TaxTMI 
TaxTMI 
2025 (5) TMI 662
X X X X Extracts X X X X
X X X X Extracts X X X X
....tive ports/air cargo complexes. The Central Board of Indirect Taxes and Customs appointed the Principal Commissioner as the common adjudicating authority to decide the proposals in the SCN and accordingly, he passed the impugned order. 1.1 Appeal no. 50851 of 2021 is filed by M/s. SMPL Infra Ltd. [Importer], the company / importer challenging the change of classification of the imported goods, demand of differential customs duty under section 28(4) of the Customs Act, 1962 [Act] invoking extended period of limitation, confiscating the imported goods/ holding the imported goods liable for confiscation under section 111(m) of the Act on the allegation of wrong classification and imposing penalties under section 114A and 114AA of the Act. Appeal no. 50852 of 2021 is filed by Shri Sushil Sethi, Managing Director of M/s. SMPL Infra Ltd.to challenge the order of imposition of penalties upon him under section 112(a) (ii), 114AA and 117 of the Act. The facts which culminated into the impugned order are as follows: - 1.2 M/s SPML Infra Ltd. is engaged in execution of water supply projects. For this purpose, it imported AMR/Non-AMR (automated meter reading apparatus) water ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....assified them under CTI 90261010 with an intent to evade duty. 1.4 Shri Deepak Jain, General Manager (Projects) of SMPL, in his statement dated 31.01.2020 made under section 108 of the Act admitted that they imported water meters meant for measuring the domestic consumption of water, which are classifiable under CTI90282000. 1.5 Investigations revealed that the importer had previously (during 2012) imported the same goods, i.e. AMR water meters as samples for testing from the same foreign supplier, M/s Arad Technologies Ltd. classifying them under CTI 90282000. Those consignments were cleared through their Customs Broker M/s. Shailendra Jain C&F Pvt. Ltd., New Delhi. 1.6. Thereafter, the importer changed its Customs Broker to M/s. P.S. Bedi &Co. Pvt. Ltd., New Delhi through whom it cleared the goods imported through the disputed Bills of Entry by classifying them under CTI 9026 1010. Shri Deepak Kumar Jain admitted in his statement that the goods imported through the disputed Bills of Entry and the goods which they had previously imported were identical. 1.7 The invoices issued by the supplier M/s. Arad Technologies Ltd. indicated four-digit HSN code of 9026....
X X X X Extracts X X X X
X X X X Extracts X X X X
....any Pvt. Ltd., the customs broker of the appellants. It was proposed to reassess duty classifying the imported goods under CTI 90282000 instead of CTI 90261010. The goods were also proposed to be confiscated due to misdeclaration and the differential customs duty was proposed to be recovered under section 28 of the Act invoking extended period of limitation along with the interest under section 28AA of the Act. Penalties were proposed to be imposed on the importer company under section 114A, 114AA of the Act. Penalty was proposed to be imposed on Shri Sushil Sethi was proposed under Sections 112, 114AA and 117 of the Act. Penalty against custom broker was also proposed under section 112 and section 114AA of Custom Act 1962. The proposals in the SCN were confirmed by the impugned order dated 08.01.2021. We have before us, only appeals of M/s. SMPL Infra Ltd and of Shri Sushil Sethi. There is no appeal by the Customs Broker M/s. P.S. Bedi & Co. 2. We have heard Shri Bhaskar Thakkar, learned Chartered Accountant representing the appellants and Sh. SK Rahman, learned authorized representative of the department and perused the records. Submissions on behalf of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s not only the order of re-assessment which is appealable but the provisions of Section 128 make appealable any decision or order under the Act including that of self-assessment" 3.4 The disputed bills of entry were filed in the FY-2015-16 and the SCN has been issued on 12.03.2020 invoking extended period on the ground of suppression of facts. The question arises that when the Bills of entry were finally assessed from three different location i.e. ICD Tughlakabad, Air Cargo Complex, New Delhi, Nhava Sheva Port. Thus, three different officers having rank of Assistant Commissioner or above have dealt with such classification issue and accepted the same, then just because DRI have different interpretation it does not tantamount to "Suppression" Reliance is placed on Incredible unique Buildcon Pvt. Ltd. versus Commissioner of C. Ex. & S.T., Alwar 2022 (65) G.S.T.L. 377 (Tri. - Del.). 3.5 The impugned order may be set aside and both the appeals may be allowed. Submissions of Revenue 4. Rebutting these submissions, Ld. Authorised Representative (AR) for the department submitted as follows. 