TaxTMI 
TaxTMI 
2025 (8) TMI 1572
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....ification No. 152/2009-Cus dated 31.12.2009. Table I Sl. No. Description of the item imported Declared CTH Correct CTH as per DRI 1 Hub Assembly 87089900 87085000 2 Parts of Hub Assembly 87089900 87085000 3 Parts/Components of Door Checker 87089900 87082900 4 Stabilizer Link Assembly (Suspension Part) 87089900 87088000 5 Ball Joint Suspension Part 87089900 87088000 6 Tie Rod (Steering Part) 87089900 87089400 3. Upon completion of investigation, the Show Cause Notice dated 20.12.2022 was issued to the Respondent wherein it was proposed to re-classify the goods as per Table above and thereby, deny the benefit of Indo-Korea Preferential Trade Agreement under Notification No: 152/2009-Cus dated 31.12.2009 for the said goods and consequently differential duty of Rs. 71,00,62,952/- was demanded by invoking Section 28(4) of the Customs Act, 1962 and interest under Section 28AA ibid was also demanded. The Show Cause Notice also proposed confiscation of the goods having assessable value of Rs.522,88,02,291/- under Section 111(m) & (q) of the Customs Act, 1962 and imposition of penalties under ....
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....ion No. 152/2009 dated 31.12.2009. 4.4 The Adjudicating Authority confirmed the demand to the extent of Rs.11,11,92,854/- under Section 28(1) read with Section 28(10B) along with interest under Section 28AA of the Customs Act, 1962. 4.5 The Adjudicating Authority dropped the proposals to confiscate the imported goods under Section 111(m) & (q) of the Customs Act, 1962 and to impose penalties under Sections 112(a)/114A & 114AA of the Customs Act, 1962. 5. As such, the Respondent has preferred the present appeal assailing the impugned order. 6.1 The Ld. Authorized Representative Shri P. Narasimha Rao, Commissioner Appeared for the appellant and submitted that the Adjudicating Authority has passed the order beyond the scope of Show Cause Notice by adjudicating the same under Section 28(2) of the Act even as the Show Cause Notice was limited to applicability of duty demand for extended period under Section 28(4) of the Customs Act, 1962. 6.2 He further submitted that Rule 3(a) of General Interpretative Rule (GIR) is applicable for classification of goods at "heading level" only and not at tariff item level. Therefore, the Adjudicating Authority has erred in applying the ....
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....issued prior to various recent amendments in the Harmonized System. Therefore, Adjudicating Authority has erred in relying on an old US customs CROSS Ruling issued prior to recent amendments in the Harmonized System and disregarding recent WCO recommendations issued in the year 2019. 6.6 The Ld. AR argued that the statements of officials of the Respondent under Section 108 of the Customs Act, 1962 wherein they had admitted correct classification of imported goods on the basis of the terms of the headings and relative Section or chapter notes, WCO recommendations and Notification issued by their supplier country and web catalogues were corroborative evidences. 6.7 It was submitted by the Learned AR that the Adjudicating Authority has disregarded the explanatory notes to chapter heading 8708 and wrongly concluded that Wheel Hub Assembly and parts of Wheel Hub Assembly are not classifiable under CTI 8708.50.00 and they are rightly classifiable under CTH 8708.9900. He referred to the chapter heading 8708 and explanatory notes to chapter heading 8708 which read as under: - Heading 8708 of the Customs Tariff Act, 1975; 8708 PARTS AND ACCESSORIES OF THE MOTOR VEHI....
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....on 46(4A) of the Customs Act, 1962 in all their import declarations. 6.11 The Learned AR submitted that Korean Customs vide Notification Service No. 2020-7 dated 01.06.2020 has re-classified Wheel Hub Assembly from 8708 99 to 8708 50 on the basis of the aforesaid approved HS Classification written Opinion in WCO 63rd HS Committee. The subject goods have been imported from Republic of Korea and the PTA Certificates i.e. Indo-Korea Preferential Trade Agreement (PTA) produced by the Respondent were got issued by them by wilful mis-statement that the said goods were not classifiable under CTI 8708 50 00. Thus, these certificates are rendered null and void ab initio in respect of the said imported goods. 6.12 The Ld. AR further submitted that it appears that the adjudicating authority has mis-interpreted Trade Notice No. 46/2019-20 dated 17.01.2020 issued by DGFT in respect of goods under 'Others' category which is residual code category wherein the importers were also requested to file their Bills of Entry with specific codes available for the imported items under ITC (HS), 2017, Schedule I at 8 digit level and to avoid as far as possible 'others' category. Adjudicating Authority....
