TaxTMI 
TaxTMI 
2025 (9) TMI 414
X X X X Extracts X X X X
X X X X Extracts X X X X
....y through its CB and self-assessed duty, classifying them under Customs Tariff Item [CTI] 8479 89 20 and cleared them. The SCN was issued to the importer and to the CB proposing to reclassify them under CTI 8509 80 00, recover the differential duty under section 28 of the Customs Act, 1962 [Act], hold the goods liable to confiscation under section 111 of the Act and impose penalties on the importer and CB. These proposals in the SCN were decided in the impugned order confirming demand of duty of Rs. 78,06,352/- on the importer and imposing and equal amount as penalty under section 114A and imposing penalty of Rs. 78,06,352/- on the CB under section 112. 3. Aggrieved, the importer and the CB filed these appeals. 4. The importer had also imported the same goods in the past and filed Bill of Entry No. 7981861 dated 27.12.2016 and self-assessed duty classifying the same goods under CTI 8479 89 20 but it was re-assessed by the proper officer under CTI 8509 80 00. The importer did not contest the re-assessment and therefore, it attained finality. 5. After 27.12.2016, the importer filed several Bills of Entry up to 31.5.2017 classifying the goods under CTI 8509 80 00 and paid dut....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d have been issued only under section 28(1) of the Customs Act. (vii) The goods were cleared after self-assessment which is also an assessment and there is no evidence of collusion, wilful statement or suppression of facts. Therefore, extended period of limitation is not invocable. (viii) Since the department did not appeal against the self assessment of the Bills of Entry, no demand of duty can be made against the appellant in view of the judgement of the Supreme Court in ITC Ltd versus CCE Kolkata-2019 (368) E.L.T. 216(S.C.). (ix) The penalty imposed on the Customs Broker cannot be sustained. (x) The appeal may be allowed, and the impugned order may be set aside. Submissions on behalf of the Revenue 10. Shri Rakesh Kumar, learned authorized representative for the Revenue vehemently supported the impugned order made the following submissions: (i) The submission of the learner, Counsel that per ITC Ltd., no demand issued under section 28 without assailing the self-assessment of the Bills of Entry is not correct. In ITC Ltd., the question before the Supreme Court was whether refund could be sanctioned modifying the self -assessed bi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ut those Bills of Entry. (viii) Thus, this is a case where the appellant had knowingly and intentionally entered the wrong CTI in its Bills of Entry during the disputed period without mentioning the weight of the dehumidifiers in the description and thereby evaded duty. After it was caught and DRI started investigation, it again started classifying the goods correctly. (ix) Therefore, in the facts of the case, extended period of limitation under section 28 (4) as well as the penal provisions were correctly invoked. (x) The impugned order may be upheld and the appeal may be dismissed. Findings 11. The arguments advanced by the learned counsel for the appellants and the learned authorized representative for the Revenue have been considered. The questions to be decided in these two appeals are as follows: a) Are the de-humidifiers weighing less than 20 kg imported by the importer classifiable under CTI 8509 80 00 (as held in the impugned order) or under CTI 8479 89 20 (as asserted by the importer)? b) Could the demand have been issued under section 28 of the Act without the Revenue first assailing the self-assessment of Bills of Entry....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles NOTES : 4. Heading 8509 covers only the following electro-mechanical machines of the kind commonly used for domestic purposes : (a) floor polishers, food grinders and mixers, and fruit or vegetable juice extractors, of any weight; (b) Other machines provided the weight of such machines does not exceed 20 kg. The heading does not, however, apply to fans and ventilating or recycling hoods incorporating a fan, whether or not fitted with filters (heading 8414), centrifugal cloths-dryers (heading 8421), dish washing machines (heading 8422), household washing machines (heading 8450), roller or other ironing machines (heading 8420 or 8451), sewing machines (heading 8452), electric scissors (heading 8467) or to electro-thermic appliances (heading 8516). 8509 ELECTRO-MECHANICAL DOMESTIC APPLIANCES, WITH SELF CONTAINED ELECTRIC MOTOR, OTHER THAN VACUUM CLEANERS OF HEADING 8508. 8509 40 - Food grinders and mixers; fruit or vegetable juice extr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ances for domestic use, have self-contained motors and they are not vacuum cleaners. These facts are not in dispute. For this reason, they fall under CTH 8509. However, this heading must also be read with the corresponding Chapter Note, which is Chapter Note 4 to Chapter 85. This Note indicates which types of goods are covered under CTH 8509 and which types of goods are excluded. As per this Note, they: (a) must be electro-mechanical appliances; (b) must be meant for domestic use; (c) they must weigh less than 20 kg; and (d) they must not be fans and ventilating or recycling hoods incorporating a fan, whether or not fitted with filters (heading 8414), centrifugal cloths-dryers (heading 8421), dish washing machines (heading 8422), household washing machines (heading 8450), roller or other ironing machines (heading 8420 or 8451), sewing machines (heading 8452), electric scissors (heading 8467) or to electro-thermic appliances (heading 8516). 18. The disputed goods meet the criteria laid down in (a), (b) and (c) above and are not one of the goods listed in (d) above. Therefore, they fall within the four-digit CTH 8509. This CTH is further divided....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Blue and Flock India were on the question as to if refund could be sanctioned so as to modify the assessment or it could be sanctioned only if the duty was paid in excess of what was assessed. 