TaxTMI 
TaxTMI 
2024 (9) TMI 11
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....r 35 bills of entry detailed in the enclosed worksheet under CTH 70052110 instead of CTH 70051010 and calling for payment of Rs. 1,14,03,577/-. Such communication was responded to by the petitioner on 11.05.2022 by asserting that the goods are non-wired and have an absorbent layer of tin on one side, which is fluorescent under UV illumination, and also have a microscopically thin non-reflecting layer of zinc sulphate coating on the surface of the glass. Test reports were annexed in support of the assertions. Consequently, it was stated that the classification in CTH 70051010 was in order. A subsequent detailed letter dated 06.03.2023 was also issued by the petitioner. 2. According to the petitioner, on the erroneous basis that the petitioner had not responded to the audit consultative letter, the first respondent issued a show cause notice dated 07.08.2023, whereby the extended period of limitation was invoked, and the petitioner was called upon to show cause as to why the light green tinted float glass imported under the bills of entry detailed in Annexure-I thereto (the Relevant Goods) should not be classified under CTH 70052110. The amount payable by the petitioner towards sh....
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....1250 dated 13.04.2022. Out of the features listed in the test results at paragraph 17, he submitted that the features mentioned under clauses (c), (d), (j), (k) &(l) are relevant. He also submitted that these features establish that the petitioner's classification is correct. 5. With regard to earlier imports of light green tinted float glass, learned senior counsel submitted that an audit consultative letter dated 27.03.2019 was issued by the Assistant Commissioner, Circle-II, Customs Audit Commissionerate, ICD, Patparganj, Gazipur, Delhi-96. After examining relevant material, he pointed out that the Commissioner, Customs Audit Commissionerate, by communication dated 12.04.2021, informed the Commissioner of Customs, ICD Patparganj & Other ICDs, New Delhi, that the office is accepting the view of the Assistant Commissioner (SIIB), ICD Patparganj, and that the audit proceedings were being closed by accepting the classification of the goods under CTH 700510, as declared by the importer. 6. In spite of the above communication, he submitted that an order dated 04.09.2021 was issued by the Deputy Commissioner of Customs, ICD Rewari, rejecting the petitioner's self-classifi....
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....ssification under CTH 70051090. A substantially similar judgment of the CESTAT, Kolkata, in a batch of appeals, including Customs Appeal No.75536 of 2023, was also relied upon for the same proposition. 8. The next contention of learned senior counsel was that the reply dated 20.05.2022 to the consultative letter and subsequent letter dated 06.03.2023 were disregarded while issuing the impugned show cause notice. After pointing out that the consultative letter was in respect of only 35 bills of entry and that the short-levy was confined to Rs. 1,14,03,577/-, he submitted that sub-section (4) of Section 28 of the Customs Act, 1962 (the Customs Act), was unlawfully invoked in relation to a classification dispute and that the short levy was computed in a sum of Rs. 11,78,27,642 in the impugned show cause notice. By pointing out that sub-section (4) may be invoked only in cases where there is fraud, collusion or wilful mis-statement, learned senior counsel submitted that the said provision cannot be invoked in cases wherein there is reasonable basis to classify the goods under a particular tariff heading (such as CTH 70051010 here), especially if the goods were classified and cleared....
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.... under CTH 700510 in the absence of an absorbent, reflecting or non-reflecting layer. His next contention was that each consignment of goods is required to be examined to ascertain whether the characteristics necessary for classification under CTH 70051010 are present. Consequently, he contended that the self-classification by the petitioner cannot be accepted merely because such classification was accepted in respect of goods imported under earlier bills of entry. Put differently, his contention is that the examination should be on goods-specific basis. He relied on the judgment of the Calcutta High Court in Stores Supply (India) Agency v. Assistant Collector of Customs, 1985 0 Supreme (Cal) 55, for the proposition that jurisdiction to decide on the validity of classification is vested in the competent customs authorities and, consequently, the court would not interfere unless there is an apparent mistake. He also contended that the judgment of the Hon'ble Supreme Court in Vicco Laboratories is distinguishable because the issue of classification had been conclusively decided earlier therein. 11. Since the challenge is to a show cause notice, learned senior standing counsel ....
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.... have no jurisdiction to issue impugned show-cause notice on the ground on which it has been issued and it virtually amounts to reopening of the issue which stands concluded by the decision of this Court, and that therefore it is an abuse of process of law. The High Court after referring to the history of litigation rightly concluded that the matter stood concluded by judgments of this Court and the High Court in respondent's case. 33. In the earlier judgment this Court had given liberty to the Department in the following terms: (Vicco Laboratories case, pp.20-21, paras 9-11) "9. Although the adjudicating authority had found in the course of the hearing that the market survey indicated that the product in question was known as a cosmetic, we do not go into the question as this was not the ground on which the show-cause notice was issued. 10. The show-cause notices having proceeded on a misapprehension of the tests laid down in Shree Baidyanath's case, the same cannot be sustained. 11. The appeals are accordingly dismissed without any order as to costs. It will be open to the Department to take such test if otherwise so entitled in respect....
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....ent of 0.86%. f. The glass is light green glass without opacified or surface ground. g. The glass is light green coloured throughout the mass (body tinted) h. It is non-wired glass. i. No absorbent layer is observed other than tin layer on one side of the glass which is fluorescent under UV illumination. j. No reflecting or non-reflecting layer." (emphasis added) 15. By relying on the above test results, the first respondent recorded the prima facie conclusion that the Relevant Goods do not have an absorbent layer, other than the tin layer observed in the above extracted test results. This tin layer was, however, construed in the show cause as inherent to the production of float glass and, consequently, not a valid basis for the classification. As regards the zinc sulphate layer, it was prima facie recorded that it is a protective layer and, therefore, not an absorbent, reflecting or non-reflecting layer. As a corollary to the above interpretation of the test results, the prima facie finding that the Relevant Goods were wrongly classified under CTH 70051010 was recorded. On the basis of the prima facie conclusion that the Relevant ....
