AI Drafter 
TaxTMI 
TaxTMI 
2026 (4) TMI 1756
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....ction 28AA of the Customs Act and penalty under section 114A of the Customs Act. The goods have also been confiscated under section 111(m) of the Customs Act with an option to redeem the same on payment of fine. 2. Customs Appeal No. 54923 of 2023 has been filed by Vikas Agarwal, Director of the appellant to assail that portion of the order dated January 30, 2023 passed by the Commissioner that imposes a penalty of Rs. 10 lacs under section 114AA and a penalty of Rs. 2 lacs upon him under section 112(a)(ii) of the Customs Act. 3. Customs Appeal No. 54917 of 2023 has been filed by Dharam Chand Sahu, Manager of the appellant to assail that portion of the order dated January 30, 2023 passed by the Commissioner that imposes a penalty of Rs. 1 lac upon him under section 112(a)(ii) of the Customs Act. 4. The appellant imported Apatite (GR) Calcium Phosphate through six Bills of Entry during the period from May 25, 2019 to January 29, 2020 and classified the same under CTI 2510 20 30. 5. However, a show cause notice dated March 17, 2022 was issued to the appellant proposing to classify the goods under CTI 2835 26 90 with consequential demand of customs duty. The show cause not....
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.... 25 are clearly brought out by these emails." [emphasis supplied] 8. The Commissioner also relied upon the emails dated February 29, 2020, March 13, 2020, March 15, 2020 and March 16, 2020 wherein the Director of the appellant had requested the supplier to remove the word 'calcination' and use the word 'heating' instead. The Commissioner concluded that this was done to show that the products supplied had not undergone any calcination. The observations are : "16. I also observe that prior to May 2019, the assessee were importing Calcium Phosphate under CTH 28352690. In the instant 6 bills of entry, they declared the product as Apatite (Gr) Calcium Phosphate and classified the same under CTH 25102030 and claimed concessional duty. After the investigation began, they again, without any rhyme or reason, started filing bills of entry declaring the product as Calcium Phosphate and classifying under CTH 28352690. For hiding the act of misdeclaration of the goods, they have created false documents with the assistance of their suppliers. They also approached and obtained a favourable analysis from the CSIR, Khurja. This clearly shows their malafide intention of manipulating t....
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....r was looking after all the import related work. The e-mail communications between him and the supplier and others shows that he manipulated/doctored the documents to be submitted to the Customs Authority with intent to mislead the Customs Authority with sole motive of bypassing legal requirement of NOC & to evade duty. Despite having knowledge of the fact that the goods imported were Calcium Phosphate, he has consciously and deliberately indulged in misdeclaration and misclassification of the goods imported in the name of Apatite (GR) Calcium Phosphate under Chapter Heading 25102030 instead of Calcium Phosphate under HSN 28352690. In fact, he was even in constant touch with the suppliers and with another person Sh. Anuj Kumar Mittal against whom also investigations were being undertaken by the Department for similar offence. From his suppliers he has obtained documents and information as per his say which suited his version in the matter. After obtaining the same, he has also produced the same before Customs officers investigating the matter. Therefore, I have no hesitation in holding him to be liable for penal action under Section 114AA." 12. The Commissioner also imposed pena....
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....) In respect of the correspondence with the supplier, the appellant was trying to clear doubts and had never asked them to mis-declare the goods to be supplied by them. Manipulation of any document was not done by the appellant and the goods were correctly declared as Apatite Calcium Phosphate; (vii) The material imported by the appellant is mined and is called Apatite Calcium Phosphate, which is in the raw form. It is then washed, dried, and heated to remove impurities but the chemical formula remains the same as no chemical change occurs during the entire process. The Apatite Calcium Phosphate and Calcium Phosphate are chemically the same product which have three portions of phosphate. Thus the chemical name is Tri Calcium Phosphate which is commercially known as Apatite Calcium Phosphate/Calcium Phosphate and is called TCP in short; (viii) During the investigation, the officers summoned Vikas Agarwal and Dharam Chand Sahu several times and recorded their statements on various occasions. These two did not accept that the goods imported through the six Bills of Entry were Calcium Phosphate and not Apatite Calcium Phosphate; (ix) The technical expert had ....
