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TMI Blog2012 (9) TMI 537X X X X Extracts X X X X X X X X Extracts X X X X ..... These goods were also similarly assessed to duty and allowed to be cleared on payment of the duty. 3. M/s. Radha V. Company (appellant in appeal No. C/1191/2006) also imported 2 consignments described as "Pippali" and classified under SH 1211.90 in September and November 2002. The relevant Bills of Entry were also assessed in the same manner as above and accordingly the goods were cleared on payment of duty as applicable to SH 1211.90. 4. Subsequently, SIIB (Import) launched investigations into the above imports on the basis of information received to the effect that the aforenamed parties had evaded duty by deceptively describing the goods as "Pippali" and wrongly classifying it under SH 1211.90 with intent to pay duty at lesser rate than what was applicable to "Long Pepper" classifiable under SH 0904.11. During the course of investigations, the premises of the importers were searched and certain documents taken over under panchanama. Statements of the importers were also recorded under Section 108 of the Customs Act. On the basis of the results of investigations, show-cause notices were issued to the above importers under Section 28(1) of the Customs Act proposing (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y against the appellant. This order of the Commissioner (Appeals) is the order impugned in appeal No. C/1191/06 filed by M/s. Radha V. Company. 8. Heard both sides. The main issues arising out of the rival contentions are the following :- (i) Whether, in respect of the imported goods which were assessed to duty under Section 17 of the Customs Act and cleared on payment of such duty under Section 47 of the Act, any amount of duty short-levied can be demanded subsequently under Section 28 of the Act without recourse to revision of assessment by the procedure laid down under Section 129D of the Act; (ii) Whether the goods imported by the appellants should be classified under SH 1211.90 of the First Schedule to the Customs Tariff Act (CTA Schedule) as claimed by them or under SH 0904.11 of the said Schedule as claimed by the Revenue for the period of dispute; (iii) Whether the demand of duty raised on M/s. Radha V. Company is barred by limitation; (iv) Whether any fine is imposable under Section 125 of the Customs Act in lieu of confiscation of the goods imported and cleared by M/s. Radha V. Company. 9.& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty Commr. of C.Ex., Madurai-I - 2008 (229) E.L.T. 521 (Mad.) The learned Counsel has also pointed out a difference between Section 28 of the Customs Act and Section 11A of the Central Excise Act. An amount of duty of excise short-levied or non-levied can be demanded from the manufacturer of the excisable goods notwithstanding any approval, acceptance or assessment relating to the rate of duty or the value of the goods. But there is no reference to approval, acceptance or assessment in the text of Section 28 of the Customs Act. Therefore, according to the learned counsel, Section 28 of the Customs Act cannot be invoked to demand Customs duty on the ground of short-levy or non-levy without a successful challenge to the assessment. Decisions cited by the learned SDR : (1) Union of India v. Jain Shudh Vanaspati Ltd., 1996 (86) E.L.T. 460 (S.C.) (2) Collector of Central Excise, Bhubaneshwar v. Re-Rolling Mills, 1997 (94) E.L.T. 8 (S.C.) (3) Venus Enterprises v. Commissioner of Customs, Chennai, 2006 (199) E.L.T. 405 (Mad.) (4) Sandur Manganese & Iron Ores Ltd. v. Commissioner of Cus., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vocate and the learned SDR. The earliest judgment referred to by both sides is that of the Hon'ble Supreme Court in the case of Jain Shudh Vanaspati Ltd.(supra). The learned counsel has argued that the relevant ruling of the Apex Court in the said case is applicable only in cases involving fraud on the Revenue. On the other hand, the learned SDR has argued that the ruling is applicable to other cases also. Obviously, while the learned counsel relied on para-6 of the Apex Court's judgment, the learned S.D.R. focused on para 5 of the said judgment. We note that, in the case of R.K. Impex (supra), the ratio of the Apex Court's judgment in the aforesaid case was analyzed at length and it was held as under :- "We have given careful consideration to the submissions. On a perusal of the impugned order, we have found many an infirmity in the order. Some of the sweeping observations made by the learned Commissioner (Appeals) will not stand the test of law or reason. One basic question which appears to have been considered by the learned Commissioner (Appeals) is whether it was open to the department to make out a case of short-payment/short-levy of duty against an assessee who was already ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erges from the above judgment of the Apex Court is that, even subsequent to clearance of goods under Section 47 of the Customs Act, a show-cause notice could be issued under Section 28(1) within the prescribed period of time reckoned from the relevant date for the purpose of recovery of customs duty not-levied, short-levied, not-paid, short-paid etc". 