TaxTMI 
TaxTMI 
2026 (5) TMI 1609
X X X X Extracts X X X X
X X X X Extracts X X X X
....have been described as "Crude Mica Rifted into Sheets" in all import documents, invoices, packing lists, etc. The description declared in the Bills of Entry exactly matched the overseas supplier's documents. 2.1. Based on intelligence developed by SIIB (Port), that the goods imported by the Appellant were actually 'PROCESSED MICA SHEETS OF REGULAR SHAPES & SIZES AND PLAIN EDGE," which fall under Tariff item 68149090 of the First Schedule to the Customs Tariff Act, 1975, the officers alleged that the Appellant had mis-classified the goods with a view to pay less Customs Duty. Basic Customs Duty (BCD) is 5% for goods under Tariff Item 25251090 but 10% for CTH 68149090, and Integrated Goods and Services Tax [IGST] is 5% for Tariff Item 25251090 versus 18% for CTH 68149090. Accordingly, samples were drawn from two consignments and sent to CRCL, Kolkata. 2.2. The CRCL reports stated that the samples "appear to be processed mica". Based on the said reports, the Customs proposed reclassification of the goods pertaining to 2 live Bills of Entry and 72 past Bills of Entry (out of which 2 Bills of Entry had been provisionally assessed), by invoking extended period of limitation und....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ategorically conclude that the goods are classifiable under Heading 6814; that it merely states that the samples "appear to be processed mica." It is contended that the phrase "appears to be" is inherently tentative and cannot form the sole basis for reclassification involving enormous duty and penalties. 3.4. The Appellant stresses that "Processed" does not automatically mean classifiable under Heading 6814; that every mica sheet under Heading 2525 undergoes some degree of processing such as rifting and trimming; therefore, the finding that the goods "appear to be processed" does not automatically exclude it from the purview of Heading 2525. 3.5. It has the submission of the Appellant that classification is a legal issue and cannot be determined by laboratory test alone; a chemical laboratory may identify characteristics of goods, but the ultimate classification is a legal exercise requiring interpretation of tariff entries and HSN notes; that the CRCL reports do not opine about classification or report on the following: * die-cutting, * clean-cut edges, * agglomeration, * reconstitution, * end-use. Hence, the Appellant's conte....
X X X X Extracts X X X X
X X X X Extracts X X X X
....it has been held that when goods are fully described, misstatement cannot be alleged. 5. Cast Metal Industries Pvt. Ltd. v. CCE, [2003 (162) ELT 498 (Tri.)] wherein it has been held that classification disputes do not attract extended period. 3.9. Furthermore, the Appellant submits that to invoke Section 28(4), the Department must prove collusion, wilful misstatement, or suppression of facts, with intent to evade duty. None of these ingredients is present in this case; the Appellant made complete disclosure of description, quantity, value, country of origin, supplier details and the assessments were finalized by Customs after scrutiny. Accordingly, the Appellant strongly contends that the demand confirmed by invoking the extended period of limitation is unsustainable. 3.10. Without prejudice to the above, it has been stated by the appellant that the Department has sought to apply the CRCL findings on two consignments to the earlier consignments and this is impermissible because: 1. No samples were drawn from past consignments. 2. No evidence exists that each past consignment was identical in all respects. 3. Classification depends on physic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e submissions, the Ld. Counsel for the Appellant submits that the impugned order, confirming differential Customs duty along with interest, confiscating the goods in question and imposing Redemption Fines and penalties, is liable to be set aside. 4. The Ld. Authorized Representative of the Revenue appearing before us submits that the Test Reports received from CRCL indicates that the goods imported are processed Mica and hence the same are rightly classifiable under the CTH 6814. 4.1. Regarding demand of differential Customs duty for the past imports, the Revenue contends that the Appellant is a regular importer from Pamica Electric, China; they have been importing the same goods on earlier occasions also and declared the same as 'crude mica rifted into sheets' as declared in the present consignments. Accordingly, he submitted that the differential duty has been rightly confirmed for the past imports also under Section 28(4) of the Customs Act. 4.2. Thus, he prays for upholding the demands of duty, interest, order of confiscation and imposition of Redemption Fines and penalties as confirmed in the impugned order. 5. Heard both sides and perused the appeal documents pres....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng, * shaping into sheets, continues to remain within Heading 2525. 8.2. Description of the goods falling under the CTH 68.14 are furnished below: 68.14- Worked mica and articles of mica, including agglomerated or reconstituted mica, whether or not on a support of paper, paperboard or other material. 6814.10- Plates, sheets and strips of agglomerated or reconstituted mica, whether or not on a support 6814.90- Other This heading covers natural mica, further worked than merely rifted and trimmed (e.g., cut to shape), and also products consisting of agglomerated (bonded) mica or pulped (reconstituted) mica, and articles made from any of these materials. Thin sheets and splittings obtained by merely rifting and trimming mica blocks as mined fall in heading 25.25. 