AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2024 (5) TMI 943
X X X X Extracts X X X X
X X X X Extracts X X X X
.... duty short levied under Section 114 A of Act ibid. 2.1 Brief facts emerging from this appeal are that the Appellant had imported "Clear Float Glass" (CFG) from Malaysia classifying under CTH 7005 1090 and cleared the same @ Nil rate of BCD availing exemption under Notification No. 46/2011-Cus dated 01.06.2011(Serial No. 934) as the Country of Origin of subject import goods is Malaysia, a country notified for the benefit of ASEAN India Free Trade Area (AIFTA). 2.2 However, the department was of the view that the imported Float Glass is classifiable under CTH 7005 2990 attracting BCD @10% and consequently not eligible for the benefit under Notification No. 46/2011-Cus. dated 01.06.2011. Hence it was alleged that the CFG imported from Malaysia was wilfully mis-classified under CTH 70051090 for the purpose of availing FTA benefit of said Notification, resulting in short levy of applicable Customs duty. 2.3 Accordingly, a Show Cause Notice dated 18.04.2022 was issued to the Appellant proposing :- i. to reject the classification of CFG adopted by the Appellant for the subject imports and to re-classify the same under CTH 70052990 thereby seeking ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of admitted DAP/AP's should be undertaken after ensuring that the reply given by the Ministry (CBEC) is available on record. It was informed that the appellant sought from the Ministry the Action Taken Note on the said Audit Para by way of information sought under the RTI Act and perusal of the same would reveal that the Ministry has replied both scientifically as well as legally justifying the classification of CFG under CTH 70051090, in their reply to the said Audit Para and the relevant Action Note is reproduced below:- iii. It was submitted that to get classified under Chapter Heading 70051090 of CTH, the CGF shall be a non-wired glass, having an absorbent, reflecting or non-reflecting layer and not tinted. In the instant case, there is no dispute between the importer and department that the CFG imported is a non-wired glass. The CFG has a microscopic tin layer during the manufacturing process and the dispute was only with regard to whether such a layer is an absorbent, reflective or non-reflective layer to merit classification under CTH 7005 10 90 as per Chapter note 2 (c) of Chapter 70 to Customs Tariff Act, 1975. iv. It was pointed out that for the per....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t reflecting or non-reflecting layer is available only on the tin side of the CFG and not on the air side of the CFG. vi. It was submitted that the impugned order has reproduced the test reports in Paragraphs 51-54 and has ignored the vital finding of the test report which proves the presence of absorbent tin layer. In this connection the Appellant made mention of clause (c) and (h) of the test report wherein it was clearly stated that "the tin side is detected under UV illumination using tin detector" and "No absorbent layer is on air side other than the tin layer on the tin side of the glass which is fluorescent under UV illumination". Further it was also referred to an RTI application made to CSIR which clarified that all the float glasses tested by them between 2017 and 17.07.2023 have a tin layer on one side of the float glass which is absorbent and non-reflective. In this regard, the reply dated 17.07.2023 of CSIR, CGCRI, Kolkata is extracted and reproduced below:- Query vide Registration Numben NIL RTI Reg SI No: 423 I am to refer to yöur request for information under RTI Art, 2005, receivëd vide Registration Number:: NIL da....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rtunate. CFG when classified under Chapter Heading 70052990 is eligible for concessional rate of duty at 5% under the Notification dated 01.06.2011 supra. ix. It was submitted that in an identical proceeding against the same Appellant, the Hon'ble Bench of CESTAT, Kolkata vide Final Order No. 77460-77462/2023 dated 03.11.2023 [2023 (11) TMI 485-CESTAT Kolkata], had categorically upheld the Appellants classification under CTH 70051090 and rejected the Department's classification under CTH 70052990 which is squarely applicable to the instant case. x. The Appellant has also relied on the ruling given by Customs Authority for advance Rulings for the identical imports in the case of Chandrakala Associates [2021 (9) TMI 1433-A.A.R Customs, Mumbai] wherein the subject goods were appropriately classified under CTH 7005 1090 which stand was reiterated in the case of Suraj Constructions by the Advance Ruling Authority. The relevant Paragraph of the decision of Advance Ruling Authority is extracted below:- "10. In view of the above discussions, I rule that the subject goods 'Clear Float Glass' with absorbent layer on only one side would merit classification ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... only prospectively from the date of issuance of Show Cause Notice and in this regard reliance was placed on the following decisions:- (a) Steel Authority of India Ltd. Vs. CCE, Calcutta [1985 (22) ELT 487 (Tribunal)]- Maintained in Supreme Court [1991 (51) ELT A 42 (SC)] (b) Inarco Ltd., Bombay Vs. CCE, Bombay [1987(31) ELT 469 (Tribunal)]- Approved in [1996(87) ELT 3 (SC)] (c) Indian Oxygen Ltd. Vs. CCE [1990 (47 )ELT 449 (Tribunal)]-Approved in [1991 (51) ELT A36 (SC)] (d) CCE Vs. Swastik Coaters Pvt. Ltd. [1999 (107) ELT 533 (Tribunal)] (e) Saurashtra Chemicals Ltd. Vs. CC, Jamnagar [2011 (272) ELT 158 (Tri.