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2025 (6) TMI 1195

Requirement to file refund claim of the Extra Duty Deposit made on pending finalization of the provisional assessment without filing an application for refund under Section 27 read with Section 18 of the Customs Act, 1962 - refund claim filed by the importer cannot be treated as barred by limitation as provided under Section 27 of the Customs Act, 1962 for claims filed after 2006 - HELD THAT:- The amount of 1% EDD deposited by the Respondent-Assessee was in a nature of security deposit and not the duty either provisional or final under the provisions of the Act.

Section 2 (15) of the Act duty means “duty” of customs leviable under this Act. 1% EDD to be deposited by the Assessee as per the aforesaid Circular is not a duty payable under the provisions of the Act. The Hon’ble Madras High Court in the earlier decision in the case of Sayonara Exports Pvt. Ltd. [2015 (3) TMI 861 - MADRAS HIGH COURT] after considering the decision of this Court in the case of Commissioner Vs. Hindalco Industries Ltd. [2008 (9) TMI 71 - GUJARAT HIGH COURT] as well as the decision of the Delhi High Court in the case of Commissioner of Customs Vs. Indian Oil Corporation [2012 (1) TMI 31 - DELHI HIGH COURT] came to the conclusion that the entire case of claim for refund arose as per the first situation envisaged in para-104 of the judgment of the Supreme Court in the case of Mafatlal Industries Ltd. Vs. Union of India [1996 (12) TMI 50 - SUPREME COURT] as it would be an unjust enrichment on the part of the Appellant-Revenue if the amount of EDD is not refunded which was deposited by the Respondent-Assessee as per the Circular No. 11/2001-Cus. as a safeguard to the Revenue by way of security deposit till the process of valuation undertaken by The Special Valuation Branch of the Appellant-Revenue is completed.

The Appellant is directed to refund the entire amount which is deposited by the Respondent pursuant to the aforesaid directions containing in the order dated 4th March, 2024 within a period of Twelve (12) weeks from the date of receipt of copy of this order with statutory interest from the date of re-deposit by the applicant till the date of payment - Appeal dismissed.
2025 (6) TMI 1194

Imposition of penalty for import of Poppy Seeds - penalty imposed for the import of PVC Regrind of 23978 kgs - PVC Regrind deserves to be allowed for domestic clearance on payment of appropriate redemption fine or not - PVC Regrind of 56080 kgs. imported separately deserves to be allowed for domestic clearance or not - levy of redemption fine and penalty - HELD THAT:- What the appellant declared in its Bill of Entry as observed by both the authorities is ‘PVC Regrind’; the same is also confirmed in the test report of CIPET, Chennai - At least to this extent, the declaration in the first import is correct. The declaration is absolutely perfect insofar as the second Bill of Entry is concerned.

Regarding the concealment of ‘Poppy Seeds’ is concerned, it is observed, as admitted by learned Advocate, that the Appellant is not contesting the confiscation and destruction of the same since they were not responsible for the import of the same.

Whether the authorities below were justified in ordering re-classification of PVC Regrind under Heading 3904? - HELD THAT:- Admittedly, the test report also confirms the goods as ‘PVC Regrind material and of single thermoplastic material’ which the Revenue treated as ‘waste and scrap’. It was the Department which disbelieved the declaration and got it tested by CIPET, Chennai and having obtained their report, they chose to ignore the same. The fact remains that this view is bereft of any supporting documentary evidence. From the report, it is even clear that goods sent for examination was a ‘single thermoplastic material transformed into regrind chips’. It is the settled position of law that it is the responsibility of the Revenue to prove its case when the classification declared by an importer is sought to be meddled with. It is also the settled position of law that allegations how-so-ever grave or strong, cannot take the place of proof.

The contentions of the appellant accepted insofar as the bonafide declaration in the Bill of Entry are concerned; we do not find any misdeclaration insofar the import/declaration of PVC Regrind is concerned, since the appellant itself is not responsible for the import of Poppy Seeds, the action of the Original Authority in ordering confiscation and destruction of the same is justified and since the same was part of the same import of PVC Regrind, the only liability on the appellant would be the cost insofar as the destruction of the poppy seeds are concerned. The PVC Regrind imported vide Bill of Entry No.7777460 dated 11.09.2023 deserves to be allowed for home consumption however, subject to the payment of appropriate duty since we agree that there is no violation to any Foreign Trade Policy. Insofar as BE No.8695228 dt. 09.11.2023 [prior Bill of Entry No.8031595 dated 27.09.2023], the PVC Regrind are 23978 Kgs. deserves to be allowed for home consumption on payment of appropriate duty with fine and penalty.

Conclusion - i) The poppy seeds found concealed are liable for confiscation and destruction, which the appellant did not contest. However, no penalty is imposed on the appellant for this, as the import was inadvertent and caused by the supplier. ii) The penalty and confiscation imposed on the PVC Regrind in the first consignment are unjustified. The goods are correctly declared and classified, and penalties are set aside. iii) The PVC Regrind in both consignments is allowed for domestic clearance on payment of appropriate duties, with a redemption fine applicable only to the first consignment due to the presence of poppy seeds. iv) No penalty or fine is warranted on the second consignment of PVC Regrind.

Appeal disposed off.
2025 (6) TMI 1193

Absolute confiscation of gold bars, Indian Currency and a Hyundai i10 Car - levy of penalties u/s 112(b) of the Customs Act, 1962 - existence of reason to believe that the said gold was smuggled or not - HELD THAT:- In this case, the appellant was intercepted on 29th March, 2017 at Md. Ali Park, Central Avenue, Kolkata, while he was travelling in a car bearing Registration No. WB-06/8713 Which was being driven by his driver, namely, Shri Manoj Kumar Bhagat. During the course of search, the gold in question was recovered and no documents of licit procurement of the gold were found in the possession of the appellant. It is also a fact on record that the appellant was having foreign currency of USD 3400/-; some Indian currency was also seized from the person of the appellant. It is also a fact that the appellant was engaged in the sale and purchase of jewellery. The allegation of the Revenue is that the appellant has brought the said gold from Myanmar, which is a smuggled one.

