TaxTMI 
TaxTMI 
2026 (3) TMI 934
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....er the table below: Sl. No Product Classification Basic Customs Duty ("BCD")/ Social Welfare Surcharge ("SWS") Integrated Goods and Service Tax ("IGST") 1. Laptops CTI 8471 30 10 0 18% 2. Desktops CTI 8471 50 00 0 18% 3. Monitors CTI 8528 52 00 0 18% 2. After the Post clearance audit, the Audit Commissionerate was of the view that the subject goods removed from the SEZ unit to the DTA were misclassified under CTH 8471 30 10, 8471 50 00 and 8528 52 00. According to the Department, the subject goods merited classification under CTH 9804 90 00 since the subject goods were removed to individual customers in DTA for their personal use. Pursuant to this, the Department issued the Show Cause Notice dated 20.01.2023 inter alia proposing reclassification and thereby demanding differential duty to the tune of Rs.82,78,72,633/- along with applicable interest; confiscation of goods under Section 111 (m) & (o) and also for imposing penalty under Section 112(a) of the Customs Act, 1962. 3. The Principal Commissioner of Customs, Chennai (Adjudicating Authority) after hearing the submissions of the Appellant passed Order-In-Original....
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.... Act which defines 'duty', dutiable goods are goods which are chargeable to duty and on which duty has not been paid. Therefore, the subject goods i.e., goods falling under CTI 8471 30 10 (Laptops) and CTI 8471 50 00 (Monitors) are not leviable to any Customs Duty as the Customs Tariff itself prescribes that the goods falling under the said Headings are 'free'. Further, Monitors falling under CTI 8528 52 00 are eligible for complete exemption from payment of Customs Duty vide Sl. No. 17 of Notification No. 24/2005-Cus dated 01.03.2005, hence subject goods cannot be termed as 'dutiable goods' for the purpose of Heading 9804. 10. In this regard, reliance has been placed on the decision of the Hon'ble Supreme Court in Associated Cement Companies Ltd. Vs Commissioner of Customs [2001 (128) E.L.T. 21 (S.C.) reaffirmed in 2002 (144) ELT A100 (SC)], wherein it was held that when the Customs Tariff provides that import of a particular item is 'Free' from duty or is exempt from payment of any duty, then such goods cannot be treated as 'dutiable goods'. This decision has been subsequently followed by the Tribunal in Jay AR Enterprises Vs Commissioner of Customs (Sea), Chennai [2007 (210) ....
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....mpted from duty under Exemption Notification issued under Section 25 of the Act ibid is not tenable. He referred to Section 12 of the Act read with Section 3 (7) of the Customs Tariff Act, 1975, to submit that IGST was leviable on the impugned goods. ⮚ With regard to Associated Cement Corporation (supra) and Sterlite Industries India Ltd. (supra), findings in those cases are not applicable in this context as the Hon'ble Courts discussed the applicable duty on the goods brought as 'baggage' and not as 'imported goods', since the duty was not applicable on the imported goods, the same should be applicable on the baggage goods. However, the context and goods discussed are different from the present case, as the goods are having GST leviable on them, the goods are dutiable goods. ⮚ From a plain reading of Section 12 of the Act read with Section 3 (7) it is evident that IGST or any other duties like ADD, CVD are applicable. Hence, the impugned goods are 'dutiable goods'. Section 5 (1) of the IGST Act is the charging section and the proviso to Section 5 (1) states that the integrated tax on goods imported into India shall be levied and collected in accorda....
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.... (b) Removal of the impugned goods from SEZ to DTA fits into the definition of "personal import" as the goods are being removed for persons / individuals for their personal use and not related to trade or manufacture or agriculture. In this regard, Ld. A.R placed reliance on CBIC Circular No. 14/2018-Customs dated 04.06.2018. ⮚ Further, the SEZ Unit has filed Bills of Entry without IEC for clearance of goods, since the goods cleared are for personal use, Bill of Entry should have been filed with IEC Number as clarified by the above circular. ⮚ SEZ-DTA clearances are imports, the Appellant has violated the Customs Act by misclassifying the goods and hence, the goods imported by the SEZ Unit holder are liable for confiscation, penalty and interest under relevant provisions of Customs Act, 1962. ⮚ With regard to the removal of goods from SEZ to DTA to the individuals/persons, Bill of Entry is filed by SEZ unit on behalf of DTA buyer as per provision under Rule 48 of the SEZ Rules and the duty liability is discharged by the SEZ unit. Therefore, the Appellant was responsible for following all the customs procedures and any further pr....
