TaxTMI 
TaxTMI 
2026 (9) TMI 1680
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....a consequence of the reclassification. Differential duty of Rs.23,17,45,224/- was held to have escaped payment by reason of collusion, wilful mis-statement and suppression of facts and was determined in terms of Section 28(8) of the Customs Act, 1962 (the Act) upon a notice which had invoked Section 28(4), with interest under Section 28AA. Goods valued at Rs.170,37,12,914/- were held liable to confiscation under Section 111(m) and (o), a redemption fine of Rs.17,00,00,000/- was imposed under Section 125 in lieu of confiscation, and a penalty equivalent to the duty so determined together with the interest payable thereon was imposed under Section 114A. The Adjudicating Authority refrained from a penalty under Section 112(a) by reason of the fifth proviso to Section 114A. 2. The appellant is the Indian subsidiary of Toyota Motor Corporation, Japan, and manufactures and trades in passenger and multi utility vehicles. In the course of its business the appellant regularly imports parts and accessories from its overseas group companies, among them Guard Propeller Shaft, Panel Assy Instrument Panel Finish Lwr, Frame Assy RR, Tank Assembly Fuel and Battery Door Control, etc., described ....
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....5.11.2019, the allegation in their regard being one of short payment for the remainder of the period. Annexure C set out the bill of entry wise computation of differential duty and Annexure D carried an allegation of short payment of Rs.1,56,91,525/- in respect of 70 articles said to have continued to be cleared under the declared heading even after the revision had been proposed and accepted. Reply and order of adjudication 5. The appellant replied defending its declared classification article by article and pointing to errors of quantification in Annexure C. Its defence, as recorded in the impugned order, was that the expression other parts and accessories of bodies in Customs Tariff Item 87082900 answers only to the articles enumerated in paragraph (B) of the Explanatory Notes to Heading 87.08, and that articles such as Guard Propeller Shaft, Frame Assy RR, Tank Assembly Fuel, Rack Assembly Roof, Battery Door Control, Check Assy FR Door, Cover Sub Assy Shifting Hole, Cover FR Bumper Hole, Grip Assy Assist, Panel Subassy Instrument Lower, Panel Assy Instrument Panel Finish Lwr and Garnish Instrument Panel Finish Plate do not answer that description and fall within the resid....
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...., be negated. He held that the articles fall within the inclusive list in the Explanatory Notes to Heading 87.08 under parts of bodies, that the part numbers show them to be made to order for specific models of vehicles and therefore for fitment at a specific place, and that upon Rules 1 and 6 of the General Rules for the Interpretation of the First Schedule read with Note 3 to Section XVII the articles are parts and accessories of bodies. Recourse to the residuary tariff item was held to be foreclosed once a specific entry covers the goods. The cross rulings relied upon by the appellant were dismissed on the basis that they indicate headings other than 87089900 and that the extent of their alignment was not forthcoming. 8. Two further strands of that reasoning must be noticed, since much turns upon them. The Adjudicating Authority recorded that after an initial period of cooperation the appellant did not appear before the officers for investigation, a circumstance which he described as fatal to its case. He observed that the appellant and its supplier are related parties, that their websites weigh heavily against the modus operandi adopted, and that the appellant could not take....
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....eclared classification. Reclassification was proposed for 226 parts, yet neither the notice nor the impugned order contains a part specific finding explaining why any given article answers the description of a part or accessory of a body. Annexure A is a bare list. The website said to establish the case was never extracted, no screenshot or printout was placed on record, and the appellant was never confronted with the material on which the charge rests. The expression body, as used in relation to motor vehicles, is a technical expression which the Dictionary of Automobile Engineering defines as the main visible upper structure of a vehicle, as opposed to the chassis and running gear, and it could not be construed by assertion. Classification, it was argued, has to be determined by the General Rules for Interpretation read with the Section and Chapter Notes and the Explanatory Notes to the Harmonised System of Nomenclature, and not by information gathered from a website. Reliance was placed on H.P.L. Chemicals Ltd. v. Commissioner of Central Excise, 2006 (197) E.L.T. 324 (S.C.), on Commissioner of Central Excise, Lucknow v. Railway Equipment and Engg. Works, 2015 (325) E.L.T. 184 (T....