Whether there is reasonable belief to seize the said gold or not? - HELD THAT:- The said issue has been examined by this Tribunal in the case of Ajit Bhosle [2019 (8) TMI 1639 - CESTAT KOLKATA] wherein it has been held in respect of seizure of gold in cut pieces, having no marking and of different purity, from melting house, that since gold is freely imported in country and abundantly available in the market, it cannot be held that the seized gold is a smuggled one, which creates doubt and suspicion on the investigating authority.

Further, in the case of R.K. Swami Singh [2024 (5) TMI 19 - CESTAT KOLKATA], the appellant had been intercepted at the outskirts of Imphal, testing showed purity of gold as 995.2 mille, which had no foreign marking; the appellant therein was not having any documents for licit importation, and confiscation of gold was ordered under “reasonable belief” that foreign origin gold was smuggled into India without Customs duty. In the said case, the intercepted person in initial statements, in his own handwriting, in the presence of two independent witnesses had stated that the gold had been handed to him by another person for transporting based on financial consideration, but the same was retracted later on, saying that it was not voluntary - It was also observed therein that there was no document on record to establish that the gold bars/pieces were smuggled into India without Customs duty payment and there was no evidence to counter the intercepted person’s claim that the gold was domestically purchased by his father and thus inherited; therefore, confiscation of gold under the presumption of the Customs Officer that the same was smuggled one, was set aside.

It is also seen that the gold in question is not having any foreign marking. The appellant has produced evidence of procurement of the said gold in question by way of an Affidavit executed by the mother of the appellant and the Wasiyatnama dated 28.02.2006. In view of these facts, we find that the appellant has been able to explain the source of procurement of the gold in question, which has been inherited from the appellant’s mother through Wasiyatnama, and who, in turn, has given the said gold to the appellant after converting her jewellery into gold - In these circumstances, the gold in question cannot be absolutely confiscated.

The Indian currency recovered during the course of investigation has not been proved by the Revenue to be the sale proceeds of smuggled goods. Consequently, the Indian currency recovered during the course of investigation is also not liable for confiscation - Moreover, the vehicle seized during the course of investigation, is also not liable for confiscation as the same was not involved in any activity of smuggling by the appellant.

Conclusion - The gold in question, the vehicle in question, foreign currency and Indian currency recovered from the appellant are not liable for confiscation and therefore, the same are to be released to the appellant - no penalties are imposable on the appellant.

The impugned order is set aside - appeal allowed.
2025 (6) TMI 1192

Legality of the order passed by the Commissioner (Appeals) on dated 17.08.2022 in not allowing refund claim filed by the Appellant on the ground of limitation without consideration of general period of exemption granted by Hon’ble Supreme Court in suo- motu writ petition - HELD THAT:- Hon’ble Supreme Court’s order being law of land and the authorities below can not take a plea that they are unaware of the law declared by the Hon’ble Supreme Court specifically under Article 142 of Constitution of India in exercise of power to ensure complete justice with a direction to communicate it to all concerned authorities that the order is having binding effect within the meaning of Article 141 of the Constitution of India, on all courts, Tribunals and Authorities. In the said suo-muto writ petition (Civil) 3/2020, it has been clearly held that period of limitation in all such proceedings, irrespective of the limitation prescribed under the General Law or Special Laws, whether condonable or not, shall stand extended w.e.f. 15.03.2020 till further orders and on March 8, 2021, the order passed by it would be covering the Appellant’s case.

Conclusion - Appellant’s application for refund was filed within the stipulated time and he is entitled to get the refund with applicable interest.

Appeal allowed.
2025 (6) TMI 1191

Classification of imported goods - trampoline - tag arena - classifiable under tariff item 9506 9190 or should be reclassified under tariff item 9506 9990? - recovery of differential duty with interest and penalty - appellant submitted that the impugned order was not based on any legal foundation and relied upon isolated correspondences that remained untested to affirm the allegations in the show cause notice - principles of natural justice - entitlement to benefit of preferential rate notified for imports from ASEAN countries - HELD THAT:- In the present dispute, ‘condition of sale’ has been inferred from documents and the factum of separate payments to the same seller. That ‘installation and commission’ was contracted to the Bulgarian supplier is not in dispute and that payment was made through bank remittance is not in controversy. It only needs to be ascertained if the enhancement has been prompted by finding that ‘installation and commissioning’ was ‘condition of sale’ or was merely an option exercised by the appellant. It is inclined to accord primacy to the submission of appellant that it was the latter for even if it were not ‘condition of sale’, it would be sound for any importer, especially where safety in usage is of undoubted priority, to requisition the services of the seller for ‘installation and commissioning’ of equipment. In such instances, the seller does not even have to make rendering of such service to be ‘condition of sale’ and, in the absence of such condition, a narrow construct of rule 10 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 precludes any circumstantial inference; there must be evidence of negotiation demonstrating that seller has refused to sell the goods save with condition of rendering service in relation to goods for additional remuneration.

In the light of altered circumstances, the Explanation in rule 10 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, admittedly inserted to overcome the ruling of the Hon’ble Supreme Court such as in re JK Corporation Ltd [2007 (2) TMI 1 - SUPREME COURT], may find itself being deployed as counter in proceedings initiated for recovery of duties for having been short-paid to the extent of charges for post-import services contracted for rendering. In effect, save for this Explanation, the provision for addition of ‘cost and services’ rendered by supplier after import remained the same in the preceding rules as in Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 and, thereby, continuing the validity of decisions of the Hon’ble Supreme Court such as in re JK Corporation Ltd, in re Steel Authority of India and in Collector of Customs, Ahmedabad v. Essar Steel Ltd [2015 (4) TMI 486 - SUPREME COURT] owing to inconsequentiality of the deeming fiction, notified around the time of taxing import of services was incorporated through section 66A of Finance Act, 1994 and of doubtful use only in certain situations of import, from ‘across-the-board’ credit neutralization under ‘goods and service tax (GST)’ with effect from 1st July 2017.