-Ahmd.)] (f) CCE, Aurangabad Vs. Videocon Appliances [2009 (235) ELT 513 (Tri.-Mumbai)] (g) CC(Imports), Mumbai Vs. Hindutan Gas & Industries Ltd. [2006 (202) ELT 693 (Tri.-Mum.)] (h) Mac & Megha Agro Equipments (P) Ltd. Vs. CCE, Cochin [2006 (199) ELT 260 (Tri.-Bang.)] (i) Madhus Garage Equipments Vs. CC, Bangalore [2006 (198) ELT 388 (Tri.-Bang.)] (j) Wipro Ltd. Vs. CC, Chennai [2005 (189) ELT 289 (Tri.-Bang.)] xiii. It was averred that the reliance of the Adjudicating Author....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (c) Raja Impex Pvt. Ltd. [2008 (229) ELT 185 (P&H)] (d) Shiv Kripa Ispat Pvt. Ltd. [2009 (235) ELT 623 (Tri. LB)] and the appeal filed by department dismissed by the High Court, Bomaby [2015 (318) ELT A259 (SC)] (e) Finesse Creation Inc. [2009 (248) ELT 122 (Bom.)] and the appeal against the decision was dismissed by the Hon'ble Supreme Court [2010 (255) ELT A120 (SC)] (f) Sudarshan Cargo Pvt. Ltd. [2010 (258) ELT 197 (Bom.)] xvi. It was contended that when demand itself is unsustainable, the question of interest, penalty and redemption fine does not arise. 4.1 The Ld. Authorised representative Shri R. Rajaraman representing the Department affirmed the findings of the lower Adjudicating Authority. He has drawn our attention to the test report of CSIR-Central Glass & Ceramic Research Institute, Kolkata wherein the testing agency has opined that there is no absorbent, no reflective or non-reflective layer on airside. As such, the primary condition for classifying the imported CFG under CTH 70051090 was not satisfied. He has submitted that if the tin layer is treated as the absorbent layer which is inherent of the manufacturi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....referential Trade Agreement Between the Government Of Member States of ASEAN and Republic of India) Rules, 2009. The SCN dated 18.04.2022 proposed to reclassify the imported CFG from Tariff item 7005 1090 to 7005 2990 and to demand differential duty of over Rs.41.41 crores by invoking the extended period and to deny the benefit of FTA Notification claimed. The SCN also proposed to confiscate the imported CFG and to impose fine and penalty on the importer. The Commissioner of Customs, Chennai vide the impugned order dated 11.04.2023 reclassified the imported CFG as proposed and confirmed the demand of duty absolutely by invoking extended period with interest and equal penalty. Further, the Commissioner also had held that the imported CFG was confiscable and allowed it to be redeemed on payment of fine of Rs.31 crores. 8.1 The Ld. Advocate for the appellant argued that they have been importing CFG for more than 15 years and have been classifying the CFG under 7005 1090 as the imported CFG are non-wired glass, non-tinted and has a thin TIN absorbent layer on one side of the glass. Manufacturing process of CFG: 8.2 Float Glass is manufactured by float pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....id 61 Bills of Entry accepting the classification of CFG imported by the appellant under CTH 70051090 of CTA (Paragraph 31 of Order-in-Original dated 11.04.2023). 8.5 The Ld. Advocate has argued that despite finalisation of provisionally assessed imports on the basis of the test report obtained accepting the importer's classification, the above SCN dated 18.04.2022 was issued proposing to reclassify the imported CFG from Tariff item 7005 1090 to 7005 2990 solely basing on the audit report which was being contested by the Department; that the SCN was issued in gross violation of the instructions given by the Department with respect to issuance of SCN based on CRA objections. He has referred to the Circular No. 1023/11/2016-CX dated 08.04.2016 wherein under Paragraph 4.1.2 it has been instructed that no SCN should be issued in cases where Department has not agreed with audit objections on merits. Further under Paragraph 4.2 of the said Circular, it was further instructed that where a contested objection has become DAP and on examination it is found by the Commissioner (PAC) or Joint Secretary (Customs) in CBEC that the objection should have been admitted, they may give neces....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... microscopically thin coating of metal or of a chemical compound (for example, metal oxide) which absorbs, for example, infra-red light or improves the reflecting qualities of the glass while still allowing it to retain a degree of transparency or translucency; or which prevents light from being reflected on the surface of the glass." 