TaxTMI 
TaxTMI 
2024 (3) TMI 1188
X X X X Extracts X X X X
X X X X Extracts X X X X
....t-paid Rs.2,22,180/- (No penalty) 2. C/41907/2015 Kisankraft Machine Tools Pvt. Ltd. 3559187/20.05.2011, 3559189/20.05.2011, 3782822/14.06.2011, 4088758/15.07.2011, 4164371/25.07.2011, 4176057/26.07.2011 Order-in-Appeal C.Cus. II No. 548/2015 dtd. 29.05.2015 Differential duty demand of Rs.28,25,739/- Penalty Rs.50,000/- u/s 112(a) of the Customs Act, 1962 3. C/41715/2017 Kisankraft Machine Tools Pvt. Ltd. 7678255/16.08.2012, 8322952/26.10.2012, 7162275/20.06.2012, 6727767/03.05.2012 Order-in-Appeal C.Cus. II Nos. 348 to 350/2017 dtd. 24.04.2017 Differential duty demand of Rs.31,80,608/- plus equal penalty u/s 114A of the Customs Act, 1962 4. C/41716/2017 Kisankraft Machine Tools Pvt. Ltd. 5323114/20.11.2011, 6078000/23.02.2012 Differential duty demand of Rs.4,17,777/- plus equal penalty u/s 114A of the Customs Act, 1962 5. C/41717/2017 Kisankraft Machine Tools Pvt. Ltd. 9678154/25.03.2013, 9473984/04.03.2011, 9251108/07.02.2012, 9349291/08.02.2013 Differentia....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... as below. Department's View: 4. The following points have been made by Revenue: (i) The goods as seen from the Appellants website and literature are marketed as "Brush Cutters" to cut or trim bushes, hedges, weeds, plants and grass. (ii) Brush cutters are primarily used for trimming or cutting rather than reaping, croplifting, gathering, picking, threshing, binding or bundling. Their primarily use is to remove unwanted growths like weeds, small cultivations, thick grasses, and hardy hedge plants. (iii) As per the advertisement, supply orders to Govt programs and other selective material given by the appellant the impugned goods are known as 'brush cutters' or 'weed cutters' and have been purchased for use in agricultural and horticultural fields. (iv) Weight of the majority of machines varies from 10-12 Kgs and are designed to be handled by a single operator and carried in hand. (v) Explanatory Notes to heading 8467 at Sl no 19 gives exact specifications of machines included in the heading and includes portable brush-cutters with a self-contained motor, a drive shaft (rigid or flexible) and a tool holder. (vi) In terms of the Explanatory N....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he notes suffice to clarify the scope of a heading, then it must be construed according to the provisions contained in the Rules. Rule 1 gives primacy to the section and chapter notes along with terms of the headings. They should be first applied. The need to refer to the HSN and resort to any interpretative process arises only where the meaning is not manifest. If the words are plain and clear and directly convey the meaning, there is no need for any interpretation. 7. It is not dispute that the Schedule to the Customs Tariff in itself does not contain a specific heading for "Agricultural Reaper" and its parts. There is also no dispute that though different models of goods have been imported all are sought to be classified under one heading. Finally, it is also not disputed that the impugned goods are marketed and known in the trade as "brush cutters" as also seen from the product literature and the tender notices etc. enclosed with the appeal. 8. In M/s Indo International Industries v. Commissioner of Sales Tax, Uttar Pradesh, [1981 (2) SCC 528], it has been held by the Apex Court that "if any term or expression has been defined in the en....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e hence proceed to examine the classification of the impugned goods as finalized in the impugned orders and which in popular / trade parlance are known as "brush cutters'. The CTH 8467 preferred by Revenue pertains to 'TOOLS FOR WORKING IN THE HAND, PNEUMATIC, HYDRAULIC OR WITH SELF-CONTAINED ELECTRIC OR NON-ELECTRIC MOTOR', whereas CTH 8433 which reflects the Appellants choice covers 'HARVESTING OR THRESHING MACHINERY, INCLUDING STRAW OR FODDER BALERS; GRASS OR HAY MOWERS; MACHINES FOR CLEANING, SORTING OR GRADING EGGS, FRUIT OR OTHER AGRICULTURAL PRODUCE, OTHER THAN MACHINERY OF HEADING 8437'. The impugned goods which are handheld machines, would at first sight and by its popular name as 'brush cutter', be more suitable to be classified under CTH 8467. However, the goods due to the dispute in their classification needs to be examined with support from the HSN. 10. As per Explanatory Notes to heading 8467 the tools included under the heading are shown in a list and include at Sl. No. 19, portable brush-cutters with a self-contained motor, a drive shaft (rigid or flexible) and a tool holder, presented together with various inter changeable cutting tools for mounting in the tool ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....th. The last three ways are much more common in British English than in American English. American English uses "at hand" instead of "in hand" and so forth. 11.2 This goes to show that language is an imperfect vehicle of thought and the ability of the written language to precisely convey technical information and description of products as done by mathematical symbols and formula, especially in the case of legal matters, enactment or notifications, may not at all times be achieved. As said "It is difficult to expect the Legislature carving out a classification which may be scientifically perfect or logically complete or which may satisfy the expectations of all concerned". The inability of words to achieve precision at times makes it necessary, as discussed above, to understand the legislative intent by the one principle which is fairly well settled by a catena of judgments by the Supreme Court, that words and expressions describing goods in a taxing statute should be construed in the sense in which they are understood in the trade, by the dealer and the consumer. The reason is that it is they who are concerned with it and it is the sense in which they understood ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ment has been raising the issue of mis-classification of Brush Cutters since 2012. Based on audit findings, the demands of short-levied duties have been confirmed by adjudicating authorities in past several cases and upheld by appellate Commissioners and most of the cases are pending before Hon'ble CESTAT. Thus, the entire issue and rival CTH were known to importer as well. In addition, it is also pertinent to mention here that immediately on receipt of audit findings, the importer was issued a letter vide F. No. TA/116085/2017 Gr. 5 dated 20.11.2017 for effecting payment of short-levied duty in this case, within the ambit of two years from