For all the above reasons of having failed to demonstrate ‘installation and commissioning’ being ‘condition of sale’, such service being not only taxable upon being undertaken in India but also with ‘revenue neutral’ impact in circumstances of entitlement to exemption in the impugned notification, proposal for enhancement of value resting solely on an agreement that not only was lacking in provenance in accordance with section 138C of Customs Act, 1962 but also inadequate for evidencing that such service was ‘condition of sale’ and the factual matrix not excluding the inappropriateness of invoking extended period of limitation, resort to rule 10(1)(e) of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 is questionable.

The principle of ‘essential character’ and ‘predominant use’, that the adjudicating authority relied upon to classify ‘trampoline’, have no relevance until application of rule 3 of General Rules for Interpretation of the Tariff appended to Customs Tariff Act, 1975 is necessitated or notes in chapter prescribing ‘used principally or solely’ is required to be determined. In the impugned order, neither are. The adjudicating authority appears also to have picked up the wrong end of the stick in taking up technical specifications of ‘trampoline’ for scrutiny - The dispute here is not about ‘trampoline’ but the connect of ‘trampolining’ with ‘gymnastics’ that has not been considered in the impugned order despite the rubric of the heading requiring foray in that direction. The contemptuous disdain for ‘public good’ as ‘afterthought’ to obfuscate ‘fun and games’ in ‘trampolining’ does nothing, however, to derogate the impugned goods as equipment for gymnastic sport.

The reasons ‘assigned in the impugned order for recourse to rule 10 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 do not pass muster as discussed supra. That the treaty negotiators considered certain types of sports and games to be deserving of preferential rate while not for others may have been outcome of deliberations or even deliberate national policy formulation. It may have been inadvertent slippage or from lack of domain expertise in devising template for inclusion which is not for us to remedy. That the swings for one and roundabouts for the other is fact of life and the tax collector is not empowered to suggest that ‘fun and games’ is anathema to trade and, therefore, that to be the test of disallowance, merely from the domain of customs authority having been encompassed in a trade treaty, is not tenable.

Conclusion - The impugned goods are, under law, to be assigned rate of duty for assessment. Neither did the impugned order deploy the General Rules for Interpretation of the Tariff appended to Customs Tariff Act, 1975 for finding tariff item 9506 9990 of First Schedule to Customs Tariff Act, 1975 to be appropriate nor did our scrutiny of evidence and proposition in support of such classification generate a definitive finding to justify disturbing the declared classification.

There are no merit in the impugned order which is set aside - appeal allowed.
2025 (6) TMI 1190

Jurisdiction of Tribunal to deal with appeal that arose from order passed u/s 79 & 80 of the Customs Act - Baggage Rules - HELD THAT:- Section 129A clause-I proviso states that no appeal shall lie to the Appellate Tribunal and Appellate Tribunals shall not have jurisdiction to decide any appeal in respect of any order referred to writ clause-B (i.e. order passed by Commissioner (Appeals) u/s. 128 A), if such order relates to Sub-clause-A - Any goods imported /exported as baggage.

Appellate Tribunal lacks jurisdiction to entertain such appeal and therefore accepting request of ld. Counsel for the Appellant, liberty is granted to withdraw this appeal from this forum so as to enable him to file appeal before the Appropriate Revisional Authority, to be done within a month of passing of this order.

This limitation matter is supposed to be dealt by the Revisional Authority, before whom the computation of period of limitation is to be made and Section 14 being statutory provision, spirit of which, Hon’ble Supreme Court in the case of M.P. Steel V/s. Union of India, has clearly directed Tribunals to apply while computing the period of limitation, Appellant can avail of the said opportunity before the Revisional Authority.

The appeals stand dismissed as withdrawn with liberty to re-file the same before the appropriate Authority.
2025 (6) TMI 1189

Absolute confiscation of the 6 kg gold required from the appellant no. 2 & 3 - imposing of penalty on the appellants - appellant has not submitted any document regarding procurement of gold bars of foreign origin at the time of seizure - whole of the case of the department is on the basis of statement of appellant no. 2 and 3 and which were retracted by the appellants on very first opportunity - HELD THAT:- It is found that the statements recorded during the course of investigation cannot be relied upon as an evidence to allege that the appellants have admitted that the gold is of foreign origin. Infact, the statement recorded under Section 108 of Customs Act has to be tested as provided under Section 138(B) of the Customs Act, 1962 by way of examination in Chief and after the examination in Chief The Adjudicating Authority has to make up his mind that the statements made by the accused are admissible in evidence. The said examination has not been done by the Adjudicating Authority. Moreover the statements recorded during the course of investigation have been retracted before the Session Judge. In that circumstances, the statements recorded during the course of investigation are not a piece of evidence to allege that gold in question is of smuggled in nature.

From the facts of the case, as there is no mentioning of foreign origin on gold having purity of 99.6% and not recovered either at port/airport or international border, it is held that the burden under Section 123 of the Act to prove that the gold is not the smuggled one, does not lie on the appellant. Further as evidence of GST paid in the gold in question has been produced by the appellant in support of the claim also that goods are not smuggled one has been discharged by the appellant in terms of Section 123 of the Act, and Revenue has failed to discharge the onus to prove that gold in question is the smuggled one, the gold in question cannot be confiscated.

Conclusion - The confiscation of the gold in question is held illegal and the confiscation thereof is set aside - As gold is not liable to confiscation therefore, no penalty can be imposed on the appellant .Consequently penalty imposed on the appellant are set aside.

