 38. E. On merits of classification 39. The imported goods were described as '0.1% Natural Brassinolide Fertilizer' and the appellant classified them under Chapter 31 of CTH as fertilisers. However, the appellant had sold it as Plant Growth Regulator. The SCN proposed classification as Plant Growth Regulator under Chapter heading 3808 based on the investigations and expert opinion. During the first round of litigation and also before us, learned counsel does not dispute that the good was Plant Growth Regulator. His submission during the first round of litigation was that even plant growth regulators cannot be classified under Chapter 38 in view of the Chapter Note 1(a) (2) which excludes "specially defined chemicals" from the Chapter unless they are in the forms as described in 3808 and since their goods were not put up in packings for retail sale, they cannot be classified under 3808. His submission is that once the classification proposed in the SCN fails, the importer's classification under Chapter Heading 31010099, must survive, even if it is not correct because no notice has been served proposing any other classification. 40. Learned....
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.... was not levied, not paid, short levied, short paid or erroneously refunded by reasons of (a) any collusion; (b) any willful mis-statement; or (c) suppression of facts 44. The SCN invoked extended period of limitation on the ground that the appellant had malafide intention to evade its customs duty liability. Relevant extract of SCN dated 16.11.2015 issued to M/s Midas Fertchem is as follow: "(viii) Authorized signatory of the said importer during their statement has stated that they took the verbal guidance from their overseas supplier M/s Chengdu Newsun, also a manufacturer of Brassinolide who guided them that Brassinolide is a fertilizer. They also tried to support their stand by submitting the copies of Invoice of M/s Chengdu Newsun wherein the word 'Fertilizer' is used by the said supplier. However, a copy of literature of said product retrieved from the web page of M/s Chengdu Newsun, clearly reveals that Brassinolide is a 'Botanic PGR From mentioning the word "fertilizer" and CTH "31010099" in the invoice of M/s Chengdu Newsun and in the Bill of Entry of importer, it appears that the importer had a malafide intention since the start of their import of th....
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....r'. All documents including invoice, packing list, etc. described the imported goods the same way and hence the Bills of Entry were filed accordingly classifying the goods under CTH 31010099. The officers assessing the Bills of Entry sought additional information and literature in respect of several Bills of Entry, which was provided to them. After examining the literature and information, the proper officers accepted the appellant's classification of the goods. What the appellant did after importation and how it sold in the market are irrelevant because the goods must be assessed as they are imported. The appellant sold the imported goods as Plant Growth Regulators in the market because that is how they are known in the Indian market. No information was hidden and all literature sought by the officers was promptly provided. So, there is no evidence of any collusion or willful misstatement or suppression of facts. 47. Learned counsel further submitted that claiming classification of the imported goods under a particular CTH does not amount to mis-declaration but is only self-assessment. Such self-assessment is subject to reassessment by the officers and they also accepted the clas....
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....er person to produce any document or information, whereby the duty leviable on the imported goods or export goods, as the case may be, can be ascertained and thereupon, the importer, exporter or such other person shall produce such document or furnish such information. (4) Where it is found on verification, examination or testing of the goods or otherwise that the self- assessment is not done correctly, the proper officer may, without prejudice to any other action which may be taken under this Act, re-assess the duty leviable on such goods." ****** 50. In practice, the importer makes an entry under section 46 and also self-assesses duty under section 17(1) by filing the Bill of Entry. There is no separate mechanism to self-assess duty. The columns pertaining to classification, valuation, rate of duty and exemption notifications which determine the duty liability are part of the Bill of Entry which is also an entry under section 46. Thus, although the Bill of Entry requires the importer to make a true declaration and further to confirm that the contents of the Bill of Entry are true and correct, the columns pertaining to classification, exemption notifications claimed and in so....
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....and hence extended period of limitation was correctly invoked. 53. We find Revenue is correct in submitting that the appellants had sold the imported goods as plant growth regulators and hence must have been aware that they were not fertilizers and hence had wrongly classified them as fertilizers. It is equally true that the assessing officers were also aware of the nature of the goods and had, on more than one occasion, called for the technical literature on the product which the appellants had provided. After studying the technical literature, the officers cleared the goods as fertilizers. Balancing these two facts on record, we do not find that sufficient grounds exist to invoke extended period of limitation in this case. We, therefore, find that extended period of limitation could not have been invoked in the present case. In our considered view, demand can be sustained only within the normal period of limitation along with applicable interest. G. Penalties 54. In the impugned orders, penalty under section 114A was imposed on the appellant importers while penalty under section 112 was imposed on Smt. Rashmi Jain and Shri Manish Jain. According to the learned counsel for the ....
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....d penalty under the first proviso shall be available subject to the condition that the amount of penalty so determined has also been paid within the period of thirty days referred to in that proviso : Provided also that where the duty or interest determined to be payable is reduced or increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the court, then, for the purposes of this section, the duty or interest as reduced or increased, as the case may be, shall be taken into account: Provided also that in case where the duty or interest determined to be payable is increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the court, then, the benefit of reduced penalty under the first proviso shall be available if the amount of the duty or the interest so increased, along with the interest payable thereon under section 28AA, and twenty-five percent of the consequential increase in penalty have also been paid within thirty days of the communication of the order by which such increase in the duty or interest takes effect : Provided also that where any penalty has been levied under this section, no penalty shall be lev....
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....s may be seen the ingredients necessary for imposing a penalty under section 114A are identical to the ingredients necessary to invoke extended period of limitation. We have found that extended period of limitation cannot be invoked in these cases. Logically, the penalty under section 114A imposed on the appellant importers also cannot be sustained for the same reason. 58. As far as the penalty under section 112 is concerned, it is imposable on any person whose acts or omissions render the goods liable to confiscation under section 111 or who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111. In these cases, goods were held liable for confiscation under section 111 (d) and (m) and consequently penalty was imposed under section 112. However, since the goods were not physically available no order of confiscation was issued nor was any redemption fine was imposed by the impugned orders. Section 111(d) and (m) read as follow: "Section 111. Confiscation of improperl....