9.2 It is evident from the manufacturing process that the CFG manufactured as above has a microscopically thin coating of metal layer, namely TIN on one side of the CFG, which is known as "Tin Side". Further it is an undisputed fact in this proceeding that the imported CFG are non-wired and non-tinted. This leaves us to ascertain whether such microscopically thin Tin Coating appearing on the TIN side is an absorbent, reflecting or non- reflecting layer to get classified under Tariff item 7005 1090. 9.3 It is already on record that the Department have drawn samples and tested the same with the Government notified laboratory namely CSIR-CGCRI, Kolkata which had reported that the imported CFG sample is having a microscopically thin coating of Metal, namely TIN, and it is an absorbent/non-reflective layer. This fact is also not in d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mandates that the absorbent reflecting or non-reflecting layer shall be on which side of the CFG. In other words, the only requirement for CFG to get classified under 70051090 is that the CFG shall have an absorbent reflecting or non-reflecting layer, which is undisputedly present in the instant case and the same, is evidenced by test reports issued by the notified Government Agency viz., CSIR-CGCRI as many as more than 40 test reports pertaining CFG imports through various Custom Houses. Further, the Ld. Advocate referred to an RTI application made to CSIR wherein it was clarified that all the float glasses tested for Customs by them since 2017 till 17.07.2023 has a tin layer on one side of the float glass which is absorbent and non-reflective. [CSIR-Central Glass and Ceramic Research Institute's letter dated 17.07.2023. (Page No. 43 of Synopsis filed)] 9.8 He also submitted that, identical goods manufactured by domestic manufacturers viz., Saint Gobain have also classified the goods under CTH 7005 1090 and assessed accordingly both for domestic clearances and exports. 9.9 We find that Department's insistence of absorbent layer to be only on the air side for....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is fluorescent is mentioned. Whether such layers are reflective or not-reflective and whether such layers are absorbent or not? The reply is given as (a) not-reflective and (b) absorbent (UV). 20. If the same is considered then the said clarification is satisfying the Chapter Note 2(c) of Chapter 70 of the Customs Tariff Act and the said Report has not been relied upon by the adjudicating authority while adjudicating the case. Therefore, the impugned order is bad in law. 21. We further take note of the fact that in the case of M/s. Suraj Constructions (supra), the Advance Ruling Authority has examined the issue and observed as under:- "7. I have considered all the materials placed before me for the subject goods. I have gone through the submissions made by the applicant during personal hearing and the comments of the jurisdictional Principal Commissioner/Commissioner of Customs, on the impugned subject matter. The subject goods for which advance ruling has been sought, their characteristics, manufacturing process, utility etc. are already mentioned in the aforementioned paras. The subject goods are clear float glass, with an absorbent layer, which is fluo....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... hearing. In the absence of any comment from the jurisdictional Principal Commissioner/Commissioner of Customs, on the impugned subject matter, I proceed to render an advance ruling based on materials available on record. The subject goods for which advance ruling has been sought, their characteristics, manufacturing process, utility etc. are already mentioned in the aforementioned paras. The subject goods are clear float glass, with an absorbent layer, which is fluorescent under UV illumination. The subject goods are not wired, not tinted or not green in colour. The heading 7005 10 covers nonwired glasses having an absorbent, reflecting or non-reflecting layer and the headings 7005 21 to 7005 29 deal with non-wired glasses which are body tinted, opacified, flashed etc. Therefore, the subject goods should more appropriately be covered under sub-heading 7005 1090. While prima facie, based on the applicant's submission about the country of origin and the manufacturer of the subject goods, exemption notification no.46/2011-Cus., dated 01.06.2011, appears to be available, in terms of the said notification, in each case of import the applicant would have to produce evidence before the D....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the glass while still allowing it to retain a degree of transparency or translucency; or which prevents light from being reflected on the surface of the glass." 5.4.3 A Plain reading of CTH 7005 would reveal that 700510 covers non-wired glass having absorbent, reflecting or non-reflecting layer. A clear conclusion is that single clash entry after 70051090 i.e. ".... other non-wired glass" would cover non-wired glasses without absorbent, reflecting or non-reflecting layer. 5.4.4 The Adjudicating Authority has held that CTH 700521 covers glass which may or may not have absorbent or reflecting or non- reflecting layer. The Adjudicating Authority has contended that the impugned goods are coloured through out body (i.e. body tinted) and thus covered by CTH 700521 and articles of CTH 700521 may or not have absorbent/reflecting layers. This interpretation itself is erroneous in light of scheme of CTH under 7005 and explanation given in 5.4.3 above. 