The impugned order is set aside - appeal allowed.
2025 (6) TMI 1106

Determination of rights of the appellant (a shipping line) vis-`a-vis the first respondent, when the appellant was not a party to the original contempt petition - impleadment of the appellant as a party to the contempt proceedings - HELD THAT:- It is not in dispute that as against the order dated 24.11.2021 passed in APOT/170/2021 and OCOT NO.2 of 2021 by the Division Bench of the High Court at Calcutta, certain directions were issued and the lis between the first respondent and the respondent(s)-Customs Department was concluded. It is as against the directions issued in the said order that the first respondent initiated Contempt Petition viz., CC/8/2022 before the High Court by bringing to the notice of the High Court the directions issued earlier not being complied with. It is in the course of the consideration of the said contempt petition filed by the first respondent herein that the aforesaid orders were passed which are extracted above dated 17.02.2022 and 04.03.2022. Further, by order dated 18.04.2022, the rights of the appellant herein as a shipping line as against the first respondent herein have also been determined and adjudicated upon. Consequently, the appellant is aggrieved by the directions issued in the order dated 18.04.2022.

The impleadment of the appellant herein as a party to the Contempt Petition was not in accordance with law. Secondly, the determination of the rights of the appellant vis-a-vis the first respondent, when the first respondent has filed a contempt petition as against the officers of the respondent(s)-Customs Department, was wholly unwarranted. In the circumstances, the portions of the orders dated 17.02.2022 and 04.03.2022 are set aside. Further, the order dated 18.04.2022 is also set aside.

Appeal allowed.
2025 (6) TMI 1105

Misdeclaration of description and gross under invoicing the goods to evade payment of appropriate customs duties - imported viscose knitted fabrics - onus of prove (shifting burden to prove) - HELD THAT:- The belief, knowledge and intention of the parties involved are a part of evidence. Direct evidence is not the only mode envisaged in the Evidence Act, through which a fact can be proved. Once the Revenue has been able to disprove the description and value declared by the importer, based on facts and preponderance of probabilities respectively, the burden would then shift to the assessee to prove its claim.

As stated by the Apex Court in Commissioner Of Income Tax, Madras vs Messrs. Best & Co [1965 (11) TMI 23 - SUPREME COURT] where it was held that 'The process is described in the law of evidence as shifting of the onus in the course of a proceeding from one party to the other. There is no reason why the said doctrine is not applicable to income-tax proceedings. While the Income-tax authorities have to gather the relevant material to establish that the compensation given for the loss of agency was a taxable income, adverse inference could be drawn against the assessee if he had suppressed documents and evidence, which were exclusively within his knowledge and keeping.'

Further as held in A. Raghavamma & Anr. Vs. Chenchamma & Anr. [1963 (4) TMI 67 - SUPREME COURT], there is an essential distinction between burden of proof and onus of proof. Burden of proof lies upon a person who has to prove the fact and which never shifts. Onus of proof shifts. Such a shifting of onus is a continuous process in the evaluation of evidence.

It is seen from the facts of the case that the description and value of the goods were prima facie mis-stated as per the test report and the contemporaneous imports cited in the SCN - Once the Revue has pointed to discrepancies in the declaration made in the BoE’s, the burden of rebuttal that the mistake was a bonafide one, is on the assessee because the basic facts are within his special knowledge. Section 106 of the erstwhile Indian Evidence Act., 1872, as it stood during the relevant time, gives statutory recognition to this universally accepted rule of evidence. However, this alone would not suffice.

It is found that it was the duty of the original authority to examine this evidence and to accept the same or make out a case contrary to what has been stated. He could not have concluded the existence of a fact contrary to evidence put forward by the appellant without specifically disproving the material before him. Merely stating that the importers reply is not acceptable in as much as they had mis- declared the description and undervalued the imported goods with an intention to evade duty which could not have been detected but for the detailed investigation carried out by DRI and the tests conducted at textile committee Chennai, would not suffice - While minor contradictions, inconsistencies or insignificant embellishments, like minor differences in weight, GSM, percentage of constituent material of the goods etc if any, in the evidence relied upon by revenue may not affect the case. That would come up for consideration only after refuting the evidence relied upon by the importer and then proceeding sequentially as per the Customs Valuation Rules, 2007.

Conclusion - The non-consideration of the evidence submitted by the appellant in the OIO is a curable defect and hence the matter merits to be remanded back to the original authority for examining all the evidences including that submitted by the appellant afresh before coming to a conclusion in the matter.

The matter is remanded back to the Original Authority for de novo adjudication - appeal allowed by way of remand.
2025 (6) TMI 1104

Revocation of CB License issued to the appellant under Regulation 14 read with Regulation 17 of Customs Brokers Licensing Regulations, 2018 - levy of penalty under Regulation 18(1) of CBLR, 2018 - export by mis-declaration of red sanders - illegal export - violation of Regulation 10(a), (d), (e), (f), (m), (n) and 13(2) of CBLR, 2018 - opportunity of cross examination not provided during the adjudication proceedings before the adjudicating authority - violation of principles of natural justice - HELD THAT:- SCN was issued within prescribed period but the department has not approved for cross-examination and the reason given by learned Commissioner is not reasonable and sustainable. Therefore, we are in definite opinion that matter should be remanded to the Adjudicating Authority to decide after giving proper opportunity of cross-examination.

The appeals are disposed of by way of remand to the learned Commissioner to decide the matter afresh after giving proper opportunity to both the parties.
2025 (6) TMI 1103

Applicability of N/N. 30/2004-CE dated 09/07/2004 as amended by N/N. 34/2015-CE dated 17/07/2015 and N/N. 37/2015-CE dated 21/07/2015 - imposition of additional customs duty on import of Silk Fabrics without dyed and without printed - HELD THAT:- The amendment made by notification No. 34/2015-CE dated 17/7/15 provides a condition qua payment of duty on inputs and non-availment of Cenvat Credit by the manufacturer. Therefore, the sweep of the judgment of SRF Ltd. [2016 (7) TMI 1381 - SC ORDER] is not affected. Notification No. 37/2015-CE dated 21.7.15, further relaxes the condition that the nil payment of duty on input would also qualify as payment of duty. Here again too these amendments do not bring about any change to the implication and the meaning as flows from the apex court’s orders.

