TaxTMI 
TaxTMI 
2025 (11) TMI 1121
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.... Commissioner] that re-classifies the goods imported under 19 Bills of Entry; confiscates the seized goods covered under 6 live Bills of Entry with option to pay redemption fine; confiscates the goods covered under 13 previous Bills of Entry with option to pay redemption fine; confirms the re-assessment of the duty in the 6 live Bills of Entry; confirms the demand of duty short paid in respect of the 13 previous Bills of Entry under section 28(4) of the Customs Act, 1962 [the Customs Act] ; and imposes penalties upon the appellant under section 112(a)(ii) of the Customs Act in respect of the 6 live Bills of Entry and penalty under section 114A of the Customs Act on the 13 previous Bills of Entry. 2. Customs Appeal No. 51078 of 2022 has been filed by Anuj Sharma, Managing Director of the appellant, to assail that part of the order dated 20.08.2020 passed by the Principal Commissioner that imposes penalty upon him under section 112(a)(ii) of the Customs Act. 3. Customs Appeal No. 50217 of 2021 has been filed by Professional Exim, Customs House Agent, to assail that part of the order dated 20.08.2020 passed by the Principal Commissioner that imposes penalty upon it under section....
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.... of the show cause notice relating to 2 Bills of Entry, both dated 12.02.2019, is reproduced below: "2. The Scrutiny of the aforesaid Bills of Entry No. 2030048 and 2030112, both dated 12.02.2019, revealed that the consignment in Container No. TCNU5171790 covered under Bill of Entry No. 2030048 dated 12.02.2019 was having 91 pieces/sets of different parts for 70 e-rikshaw and the consignment in Container No. DFSU7688331 covered under Bill of Entry No. 2030112 dated 12.02.2019 was having 99 pieces/sets of different parts for 72 e-rikshaws as is evident from the fact that most of the parts are either 70 or 72 in numbers or in multiples of 70 or 72 in the respective Bills of Entry. Both the import consignments were having "Differential Axles" of the erikshaw which appeared to be an integrated device having Axle, Transmission (Gears), Brake Drum Assembly, etc. Further, both the consignments were also having Chassis of the e-rikshaw. The remaining items imported vide aforesaid two consignments were for the use in the body/cabin of the e-rikshaw as well as several other parts of e-rikshaw, such as wiper motor, Brake Rod, Accelerator, Hand Brake and its wire, Remote Lock, Convert....
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....gainst the appellant was noted by the Principal Commissioner in paragraph 67 of the impugned order, which is reproduced below: "67. I find that the principal allegation against the Noticees to the Show Cause Notice in the instant case is that Noticees having willfully classified their said imported Goods as spare parts under different CTH instead of as ERickshaw under CTH 87039010/87038040 with an intent to evading payment of Duty resulting thereof into short payment of said Duty in violation of said Office Order dated 12.03.2014 issued by the Joint Commissioner of Customs, ICD, TKD, New Delhi read with Rule 2(a) of the General Rules for the interpretation of First Schedule of the Customs Tariff Act, 1975." (emphasis supplied) 13. The Principal Commissioner after considering the statement of Anuj Sharma made under section 108 of the Customs Act observed: "68.3 I find that said Sh. Anuj Sharma has admitted in his said statement dated 27.03.2019 about the import of (i) transmission, (ii) axle and (iii) chassis of E-rickshaw Vehicle in their said import consignments under said Bills of entry." (emphasis supplied) 14. In respect of the live Bill of E....