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....e chassis. Reference was made to rulings of the United States Customs and Border Protection, being Cross Ruling No. N317522 dated 09.03.2021 and Cross Ruling No. NY R04672 dated 11.09.2006. It was pointed out that of the total demand, differential duty of about Rs.22,05,01,244/- relates to the proposed reclassification under Customs Tariff Item 87082900 and about Rs.1,15,74,327/- to goods sought to be taken to other headings altogether. 13. On the denial of the exemption under Notification No.46/2011 Customs dated 01.06.2011, Ld. Counsel submitted that the appellant held valid certificates of origin whose veracity was never questioned, and that paragraph 7(c) of the Rules of Origin notified under Notification No.189/2009 Customs (N.T.) dated 31.12.2009 obliges the Customs Authority which does not accept a certificate to mark it accordingly in box 4, to return the original to the Issuing Authority within a reasonable period not exceeding two months and to notify that Authority of the grounds of denial. None of this was done. Reliance was placed on Hyundai Motor India Limited v. Commissioner of Customs, Chennai II, 2026 (1) TMI 800, to contend that noncompliance with the prescribe....
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....aipur, 2009 (14) S.T.R. 34 (Tri. Del.) and K.K. Appachan v. Commissioner of Central Excise, Palakkad, 2007 (7) S.T.R. 230 (Tri. Bang.). As to the integrated tax component of about Rs.5,06,25,451/-, the position was said to be revenue neutral since the tax would have been available as input tax credit, for which Suryadev Alloys and Power (P) Ltd. v. Commissioner of Customs, 2025 (8) TMI 1356, Nuevera Wellness v. Commissioner of Customs, (2024) 22 Centax 418 (Tri. Ahmd.), AMNS Ports Hazira Limited v. Commissioner of Customs, Ahmedabad, 2024 (7) TMI 1268, International Auto Ltd. v. Commissioner of Central Excise, 2005 (183) E.L.T. 239 (S.C.) and Imperial Fragrance and Flavours Pvt. Ltd. v. Commissioner of Customs (Port), Kolkata, 2026 (3) TMI 1161 were pressed into service. 15. A separate limb of the argument turned upon the corrigendum dated 04.07.2024. That document, it was submitted, did not merely correct arithmetic. It replaced the entire Annexure C, altered invoice numbers and serial numbers of products, changed the duty demanded and, most significantly, brought in 14 parts across 81 bills of entry which had never before been noticed. To that extent the corrigendum operates a....
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....pal Commissioner of Customs, Chennai, 2025 (11) TMI 1120; and that interest and penalty could not be imposed in respect of the differential integrated tax for the relevant period, the machinery provisions having been borrowed only later, for which Mahindra and Mahindra Ltd. v. Union of India, 2022 (10) TMI 212-Bombay High Court, affirmed in Union of India v. Mahindra and Mahindra Ltd., 2023-VIL-72-SC-CU, and the decisions in A.R. Sulphonates Pvt. Ltd. v. Union of India, 2025 (4) TMI 578-Bombay High Court and Flextronics Technology India Pvt. Ltd. v. Commissioner of Customs, Chennai, 2025 (3) TMI 695 were cited. Submissions on behalf of the respondent 18. Shri C. Dhanasekaran, learned Special Counsel for the respondent, supported the impugned order. He submitted that the Adjudicating Authority had not proceeded by assertion but had applied Rule 1 of the General Rules for Interpretation, the Harmonised System of Nomenclature and the Explanatory Notes relating to parts and accessories falling under Section XVII, including the three conditions prescribed in the General Note under the head Parts and Accessories, all of which is recorded in paragraphs 45 to 53 of the impugned order....
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....he 114 articles listed in Annexure B in respect of which the appellant had itself proposed the revised classification? c) Whether the extended period of limitation under Section 28(4) of the Act was available, and what is the effect of the corrigendum dated 04.07.2024 upon the reckoning of limitation? d) Whether the goods were liable to confiscation and whether a redemption fine could be imposed under Section 125 of the Act? e) Whether the penalty under Section 114A was imposable? 23. Since the first issue goes to the root of the entire proceeding and its answer governs much of what follows, we take it up first and confine ourselves thereafter to such of the remaining questions as require to be answered. 24. That the burden of establishing a reclassification lies upon the Revenue is no longer open to debate. In Hindustan Ferodo Ltd. v. Collector of Central Excise, Bombay, 1997 (89) E.L.T. 16 (S.C.) the Supreme Court held that the onus of establishing that goods fall within a particular tariff entry lies upon the Revenue, and that where no evidence is led, there is no good reason to remand the matter and the classification claimed by the assessee can....
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....26. Heading 87.08 carries a further discipline of its own. The General Explanatory Note to Section XVII, under the head Parts and Accessories, admits an article to the headings of that Section only if it satisfies three cumulative conditions, namely that it is not excluded by Note 2 to the Section, that it is suitable for use solely or principally with the articles of Chapters 86 to 88, and that it is not more specifically included elsewhere in the Nomenclature. Beneath the chapter heading 87.08 itself, and before the enumeration of what the heading includes, the Explanatory Notes stipulate that the heading covers parts and accessories of the motor vehicles of headings 87.01 to 87.05 provided they fulfil both of two conditions, that they are identifiable as suitable for use solely or principally with such vehicles and that they are not excluded by the provisions of the Notes to Section XVII. The articles which the heading includes are then set out in lettered paragraphs, of which paragraph (B) deals with parts of bodies and associated accessories and lists floor boards, sides, front or rear panels, luggage compartments, doors and parts thereof, bonnets, framed windows, window frame....