8.3. We observe that samples have been drawn from the live consignments and tested by CRCL, Kolkata. The Test Reports received are as furnished below: "The sample of the goods imported under Bill of Entry No. 8818052 dated 11.03.2025 were sent to CRCL, Kolkata vide Test Memo No. 14/2025 dated 01.04.2025. Consequently, CRCL Kolkata submitted test report vide L....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r shapes, plain edge) is fundamentally inconsistent with the definition of mica falling under CTH 2525. 24.7 I also find that in view of the findings from physical examination, laboratory analysis, and supplier verification, both consignments were seized under Section 110 of the Customs Act, 1962 on the grounds of misdeclaration of description and classification. B/E No. 8818052 dated 11.03.2025 was Seized on 23.04.2025 and B/E No. 9198035 dated 29.03.2025 was Seized on 17.06.2025. Subsequently, the consignment covered under 8818052 dated 11.03.2025 was provisionally released on 11.06.2025 against execution of a bond and bank guarantee of Rs. 38,00,000/ and Rs.10,00,000/- respectively and 9198035 dated 29.03.2025 was provisionally released 17.07.2025 against execution of a bond and bank guarantee of Rs.32,00,000/ and Rs. 6,50,000/- respectively, pending final adjudication. 24.8 I also find that the Director, Shri Subhash Bhudolia, admitted during his statement that the goods are processed in a machine to obtain the required shapes and sizes and that other resins might be used to strengthen cohesiveness. Shri Subhash Bhudolia (Director, M/s M.P. Mica Enterprises Pv....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he two live consignments are classifiable under the CTH 6814. The CRCL Test Report supports the findings that the goods imported under the two live consignments are Processed Mica, classifiable under the CTH 6814. We do not find any infirmity in the said findings and accordingly, uphold the classification of the goods imported under the two live consignments under the CTH 6814. Accordingly, we uphold the differential duty confirmed in respect of the goods imported under the said two live consignments. 9. Classification of the goods and demanding differential Customs duty in respect of the past 72 consignments: 9.1. We observe that the goods imported under 2 live consignments have been reclassified under the CTH 6814 on the basis of the samples drawn from the said consignments and the Test Reports received in respect of those consignments. In respect of the past 72 consignments, however, we find that the Department has not drawn any samples and no Test Report is available in respect of those goods. We also find that the goods imported under those 72 consignments were cleared after proper examination and assessment. Now, the Department wants to apply the CRCL findings in respec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e supplier from China, it does not mean that the Appellant has imported identical goods on earlier occasions also from the same supplier, particularly when the findings of the Test Reports of samples drawn from the two live consignments are not identical - one mentions presence of polymer/additive while the other does not. Accordingly, we hold that the Test Reports obtained in respect of the two live consignments cannot be made applicable to the goods cleared under the past 72 consignments. Thus, we hold that the demand of differential Customs duty confirmed in respect of the past consignments, including the two provisionally assessed consignments, on the basis of the Test Reports received for the two live consignments, is legally not sustainable and hence we set aside the same. Issue (iii): Whether extended period under Section 28(4) of the Customs Act, 1962 can be invoked. 10. Regarding raising of the demand by invoking Section 28(4) of the Customs Act in this case, we find that the issue involved in this case is a pure classification dispute. It is on record that the Appellant has declared the goods exactly same as described in supplier's documents. They have disclosed ful....
X X X X Extracts X X X X
X X X X Extracts X X X X
....atched the Bills of Entry, we hold that there is no basis for confiscation. Accordingly, we set aside the confiscation of the goods in the impugned order. Consequently, the redemption fine imposed is also set aside. 12. Regarding the penalty imposed, we observe that penalty has been imposed under the Sections 112, 114A and 114AA of the Customs Act, 1962. For imposition of penalty imposed under Section 112 of the Customs Act, it is required to establish that there is a conscious and deliberate act rendering the goods imported liable to confiscation. However, in the present case, it is a case where the dispute involved is of interpretation of tariff entries. No penalty is warranted on such interpretational issues. This principle has been recognized in the case of Mettaco Engg. Pvt. Ltd. v. CC, [2005 (182) ELT 210 (Tri.)]. Thus, relying on the ratio of the decisions cited supra, we hold that no penalty is imposable under Section 112 of the Customs Act, 1962 in this case. Accordingly, the penalty imposed under Section 112 is set aside. 12.1. Regarding the penalty imposed under Section 114A, we observe that for imposing penalty under this Section, wilful misstatement or suppressio....