AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (3) TMI 586
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.... particularly since the previously issued SCN dated 25 July 2023 was on a similar factual matrix relating to the importation of similar goods. Such a notice, would in fact, constitute a "change of opinion". ii. The impugned SCN does not satisfy the requirements of Section 28 (4) of the Act as the same lacks any particulars regarding any alleged (a) collusion (b) deliberate misrepresentation, or (c) the withholding of crucial information. The impugned SCN does not satisfy the mandatory conditions for issuance of the same. iii. The Petitioner has been making continuous and consistent imports of the very same goods since the year 2016 and it is for the first time that by the previous SCN dated 25 July 2023 and the present impugned SCN that the Respondents have sought to classify the imported goods under a different tariff heading (Parts of Mobile Phones as against Complete Mobile Phones). iv. The classification by the Petitioner under CTH 85171400/85171219 is held as disputed by the Respondent as the Respondent claims that the said classification is incorrect. Such incorrect classification or declaration by the Petitioner cannot form the basis for a SCN unde....
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....sential characteristics of the article..." Further, an essential feature of a mobile phone is communication between two or more people. All other features, viz. camera, torch, earphone slot, storage capacity, etc., are added features of a mobile phone. Therefore, a mobile phone will essentially remain a mobile phone even without a camera feature. 10. Applicable legal provision in this regard is hereunder: Rule 2(a) The General Rules for The Interpretation of Import Tariff read as follows: "2. (a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished articles have the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), presented unassembled or disassembled." 11. In order to find out that the mobile parts imported like the camera, Lens, Cover, Keypad, etc. by themselves have acquired the essential character of a mobile phone, it will be relevant in this context to refer to HSN Exp....
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....w Delhi Vs. M/s Sony India Ltd. (Citation 2008 (231) E.L.T 385 (SC)) wherein the Hon'ble Supreme Court had dismissed the appeal filed by the department and upheld the decision of the CESTAT Final Order No. 237/2002-B dated 28.05.2002 in Appeal No. C/122/99-B - Sony India Ltd. vs. Commissioner of Customs, ICD New Delhi (Citation 2002 (143) E.L.T. 411 (Tri-LB). However, the facts and circumstances of the case cited by the importer are different from the instant case. In the cited case, the appellant had imported 94 consignments of various components of CTV, whereas in the instant case, goods were brought in a single consignment. 11.4 In contradiction, it appears that the findings in the case of M/s Bird Retail Pvt. Ltd. vs. Commissioner of Customs (Import), ICD Tughlakabad (CESTAT's Final Order No. 50362/2020 dated 24.02.2020 in Appeal No. 51007-09 of 2019) are applicable in the instant case. In this case, the appellant has been importing "Segway" products in CKD condition in the form of very assemblies such as power assembly, transmission assembly, wheel assembly, etc., wherein they have filed bills of entry for assessment and clearance of the imported consignment, declar....
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....was noticed that the importer submitted details of Model 'IT5607' only which was the disputed model in the examined BE No. 2432709 dated 14.09.2022, and the details submitted were not in accordance with the prescribed format mentioned in the said letters. 12.3 Further, the importer, vide email dated 11.05.2023 (RUD-XII), submitted data regarding details of shipments having PCBA for the past two years. On perusal, the Bill of Entry as submitted by the importer was checked from the ICES system. Accordingly, differential duty has been calculated for the consignments imported in the past 2 years. 13. Initial investigations were around Model No. IT5607. Whereas data submitted by the importer reveals that there has been importation of parts for manufacturing of mobile phones of models other than IT5607, wherein the shipments/consignments contain PCBA and other parts essential for assembly/manufacturing of the mobile phones. In other words, it appears that provisions of General Rules 2(a) would also be applicable in these cases as well. Redetermination of classification of goods and Computation of Differential duty: 14. Details of differential duty calculation in respect of th....
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....esulted in short payment of duty of Rs.5,30,87,373/-, as detailed in Annexure-A & B, and the same is recoverable under Section 28(1) of the Customs Act, 1962 along with interest under Section 28AA of the act ibid. 17.1 The importer by their aforesaid act of omission and commission has contravened the provisions of Section 46 (4) and 46 (4A) of the Customs Act,1962 in as much they have failed to furnish correct particulars with respect to description and classification of the said goods. Section 111(m) of the Customs Act, 1962 provides that any goods which do not correspond in respect of value or in any other particular with the entry made under this Act, are liable to confiscation. As the importer had mis-declared the value of the goods with an intention to evade proper Customs Duties against the goods imported vide impugned Bills of Entry, as detailed in Annexure-A & B, the same are liable to confiscation under Section 111(m) of the Customs Act, 1962. 17.2 Section 112 (a) (ii) of the Customs Act, 1962 provides that any person, who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or ....