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.... appellant to fabricate and modify documents to conceal the true nature of the goods : (a) The importer requested the supplier to remove references to calcination and to "back-date" technical data sheets by 1-2 years; (b) The importer sought alternative product descriptions ("Calcium Phosphate Grade-1" instead of "Apatite (GR) Calcium Phosphate") to avoid suspicion during customs clearance; and (c) The directive to declare all CP material as "uncalcined" despite factual processing constitutes clear evidence of mens rea and intent to mislead. (vi) The correct classification under CTI 2835 26 90 attracts not only a higher rate of duty but also the requirement of a No-Objection Certificate (NOC) from the Drug Control Department under the Drugs and Cosmetics Act, 1940. The deliberate choice to misclassify under Chapter 25 was thus intended both to evade payment of duty and to circumvent mandatory import controls; (vii) Vikas Agarwal, Director of the appellant was directly responsible for overseeing all import related activities of the company, including classification, documentation, and correspondence with foreign suppliers; (viii)....
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....betment of an act rendering the goods liable to confiscation under section 111 of the Customs Act. His conduct clearly attracts penal consequences under section 112(a)(ii) of the Customs Act, as he knowingly participated and assisted in the commission of the offence. 15. The submissions advanced by the learned counsel appearing for the appellant and the learned authorized representative appearing for the department have been considered. 16. The issue that arises for consideration is whether the goods imported by the appellant and declared as Apatite (GR) Calcium Phosphate under CTI 2510 20 30 were correctly classified by the appellant or deserve to be classified under CTI 2835 26 90, as claimed by the department. 17. Heading 2510 of the Tariff Act deals with "natural calcium phosphates, natural aluminium calcium phosphates, and phosphatic chalk". The description of the goods under CTI 2510 20 30 is "natural calcium phosphates apatite" 18. On the other hand, Heading 2835 of the Tariff Act deals with "Phosphinates (hypophosphites), phosphonates (phosphites) and phosphates; polyphosphates, whether or not chemically defined". Tariff Item Description of Goods Unit ....
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....5, but are appropriately classifiable under Chapter 28. The emails also show that the appellant had requested the supplier that they are unable to use the name "Apatite Calcium Phosphate" for goods under Chapter 28. What is also important to note is that in the email dated February 29, 2020, the appellant requested the supplier to remove the line that mentions that "the product is classified by the chemical and taxable department of the supplier under Chapter 28". 22. The Commissioner has also referred to the email dated February 13, 2020 sent by the supplier. The relevant portion of this email is reproduced below : "Technical......The waterground Phosphates of calcium grade utilises the basic Calcium Phosphate material which is then further processed via a ball mill and a series of chemical additions to render the material suitable for the world's premier producers of fine bone China tableware such as Wedgwood, Noritake, Villeroy & Boch, to name but three. This product carries a price premium over Calcium Phosphate due to its ability to maximize client yields in modern automatic production lines. This material is also classified under HS Code 28 35 26 90 due to the....
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....lished because of these Emails is not correct." 26. From all the aforesaid emails, the Commissioner concluded : "12. From these evidences, it is clearly evident that the goods that had been imported in the past, under the cover of the six Bills of entry in question, were calcined. The other aspect, that is emerging is that their supplier is also sure that Apatite (Gr) Calcium Phosphate, which they had supplied under the six Bills of entry in question, were also calcined and were appropriately classifiable under CTH 28352690. They have quite categorically confirmed that there has been a mistake and as per their HQs and the Taxation Department, the Apatite (Gr) Calcium Phosphate appropriately fall under CTH 28 and not under CTH 25. In fact, the Mudrika decision of Commissioner Appeals has also been considered by their suppliers before arriving at the conclusion that the goods supplied were correctly classifiable under CTH 2835, the six consignments in dispute or the goods that they were to supply subsequently. The conclusion drawn is that whether the goods are named as Calcium Phosphate or as Apatite (Gr) Calcium Phosphate, the same are correctly classifiable under CTH 28....
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.... 27. It is, therefore, clear that the Commissioner concluded that the goods imported through the six Bills of Entry were calcined and would not fall under Chapter 25 of the Tariff Act and will fall under Chapter 28 of the Tariff Act. This inference also finds support from the communication sent by the supplier that since the goods were calcined, they would be appropriately classifiable under CTI 2835 26 90. It is also seen that prior to May, 2019 the appellant imported calcium phosphate under CTI 2835 26 90 and after investigation again started filing Bills of Entry declaring the product as 'calcium phosphate' and classified it under CTI 2835 26 90. It is only in respect of the six Bills of Entry during the interregnum period that the appellant described the product as Apatite (GR) Calcium Phosphate in the six Bills of Entry and classified it under CTI 2510 20 30. 28. The aforesaid conclusions have been drawn by the Commissioner from the emails that were exchanged between the appellant and the supplier and cannot be said to be perverse. The emails clearly show that even the supplier was of the opinion that the goods were classifiable under Chapter 28 and not under Chapter 25 and....