The Honb'le Supreme Court in the case of AIDEK Tourism Services Pvt. Ltd. [2015 (3) TMI 690 - SUPREME COURT], has held that for the purpose of levy of duty under Section 3 of the Customs Tariff Act, actual production or manufacture of a like article in India is not necessary. It is to be imagined that article imported has been manufactured or produced in India and it need to be seen as to what amount of excise duty was leviable thereon. Honb'le Supreme Court held that the importer is to be treated as a manufacturer of the goods and thereafter the amount of Excise duty/Additional Duty that is required to be determined and paid.

Considering the above cases, it is now settled that the rate of duty would be only that which an Indian Manufacturer would pay under the Excise Act on a like Article. Therefore, the importer would be entitled to payment of concessional/reduced or NIL rate of Countervailing duty if any notification is issued providing exemption/remission of excise duty for a like article if produced/manufactured in India.

Conclusion - The exemption under N/N. 30/2004-CE and its amendments applies to the imported silk fabrics in question, entitling the importer to NIL CVD.

There are no reason to interfere with the impugned orders and accordingly, the same are sustained - appeal of Revenue dismissed.
2025 (6) TMI 1102

Classification of imported goods - Freestyle Neo Glucose Meter, Freestyle Libre Sj sensor Kits and Freestyle Libre Pro sensor Kits - classifiable under CTH 9027 80 90 or under CTH 9018 90 99? - applicability of ‘NIL’ rate of BCD under N/N. 24/2005-Cus., dated 01.03.2005 - HELD THAT:- The issue arising out of the present dispute with regard to classification of the subject goods is no more res integra in view of the order passed by this Bench of the Tribunal in the case of Bayer Pharmaceuticals (P.) Ltd. Vs. Commissioner of Cus., Mumbai [2015 (11) TMI 943 - CESTAT MUMBAI]. In the said order, by relying upon the HSN Explanatory Note appended to the competing headings, the Tribunal has held that the imported goods viz. glucometers are classifiable under heading 90.27 and are eligible for exemption under N/N. 24/2005-Cus., dated 01.03.2005.

The order of the Tribunal passed in the case of Bayer Pharmaceuticals (P.) Ltd. was approved by the Hon’ble Bombay High Court in the case of Ascensia Diabetes Care India Pvt. Ltd. [2022 (11) TMI 871 - BOMBAY HIGH COURT]. The Hon’ble High Court has held that the Notification No.50/2017-Cus., dated 30.06.2017 at Sl. No. 576, prescribing the concessional rate of duty of 5% shall be applicable in case of goods falling under CTH 9018; and the same would not be applicable, where the goods are classified under CTH 9027. In the present case, since the appellant had claimed the classification of subject goods under CTH 9027, the benefit provided under Notification No.24/2005- Cus., 01.03.2005 should alone be applicable.

Conclusion - The classification of the subject goods under CTH 9027 80 90 upheld, thereby entitling the appellant to NIL BCD.

There are no infirmity in the said order passed by the learned Commissioner (Appeals) - appeal of Revenue dismissed.
2025 (6) TMI 1030

Power to issue SCN - Jurisdiction of Customs Authorities to initiate adjudication proceedings under Section 28 of the Customs Act, 1962 - misrepresentation of Regional Value Content (RVC) in imported Tin Ingots from Malaysia, despite the existence of a specialized dispute resolution mechanism under Article 24 of the ASEAN-India Free Trade Agreement (AIFTA) - recovery of benefits obtained through misrepresentation or suppression of correct facts - levy of penalty - HELD THAT:- In Union of India Vs. Agricas LLP [2020 (8) TMI 705 - SUPREME COURT], the Hon’ble Supreme Court explained the distinction between ‘direct application’ of treaties in domestic law, and national legal systems that mandate and require ‘act of transformation’ for an international treaty to apply and be a part of domestic law. ‘Direct application’ means and mandates that the treaty norms, either wholly or to some extent, are directly treated as norms of domestic law and enjoy the statutory law status by default in the domestic legal system. The term 'direct application' will also cover situations in which government or different levels of government utilise treaty norms as part of domestic jurisprudence and is not limited to situations in which private parties can sue based on the treaty norms.

There is a distinction between direct application and 'invocability'. 'Act of transformation' principle means and implies that an international treaty is not directly applicable in the domestic law system and requires provision in the domestic rules before it is applied. 'Transformation' is a word of wide amplitude and does not refer to mere implementation as it includes the right of the country to adopt, amend or modify the treaty language into domestic jurisprudence. The 'act of transformation' is different from 'direct application' as in the former, the treaty is not received and treated as part of domestic jurisprudence until it is published and made part of the domestic jurisdiction in the same manner as other law.

In Agricas LLP the Hon’ble Supreme Court also referred to and explained the principle of invocation or invocability. The Court explained that, in simple terms invocability refers to justiciability, admissibility of a claim before the national Courts. It is not connected with the defence or merits of the defence. In cases where an 'act of transformation' is required, treaties may be partially or entirely incorporated into domestic law. Where the treaty or portion thereof becomes a part of the domestic law by 'act of transformation', it is obvious that only the part incorporated or transformed into domestic law is invocable and justiciable and not the parts that are not codified into domestic law.

The Petitioners’ contention about the enforceability of Article 24 of AIFTA, even though the Petitioners were unable to show any statute or even rules by which this treaty provision had been transformed into municipal law, is untenable. If accepted, this contention would run counter to several decisions of the Hon’ble Supreme Court on the subject and the principles of interplay between domestic law and international law as explained by eminent authors and the Hon’ble Supreme Court from time to time.

In the present case, the Customs Authorities are yet to adjudicate the matter, and therefore, it is not for this Court to make any observations that would even remotely prejudice the interest of the Petitioners or the Respondents. However, attempts to stall or prevent the adjudication proceedings, as outlined in the impugned show cause notices, cannot be encouraged when exercising our extraordinary and equitable jurisdiction under Article 226 of the Constitution - The primary argument that the impugned show cause notices are ultra vires for failing to comply with the provisions of Article 24 of AIFTA lacks merit.