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....00. However, invoices issued for the same item "Hub Assembly" by the ILJIN Global Korea to the Respondent had no Customs Tariff Item though the invoices were issued /signed by the same person. Thus, the overseas related company of the Respondent colluded and helped the importer in availing undue benefit of concessional rate of duty under Notification No. 152/2009. 6.16 The Ld. AR relied upon the following case laws in support of his request for invocation of extended period of limitation under Section 28(4) of Customs Act, 1962 in the subject case and for confiscation and imposition of penalties under the Customs Act, 1962: (i) Order No. 40526/2024 dated 6-5-2024 passed by CESTAT, Chennai vide in case of Sai Balaji Fancy Store Vs Commissioner of Customs, Chennai (ii) Judgement of CESTAT, Chennai in the case of M/s. Kisankraft Machine Tools Pvt Ltd Vs Commissioner of Customs, Chennai [2024(3) TMI-CESTAT Chennai] (iii) Judgement of CESTAT, NEW DELHI in the case of M/s. Sarvatra International Vs Commissioner of Customs, ICD Tuglakabad, New Delhi (vice versa) [2025 (2) TMI 25-CESTAT New Delhi] (iv) Final Order No. 20278/2024 dated 10-12-2024 passe....
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....the Hon'ble Supreme Court held that there is no estoppel in law against a party in a taxation matter; and the decisions to the same effect were pronounced in Jeyaswal Neco. Ltd. Vs. Commissioner of C.Excise, Raipur [2015 322 ELT 587 (S.C.)] and Tata Chemicals Ltd. Vs. Commissioner of Cus. (Preventive), Jamnagar [2015 320 ELT 45 (S.C.)]. 7.2 The Ld. Advocate submitted that both the Show Cause Notice and appeal try to classify the impugned goods based on extraneous materials and not based on GIR. The terms of heading of CTH 8708 and the wordings of the entries under it are very clear, hence there is no need to look into other extraneous materials. 7.3 It was further submitted by the Ld. Advocate that the Show Cause Notice tried to fit each item into a specific entry, when it is not possible, it defines the item as part of some other item which has a specific entry, only because it is physically connected with that item, which is against the principles of classification. Even though the terms of heading 8708 reads 'parts and accessories', the individual entries specifically cover either a specific item or item and their parts only or assemblies or item and their parts & accessor....
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....ransfer power, its primary role is to provide a mounting point for the wheels and act as a part of suspension system, allowing the wheels to move while still supporting the vehicle's weight. The impugned item Hub bearing Assembly is for non-drive wheel only. The entry 8708 5000 mentions differentials and transmission components only with Drive axles, whereas with non-drive axles nothing is added. This shows that no other component of non-drive axle is included under the entry 8708 5000. In all cases, the Hub bearing assembly is a functionally independent assembly, carrying out its own function independent of Axle and hence cannot be classified under CTI 87085000. 7.8 The Ld. Advocate contended that the appeal is devoid of any technical details. She submitted that the appellant in para 5 of Grounds of appeal says that Hub Assembly is the integral part of transmission and without Hub Assembly power cannot be transmitted to the wheel for running the vehicle. If this contention of the appellant is applied to axle, then the axle and differential themselves will become part of transmission equipment and will fall under CTH 8483. In an automobile, the power generated in the engine is t....
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....latitude should be given to them or administrative tribunals to correct or modify their previous decisions may still remain a debatable controversy in the world of law; nevertheless I am clearly of the opinion that neither the Appraiser nor the Collector of Customs can change his mind from time to time in respect of the same articles by assessing them in the case of one importer under one section and then assessing them for another importer under different section. To allow the Customs to do so will lead to utter confusion in the very basis and principles of taxation and grave uncertainty in business and foreign trade of India." 7.12 The Ld. Advocate referred to the US Cross Ruling NYF 86222 dated 17.05.2000 to submit that the Hub assembly of drive wheel are clearly classified under 870899 (others) and only the non-drive wheel Hub assembly are classified under 870839. Even before 2000, the HS code 8708 99 covered "other" items and 8708 39 covered other parts of Brakes. Hence it is obvious that even the non-drive Hub assembly is not classified as part of axles. She submitted further that in the US Cross Ruling after 2000, viz., in N276944 dated 15.07.2016, casting Hub assembly fr....