25. To examine this issue, it is profitable to understand the law laid down by successive judgments. In Flock India, the Assistant Collector had, after examining the classification lists filed by Flock India (as assessees were required to during the relevant period), rejected the classification claimed and passed an order changing the classification. This order of the Assistant Collector was appealable but the assessee had not appealed to the Collector (Appeals). Instead, it directly filed a refund application for the differential duty. Supreme Court held that refunds can be claimed if they flow from the assessment and not so as to modify the assessment. Therefore, unless the assessment is appealed against and is modified, no refund could be sanctioned. 26. The ratio of Flock India was followed by the Supreme Court in Priya Blue which was a Customs matter. It needs to be pointed out that unlike a SCN for demand of duty, sanction of refund is not an adjudication procedure to modify the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Order of Assessment is passed the duty would be payable as per that order. Unless that order of assessment has been reviewed under Section 28 and/or modified in an Appeal that Order stands. So long as the Order of Assessment stands the duty would be payable as per that Order of Assessment. A refund claim is not an Appeal proceeding. The Officer considering a refund claim cannot sit in Appeal over an assessment made by a competent Officer. The Officer considering the refund claim cannot also review an assessment order. 7. We also see no substance in the contention that provisions for a period of limitation indicates that a refund claim could be filed without filing an Appeal. Even under Rule 11 under the Excise Act the claim for refund had to be filed within a period of six months. It was still held, in Flock (India)'s case (supra),that in the absence of an Appeal having been filed no refund claim could be made. 8. The words "in pursuance of an Order of Assessment" only indicate the party/person who can make a claim for refund. In other words, they enable a person who has paid duty in pursuance of an Order of Assessment to claim refund. These words do not lead to t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aintained."(emphasis supplied) 41. It is apparent from provisions of refund that it is more or less in the nature of execution proceedings. It is not open to the authority which processes the refund to make a fresh assessment on merits and to correct assessment on the basis of mistake or otherwise." 32. Thus, both ITC Ltd. and Flock India make it explicit that the assessments can be modified either through an appeal to the Commissioner (Appeals) or modified under section 28. The submission of the learned counsel is quite the opposite of the law laid down by the Supreme Court and hence cannot be accepted. It would also be pertinent to mention that if the submission of the learned counsel is accepted, it will result in absurd consequences. If a notice under section 28 is issued, after considering the reply and hearing the noticee, the proper officer (Commissioner or Additional Commissioner or Joint Commissioner or Deputy Commissioner or Assistant Commissioner) has to adjudicate the matter and pass an order. If the assessment was already appealed against before Commissioner (Appeals) and was either affirmed or annulled or modified, the assessment order merges with the orde....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt had initially filed the Bill of Entry dated 27.12.2016 classifying under CTI 8479 89 20 and the Bill of Entry was re-assessed by the officer under CTI 8509 80 00. The appellant paid duty accordingly and did not contest the classification. 37. Further, in all the Bills of Entry filed up to 31.5.2017, the appellant classified the goods under the same CTI 8509 80 00. It then started classifying the goods again under CTI 8479 89 20 and paying duty at a lower rate until DRI started investigation. The appellant thereafter, classified the goods under CTI 8509 80 00 and started paying duty at a higher rate. This shows that the appellant had no honest belief or opinion about the classification but it only tried to take advantage and pay lower duty if mis-classifying the goods was not detected. Honest opinion cannot change suddenly after 31.5.2017 and change back after DRI starts investigation. 38. The question of deliberate mis-classification to pay lower duties was examined by the Supreme Court in Commissioner of Central Excise, Ahmedabad versus Urmin Products Pvt. Ltd. - 2024 (388) E.L.T. 418 (S.C.) in which the decision of a Bench of this Tribunal against invoking extended....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ification list is not a short levy. Differential duty cannot be recovered on the ground that it is a short levy. Rule 10 has then no application. 16. We are, therefore, of the opinion that the judgment in Ballarpur Industries which did not advert to Rule 173-B, does not lay down the law correctly and it is overruled. The decision in Rainbow Industries, on the other hand, correctly lays down the law. It was delivered in the context of Rule 173-C dealing with approved price lists and the provisions of Rules 173-C and 173-B are analogous." 39. However, the said finding in Cotspun's case would not merit acceptance for the simple reason that the amendment to Section 11A of CE Act, brought by Act 10 of 2000, would clearly take within its sweep, that even if there is non-levy or non-payment, short levy or short payment, or erroneous refund, as the case may be, on the basis of any approval, acceptance or assessment relating to the rate of duty or on valuation of excisable goods under any other provisions of the CE Act or the rules made thereunder, the Central Excise Officer can, within one year from the relevant date, serve a notice on the person chargeable with duty ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mmediate reference and at the cost of repetition it is extracted herein below: "This is to inform you that as per the practice followed by our industry, we classified our product; chewing tobacco into CETSH 2403 9910." 