the relevant date. The importer has also submitted written submissions dated 24.1.2018 to the aforesaid letter. Therefore, the importer cannot take refuge under the allegation that demand is time-barred and deviate from the main issue of mis-classification which resulted in short-levy of duty. . . . . In this case, it is not alleged in SCN that this is a case of suppression of facts alone but SCN has emphasized on mis-classification of impugned goods despite the fact that importer was aware of the issue and on several occasions, classification h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the importer while presenting the Bill of Entry shall make and subscribe to a declaration as to the truth of such Bill of Entry. Further, Section 114A does not incorporate 'intention to evade payment of duty'. This is because while mens rea is an essential or sine qua non for criminal offence it is not an essential element for imposing penalty for breach of civil obligations or liabilities, unless specifically stated so in the statute. Similarly, the importer is required to make a true declaration of the description and quantity of goods etc which have actually been imported and not just the goods as declared in the import documents. Thus, if the goods actually imported are more in number or the actual description or CTH as determined by an order under the Act is different from what is declared in the Bill of Entry, the importer would have made a mis-declaration. If this is done knowingly it's a willful misstatement. 16. In Associated Cement Companies Ltd. Versus Commissioner Of Customs [2001 (128) ELT 21 (S.C.)], the Apex Court observed; "52. Though it was sought to be contended that Section 28 of the Customs Act is in pari materia with Section 11A of the Excise Act, w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ould invite action as provided for under the Act. 18. The Appellant has referred to the following judgments in support of their stand that subsequent notices cannot be issued by alleging suppression or misstatement invoking the extended period of limitation. a) P and B Pharmaceuticals Pvt. Ltd. v. Collector - 2003 (153) E.L.T. 14 (S.C.): The facts of the case are that a show cause notice was issued to the assessee proposing to demand duty on the basis of the price at which its distributor sold the goods in the course of whole sale trade on the ground that the said distributor was a related person. The assessee contended that so far as the demand of duty on the basis of the distributor being a related person is concerned, there has been no suppression of fact and all these facts were before the concerned authorities and part of earlier show cause notices, therefore, it was not open to the Central Excise authorities to invoke proviso to Section 11A of the Act for making a demand of duty for the extended period. The Hon'ble Supreme Court held that the necessary facts had been brought to the notice of the authorities at different intervals from 1985 to 1988 and furthe....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... its own features. It has been held by the Apex Court in its judgment in the case of Collector of Central Excise, Calcutta v. M/s. Alnoori Tobacco Products and Anr. [Civil Appeal Nos.4502-4503 of 1998 decided on 21.07.2004], that circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases. It cited the following words of Lord Denning with approval: "Each case depends on its own facts and a close similarity between one case and another is not enough because even a single significant detail may alter the entire aspect, in deciding such cases, one should avoid the temptation to decide cases (as said by Cordozo) by matching the colour of one case against the colour of another. To decide therefore, on which side of the line a case falls, the broad resemblance to another case is not at all decisive." We hence need to look into the matter in a little more detail. The fact of this case is that although there was a dispute in the classification of imported goods, the same came to be finalised by the Department. The procedure culminated in the issue of a speaking order determining the classification of the impugned ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ence's affecting the revenue, and as such, development and security of the State. We are not oblivious of the fact that the penalty provisions cannot be used as a revenue-yielding provision. The object to the penalty provision is to ensure compliance in the larger public interest." In this case willful misstatement of the CTH is evident. 19.2 Even if a matter is under appeal it does not mean that the legal stand of the importer which has been defeated in quasi-judicial proceeding can continue to be recognized as legitimate and duty short paid. A valid order determining the CTH of the imported goods and a statutory document filed for the same goods knowingly misstating the CTH cannot coexist legally and be recognised in law to be valid. It cannot be said that ordinary prudence has been exercised by the importer-appellant according to the standards of a compliant tax payer or even a reasonable person. It violates the undertaking given as mandated by section 46(4) of the Customs Act, 1962 in the Bill of Entry by the appellant which forms the foundation for the trust based self-assessment envisaged by the Act. The undertaking is meant to carry out the intent of the statute ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e provisions of Section 46(4) ibid. Further there is nothing in the section to mean that because there is knowledge by the Department of the earlier mis-classification of the goods by the Appellant the willful misstatement in the Bill of Entry subsequently which stands established disappears. 20. In Hardeep Singh v. State of Punjab, reported in 2014 (3) SCC 92, at Paragraphs 43, the Hon'ble Supreme Court held as follows: "43. The court cannot proceed with an assumption that the legislature enacting the statute has committed a mistake and where the language of the statute is plain and unambiguous, the court cannot go behind the language of the statute so as to add or subtract a word playing the role of a political reformer or of a wise counsel to the legislature. The court has to proceed on the footing that the legislature intended what it has said and even if there is some defect in the phraseology etc., it is for others than the court to rectify that defect. The statute requires to be interpreted without doing any violence to the language used therein. The court cannot re-write, recast or reframe the legislation for the reason that it has no power to legisl....