Conclusion - The issuance of show cause notices under Section 28 of the Customs Act is valid and within jurisdiction. The specialized dispute resolution mechanism under Article 24 of AIFTA is not enforceable before domestic courts or authorities without incorporation into municipal law. Consequently, the Petitioners' challenge to the jurisdiction of customs authorities failed.

Petition dismissed.
2025 (6) TMI 1029

Revocation of customs broker license under Rule 14 of the CBLR, 2018 - levy of penalty under Regulation 18 of the CBLR, 2018 - violation under Regulation 10(a), (d), (e), (m) and (n) respectively - non-extension of an opportunity to cross examine Customs Officers - Failure to produce relevant documents to the appellant at the time of issuance of Show Cause Notice -commission of error by not adhering the time frame depicted as per Regulation 17 (5) of the CBLR, 2018 - Commission of error by not considering that the Annexure B is issued beyond the scope of Show Cause Notice - Commission of error by not considering the Judicial Discipline - commission of error by issuing Annexure B Order-in-Original without studying the relevant documents.

Non-extension of an opportunity to cross examine Customs Officers - HELD THAT:- The reasoning of the Appellate Tribunal is found to be unassailable more so when the appellant does not have a case that the statement of any particular person was relied upon in the show cause notice that was issued to the appellant. It is also not in dispute that the appellant was given an opportunity to file a detailed representation against the enquiry report that was made available to him as part of the adjudication proceedings before the Commissioner. Under the said circumstances, the appellant cannot be heard to contend that he had a right to cross-examine even other persons such as Officers and staff of the Customs Department who did not have a role to play in the breach of obligations alleged against the appellant under the CBLR.

Failure to produce relevant documents to the appellant at the time of issuance of Show Cause Notice - HELD THAT:- As rightly found by the Appellate Tribunal in paragraph 9 of its order, that as per the Regulations, the appellant was entitled to receive only those documents, that were mentioned in the show cause notice and the enquiry report that was drawn up by the Enquiry Officer during the adjudication proceedings before the Commissioner. Since it is not in dispute that the appellant received both the show cause notice and the enquiry report and that he was afforded an opportunity of filing representations against both, we fail to see how the appellant can sustain a contention regarding violation of natural justice.

Commission of error by not adhering the time frame depicted as per Regulation 17 (5) of the CBLR, 2018 - HELD THAT:- The specific contention raised by the appellant in terms of Regulation 17 (5) with regard to the submission of the enquiry report being beyond the period of 90 days from the date of issuance of notice under Regulation 17 (1) was dealt with by the Appellate Tribunal in a practical sense, and on finding that in as much as there was no suspension of the license of the appellant, there was no prejudice caused to the appellant inasmuch as he had been permitted to carry on his activities as a customs broker, and therefore, the 90 days period envisaged in Regulation 17 (5) had to be seen only as directory and not mandatory in the peculiar circumstances that arose in this case. There are no illegality or impropriety in the said finding of the Appellate Tribunal.

Although the learned counsel for the appellant brought to notice a recent order of the CESTAT that allowed an appeal preferred by the appellant against an earlier order imposing penalty on it for violating the provisions of the Regulations, it is felt the same may not be of much avail to the appellant in the instant appeal. The important aspect that requires to be taken note of in such cases is that the relationship between the Customs Department and the Customs Broker appointed in terms of the Regulations is essentially one of trust. Once that trust is broken, and the Customs Broker ceases to inspire the confidence of the Customs Department in relation to his functioning, he loses the right to seek a reinstatement of his license under the Regulations.

This Customs Appeal is dismissed by upholding the impugned order of the Tribunal and answering the questions of law raised against the appellant and in favour of the Department.
2025 (6) TMI 1028

Violation of principles of natural justice - it is submitted that the Commissioner of Customs did not enquire into the case made out by the petitioner and had dismissed the appeal in a mechanical manner - dismissal of appeal on the ground of non-compliance with the pre-deposit requirement under Section 129E of the Customs Act, 1962 - HELD THAT:- Having regard to the specific embargo provided for in Section 129E of Customs Act, the appellate authority being the Commissioner of appeals, in my view, is estopped from entertaining an appeal, if the pre-deposit as provided therein is not furnished. Admittedly, in this case, the petitioner did not comply with the direction for payment of pre-deposit which prompted the appellate authority to dismiss the appeal.

The petitioner has attempted to make out a case that since, the entire proceedings are without jurisdiction, non-compliance of the direction for payment of pre-deposit which resulted in dismissal of the appeal cannot stand in the way of the petitioner in preferring the writ petition - The petitioner had in fact while adhering to the statutory provisions applied before the appellate authority. Since, the petitioner had invoked the statutory remedy, the petitioner was obliged to adhere to the provisions of the statute for maintaining the statutory appeal. The petitioner having failed to comply with the statutory provisions, it would not be fit and proper for this Court to exercise discretion in favour of the petitioner. As such there are no scope to entertain the writ petition. However, the petitioner may avail further statutory remedy as may be advised.

Petition dismissed.
2025 (6) TMI 1027

Challenge to detention, seizure and summon proceedings - roasted areca nut or raw areca nut - correctness in detention of goods that were already cleared from customs area and subsequently sold to the domestic buyers - HELD THAT:- It is seen that the detained goods covered under the Bills of Entry Nos.4502433 dated 15.07.2024 & 4502923 dated 15.07.2024 by the respondents/ ADG & AD, DRI, Lucknow were already assessed and cleared for home consumption by the Proper Officers by the Customs at Tuticorin and sold to domestic buyers. Subsequent to that seven more consignments were sent through bills of entry as stated above. While that being so, the consignments dated 15.07.2024 were detained by the respondents/ ADG & AD, DRI, Lucknow on suspicion at Nagpur and their samples were drawn and subjected to test at CPCRI. Apart from that, subsequent consignments were also detained by the respondent/Commissioner of Customs, Tuticorin on the instructions of the respondents/ ADG & AD, DRI, Lucknow based on the test report of CPCRI, wherein the report stated that it is not roasted areca nuts but only raw areca nuts which are transported illegally by evading customs duty and wanted a full fledged investigation on the same whether it falls under smuggling.