42. It is an admitted fact that till the filing of this letter, the assessee continued to classify the product as 'zarda/jarda scented tobacco' falling under CET SH 2403 9930. It is for this precise reason, that the adjudicating authority has observed, and rightly so that the letter dated 30-3-2006 had been cleverly drafted and it does not mention in detail the product which they were manufacturing at that material time namely 'zarda/jarda scented tobacco'. Though the classification in the letter shows entry CET SH 2403 9910 ('chewing tobacco'), it would depict a picture as though it is a new product. A plain reading of the letter would not indicate that the author of the said letter intended to reveal any details about the product that is being manufactured. However, the assessee cannot feign ignorance as to the necessity of furnishing such relevant details necessary for determination of payment of duty. The assessee having ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the show cause notice and invocation of Section 11A and Section 11 AC of the CE Act, by the Department. It cannot be ignored that till filing of the letter dated 30-3-2006, the assessee itself was classifying the product as 'zarda/jarda scented tobacco' falling under CET SH 2403 9930 and being a large-scale manufacturer and paying large sums of amount as duty, to contend that it was unaware of the difference between these two products, or to contend that it had classified the product as 'zarda/jarda scented tobacco' by ignorance, is not a plausible justification on part of the assessee. However, on the issuance of Notification No. 2 of 2006 dated 1-3-2006 under which 'zarda/jarda scented tobacco' was excluded or in other words not included in the said notification, the assessee changed the description of its product from 'zarda/jarda scented tobacco' to 'chewing tobacco'. The date of communication of the letter dated 30-3-2006 by the assessee also acquires significance in as much as the Notification No. 2 of 2006 dated 1-3-2006 were to take effect from 1-4-2006 and just two days before the date of the said Notification No. 2 of 2006 coming i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and the adjudicating authority opined as under: "It can be seen that the assessee had very cleverly drafted the letter and did not mention any details of the product which they were manufacturing at that material time i.e., 'Jarda scented tobacco'. On reading this letter, any person could conclude that they have started a new product 'Chewing tobacco' which they have classified in 2403 9910 as it is the, correct subheading of Chewing tobacco. On a plain reading of the letter, at the first instance, no one will be able to understand the real motive. The assessee did not mention in the letter that they are changing the name and classification of the goods which are currently being manufactured by them which they were supposed to do. Had they mentioned this fact at that time, the issue would not have arisen at all. Intentionally, they have hidden the facts and did not elaborate in the letter. The assessee, on the contrary preferred to show the reasons in the statement recorded under section 4 on 26-6-2006 when the department caught him for evading the duty. Further, the assessee has mentioned that as per the practice followed by their industry, they classify t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as been dealt in detail hereinabove. In other words, the tribunal by cryptic order has negatived the contentions of the Revenue and held that the invocation of the extended period of limitation was not warranted. This finding, not being in consonance with the facts obtained on the hand, we are unable to subscribe our views to the judgment of the tribunal. In that view of the matter, we are of the considered view that Question No. 1 is to be answered against the assessee and in favour of the Revenue and affirm the finding of the adjudicating authority and reverse and/or set aside the finding recorded by the tribunal which has been observed at the initial stage herein given that it is not only contrary to the facts but also contrary to law as noticed hereinabove. It is for these precise reasons the Adjudicating Authority was of the clear view that there has been a deliberate intention to avoid payment of duty by the assessee by misclassification and willful misstatement of its product and hence it was justified in invoking the extended period as provided in the proviso to Section 11A(1) of CE Act, 1944. 39. Thus, in the case of Urmin Products, even though the appellant had informe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....***** Provided also that where any penalty has been levied under this section, no penalty shall be levied under section 112 or section 114. *** 44. It is evident from the above that the conditions for invoking extended period of limitation and for imposing penalty under section 114A are the same. Since we have held in favour of the Revenue on the question of extended period of limitation, we also uphold the penalty imposed on the importer under section 114A. Was the penalty correctly imposed on the CB under section 112? 45. Learned counsel submitted as follows with respect to the penalty on the Customs Broker. "The imposition of penalty of Rs. 3,00,000/- under section 112 (a) (ii) of the Customs Act, 1962 on the Appellant No. 2 i.e. Customs Broker is not tenable since, neither the SCN nor the impugned order has brought out any specific allegation regarding the role of the Appellant No. 2 (Customs Broker) in the alleged mis-classification and the Appellant No. 2 had duly filed the Bills of Entry mentioning the correct description of goods as per the Commercial Invoice and other import documents". 46. The show cause notice states in paragraphs 1....