4.1 The appellant imported disputed goods by declaring them as "AMR or non-AMR ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rigin issued by the authorities of the exporting country still indicate HSN 9028. 4.7 Shri Rupendra Singh Bedi, Director of PS Bedi & Co., the Customs broker, in his statement dated 02.03.2020, said that he had seen the contract agreement for supply and installation and maintenance of water meters between appellant-importer and Delhi Jal Board and the word "flow meter" was not mentioned in the said contract. 4.8 The CTH 9028 talks of 'liquid meters'. Water is a liquid. Hence, 9028 heading is appropriate for water meters. Reliance is placed on the case law of the case of Dunlop India Ltd. & Madras Rubber Factory Ltd. Versus Union of India and Others reported as 1983 (13) E.L.T. 1566 (S.C.) 4.9 Goods must be classified as understood by the people in trade and commerce in the usual course. In the instant case, the imported goods are used to measure volume of water flowing. It is immaterial even if they can, in addition, also measure the rate of flow. Hence, the imported goods were correctly classifiable under CTI 9028 2000 and there is no infirmity in the impugned order which may be upheld and the appeals may be dismissed. 5. We heard the submissions advanced b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the case of Collector of Customs, Bombay Versus Business Forms Ltd. reported as 2002 (142) E.L.T. 18 (S.C.). The Hon'ble Supreme Court in another matter titled as Collector of Central Excise, Shillong Vs. Wood Craft Products Limited reported as 1995 (77) ELT 23 SC has held that the tariff entry is patterned on HSN explanatory notes which are preferable even to ISI glossary in case of Conflict. The Hon'ble Supreme Court in this case has perused the statements of objects and reasons of Central Excise Tariff Bill, 1985 which led to the enactment of Central Excise Tariff Act, 1985 and held that the Central Excise Tariff is based on HSN, the internationally accepted nomenclature which has been taken into account in the said statement of objects and reasons so as to reduce disputes on account of tariff classification. Accordingly, the Hon'ble Court held that for resolving any dispute relating to tariff classification, a safe guide is the internationally accepted nomenclature emerging from the HSN. 8. The relevant HSN notes to the two entries are as follows. CTH 9026: Instruments and apparatus for measuring or checking the flow, level, pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....wmeters which operate by using magnetic fields, ultrasound or heat. This heading excludes: (a) Hydrometric paddle - wheels for measuring the rate of flow in rivers, canals, etc. which fall in heading 90.15 as hydrological instruments. (b) Apparatus which merely indicate the total amount of liquid delivered over a period, which are classified as supply meters in heading 90.28. Anemometers of the special types used for recording the rate of flow of air currents in mines, tunnels, chimneys, furnaces and conduits in general, and consisting essentially of a bladed fan and a calibrated dial. In some devices the measured values are converted into electrical signals. CTH 9028: Gas, liquid or electricity supply or production meters, including calibrating meters thereof 9028.10 - Gas meters 9028.20 - Liquid meters 9028.30 - Electricity meters 9028.90 - Parts and accessories These meters are generally fitted with a device driven at a speed proportional to the rate of fluid flow or to the electrical quantity being measured. They are often fitted ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ppellants and Delhi Jal Board pursuant whereto the appellant has imported the impugned meters. The name of the work in the said contract is "supply of installation and seven-year maintenance of 15 mm size AMR/non-AMR water meters confirming to IS 779; 1994 or ISO 4064; 1993". The description given in the contract in addition to the above is that the water meters were required to be marked to read in metric system along with the manufactures test and guarantee certificate, including cost of all material, GI fittings including supplying at store and transporting from store to consumer connections in municipal area straight reading supply of AMR water meters. Thus, it becomes clear that the contract itself is simply talking about the requirement of meters meant for measuring the volume of water supplied to the household in the municipal area over a period of time. It is nowhere talks about the flow meters. Jal Board is otherwise not suppose to measure the speed of the water. It required meters to be installed domestically for revenue billing, it otherwise coming out of the contract itself. 