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....sembly of various parts imported through a single consignment has the essential character of the complete e-rickshaw despite the fact that few parts, such as Motor, Controller, Tyres, Rims, etc., were not imported through such import consignments. Further, I find that the Chapter Note 3 of Chapter 87 specifically says that "Motor Chassis fitted with cabs fall in heading 8702 to 8704, not in heading 8706". I find that in the instant case the incomplete e-rickshaw had been imported in unassembled or disassembled condition, along with cabs and therefore, I find that the import consignments are not classifiable under the CTH 8706." (emphasis supplied) 16. The Principal Commissioner then referred to the office order dated 12.03.2014 and held: "75. I find that in the instant case, all the imports consignments had three parts, i.e. Transmission, Axle and Chassis, out of the five major components/assemblies mentioned in the aforesaid Office Order dated 12.03.2014. Further, only two parts, i.e. Motor and Controller, out of the five major components/assemblies mentioned in the aforesaid Office Order dated 12.03.2014 were missing in the import consignments. As per aforesaid Off....
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....is said statements had clearly submitted that the imported goods were meant for manufacturing E-Rickshaws and therefore I find that the same were not spare parts. From the aforesaid, I find that the various parts of e-rickshaw in the aforesaid consignments were not "spare parts". Therefore, I find that the aforesaid misclassification by the Importer amounts to wilful mis-statement." (emphasis supplied) 19. It is for this reason that in respect of these 13 previous Bills of Entry, demand of Rs. 3,58,00,851/- has been confirmed under section 28(4) of the Customs Act. 20. Penalty under section 112(a)(ii) of the Customs Act has been imposed upon the appellant for the 6 live Bills of Entry for the reason that the Bills of Entry described the goods as spare part of e-rikshaw to hoodwink the department. Penalty has been imposed on Anuj Sharma, Managing Director of the appellant, under section 112(a)(ii) of the Customs Act for the reason that he was responsible for wrong classification of the imported goods as parts of e-rikshaw. 21. Penalty has also been imposed upon the appellant under section 114A of the Customs Act on the 13 previous Bills of Entry. 22. Penalty has been ....
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....e 2 (a) of the Interpretative Rules to the first Schedule to the Customs Tariff Act 1975. 1. Shri Karamvir singh Joint commissioner of Customs, SUR 2. Shri Gauri Shankar Sinha Deputy Commissioner of Custom, AG 3. Shri Vikash Deputy Commissioner of Customs Import Seed 4. Shri Nalin Kumar Deputy Commissioner of Customs Group V 5. Shri Prashant Kumar Jha Deputy Commissioner of Customs SUB and 6. Shri Abhinav Yadav Assistant Commissioner of Customs Import Shed 2. A meeting of the Committee was held on 06.0-.2014 and after deliberation the matter the Committee has decided that as per Rule 2(a) of the interpretative Rules to the First Schedule to the Customs Tariff Act 1975 there are five major components/assemblies such as (i) transmission, (ii) motor, (iii) axle, (iv) chassis and (v) controller that provides essential characteristics to make a complete E-Rickshaw in CKD SKD condition classifiable at 8703 and are covered under the provisions of Motor Vehicle Act 1988. However if along with motor any two of the essential components mentioned above are missing then it may be considered as parts of electric Rickshaw falling und....
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....-rikshaw. Motor, therefore, is the most vital essential components. 31. The case set up by the appellant is that three of the essential components namely motor, transmission and controller were not imported. In paragraph 75 of the order reproduced above, it has been noted that the import consignment had three essential components, namely transmission, axle and chassis and as only two components including motor were missing, the import consignment cannot be classified as parts of e-rikshaw and have to be classified under CTH 8703 meant for erikshaw. 32. This finding is clearly contrary to the terms of the office order. It clearly provides that if motor along with two essential components are not imported, then the goods would be classified as parts under CTH 8708. The Principal Commissioner has misread the office order. 33. The Principal Commissioner failed to appreciate this important aspect of the office order dated 12.03.2014 that it was absolutely necessary for motor to be imported and if motor is not imported then in terms of the office order dated 12.03.2014, the goods imported will have to be considered as parts of e-rikshaw. 34. The show cause notice alleges that....