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....g OOC, which is not a simple and empty procedure. It is a quasi-judicial order passed under Section 47 of the Customs Act, 1962. When all the facts were before the officers and they have verified the description, classification and notification benefit and endorsed the COOs in respect of all the Bills of Entry, none of the essential ingredients of Section 28(4) could be established in this case. 7.18 The Ld. Advocate further submitted that the classification of CTH 8708 5000 given in the invoice raised by the same supplier to M/s. ILJIN Automotive Pvt. Ltd., Pune was a mistake made by the supplier due to the fact that those invoices were for the prototypes produced by the Development Product Management Department, whose products were handled by Development Team. Further, the classification given in the invoices pertaining to supplies made to Pune factory cannot be a ground to decide the classification. The Appellant department relying on the classification given in the invoice of supply made to Pune factory is not a method prescribed under law, viz. the GIR. 7.19 The Ld. Advocate submitted that the Assessment Group or the Examination officers had never asked for any literatur....
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....egard reliance already placed on the case of L & T Metro Rail - Hon'ble High Court of Madras in WP No. 40081 & 40082 of 2015 is reiterated. v. Hence reliance on WCO recommendation by the appellant and the SCN is not tenable as has been held by the Adjudicating Authority. 7.21 The Ld. Advocate further submitted that as number of Bills of Entry were subjected to re-assessment and examination, invocation of extended period under Section 28(4) is against law and facts of the case, as held by the Hon'ble CESTAT and higher judicial fora. She cited the judgment of this Tribunal in the case of M/s. BMW India Pvt. Ltd. Vs. Commissioner of Customs, Chennai-V in Final Order No. 42430/2018 dated 17.09.2018 wherein it was held that when number of Bills of Entry were subjected to re-assessment and examination, extended period for duty demand under Section 28(4) is not tenable. 7.22 It was argued by the Learned Advocate that the case laws relied on by the appellant in are on different ratio and not applicable to the subject issue as explained below: - i. Sai Balaji Fancy Store - Final Order No. 40526/2024 - In this case the goods were mis-declared to circumvent the policy ....
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....ts have been importing subject items from 1997 onwards and thus had imported Hub Assembly, parts of Hub assembly, parts/components of door, stabiliser link assembly, ball joint, and Tie rod by classifying them under CTI 8708 9900 with BCD 5% under Customs Notification No. 152/2009 (Sl. No. 896) on the strength of Country of Origin Certificates (COOs) issued by the exporting country viz., Korea under Indo-Korea Preferential Trade Agreement. Based on the investigation by DRI-Indore, subject SCN dated 20.12.2022 was issued proposing classification of the subject items under CTI 8708 5000, 8708 5000, 8708 2900, 8708 8000, 8708 8000 and 8708 9400 respectively and thereby denying the benefit of the subject notification and proposing merit rate of BCD @ 15%. The Respondent contested the same before the Original Adjudicating Authority, who had passed the impugned order dated 29.09.2023 wherein the classification of the four items viz., parts/components of door, stabiliser link assembly, ball joint, and Tie rod have been upheld as proposed by DRI, Indore in the SCN. However, the duty demand in respect of those items had been restricted to 2 years under Section 28(1) of Customs Act, 1962. In....
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....heels and sets it in motion. Hub is the main component of Hub assembly. Hub assembly is attached to the Road wheels and Road wheels also have specific tariff item i.e. 8708 70 00. Therefore, "Hub" is included in details of explanatory notes to Subheading 8708 50 of chapter heading 8708. iii. Compendium of Classification opinions- HS Committee 63rd Session issued by the World Customs Organization had classified Hub Assembly under Sub heading 8708.50. iv. Adjudicating Authority has erred in relying on an old US customs Cross Ruling issued prior to recent amendments in the Harmonized System and by disregarding recent WCO recommendations issued in the year 2019. v. Chapter heading 8708 and explanatory notes to chapter heading 8708 read as under: - 8708 PARTS AND ACCESSORIES OF THE MOTOR VEHICLES OF HEADING 8701 TO 8705 8708 50 00 - Drive-axles with differential, whether or not provided with other transmission components, non-driving axles; parts thereof "Relevant Explanatory Notes of CTH 8708; (E) Drive-axles, with differential; non-driving axles (front or rear); casings for differentials, sun and planet gear pi....