12. As already observed above that water meters mea....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng extended period of limitation cannot be sustained. 16. Learned authorized representative for the Revenue supports the confirmation of demand invoking extended period of limitation. 17. We have considered the submissions on this question. The reliance placed by the learned Chartered Accountant on ITC Ltd. is highly misplaced as this is a case of demand under section 28 and the question before Supreme Court in ITC Ltd. was whether refund of duty under section 27 can be sanctioned if the goods we re-cleared on the basis of self-assessment without filing an appeal before Commissioner (Appeals) and not if a demand could be raised under section 28. Supreme Court held that all assessments including self-assessments can be appealed against before the Commissioner (Appeals) and no refund can be sanctioned unless the assessment is modified. 18. Assessments can be modified either through an appeal to the Commissioner (Appeals) under section 128 or modified undersection 28. The submission of the learned counsel, if accepted, will result in absurd consequences. If a notice under section 28 is issued, after considering the reply and hearing the noticee, the proper officer....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d) 20. It is evident from the above text of the order that while the judgment of the Supreme Court in ITC Ltd. was with respect to sanction of refunds under section 27, in Rajib Saha, the bench had instead, applied it to the demands under section 28 and held that a notice under section 28 cannot be issued without first filing an appeal before the Commissioner (Appeals). This, being contrary to the explicit legal position and also the law laid down by the Supreme Court in ITC Limited, is, in our opinion, per incuriam, and hence cannot be a binding precedent on us in this case. 21. Thus, there is no force in the submission of the learned Chartered Accountant that a notice demanding duty under section 28 cannot be issued without first assailing the self-assessment before Commissioner (Appeals) under section 128. It needs to be rejected and is rejected. 22. The other submission of the learned Chartered Accountant is that classification of imported goods is a matter of opinion which, even if it is wrong, cannot result in a presumption of malafide and invocation of extended period of limitation under section 28. As per section 28, a demand can be raised only within the normal pe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....which it was filing the Bills of Entry. It obtained invoices from the supplier indicating HSN 9026 (as opposed to HSN 9028 indicated in the previous invoices), it changed its customs broker, gave the broker written instructions to file Bills of Entry classifying them under CTI 9026 1010. The Country of Origin certificates issued by the authorities in the export countries continued to indicate HSN 9028. 28. The question which may arise is if the importer deliberately changes the classification and it results in short payment of duty if extended period of limitation could be invoked. In our considered view, given the peculiar facts of this case, where the classification of the goods was deliberately changed by the appellant importer, its intention to evade duty by mis-classifying the goods is evident. We draw support from the judgment of the Supreme Court in Commissioner of Central Excise, Ahmedabad vs Urmin Products Pvt. Ltd and others -2023 (10) TMI 1112 - SUPREME COURT. In that case, Revenue assailed the orders passed by the CESTAT deciding the classification of the goods in favour of the assessee respondents. After detailed examination, the Supreme Court held the classif....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the revenue invokes the extended period of limitation Under Section 11A the burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with a wilful misstatement. The latter implies making of an incorrect statement with the knowledge that the statement was not correct. 