TaxTMI 
TaxTMI 
TaxTMI 
2023 (1) TMI 998
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.... the Department. These appeals cover 28 consignments 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 ....
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....H 3808. Accordingly, show cause notices [SCN] were issued to the appellant importers proposing to re-classify 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, sepa....
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....nder section 28 was issued without assailing the assessment 5. Learned counsel for the appellant submitted that one of the grounds 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, Noi....
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....ble on the ground that the assessment of the said B.O. Entry has not been challenged by the authorized. We find that the decision of the Hon'ble Supreme Court 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 le....
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.... order of assessment has been reviewed under Section 28 and/or modified in an appeal, that order stands. So long as the order of assessment stands the duty would be payable as per that order 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 ap....
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.... that the assessments can be modified by either of these two methods. It was also clarified by the Supreme Court in Jain Shuddh Vanaspati that a notice under section 28 can be issued without modifying the order 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 pr....
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....t which is specially conferred by law and through this SCN and the consequent adjudication, assessment can be modified. The assessment can also be modified through an appeal process. The submission by the learned counsel that an 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....
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....ose given in ignorance of some consistent statue or binding authority. Even if a decision of the Court Appeal must follow its previous decision and leave the House of Lords of rectify the mistake." 37. In Babu Parasu Kaikadi (Dead) by Lrs. vs. Babu (Dead) Through Lrs. (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 th....
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.... Regulator but contested classification under Chapter 38 on a new ground that the imported goods were not in retail packages and hence were not classifiable under Chapter 38 in view of Chapter Note 1(a) (2). The note reads as follows: 1. This Chapter does not cover: (a) separate chemically defined elements or compounds with the exception 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 in....
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....d afresh." 20. Chapter heading 3808 mentions three forms in which the goods under the heading could be. It reads as follows: "3808 Insecticides, Rodenticides, Fungicides, Herbicides, Anti-Sprouting Products and Plant-Growth Regulators, Disinfectants and Similar Products, put up in Forms or Packings for Retail Sale or as Preparations or Articles (For Example, Sulphur-Treated Bands, Wicks And Candles, 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 i....
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....reliance on the same is in gross violation of the principles of natural justice. (iii) Without prejudice to the above, the said finding of the learned Principal Commissioner is based on a total misconstruction of the factual position. Mere availability of the goods on the e-commerce sites cannot be taken to mean that it is for retail sale and are in retail packages, unless, the requirement of these being for sale to the ultimate 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 dea....
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....packing' is not defined in the tariff. Both sides refer to different Rules of the Legal Metrology Rules to interpret the term. According to the learned counsel for the appellant, the goods were not in packings meant for consumer and hence were not retail packings in terms of Rule 2(k) of the Legal Metrology Rules. According to the learned authorised representative for the Revenue, since only packages of more than 25 kg or 25 litres are excluded as per Rule 3 of the Legal Metrology Rules, the packages in question, being of up to 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 exclud....
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....N dated 16.11.2015, clarified that the imported goods were in the form of powder which can be dissolved 1 gram in 10 litres of water and sprayed. The relevant portion of the statement is as follows: "On being asked specifically about the product 0.1% Natural Brassinolide Fertilizer, mentioned at Sl. No. (v) above, I stated that it is a natural extracted product from Cole Pollen and the 0.1% Natural Brassinolide Fertilizer is water soluble and a ready to use fertilizer. On being asked specifically about the description of the 0.1% Natural 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 pla....
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....s but other inert material. It has been stated in the statement of Smt. Rashmi Jain referred to above, that it should be mixed in the proportion of 1 gram in 10 litres water and sprayed which makes it clearly a preparation of Brassinolide. Even if the submission of the learned counsel that it is sold to other companies which prepare further preparations is considered, the imported goods will be intermediate preparations which are also squarely covered by CTH 3808 as per the explanatory notes to HSN 3808. We thus find that the imported good was clearly a preparation of Brassinolide and was not excluded from CTH 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 durin....
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....pter 38, except when they are put up in forms described in 3808 viz., as retail packings, as preparations and as articles. Of these, there is no dispute that the imported brassinolide were not articles which leaves with retail packings and preparations. We have already found that the imported brassinolide was a preparation. Since the brassinolide is in the form indicated in CTH 3808 by being preparation, it is not excluded by Chapter Note 1 (a) (2). Therefore, it falls under CTH 3808. F. Extended period of limitation 43. The SCN invoked extended period of limitation under section 28 which can be invoked when the duty 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 overse....
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....importer are accepted on their face value being correct however suppression and misrepresentation of facts could only be detected upon detailed investigation which included search of the premises examining incriminating records and other aspects which in this case has led to detection of fraud and the malafide intent of the importer." 46. Learned counsel submitted even if the matter is decided on merits against the appellant, extended period of limitation cannot be invoked as none of the three elements essential to invoke extended period of limitation were present. The appellant imported the goods which were exported by the Chinese supplier as 'brassinolide fertilizer'. 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 sol....
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....orted goods under section 46, or an exporter entering any export goods under section 50, shall, save as otherwise provided in section 85, self-assess the duty, if any, leviable on such goods. (2) The proper officer may verify the the entries made under section 46 or section 50 and the self assessment of goods referred to in sub-section (1) and for this purpose, examine or test any imported goods or export goods or such part thereof as may be necessary. Provided that the selection of cases for verification shall primarily be on the basis of risk evaluation through appropriate selection criteria. (3) For the purposes of verification] under subsection (2), the proper officer may require the importer, exporter or any other 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....
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....ents. Thus, if the goods actually imported are more or different from what is declared in the Bill of Entry, the importer would have made a mis-declaration. 52. Extended period of limitation can be invoked in case of collusion or any willful mis-statement or suppression of facts. According to the Revenue, the appellant had wrongly declared the imported goods as fertilizers and they were also declared so in the invoices, packing lists, etc. supplied by the Chinese suppliers. The appellants were fully aware that the imported goods were plant growth regulators and were also selling the goods as plant growth regulators. Therefore, according to the Revenue, the appellant has willfully mis-stated the nature of the imported goods in the Bills of Entry as fertilizers 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,....
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....ously refunded by reason of collusion or any wilful mis-statement or suppression of facts, the person who is liable to pay the duty or interest, as the case may be, as determined under sub-section (8) of section 28 shall also be liable to pay a penalty equal to the duty or interest so determined: Provided that where such duty or interest, as the case may be, as determined under sub-section (8) of section 28, and the interest payable thereon under section 28AA, is paid within thirty days from the date of the communication of the order of the proper officer determining such duty, the amount of penalty liable to be paid by such person under this section shall be twenty-five per cent of the duty or interest, as the case may be, so determined: Provided further that the benefit of reduced 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 cou....
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....t of which the value stated in the entry made under this Act or in the case of baggage, in the declaration made under section 77 (in either case hereafter in this section referred to as the declared value) is higher than the value thereof, to a penalty not exceeding the difference between the declared value and the value thereof or five thousand rupees, whichever is the greater; (iv) in the case of goods falling both under clauses (i) and (iii), to a penalty not exceeding the value of the goods or the difference between the declared value and the value thereof or five thousand rupees], whichever is the highest; (v) in the case of goods falling both under clauses (ii) and (iii), to a penalty not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or five thousand rupees, whichever is the highest." 57. As 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....