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....e specifically covered under other headings/chapters are covered under CTH 8708. As submitted by the Respondent, a car contains around 30,000 parts, out of which 1800 parts are significant and it is not possible to give separate entry for each and every part of a car. The heading 8708 has been constructed in such a way to accommodate all those parts. At this juncture it is essential to examine how heading 8708 of the Customs Tariff reads: - HS Code Item Description 8708 Parts and accessories of the motor vehicles of headings 8701 to 8705 8708 10 - Bumpers and parts thereof : 8708 10 10 --- For tractors 8708 10 90 - Other parts and accessories of bodies (including cabs) : - Other parts and accessories of bodies (including cabs) : 8708 21 00 -- Safety seat belts 8708 29 00 -- Other 8708 30 00 - Brakes and servo-brakes; parts thereof 8708 40 00 - Gear boxes and parts thereof 8708 50 00 - Drive-axles with differential, whether or not provided with other transmission components, non-driving axles; parts thereof 8708 70 00 - Road wheels and parts and accessories thereof 8708 80 00 - Suspension systems an....
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....ub assembly. It is obvious from the above that the purpose of Hub assembly is to rotate along with axle so that the power from engine is transmitted to the road wheel and hence the Hub assembly does the same function as the one done by the axle. Hence, we find that Hub assembly is part and parcel of the Axle. Without Hub assembly, the purpose and function of the axle cannot get completed. Therefore, the Hub assembly is not a separate part carrying out a function independent of the axle. The function of both axle and Hub assembly is same. Having come to the conclusion that Hub assembly is a part of Axle, we hold that the same has to be classified as part of axle. 13.6 We find that the above conclusion is also strengthened by the Explanatory Notes to CTH8708. The Explanatory Notes to heading 8708 grouped "Hub" along with the axle and its parts. Even though the Explanatory Notes are only heading specific, the explanatory notes to 8708 grouped the 'Hub' along with axles. Hence it is obvious that the explanatory notes treat the "Hub" as part of axle. It is well settled law that when the terms of heading or entry is not specific and if there is any ambiguity in classifying an item, th....
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....main item. Accordingly, the parts of Hub-assembly also has to be classified along with Hub-assembly. 13.8 In the light of the forgoing discussion and findings, we hold that the Hub-assembly and its parts are rightly classifiable under CTI 8708 5000 and accordingly not eligible for 5% BCD under CN No. 152/2009 (Sl.No. 896) and thus the appeal of the Appellant-Department succeeds, as far as classification of Hub-assembly and their parts is concerned. So, ordered accordingly. 14.1 In order to decide about invoking extended period in this appeal, it is feasible first to evaluate the provisions of Section 28(4) of Act during the relevant period which reads 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 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 wit....
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....t was adjudicated by classifying the same under 8708 9900. 14.3 We find from the above unassailable facts, which are not controverted by the Appellant-Department, we have to conclude that there is no misdeclaration or mala fide intention on the part of the Respondent in classifying subject items under CTI 8708 9900. All the facts have been presented before the officers of the Department and the Respondent have been classifying the subject goods under the same CTI 8708 9900 both prior and post issuance of CN No. 152/2009 under PTA with Korea and also prior and post introduction of self-assessment. It is not disputed that the importer has been importing these goods viz., Hub Assembly and its parts since 1997 onwards adopting the classification for these goods under CTI 8708 9900. This clearly proves the fact that there is no ground shown for the Original Adjudicating Authority to invoke the extended period under sub-section (4) of the Section 28 of Customs Act 1962. It is also a fact that in the Country of Origin (COOs) issued by the Korean Authority, the items have been classified under HS code 8708 99. Though the Korean Notification has been issued on 01.06.2020, the Respondent ....
