TaxTMI 
TaxTMI 
2026 (6) TMI 22
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....peal Nos.C/40130/2014 and C/40132/2014 filed by M/s. Nippon Sea Freight Systems ("Appellant A3") and Shri P.L. Ganeshan ("Appellant A2") respectively challenge the penalties imposed upon them under Section 112(a) of the Customs Act, 1962. 2. The brief facts of the case are that M/s. Arjun Chemicals Pvt. Ltd. imported "Alkyl Ketene Dimer (AKD Wax)" from China during the period from 18.10.2007 to 30.07.2012 and classified the same under CTH 29141990. Based on investigation conducted by the DRI, the Department alleged that the goods were more appropriately classifiable under CTH 34049090 and that the description "paper finishing chemicals" was intentionally used to evade customs duty. Pursuant to investigation, including recording of statements under Section 108 of the Customs Act, 1962, Show Cause Notices dated 22.10.2012 was issued proposing recovery of differential duty of Rs.2,07,54,839/- with interest, confiscation and penalties. The adjudicating authority confirmed the demand, ordered confiscation and imposed penalties including separate penalties of Rs.5,00,000/- each upon M/s. Nippon Sea Freight Systems and Shri P.L. Ganeshan under Section 112(a) of the Customs Act, 1962, a....
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....iling of Bills of Entry containing allegedly incorrect description and classification and therefore both the appellants were rightly penalized under Section 112(a) of the Customs Act, 1962. 5. We have carefully considered the rival submissions, perused the records of the case, statements recorded under Section 108 of the Customs Act, the synopsis filed, grounds of appeal and the judicial precedents relied upon by both sides. 6. Upon consideration of the rival submissions and records available before us, the following questions arise for determination in the present appeals: - i. Whether the reclassification of the imported goods under CTH 34049090 and the consequential demand of differential duty, confiscation, and penalties imposed upon M/s. Arjun Chemicals Pvt. Ltd. are sustainable? ii. Whether suppression or wilful misstatement can be alleged when the classification adopted by the importer had been consistently accepted by the Department over several years? iii. Whether penalties imposed upon M/s. Nippon Sea Freight Systems and Shri P.L. Ganeshan under Section 112(a) of the Customs Act, 1962 are sustainable? 7. The principal issue arising for ....
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....mported were AKD Wax and even the investigation records that the consignments bore the markings "AKD". The principal allegation is only regarding use of the expression "paper finishing chemicals" in the Bills of Entry. However, mere reference to industrial application or end-use cannot amount to deliberate misdeclaration when the identity and nature of the goods had been openly declared throughout. 11. The appellant importer has produced technical literature, HSN explanatory notes and classification materials showing that Alkyl Ketene Dimer is an organic compound extensively used in alkaline paper manufacturing processes. The Department has mainly relied upon the HSN/Chapter Notes to Chapter 34 and the CRCL test report obtained from the live consignment detained under Bill of Entry No.7523378 dated 30.07.2012 to contend that the imported goods possessed waxy characteristics and were used in paper sizing applications. 12. We find from the records that the imported goods were described as "Alkyl Ketene Dimer (AKD Wax)" and were imported in the form of pale-yellow waxy flakes. The CRCL test report obtained from the live consignment detained under Bill of Entry No.7523378 dated 3....
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....ent Customs formations with imports of AKD Wax being classified at different points of time under Chapters 29, 34 and 38 depending upon the nature and presentation of the product. However, the existence of divergent practices by itself cannot override the specific test results and technical characteristics recorded in the present proceedings. The CRCL report obtained from the live consignment, read together with the HSN explanatory notes and the physical characteristics of the imported goods, substantially supports the Department's view that the goods merit classification under Heading 3404. 17. The importer had strongly relied upon earlier departmental acceptance of classification under Chapter 29. However, we find that a mistaken or inconsistent practice followed earlier cannot prevent the Department from adopting the correct classification subsequently once detailed examination and laboratory analysis revealed that the imported goods possessed characteristics more appropriately classifiable under Chapter 34. The fact that the goods were commercially used in paper sizing and finishing industry and were imported in waxy flake form further supports the Department's classificatio....
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....venue could not subsequently take a contrary view retrospectively and invoke adverse consequences on the same set of facts. The Tribunal further observed that when the assessee had acted bona fide on the basis of departmental acceptance, the extended period and consequential penal proceedings would not sustain. The ratio laid down therein squarely applies to the facts of the present case. 22. We also find further support for the above view from the decision of the co-ordinate Bench of this Tribunal in M/s. Raghav Industrial Products vs. Principal Commissioner of Customs (Import), ICD, TKD, New Delhi reported in 2019 (5) TMI 2024 - CESTAT New Delhi involving identical issues relating to classification of AKD Wax and invocation of extended period. The Tribunal therein held that where the imported product had been consistently cleared under a particular classification over several years and the relevant facts regarding description, nature and classification of the goods were already within the knowledge of the Department, invocation of extended period alleging suppression or wilful misstatement was legally unsustainable. The Tribunal further observed that once the Department had it....