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....erage thickness of glass plates is observed to be 2.91 mm. c) The Tin side is detected under UV illumination using tin detector. d) The glass is float glass. e) As received glass is transparent glass as per transmission spectral profile with average visible transmission of 85.23% and with Fe2O3 content of 0.61%. f) The glass is transparent glass without opacified or surface ground. g) The glass is coloured throughout the mass (body tinted) h) It is non-wired glass. i) An absorbent layer (Tin) is observed on one side of the glass which is fluorescent under UV illumination. j) The glass is found to be coated with ZnSO4 film on opposite to tin side as protective layer." (emphasis added) 17. On comparison of these test results, especially the three extracted in this order, the characteristics of the imported light green float glass, as reported therein, are substantially identical, except for one observation. The test report dated 30.04.2021 pertaining to bill of entry No.7094656 contains an observation that no absorbent layer is observed other than tin layer on one side of the glass. Even as regards this observ....
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.... executive Commissionerate viz. Office of the Commissioner, ICD Patparganj & Other ICDs was also in agreement with the said classification. Further, it is seen from record of hearing that the appellant specifically prayed for issuance of Show Cause Notice. Still, no reasons have been brought on record as to why no SCN was issued. Further, there is no mention in the entire order about providing of said SIIB report or Test reports to the Appellant. 5.3 It is not clear as to on what basis, the said letter was ignored by the Adjudicating Authority in the impugned order dated 04.09.2021 issued subsequent to above letter and in other two orders. None of the impugned orders mention or counter the said letter at all. The Adjudicating Authority, despite being subordinate to the Commissioner proceeded to overrule the findings of Audit, without countering or mentioning the same. I find this action to be of gross insubordination. If the Adjudicating Authority had any disagreement with the Audit Commissioner, the same should have been clearly brought out. I also note that Adjudicating Authority even did not elaborate as to what was recommendation or findings of the SIIB in their letter....
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....icles of CTH 700521 may or may 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 Reports from CGCRI, Kolkata. I find that said Test Reports are not conclusive enough to reject the declared classification by the Appellant. Rather, the said Reports do mention the presence of Layer. The exact findings of some of the Test Reports in this regard are as under:.- "c) The Tin Side is detected under UV illumination using tin detector. i) An absorbent layer (Tin) is observed ion one side of the glass which is fluorescent under UV illumination. j) The glass is found to be coated with ZnSO4 film on opposite to tin side as protective layer." The Test Reports have clearly established that impugned goods were having absorbent layer (Tin) on one side. This fact is not disputed. Accordingly, I find absolutely no reason to exclude these goods fr....
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....a and concluded that the test reports do not warrant rejection of the declared classification by the appellant. The appellate authority extracted the features / characteristics disclosed in the test report. Those features/characteristics are identical to the features/characteristics disclosed in test report dated 11.04.2023 as (c), (j) and (l). The appellate order was issued on 20.07.2022. The respondents have not placed any material on record to indicate that such appellate order was appealed against. 20. In effect, without filing an appeal, by initiating proceedings pursuant to the impugned show cause notice, the respondents are endeavouring to reopen an issue that was determined by the appellate authority in relation to the same goods on the basis of test results disclosing substantially similar characteristics of the goods. This course of action is in violation of the requirement that a subordinate authority should act in accordance with the conclusions of an appellate authority unless the order of such appellate authority is successfully challenged by approaching the Tribunal or High Court. This is the ratio of the decision in Kamalakshi Finance. 21. As held in Vicco Lab....
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....impugned show cause notice under sub-section (4) of section 28. This aspect assumes significance while examining the validity of the impugned show cause notice. 23. Section 28 of the Customs Act enables recovery inter alia of duty not levied or not paid or short-levied or short-paid. As per subsection (1), recovery proceedings may be initiated by issuing a show cause notice within two years from the relevant date. Sub-section (4) empowers the proper officer to initiate recovery proceedings within five years from the relevant date where inter alia non-levy, nonpayment, short-levy or short payment is on account of collusion, any wilful mis-statement or suppression of facts. Sub-section (4) and Explanation 1, in relevant part, are as under: "(4) Where any duty has not been levied or not paid or has been short-levied or short-paid or erroneously refunded, or interest payable has not been paid, part-paid or erroneously refunded, by reason of, - (a) collusion; or (b)any wilful mis-statement; or (c) suppression of facts by the importer or the exported or the agent or employee of the importer or exporter, the proper officer shall, within five....
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....ng the self-classification were not challenged. As discussed earlier, even appellate orders dated 20.07.2022 and 29.12.2022 accepting the petitioner's classification have not been challenged. While the impugned show cause notice refers to the audit consultative letter, it does not refer to the two replies thereto and wrongly records that no reply was received. No reasons were recorded for issuing the audit consultative letter under sub-section (1) of section 28 and, thereafter, issuing a show cause notice under sub-section (4) thereof. Out of the two test reports referred to in such show cause notice, even the report dated 30.03.2020, on which strong reliance is placed by the respondents to justify the show cause notice, records the observation that there is no absorbent layer other than the tin layer. The other more recent report dated 11.04.2023 refers to an "absorbent layer ... on the tin side of the glass". When these facts and circumstances are considered cumulatively, invoking the enlarged period of limitation is erroneous and qualifies as an additional reason to interfere with the show cause notice. 26. In W.P.No.28462 of 2023, a direction is prayed for to clear light....