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....x, West Bengal, A.I.R. 1955 S.C. 65, that an authority discharging a quasi judicial function is bound to disclose to the person proceeded against the material gathered behind his back and to give him an opportunity of meeting it, a principle which this Tribunal has applied in Shivam Masale Pvt. Ltd. v. Commissioner of Central Excise, Kanpur, 2019-TIOL-2002-CESTAT-ALL. A demand of Rs.23.17 crore cannot be founded upon a document which the authority has not reproduced, not exhibited and not put to the noticee. The observation that the material remains unrebutted only compounds the difficulty, for it treats the absence of an answer as proof of the charge and thereby inverts the burden which the law places upon the Revenue. 29. Two observations in the impugned order call for more than a passing comment. The first is that the appellant, after an initial period of cooperation, did not appear before the officers for investigation, which the Adjudicating Authority described as fatal to its case. No provision of the Act equates non appearance at the stage of investigation with an admission of the charge, and an adjudicator who draws such an inference relieves the Revenue of the very burd....
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....elied upon by Ld. Special Counsel, which holds that goods are to be classified as they are known in the market to those who deal in them. That test presupposes evidence of market understanding. As long ago as in Union of India v. Garware Nylons Ltd., 1996 (87) E.L.T. 12 (S.C.) the Supreme Court cautioned that there must be material, oral or documentary, to enter an appropriate finding upon trade parlance. There was no market enquiry in this case, no dealer was examined and no trade evidence was gathered. The governing principles restated in paragraph 66 of Welkin Foods put the matter beyond doubt, for they confine the parlance test to a state of statutory silence, forbid its use as a measure of first resort under a Harmonised System based regime, and require satisfactory evidence from the party asserting it. Here the heading, read with Note 2 and Note 3 to Section XVII and with the Explanatory Notes, furnishes the criterion, and there was accordingly no occasion to resort to parlance at all. 32. We should add a word upon the manner in which the cross rulings of the United States Customs and Border Protection were dealt with below. Foreign rulings are, of course, no more than per....
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....case which was never laid below. The consequence is that which a long line of authority prescribes, namely that the classification proposed by the Revenue having failed, the classification adopted by the importer holds the field, irrespective of what view might be taken of it were the question properly raised. That is what H.P.L. Chemicals Ltd. (supra) lays down, what Sunrise Traders (supra) applied and the Supreme Court affirmed, and what a coordinate Bench held in Golden Tobacco Ltd. v. Commissioner of Customs, 2019 (368) E.L.T. 707 (Tri. Mumbai), in holding that if the alternative proposed in the show cause notice is not defensible the claimed classification will prevail even if some other heading be more apt. Pepsico Holdings Pvt. Ltd. v. Commissioner of Central Excise, Pune III, 2019 (25) G.S.T.L. 271 (Tri. Mumbai) is to the same effect. It is also what this Tribunal held between these very parties and upon this very heading in Commissioner of Customs, Chennai v. Toyota Kirloskar Motor Pvt. Ltd., 2024 (1) TMI 1170 CESTAT Chennai. 35. The last decision cited above and relied on by the appellant obliges us to say something further. The impugned order was passed on 22.10.2024,....
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....isely this conduct, and to notice the observation of a coordinate Bench in Dow Chemical International Pvt. Ltd. v. Commissioner of GST and Central Excise, Final Order No.40607/2025 dated 11.06.2025, that it is the bane of judicial indiscipline which is resulting in the proliferation of appeals before this Tribunal, making the process itself the punishment for the assessee. An adjudication which proceeds in the teeth of a binding declaration, without so much as adverting to it, unsettles the certainty which assessees are entitled to expect and imposes upon them an expensive and avoidable strain. We expect that this will not recur. 37. For these reasons we hold upon the first issue that the Department has wholly failed to discharge the burden of establishing the reclassification proposed, and that the impugned order is not a speaking order upon the classification of the subject goods. Upon the second issue it follows that the classification declared by the appellant under Customs Tariff Item 87089900 in respect of the 226 articles listed in Annexure A holds the field, and that the differential duty referable to that reclassification, whether under Customs Tariff Item 87082900 or u....