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....,373/- (Rupees Five Crore Thirty Lakh Eighty Seven Thousand Three Hundred and Seventy Three only), as detailed in Annexure-A & Annexure-B. should not be demanded and recovered from the importer under Section 28 (1) of the Customs Act, 1962 along with applicable interest under Section 28AA of the Act ibid; and viii. Penalty under Section 112a (ii) of Customs Act, 1962 of the Customs Act, 1962, should not be imposed on the importer for improper importation of goods and evasion of Customs duty, in respect of Bills of Entry other than Bill of Entry No. 2432709 dated 14.09.2022;" 19. This show cause notice is being issued without prejudice to any other action that may be taken in respect of the impugned goods and/or the persons/company etc., mentioned in the notice, under the provisions of the Customs Act. 1962 and/or any other law for the time being in force. 20. The aforesaid noticee are to submit their written reply within the stipulated time. In their reply, they should clearly state whether they wish to be heard in person or not. In case, they do not reply or no such requests is made in their reply or they do not appear before the adjudicating authority on the date a....
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....a mobile phone. Therefore, a mobile phone will essentially remain a mobile phone even without a camera feature. 10. Applicable legal provision in this regard is hereunder: Rule 2(a) The General Rules for The Interpretation of Import Tariff read as follows: "2. (a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished articles have the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), presented unassembled or disassembled." 11. In order to find out that the mobile parts imported like the camera, Lens, Cover, Keypad, etc by themselves have acquired the essential character of a mobile phone, it will be relevant in this context to refer to HSN Explanatory Notes to the Rules of Interpretation and also to the HSN Explanatory Notes to Section XVI thereof for understanding the expression incomplete and unassembled machines. In the Explanatory Notes to Section XVI in HSN, incomplete ma....
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....in Appeal No. C/122/99-B - Sony India Ltd. vs. Commissioner of Customs, ICD New Delhi (Citation 2002 (143) E.L.T. 411 (Tri-LB). However, the facts and circumstances of the case cited by the importer are different from the instant case. In the cited case, the appellant had imported 94 consignments of various components of CTV, whereas in the instant case, goods were brought in a single consignment. 11.4 In contradiction, it appears that the findings in the case of M/s Bird Retail Pvt. Ltd. vs. Commissioner of Customs (Import), ICD Tughlakabad (CESTAT's Final Order No. 50362/2020 dated 24.02.2020 in Appeal No. 51007-09 of 2019) are applicable in the instant case. In this case, the appellant has been importing "Segway" products in CKD condition in the form of very assemblies such as power assembly, transmission assembly, wheel assembly, etc., wherein they have filed bills of entry for assessment and clearance of the imported consignment, declaring the product as "CKD Parts of electrically operated two-wheeler/personal transport - lithium ION battery for captive use." The product has been classified under Customs Tariff Heading 87149990/87144011.The Adjudicating Authority ordere....
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.... Show Cause Notice No 103/2023-24/Gr. 2G/Pr Commr./ICD-lMP/TKD dated 25.07.2023, was issued to importer. 13.2 Further, the importer was also asked to submit import data of remaining past import. However, it appeared that neither importer submitted any data nor any reply. Accordingly, import data of the importer was retrieved from the ICES 2.0 and it was found that the importer had imported "PCBA for manufacturing of mobile phones" vide Bills of Entry. as detailed in Annexure-A to D attached hereto. Redetermination of classification of goods and Computation of Differential duty: *** 14.1 From the above table and as per WCO Tariff, it is observed that complete mobile phones were classifiable under CTH 85171210 (till 31 .12.20 19), CTH 85171219 (after 01.01.2020 to 31.01,2022), CTH 85171400 w. e. f 01.02.2022. 14.2 Details of differential duly calculation in respect of the Invoices containing PCBA for the period starting from 24.08.2018 to 24.07.2023 are attached as Annexure A to D hereto. The summary of the calculation in Annexure A to D, is as hereunder- *** 14.1 From the investigations as detailed above, it appears that the importer has misclassified the goo....
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....n of the said goods. Section 111(m) of the Customs Act, 1962, provides that any goods which do not correspond in respect of value or in any other particular with the entry made under this Act, are liable to confiscation. As the importer had mis-declared the value of the goods with an intention to evade proper customs duties against the goods imported vide impugned Bills of Entry, as detailed in Annexure-A to D, the same are liable to confiscation under Section 111(m) of the Customs Act, 1962. 16.2 SECTION 114A of the Customs Act, 1962 inter alia provides that where the duty has not been levied or has been short-levied or the interest has not been charged or paid or has been partly paid or the duty or interest has been erroneously 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. In the present case, the importer has wilfully suppressed vital facts with respect to the description of the impugned goods in the Bills of Entry, as elaborated above, and thus, the importer is liable to pena....