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....D condition and when they would be considered as parts of the e-rikshaw. Thus, it is the office order that is required to be considered for this purpose. 38. It will also be pertinent to refer to the Central Motor Vehicle (16th Amendment) Rules, 2014 which came into force on 08.10.2014. After clause (ca) of rule 2 the following sub-rule was inserted: "(cb) "E-rickshaw" means a special purpose battery operated vehicle having three wheels and intended to provide last mile connectivity for transport of passengers for hire or reward, provided,- (i) such vehicle is constructed or adapted to carry not more than four passengers, excluding the driver, and not more than forty kilograms luggage in total; (ii) the net power of its motor is not more than 2000 W; (iii) the maximum speed of the vehicle is not more than twenty-five kilometre per hour;" (emphasis supplied) 39. This also shows that motor is the most essential element because in an e-rikshaw the net power of the motor has not to be more than 2000 W. 40. However, HSN General Explanatory Notes to Chapter 87 provide that an incomplete or unfinished vehicle can be classified as a com....
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....d on 01.04.2025 (Tri.-Del.)]. 44. The impugned order has also referred to the opinion given by a Chartered Engineer through a letter dated 08.05.2019. This mentions that "differential axle" actually consists of assembly of differential gear i.e. transmission with two rear axles (one on each side) along with fittings of Brake, Brake Drum Assemblies, at the end of each axle shafts. 45. The contents of the report were controvertered by the appellant in the reply filed to the show cause notice and the appellant also specifically asked for cross examination of the Chartered Engineer. 46. In such circumstances, it was obligatory on the part of the adjudicating authority to have examined the Chartered Engineer and then granted an opportunity to the appellant to cross examine him. In the absence of this procedure having been followed, no reliance can be placed on the report submitted by the Chartered Engineer. 47. Thus also, it cannot be urged that the appellant had imported incomplete e-rikshaws as three of the essential components mentioned in the office order were not imported by the appellant. It needs to be reiterated that if motor is not imported then it would necessarily....
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....tice. In the absence of any finding having been recorded that suppression was with an intent to evade payment of duty, the extended period of limitation could not have been invoked. 52. The provisions of section 11A (4) of the Central Excise Act, 1944, which also deals with the extended period of limitation, came up for interpretation before the Supreme Court in Pushpam Pharmaceuticals Company vs. Collector of Central Excise, Bombay [1995 (78) E.L.T. 401 (S.C.)]. The Supreme Court observed that section 11A(4) empowers the department to reopen the proceedings if levy has been short levied or not levied within six months from the relevant date but the proviso carves out an exception and permits the authority to exercise this power within five years from the relevant date in the circumstances mentioned in the proviso, one of it being suppression of facts. It is in this context that the Supreme Court observed that the act must be deliberate to escape payment of duty. The relevant observations are: "2. *****. The Department invoked extended period of limitation of five years as according to it the duty was short levied due to suppression of the fact that if the turnover was ....
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....usion, wilful statement, suppression of fact or contravention of any provision. These ingredients postulate a positive act and, therefore, mere failure to pay duty which is not due to fraud, collusion or wilful misstatement or suppression of facts is not sufficient to attract the extended period of limitation. 55. The aforesaid decisions of the Supreme Court were relied upon by the Supreme Court in Uniworth Textiles Ltd. versus Commissioner of Central Excise, Raipur [2013 (288) E.L.T. 161 (S.C.)] and the relevant portion of the judgment is reproduced below: "12. We have heard both sides, Mr. R.P. Batt, learned senior counsel, appearing on behalf of the appellant, and Mr. Mukul Gupta, learned senior counsel appearing on behalf of the Revenue. We are not convinced by the reasoning of the Tribunal. The conclusion that mere non-payment of duties is equivalent to collusion or willful misstatement or suppression of facts is, in our opinion, untenable. If that were to be true, we fail to understand which form of nonpayment would amount to ordinary default? Construing mere nonpayment as any of the three categories contemplated by the proviso would leave no situation for which, ....