14. As far as fraud and collusion are concerned, it is evident that the intent to evade duty is built into these very words. So far as misstatement or suppression of facts are concerned, they are clearly qualified by the word 'wilful', preceding the words " misstatement or suppression of facts" which means with intent to evade duty. The next set of words 'contravention of any of the provisions of this Act or Rules' are again qualified by the immediately following words 'with intent to evade payment of duty.' Therefore, there cannot be suppression or misstatement of fact, which is not wilful and yet co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ir statement dated 21.06.2007 recorded Under Section 14 of the CE Act, wherein they confirmed that in the E.R. 1 returns filed for the month of April 2006 onwards, they have revised the classification of their final product from CET SH 2403 9930 to CET SH 2403 9910 and started describing their product as 'chewing tobacco' instead of 'zarda/jarda scented tobacco' and by virtue of such declaration they continued to pay duty as per MRP-based assessment under the relevant Notification No. 2 of 2006 dated 01.03.2006 though 'zarda/jarda scented tobacco' was not covered under MRP-based assessment during the period 01.03.2006 to 10.07.2006 till the tariff entry i.e., CET SH 2403 9930 being brought within the ambit of Section 4A of CE Act by issuance of Notification 16 of 2006 dated 11.07.2006. It is for this precise reason that the act of the Assessee was held to be a deliberate and accordingly wilful misstatement was alleged on part of the Assessee, with an intention to evade duty payable Under Section 4 of the CE Act, which would attract the extended period of limitation, namely proviso to Section 11A (1) being invoked. The adjudicating authority has examined the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....arda scented tobacco' to 'Chewing tobacco' with an intention to evade payment of duty payable Under Section 4 of the Central Excise Act, 1944, despite knowing the fact that their product was not covered under the relevant Notification which provides for valuation Under Section 4A. The Assessee did so to enable them to pay duty on lower value [as the value as per Section 4A of Central Excise Act, 1944 (MRP based assessment) was lower than the value as per Section 4 of Central Excise Act, 1944. Thus, there was a deliberate intention to evade payment of duty by the Assessee, by misclassification and willful mis-statement of their product and due to this act, the department is entitled to invoke the extended period as provided in the proviso to Section 11A (1) of the Central Excise Act, 1944 to recover the differential duty along with interest Under Section 11 AB for the larger period upto 5 years and has also rendered themselves liable to penalty Under Section 11 AC of the Central Excise Act 1944. I, accordingly hold that the Assessee is liable to penalty Under Section 11AC of the Central Excise Act, 1944." However, the tribunal has proceeded to hold that limitati....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erred to in the proviso to sub-section (1) of section 54; 31. The imported goods were classifiable under CTI 9028 2000 and they were instead classified under CTI 9026 1010 in the Bills of Entry (which is an entry made under the Act). Such incorrect classification is, usually considered as a matter of opinion and goods are not held liable to confiscation for mis-classification. However, in the peculiar facts of the case, where the importer had, deliberately changed the classification of the goods and engaged a new Customs Broker and gave written instructions to classify the goods under CTI 9026 1010, we find that Section 111(m) squarely applies to the imported goods and they were liable confiscation. In the impugned order, the imported goods were correctly confiscated under section 111(m) wherever they were available. Where they were not available, the goods were held to be liable to confiscation but were not actually confiscated. We uphold these decisions in the impugned order. Penalties under section 112, 114A, 114AA and 117 32. These sections read as follows: SECTION 112. Penalty for improper importation of goods, etc .- Any person, - (a) who, in relati....
X X X X Extracts X X X X
X X X X Extracts X X X X
....acts which render the goods liable to confiscation. Since we have upheld the confiscation of the goods/holding that the goods were liable to confiscation, section 112 squarely applies. Penalty under section 114A can be imposed if the duty was not paid or short paid by reason of collusion or any wilful mis-statement or suppression of facts. These factors are the same as those required to invoke extended period of limitation under section 28. Since we have, considering the peculiar facts of this case, upheld the invocation of extended period of limitation, we also uphold the penalties imposed under section 114A. 33. Penalty under section 114AA can be imposed for knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material. In this case, the appellant deliberately caused incorrect CTI to be indicated in the Bills of Entry and hired a new Customs Broker and instructed him to indicate wrong CTI in the Bills of Entry. Therefore, section 114AA squarely applies to this case. As far as penalty under section 117 is concerned, it is a residual penalty imposable where there is no oth....