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.... Customs, Central Excise and Service Tax, Bangalore vs. M/s. Northern Operating Systems Pvt. Ltd. decided on 19 May, 2022, the Hon'ble Supreme Court held as follows: - "Invocation of the extended period of limitation 62. The revenue's argument that the assessee had indulged in wilful suppression, in this court's considered view, is insubstantial. The view of a previous three judge ruling, in Cosmic Dye Chemical v. Collector of Central Excise [(1995) 6 SCC 117 = 1995 (75) E.L.T. 721 (S.C.)] - in the context of Section 11A of the Central Excise Act, 1944, which is in identical terms with Section 73 of the Finance Act, 1994 was that: "Now so far as fraud and collusion are concerned, it is evident that the requisite intent, i.e., 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....
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.... Excise Officer to initiate proceedings where duty has not been levied or short-levied within six months from the relevant date. But this period to commence proceedings under proviso to the Section stands extended to five years if the duty could not be levied or it was short-levied due to fraud, collusion, wilful misstatement or suppression of facts etc. The proviso to Section 11A reads as under : "Provided that where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any wilful misstatement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder, with intent to evade payment of duty, by such person or his agent, the provisions of this sub-section shall have effect, as if for the words" Central Excise Officer", the words "Collector of Central Excise" and for the words "six months", the words "five years" were substituted." A bare reading of the proviso indicates that it is in nature of an exception to the principal clause. Therefore, its exercise is hedged on one hand with existence of such situations as have been visua....
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....t the surroundings in which it has been used it has to be construed strictly. It does not mean any omission. The act must be deliberate. In taxation, it can have only one meaning that the correct information was not disclosed deliberately to escape from payment of duty. Where facts are known to both the parties the omission by one to do what he might have done and not that he must have done, does not render it suppression." 14.11 The ratio of these laws is squarely applicable to the facts of the case as the Respondent had been importing these goods classifying under CTI 8708 9900 since 1997. The disputed period in the appeal is from December 2017 to April 2022. The concessional benefit of FTA under CN Notification No. 152/2009 dated 31.12.2009 was being availed with effect from the year 2010 onwards under Indo Korea Preferential Trade Agreement. For more than a decade, the Respondent was importing these goods adopting the classification under CTI 8208 9900 and the same classification was mentioned in the County of Origin Certificates issued. Reportedly, more than 48 consignments were examined by the officers but no doubt has ever been pointed out. Classification of imported good....
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....ed in law to be valid." In the instant case, there is no mis-declaration of description of goods and the CTH declared by the Respondent is not contrary to the CTH determined by any original authority or appellate authority before filing of bills of entry in respect of the impugned goods. In fact the CTI 8708 9900 declared by the Respondent is in accordance with the CTI determined in Order-in-Original SPOT AO No. 2015 dated 27.12.2018 by the original adjudicating authority at Air Cargo Complex, New Delhi New Delhi, which order has been accepted by that Commissioner of Customs. iii. Judgement of CESTAT, New Delhi in the case of M/s. Sarvatra International Vs Commissioner of Customs, ICD Tuglakabad, New Delhi (vice versa) [2025 (2) TMI 25-CESTAT New Delhi] It is a case of mis-declaration of description of "100% Polyester Cut Pile Fabric" as "100% Polyester Knitted Fabric" to mis-classify the goods. The Respondent in the present case has not mis-declared the description of goods. iv. Final Order No. 20278/2024 dated 10-12-2024 passed by CESTAT, Bangalore in case of Bosch Ltd Vs Commissioner of Customs - It is a case of mis-declaration of description of "infot....
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.... shall be deemed to have been issued under sub-section (1), if such notice demanding duty is held not sustainable in any proceeding under the Customs Act, 1962, including at any stage of appeal, for the reason that the charges of collusion or any wilful mis-statement or suppression of facts to evade duty has not been established against the person to whom such notice was issued and the amount of duty and the interest thereon shall be computed accordingly. Therefore, we do not find any merit in Appellant's argument that the Adjudicating Authority has passed the order beyond the scope of Show Cause Notice by adjudicating the same demanding duty for normal period even as the Show Cause Notice was issued invoking extended period under Section 28(4) of the Customs Act, 1962. 17. We find that the case laws relied by the Appellant for confiscation and imposition of penalties are distinguishable. Several case laws, including case laws relied on by the Respondent in reply to the Show Cause Notice, have been discussed in detail by the Adjudicating Authority and the Appellant has not countered the same. Further, the Respondent has not misdeclared description, quantity or value any mis-decl....