5.4.5. It is settled position of law that burden of proof of classification is on the Department. The classification has been changed on the basis of Test Reports. I have carefully going through the copies of Test ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....layer should be by way of conscious coating and on the "Air Side" of the CFG. It is relevant to note here that on one hand the revenue themselves have not accepted the CRA objection, which is the basis for these proceedings, and are contesting the CRA objection. Thus, we conclude that the classification adopted by the appellant under tariff item 7005 1090 is correct and the classification determined in the impugned order is without any basis and hence not sustainable. Appreciating the ratio of the decision of Kolkata Tribunal in the appellant's own case where facts are identical, we hold that the impugned Order-in-Original No. 101620/2023 dated 11.04.2023 cannot be sustained and so ordered to be set aside. 12. As such, we confirm the classification of the imported CFG under tariff item 7005 1090 and consequently, the appellants are rightly entitled for the benefit of Sl.No. 934 of Notification No. 46/2011-cus., as claimed by them subject to fulfilment of production of valid Customs Tariff (Determination of Origin of Goods under the Preferential Trade Agreement between the Government of Member States of ASEAN and Republic of India) Rules, 2009. 13. In respect ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....p;appellant has not suppressed or mis-declared any fact and the proposal to re-classify is only on the basis of the interpretation made in the CRA objection and not for any fault of the appellant. Therefore invoking extended period in this proceedings for demand of duty and imposing mandatory penalty is not at all sustainable. 15. Having held that the classification adopted by the appellant for the imported CFG under tariff item 70051090 is correct, we hold that the imported CFG are not liable for confiscation under Section 111(m) of the Act and the impugned order confiscating the CFG with redemption fine is also not sustainable. Thus, the appellant succeeds on merits as well as on limitation. 16. In view of the above, we hereby allow the appeal and set aside the impugned order with consequential relief, if any, as per the law. (Order pronounced in open court on 27.03.2024) ============= Document 1 Verification comments on Ministry's Action Taken Note on Audit Para No. 4.18.1 (DAP 83) Audit Report No.17 of 2020 SL Audit Para Gist of Para No No. and Ministry's ATN Remarks comments of CRA Kochi subject 4.10.1 4.10.1 Clear float ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t tariff is governed by the the legislature to bring clarity as to the goods were clear and not coated general rules of interpretation (GRI) and type of glass covered by the term with any absorbent, reflective or general explanatory notes thereof. As per absorbent, reflecting or non-reflecting non-reflecting layer, accordingly Rulel of GRI, "for legal purpose, layer" and the purpose for which such merit classification under CTH clasification shall be determined type of glass is used, ie, which 70052990 and BCD was leviable according to the terms of the headings and absorbs, for example, infra-red light 5 per cent in terms of aforesaid any relative section or chapter notes". As or improves the reflecting qualities of Document 2 notification. On this being pointed per GRI 6, for legal purposes, the the glass while still allowing it to out (July August 2018), the classification of goods in sub-headings of retain a degree of transparency or Customs authorities, Cochin stated a heading shall be determined according to translucency; or which prevents light (September 2019) that the terms of those sub-headings and any from being reflected on the surface of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Chapter note is generally understood degree Celsius on a bed of molten customs tariff item of 7065 1050 by those using the product as "coated in which inevitably introduces tin Moreover Rule 3) of the GRI states that glass thermal diffusion into one side the heading which provides the most The department has not disputed the glass. The glass so specific description shall be preferred to manufactured is clear float glass, headings providing a more general the fact that the item description in the one side of which is known as the description. It is pertinent to note that Bills of Entry mentioned in the TA Document 3 tin side and other side as the air neither the chapter notes to Chapter 70 of Memos were "Clear float glass and side. All glass manufactured under the Customs Tariff nor the explanatory not "Float glass having an absorbent float process, (clear, coated or notes issued by the World Customs reflecting or non-reflecting layer" or tinted) invariably would contain a Organization stipulate any specific "coated glass. The presence of layer of tin on one side, which does process for the production of the coating absorbent, reflecting or n....