Apparently, it is clear that the consignments were duly assessed and examined by the authorities concerned and sold to buyers. The decisions of the Tribunal, as well as various High Courts and the Hon'ble Supreme Court also supports the present case on hand. It is relevant to note that the essential parameters such as moisture and ash content were not tested properly and also in a non-accredited lab which is unsustainable. Apart from this, it is predominant to note that the consignments were detained for a very long time making serious hardships without any progress for the detention.

Considering all these aspects and in the light of the decisions of the various forums, High Courts as well as the Hon'ble Supreme Court, the orders impugned in these petitions are liable to be quashed and accordingly, the detention order, seizure memo and summon are set aside and the matter is remitted back to the respondent/ Commissioner of Customs, Tuticorin for a fresh consideration - Petition disposed off by way of remand.
2025 (6) TMI 1026

Foreign going vessel for the purposes of claiming exemption under Section 87 of the Customs Act, 1961 or not - vessel Asean Explorer engaged by it in carrying out repairs of cables in the Indian Ocean - HELD THAT:- The contention of the learned Assistant Solicitor General that on account of the agreement entered into between the respondent and the Cochin Port Trust, committing to berth the vessel in Cochin Port for a specified number of days in a calendar year so as to obtain a concessional rate of berthing charges, and in fact remaining within territorial waters for a good part of the calendar year, the vessel will lose its status as a 'foreign going vessel', cannot be accepted.

The phrase 'engaged in' has to be read in the backdrop of the SEAIOCM Agreement, under which the engagement was effected. A reading of the terms of the agreement clearly showed that the obligation of the respondent under the time charter was to keep the vessel ready in all respects for carrying out the operations envisaged under the agreement and therefore, during the period under which it was on a time charter, the vessel had to be in a ready state to perform the obligations under the contract. Merely because the vessel was not actually engaged in repair activities on any one or more days during the time charter, it could not be said that the vessel was not engaged in the activities contemplated under the agreement. So long as it was under an existing obligation by contract to carry out the activities, the mere fact that on particular days, it was not actually engaged in carrying out those repair activities, was irrelevant.

The submissions of the learned Assistant Solicitor General that the commitment with regard to berthing of the Ship in Cochin Port Trust for specified number of days in a calendar year would deprive the vessel of its status as a foreign going vessel, also cannot be countenanced. The said arrangement between the Cochin Port Trust and the respondent was only with a view to get concessional rates of berthing charges and was wholly irrelevant for the purposes of determining its status as a foreign going vessel. Since the impugned order of the Tribunal to have correctly arrived at the finding with regard to the status of the vessel as a foreign going vessel, we also deem it appropriate to affirm the further findings of the Tribunal with regard to the entitlement of the respondent to the benefit of exemption under Section 87 of the Customs Act.

Conclusion - While it may be a fact that the terms of an exemption provision under the taxing Statute have to be strictly construed against an assessee and in favour of the Revenue, we find the instant case to be one where the respondent vessel satisfies the definition of 'foreign going vessel' even without any strained interpretation of the words used in the Statute. It is therefore a clear case where the respondent vessel comes within the ambit of the phrase 'foreign going vessel' and therefore entitled to the benefit of exemption under Section 87 of the Customs Act.

There are no reason to interfere with the well-reasoned order of the Tribunal - appeal dismissed.
2025 (6) TMI 1025

Classification of imported roasted areca nuts - whether areca nuts are roasted areca nuts so as to be classifiable under CTH 2008 19 20 or are merely dried areca nuts and could be classified under CTH 080280? - HELD THAT:- This Court in examining the classification of ‘roasted areca nuts”, finds that as a matter of fact, there is no definition of “roasted” given in the Custom Tariff Act. As far as Chapter 08 is concerned, it speaks of process like chilling or steaming, boiling, drying and provisionally preserving. It is important to note that although, the said chapter contains the entry of areca nuts at “0802 80” and consists of whole, split, ground and other forms, but the description of these items has to be understood in the form it assumes after the process as mentioned under the said chapter is undertaken on them. That is to say, the end product obtained by the process mentioned in this chapter becomes significant for its classification. It has been rightly held by the CAAR that there is a marked difference between the processes of moderate heat treatment & dehydrating/drying referred in chapter 8 and processes of dry-roasting, oil-roasting and fat-roasting referred in Chapter 20.

This Court finds that roasting is a process used for bringing in to existence roasted nuts and finds that the processes mentioned in chapter 8 do not cover roasting process. Further, this court cannot be oblivious to the fact that roasting, as submitted by the importer by virtue of letter dated 04.06.2024 issued by ANL(S) Trading & services Pte Ltd., Singapore, is carried out using roasting ovens due to which betel nuts are roasted in the range of 150 degrees Celsius then cooled in room temperature and the cycle is repeated until the moisture content is less than 6%. This clearly indicates that the roasting is much more than mild heat treatment. Even in the generally understood meaning of the terms, it is understood that roasting involves severe heat treatment and is different from moderate heat treatment as well as dehydration. Thus, drying and roasting cannot be equated and both the process are diametrically different.

It can be safely concluded that a doubt always existed in the mind of the department relating to the tariff entry of ‘roasted areca nuts”, otherwise there was no occasion nor any need for issuance of the recent notification dated 02.04.2025, wherein the department was compelled to clarify and specify in clear terms that ‘roasted areca nuts’ are not covered under ITC (HS) Code 2008 19 20 as they are specifically covered under 08028090.

The “roasted areca nuts’ have been rightly classified under Tariff Entry 2008 19 20.

