TaxTMI 
TaxTMI 
2025 (3) TMI 586
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....ar 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 under Section 28 (4) of the Act as the same would not fulfill the pre-requisites mandated by Section 28 ....
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....ther 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 Explanatory Notes to the Rules of Interpretation and also to the HSN Explanatory Notes to Section XVI thereof for understanding the expression incomplete and....
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....ESTAT 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, 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 871....
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....ormat 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 the invoices containing PCBA for the period of the past two years are attached as Annexure A. *** 14.1 From the investigations as detailed above, it appears that the importer has misclassified the CTH of the goods imported vide....
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....ir 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 abets the doing or omission of such an act, shall be liable, in the case of dutiable goods, other than prohibited goods, subject to the provisions of section 114A, to a penalty under this Section. In the present case. the importer has mis-decl....
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....he 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 and time fixed, without any sufficient cause, the case will be decided ex-parte on the basis of available records without any further reference to them. 21. 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 D....
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....n 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 machines and unassembled machines are of the following types: Incomplete Machines "Throughout the Section, any reference to a machine or apparatus covers not only the complete machine but also an incomplete machine (i.e., an assembly of parts so far advanced that it already has the main essential features of the complete machine). T....
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....ought 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 ordered classifying the product under CTH 87119091. The Hon'ble CESTAT, after due consideration, held as under: "22. It can also be seen that as per the interpretative rules to the Customs Tariff Act, the General Rules for Interpretation of Schedule II provide as follows: "Rule 2(a): Any reference in a heading to an article shall be taken to include a reference to tha....
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....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 goods viz. Liquid Crystal Module, Microphone, Speaker, Front Cover, Back Cover, Keypad, Paper Sticker, Adhesive Tape, Adhesive Type Foam, Advertising Paper, Antenna, Camera Protective Lens, Conductive Fabric, Speaker Frame, Earphone, Keypad Dome, LCM Protectiveness, Light Emitting Diode (LED), Loaded Printed Circuit Board, Motor, PE bag, Protective Lens, Screw, Tape MYLAR etc.", imported vide Bills of Entry as mentio....
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....re 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 penalty under Section 114A of the Customs Act, 1962, with respect to the said bills of Entry. 17. Now, therefore, on the basis of the discussion hereinabove and investigations into the matter, M/s. Ismartu India Pvt. Ltd., D-197, 198, 199, Sector-63, Noida, Gautam Budh Nagar, Uttar Pradesh, 201301 (IEC: 0516984080), is hereby called upon to Show Cause to the Principal Commissioner of Customs, Import Commissionerate, Inland Con....
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....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 notices are issued, some of the differences, inter alia, are the periods to which they pertain, the invoices and quantities of the goods therein. 5. Interestingly, both notices conclude that "the importer has wrongly classified said goods by suppressing the fact that the said goods are complete mobile set in CKD condition. It was because of the timely intervention of the investigation agency that the said fact came to light which proves that the importer had intentionally s....
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....ot 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 has not been so levied or not paid or which has been so short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice. *** (7A) Save as otherwise provided in clause (a) of sub-section (1) or in sub-section (4), the proper officer may issue a supplementary notice under such circumstances and in such manner as may be prescribed, and the provisions of this section shall apply to such supplementary notice as if it was issued under the said sub-section (1) or sub-section (4). ......" 8.....
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....n 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 conscious application of mind is made to the relevant facts and material available or existing at the relevant point of time while making the assessment and again a different or divergent view is reached, it would tantamount to "change of opinion". If an assessing authority forms an opinion during the original assessment proceedings on the basis of material facts and subsequently finds it to be erroneous; it is not a valid reason under the law for reassessment. Thus, reason to believe cannot be said to be the subjective satisfaction of the assessing authority but means an objective view on the disclosed information in the particular case and must be based on firm and ....
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....ssee 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 CKD condition.". This apparently was done intentionally to evade payment of Customs Duty. 20. The records bear out the fact that the Petitioner has made a classification of the goods and in support of the same has disclosed all the relevant invoices and other importation details. 21. The Petitioner's employee had initially made a statement in respect of the goods. However, the said employee, at a later stage, retracted from the same and the Respondent, considering this "contradiction" in the stand of the Petitioner, got the goods examined by a Chartered Engineer for his opinion. 22. The Chartered Engineer gave his opinion and followed it up with a further opinion. 23. Without adverting to the m....
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....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 where there is a difference in the quantum of duty demanded in such cases; ii. For invoking penal action against a person under the provisions of the Act in addition to those charged in the said notice; iii. For invoking additional section / sections of the Act in such notice; iv. In cases where there is additional evidence which may have a significant bearing on the case." 32. The Respondent, in the Counter, makes a bald averment without specifying under which of the said heads the impugned notice would fall. In view of the abject failure on behalf of the Respondents to state either in the SCN itself or even specify as to which of the four heads enumerated in the counter, the alleged impugned notice is being issued as a "Supplemen....