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.... any further reference to them. 20. The Department reserves its right to add, amend, modify, etc. this notice based on any fresh facts or evidence which may come to the notice of the Department after the issue of this notice but prior to adjudication thereof. 21. The notices have the option to make an application under Section 127(B) of the Customs Act, 1962 prior to adjudication of this notice, to the Settlement Commissioner to have the case settled, in such form and in such manner, as specified in the Rules. 22. List of the documents relied upon in this notice (RUDs) enclosed with this show cause notice is an integral part of this show cause notice which is also being served through email of the noticee. ***** TWO SEPARATE NOTICES UNDER SECTIONS 28 (1) AND 28 (4) IN SIMILAR CIRCUMSTANCES CANNOT BE ISSUED: 4. A bare perusal would show that the two SCNs are identical in almost every respect except for the differences as highlighted. Apart from the more obvious differences relating to the Notices being under Sections 28 (1) and 28 (4) and the corresponding penalty provisions being Sections 112 and 114A which are consequential upon the Section under which the notice....
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....tice consultation with the person chargeable with duty or interest in such manner as may be prescribed; (b). the person chargeable with the duty or interest, may pay, before service of notice under clause (a), on the basis of- (i) his own ascertainment of such duty; or (ii) the duty ascertained by the proper officer, the amount of duty along with the interest payable thereon under section 28AA or the amount of interest which has not been so paid or part-paid: Provided that the proper officer shall not serve such show-cause notice, where the amount involved is less than rupees one hundred. *** (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 exporter or the agent or employee of the importer or exporter, the proper officer shall, within five years from the relevant date, serve notice on the person chargeable with duty or interest which h....
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....with the vice of a "change of opinion" and for that reason too, render it unsustainable. 14. We would refer favourably to the judgments of the Hon'ble Supreme Court in respect of "change of opinion" as follows: • State of U.P. v. Aryaverth Chawal Udyog, (2015) 17 SCC 324; • Commr. of Customs v. G.C. Jain, (2011) 12 SCC 713; • Prabhu Steel Industries Ltd. v. CCE, (1998) 1 SCC 303. 15. The Hon'ble Supreme Court in State of U.P. v. Aryaverth Chawal Udyog, (2015) 17 SCC 324, (3-Judges) while contemplating on requisite parameters for „change of opinion‟ by the authorities held that: "29. The standard of reason exercised by the assessing authority is laid down as that of an honest and prudent person who would act on reasonable grounds and come to a cogent conclusion. The necessary sequitur is that a mere change of opinion while perusing the same material cannot be a "reason to believe" that a case of escaped assessment exists requiring assessment proceedings to be reopened. (See Binani Industries Ltd. v. CCT [Binani Industries Ltd. v. CCT, (2007) 15 SCC 435]; A.L.A. Firm v. CIT [A.L.A. Firm v. CIT, (1991) 2 SCC 558]). If a....
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.... Ltd. v. CCE, (1998) 1 SCC 303 held that: "4. From the admitted facts of this case there can be no doubt that none of the requirements of the above-quoted proviso is satisfied in the present case to give to the Department the benefit of the larger period of limitation. The removal of the goods was in accordance with the approved classification list and all the material facts were before the authorities concerned. Simply because there was a change in opinion as to the correct description of the input, it cannot be said that the case falls within the ambit of proviso to Section 11-A. Admittedly, there was no concealment of the true facts and the classification list submitted by the assessee had been duly approved under which the removal was made." SHOW CAUSE NOTICE DOES NOT FULFILL REQUIREMENTS OF SECTION 28 (4): 18. In order for the Impugned SCN to survive, it would, independently, have to satisfy the requirements of Section 28 (4), which we have already extracted hereinabove. 19. The entire case of the Respondent at Para 16 of the SCN is that the Petitioner "...has wrongly classified said goods by suppressing the fact that the said goods are complete mobile set in....
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....eged non-submission by the Petitioners of details of their prior imports in support of the allegation of "suppression". This is a bogey that needs to be rejected resoundingly. The data allegedly suppressed was data that was available with the Respondents themselves and was in fact, admittedly, retrieved by them, from their own system. How can data that was already available with the Department be data that was "suppressed"? 30. Since we have held that the impugned SCN does not fulfill the requirements of the Section, the Respondent would also cease to have the benefit of an extended period of limitation for the purpose of its issuance. IMPUGNED NOTICE IS NOT A SUPPLEMENTARY NOTICE: 31. The respondents, in Paragraph 9 of their Counter Affidavit, seek to derive sustenance from the notification dated 18 June 2019. Para 9 reads as follows: "9. The Respondents would also seek to highlight Notification 42/2019-Customs (NT) dated 18.06.2019 which provides for a supplementary notice to be issued once a notice under Section 28 or Section 124 of the Act has been issued. The circumstances in which such supplementary notices can be issued are as follows: i. In cases ....