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....nly for the purposes of determining the rate of duty. 18. However, the enquiry cannot stop here. It is necessary to determine whether these goods are subjected to Customs duty. The goods under consideration fall in three classifications, or so the importer claims, viz., CTI 84713010, 84715000 and 85285200. So far as Headings 84713010 and 84715000 are concerned, learned advocate for the Appellant is correct in saying that under the Schedule to the Customs Tariff Act, 1975 the rate of duty is stipulated to be 'free'. In respect of Heading 8528 5200, the rate of duty so prescribed is 10%. However, this is subjected to an exemption by Notification No. 24/2005 dated 01.03.2005 at Sl. No. 17 in the Table. 19. The Hon'ble Supreme Court, in Associated Cement Companies Ltd. Vs Commissioner of Customs [2001 (128) ELT 21 (SC) reaffirmed in 2002 (144) ELT A100 (SC)] at paragraphs 79 and 80, has held as follows: "79. Under the Central Excise Act, 1944 in definition of words "excisable goods" under Section 2(d), the very specification or inclusion of goods in the First and Second Schedule of the Central Excise Tariff Act would make them excisable goods subject to duty. Under the C....
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....mported for personal use'. 21. In our opinion, importation for personal use necessarily connotes the use of the importer himself and not the use of any other person such as a customer of the importer to whom the goods are ultimately sold. In this case, there is no dispute on the fact that the goods were manufactured by the Appellant and sold to its customers in the ordinary course of its business. This, according to us, is clearly not 'personal use' as contemplated by Heading 9804. The proper construction of that Heading is in view also of the Chapter Heading. The Chapter Heading refers to passengers' baggage and personal importations together. Apparently, what is sought to be covered is goods actually brought into India from a place outside India, and used for personal purposes. We think it might be a stretch too far to extend this to 'SEZ to DTA' transactions. What is contemplated in the context of baggage is usually that a person, being outside India, comes to India, carrying with him, some goods in his baggage. These are goods he has presumably procured outside India, perhaps off the shelf. In the present case, the customers of the Appellant are undisputedly within India. Th....
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....porter is not a fact which is determinable at the time of importation. The classification, however, has to be decided at the time of importation. Therefore, the classification cannot depend on facts that arise after importation and which are beyond the knowledge and control of the importer who, we reiterate, in this case, is the Appellant. No legal fiction authorizes us to hold that the importer is not the Appellant. The requirement of Heading 9804 that the goods be 'imported for personal use' is thus not satisfied. In this view of the matter, we have no hesitation in holding that the goods cannot be classified under CTH 98049000. 25. Further, we are also conscious of Chapter Note 1 in Chapter 98, which provides that goods must be classified in that Chapter, even if covered by a more specific Heading elsewhere. However, since we have already expressed our opinion that the ingredients of Heading 9804 do not apply, that Chapter Note is also irrelevant. 26. The other aspect which we feel relevant is that the Appellant, admittedly, filed invoices which clearly indicate individual/different items, falling under different Headings. By over-looking the individual identities, the sam....
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....71 / CTH 8528. We find to this extent that even the Appellant is legally correct in its declaration insofar as the classification of the goods in question is concerned. 29. The burden of proof whenever a dispute arises, is on the person who ignites the dispute; in the case of a classification and when the Revenue does not accept the declared classification, then, the burden heavily rests on the Revenue, to not only establish that the declared classification was wrong, but also to establish how the reclassification Revenue wanted is justifiable. Thus, the primary burden itself, according to us, stands unsatisfied insofar as the rejection of declared classification is concerned. A perusal of the SCN clearly indicates that the Revenue sought to reject the declared classification solely on the ground that the goods in question were deemed to be imported into India by the individual(s) / customer(s) for their personal use and therefore, were appropriately classifiable under Heading 9804. This clearly indicates that without discharging the primary burden of proof, the Adjudicating Authority has jumped into the second aspect of getting the goods in question classified under CTH 9804, w....
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....orted into India." 31. Further, with regard to the proposal to recover IGST which stood confirmed in the impugned order, we find that duty of Customs, as contended before us, is distinct from IGST and in this regard, reliance placed by the Appellant on the decision of Andhra Pradesh High Court in the case of Maithan Alloys Ltd. Vs UOI & Others [2024 (1) TMI 305-Andhra Pradesh High Court]. While examining the question whether the goods imported into SEZ is exempt from payment of GST compensation CESS under Section 26 of the SEZ Act in the absence of specific Notification to this effect under the Goods and Service Tax [Compensation to States] Act, 2017, the Court held that the word 'duty' used in Section 26 is not Cess and accordingly under Section 26 (1) (a) what is exempted is only duty of Customs and not any Cess including GST compensation. We find that the above view was also applied by the Delhi Bench of the Tribunal in the case of Interglobal Aviation Ltd. Vs CC New Delhi [2020 (43) G.S.T.L 410 (Tri.-Del.)] and Appeal filed by the Revenue against the said order has also been dismissed by the Apex Court vide its order dt. 14.07.2025 in Civil Appeal Diary No.6685/2025. This ap....