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2014 (5) TMI 754 - CESTAT MUMBAIClassification of goods - Classification of activated Bentonite clay imported from abroad - whether under CTH 2508 or under CTH 3802 of the Customs Tariff - Duty demand - Bar of limitation - Held that:- A careful reading of Note 1 to Chapter 25 read with HSN Explanatory Notes to CTH 25.08 and 38.02, make it abundantly clear that activated Bentonite merits classification under Heading 38.02. As per technical literature, activation of Bentonite by acid or alkali results in changes in the molecular structure of the product. C.B.E. & C. vide Circular 32/2002, dated 10-6-2002, after examining the issue in depth, has clarified that activated Bentonite merits classification under CTH 3802. Therefore, the correct classification of activated Bentonite is CTH 38.02 and not CTH 25.08. - Decided against the assessee. Mistake in the tariff classification entries as introduced w.e.f. 1-2-2003 - Held that:- for the period from 1-2-2003 to 31-12-2006, activated Bentonite has to be classified under CTH 2508 10 90 (because of its specific inclusion in the tariff description). However, for the period prior to 1-2-2003 and from 1-1-2007 onwards, when there is no specific inclusion, in view of Note 1 to Chapter 25 which excludes products whose structure has undergone a change, the said product merits classification under CTH 3802 90 19 and we hold accordingly. Extended period of limitation - Section 28(1)(a) stipulates that whenever there is a short levy or non-levy or erroneous refund of duty, then the proper officer shall, within one year from the relevant date, serve notice on the person chargeable with the duty or interest which has not been so levied or which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice. Thus it is not date of issue of show cause notice but service of notice that is relevant for computing the time period. Further, as per the definition of relevant date, for reckoning the time period, it is not the date of filing of the bill of entry, but the date of payment of duty that would be relevant. If the show cause notice has been served on the party within a period of six months/one year, as the case may be, from the date of payment of duty, the demands would be valid and sustainable. Decided partly in favour of assessee.
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