Whether the commodity imported by the importer/petitioner are roasted areca nuts, so as to be classifiable under CTH 2008 19 20 or are merely dried areca nuts and could be classified under CTH 080280? - HELD THAT:- In the present case, the very conduct of the department in drawing the samples behind the back of the importer and not providing them with the sealed samples and test memo by taking shelter of Section 144 of the Customs Act, 1962 cannot be countenanced. Further, the rules specifically provides the importer for applying for re-testing, in case they are not satisfied with the first test report, this court fails to understand as to how the department cannot be satisfied with any test report in the first place. The act of the department apparently seems to be motivated and suspicious, in not providing the impugned letter dated 27.12.2024 in the first instance and then not taking the importer in confidence while sending for re-testing, if at all re-testing was permissible by the state as per the rules.

Time and again, this Court has held that in a welfare state, the power and function of the executive should be above suspicion like the Caesar’s wife. The State is expected to be impartial, unbiased and lead the way in adhering to legal and ethical standards. In the context of sample drawing for analysis and testing, the state should ensure that samples are collected and analysed according to established procedures, preserving their integrity and reliability. This includes drawing samples in a manner that avoids tampering, contamination, or alteration, and ensuring that the analytical methods used are valid and reliable.

The lackadaisical attitude of the department in not following the established guidelines relating to drawing samples and sending for testing cannot be given concession to in any manner. Apparently, it seems the department indiscriminately drew samples and sent to testing Centre at its own whims and wanted to keep the importer at bay during the pendency of the Appeal filed by them against the advance ruling, relating to classification of ‘roasted areca nuts’. The act of the department in relying on a test report, which could not have been carried out in the first place, also seems to be ill-founded. Thus, the seizure of the commodity ‘roasted areca nuts’ apparently seems to be motivated and driven by mala fide and cannot be allowed to be sustained.

Conclusion - i) Roasting is a distinct process from drying or moderate heat treatment, involving severe heat causing chemical and physical changes, and hence roasted nuts fall under Chapter 20, not Chapter 8. ii) The release of the imported roasted areca nuts under CTH 2008 19 20 is directed, quashing the seizure.

Appeal allowed.
2025 (6) TMI 1024

Seeking re-testing and re-sampling of goods - re-testing/re-sampling sought within the stipulated period normally within 10 days of the receipt of the report or not - CBIC Circular No. 30/2017 dated 18th July, 2017 - HELD THAT:- As per the decision of Tata Chemicals Ltd. [2015 (5) TMI 557 - SUPREME COURT], the sampling has to be done as per the prescribed methodology to allow the sample to be tested in the proper environment. This is the crux of the decision of Tata Chemicals Ltd. as well all the decisions quoted by the learned Advocate. Since the consignment is live and the goods are available, the re-drawl and re-testing as has been sought within the stipulated period and can be conveniently considered.

It is in the interest of the department also that the sampling is done as per the prescribed procedure by re-drawing the sample under proper panchnama and sample send to re-testing to the same lab i.e. CRCL, Vadodara, rather at this stage, than regretting later. Therefore, the ends of justice as well as the requirements for the departmental sampling shall be met by acceeding to the request of the appellant.

Request, therefore, is allowed with direction to the authorities to draw sample and re- test the same, with CRCL, Vadodara after following prescribed procedure in para 3,4&5 of IS standard 1447 (Part 1) of 2000 to the extent applicable.

Conclusion - The appellant's request for re-sampling and re-testing was validly made within the stipulated period and must be allowed.

Appeal allowed.
2025 (6) TMI 1023

Absolute confiscation - prohibited goods or not - 19 items which are declared in the Bill of Entry classifying under CTH 69120040, 25169090 and 74082990 as objects in clay, metal and stone - rejection of transaction value - acceptence of value under Rule 9 of CVR 2007 - levy of penalty u/s 112(a) and 114AA of the Customs Act, 1962.

Absolute confiscation of goods - HELD THAT:- From the records, it is found that no attempt has been made by the Customs Department to ascertain the fact from the Switzerland authorities as to whether such exports violated provisions of the said CPTA; hence interpreting the provisions of the CPTA by the Commissioner and arriving at a conclusion that there has been a violation of export laws of the said country, cannot be construed to be a correct interpretation of the provisions of the said act in the circumstances of the case and its applicability to the 19 objects imported from the said country in question. Therefore, the said 19 items cannot be considered as prohibited goods and liable to absolute confiscation under Section 111(d) of the Customs Act.

Rejection of transaction value - HELD THAT:- There are no error in the conclusion of the learned Commissioner as the description of the imported goods has been misdeclared and also classification has not been correctly disclosed in the Bill of Entry even though the appellant is a regular importer of antiques. The assessing officer, if has a reason to doubt the truth and accuracy has the jurisdiction to reject the transaction value.

Whether the valuation has been done in accordance with the procedure prescribed under Rule 12 of the CVR, 2007? - HELD THAT:- The valuation of the antiques arrived only on the basis of assessment of the criteria of aesthetic value, material of the object, age and period to which it belongs. The learned Commissioner in the impugned order did not consider the claim of the appellant about the comparable auction price available of more or less similar goods before discarding the said claim and adopting the opinion of valuation committee, recorded its finding solely on the basis of the same.

The learned Commissioner ought to have considered the availability of comparable international auction price as per Rule 4 & 5 of the said Rules while applying the valuation suggested by the Committee. Since the purpose of the determination of the transaction value rests on ultimate sale on the goods by the appellant, an antique dealer; therefore, international auction prices of similar goods definitely would play a significant role in arriving at the nearest transaction value of the imported goods for the purpose of assessment, when the declared transaction value was rejected under Rule 12 of the CVR 2007.

Conclusion - The determination of assessable value solely on the basis of the expert committee opinion, cannot be sustained and the matter is remanded to the learned Commissioner to reassess the value taking note of the claim of the appellant that comparable price of similar goods in auction produced for consideration by them in ascertaining the correct value of the goods.

The impugned order is set aside and the matter is remanded to the adjudicating authority to redetermine the assessable value, and consequently the redemption fine and penalty on the appellant and the Managing Director - Appeal disposed of by way of remand.