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....ld that the foundational facts which led to the inference of fraud, wilful misrepresentation or suppression should be evident from the notice itself, that the mere employment of such words will not indicate an application of mind upon which alone the satisfaction can be arrived at, and that the words are not to be mechanically recited in the notice to enable recovery outside the normal period of limitation. The foundation must therefore be laid in the notice and established on evidence. It cannot rest upon the adjectives deliberate and knowing, however often they are repeated. We may observe, in the same connection, that the operative portion of the impugned order records that the duty escaped payment by reason of collusion, wilful mis-statement and suppression of facts, although no finding of collusion is to be found anywhere in the order, and no person is identified with whom the appellant is said to have colluded. The recital of a statutory expression which the body of the order does not support is the clearest indication that the ingredients were assumed rather than found. 41. On the record before us the foundation is absent, and is indeed excluded by the Department's ow....
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....ifferential duty for the two year period from 06.11.2017 to 05.11.2019, which suggests that the Department was in possession of the relevant facts by then and issued its notice on 22.12.2022. 43. We come to the corrigendum dated 04.07.2024, and here we must speak plainly. A corrigendum is a device for the correction of a clerical or arithmetical slip. It is not an instrument by which a notice may be enlarged, and it cannot be employed to the disadvantage of a noticee, as this Tribunal held in Ave Maria Enterprises v. Commissioner of Customs (Air Cargo), Chennai VII, 2021-TIOL627-CESTAT-MAD. The reason is the one stated in Precision Rubber Industries (P) Ltd. supra, that the show cause notice is the foundation of the proceeding. Where a corrigendum so alters the notice that the noticee must in substance meet a different case, the date of the corrigendum becomes the date from which limitation runs, a proposition applied in as the appellant pointed out, in Bakers Product (India) (supra) and in JSW Steel Ltd. (supra). The corrigendum in this case replaced the whole of Annexure C, altered invoice numbers and serial numbers, revised the duty demanded, and brought into the proceeding 1....
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....artment. An adjudicating authority is not at liberty to confirm a demand in its entirety and relegate the noticee to some future and unidentified proceeding for credit of tax already in the treasury. The obligation to determine the amount due under Section 28 is an obligation to determine what is due, and what is due is what remains after credit for what has been paid. Annexure C was revised but Annexure D, extracted from the superseded version and carrying the allegation of short payment of Rs.1,56,91,525/- in respect of 70 articles, was left as it stood, so that the two annexures upon which the demand rests do not speak to each other. 46. One observation in this part of the impugned order we are unable to pass over. Of the appellant's assertion that it had paid Rs.3,84,75,436/- voluntarily, the Adjudicating Authority observed that the payment could not be linked to the bills of entry in dispute and that it further cemented the case of the Department. To treat a voluntary payment of duty as corroboration of an intent to evade duty is to stand the matter on its head. If conduct of that kind is to be read as an admission of guilt, no assessee will ever again come forward to c....
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....roversy upon which the parties joined issue. A fine under Section 125 is a fine in lieu of confiscation. It presupposes that confiscation was authorised. Once the foundation for confiscation under Section 111(m) and (o) disappears, given our findings on this count above, there is nothing in lieu of which a fine can be imposed, and the decisions in Weston Components Ltd. (supra), in Synergy Fertichem Pvt. Ltd. and in Visteon Automotive Systems India Ltd. (supra), upon which the Adjudicating Authority relied, do not assist, for each of them proceeds upon the footing that confiscation was authorised and addresses only the different question whether the fine may be levied when the goods are not available. That question does not arise for decision and we express no opinion upon it. We would, however, be failing in our duty if we did not record that even upon the assumption most favourable to the Revenue the quantum of the fine is indefensible. The proviso to Section 125(1) caps the fine at the market price of the goods confiscated less the duty chargeable thereon, and the Supreme Court held in Commissioner of Customs, Mumbai v. Mansi Impex, 2011 (270) E.L.T. 631 (S.C.) that the quantum ....
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....e notice by a corrigendum which brought in fresh articles reaching back to clearances beyond the outer limit of five years, accepted in terms the very test which required their exclusion, and then excluded a sum of about three lakhs while confirming a demand far in excess as per computation placed before it and to which that test equally applied. It found itself able to verify a duplication of a little over one lakh in the appellant's favour, yet unable to verify payments of nearly four crores which the appellant had made and which it relegated to a separate proceeding, while treating the very fact of those payments as cementing its case. It ordered confiscation of goods that had ceased to exist and imposed a fine of seventeen crore rupees in lieu of a confiscation whose foundation was never laid and whose quantum was never explained. An order of that description cannot be allowed to stand in any part. 52. We are conscious that the Department may yet be of the view that some among the two hundred and twenty-six articles are properly classifiable elsewhere, and that some short payment may survive in respect of the articles listed in Annexure B once the payments already made a....