9.5 In the case of Venus Enterprises (supra), the Hon'ble High Court held that a show-cause notice under Section 28(1) of the Customs Act for recovery of Customs duty not levied or short-levied or erroneously refunded could be issued subsequent to the clearance of the goods under Section 47 of the Act. The Hon'ble High Court so held by relying on the Apex Court's ruling in Jain Shudh Vanaspati case (supra). The facts of the case of Venus Enterprises (supra) and the ratio of the High Court's decision in that case were discussed by this Tribunal in the case of Rahul Ramanbhai Patel (supra) as follows :- "We further note that, in the case of Venus Enterprises (supra), the assessee had filed 11 Bills of Entry for clearance of computer parts in 1995-96. The declared value was accepted in respect of some of these Bills of Entry, whil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 209) E.L.T. A61 (S.C.)]". 9.6 We further note that the ratio of the Apex Court's decision in Jain Shudh Vanaspati case (supra), as contained in para 5 of its judgment, was applied by the court later in a Central Excise case (Re-Rolling Mills case) after observing that Section 11A of the Central Excise Act was pari materia with Section 28 of the Customs Act. The Hon'ble Supreme Court thus held against the assessee (Re-Rolling Mills) that a show-cause notice could be issued under Section 11A of the Central Excise Act for demand of any duty not paid or short-paid, without revising the assessment of the goods under Section 35E of the said Act. 9.7 The Apex Court's ruling in Jain Shudh Vanaspati case (supra) was appropriately followed by the Tribunal in numerous other cases viz. Ford India Private Ltd, Sudhan Spinning Mills (P) Ltd., Sandur Manganese & Iron Ores Ltd. etc. 9.8 As rightly pointed out by the learned SDR, the Hon'ble High Court's decision in the case of Jindal Vijaya Nagar Steel Ltd. (supra) to the effect that the department could not have issued show-cause notice for recovery of interest on duty from the assessee without challenging the original assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which was answered in the negative by the Hon'ble High Court. We note that the Hon'ble High Court's decision was rendered without noticing the Hon'ble Supreme Court's judgment in Re-Rolling Mills case (supra) wherein the Apex Court passed the following order : "The learned Counsel for the parties do not dispute that this appeal is covered by the decision of this Court in Union of India & Ors. v. Jain Shudh Vanaspati Ltd. & Anr. - 1996 (86) E.L.T. 460 (S.C.) = (1996) 10 SCC 520. In that case the Court was dealing with Section 28 of the Customs Act which is in pari materia with Section 11A of the Central Excise Act. The said decision is thus applicable to the present case also. For the reasons given in the said judgment, the appeal is dismissed with no order as to costs." Therefore, the Hon'ble High Court's decision in Madurai Power Corpn. case cannot be followed as a binding precedent. 9.11 The issue in hand is squarely covered in favour of the Revenue by the Hon'ble Supreme Court's ruling in Jain Shudh Vanaspati case and the Hon'ble High Court's decision in Venus Enterprises case. Issue No. (i) thus stands answered in the affirmative in favour of the Revenue. 10. Issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e much prescribed in palsy, gout, rheumatism, lumbago, etc. Fruit is given to women after parturition to check haemorrhage and to ward off fever. As vermifuge it is one of the best remedies for colic in children. Fruit is used to some extent as a spice". (2) MEDICINAL PLANTS by S.K. Jain : This book states thus : "Long Pepper" consists of the dried fruits of the plant. It is used as a tonic, and in making irritating snuffs. It is also used in liniments for rheumatic pains and paralysis. A decoction made from the dried immature fruits is useful in chronic bronchitis" (3) HANDBOOK OF AYURVEDIC MEDICINAL PLANTS by L.D. Kapoor : This book, in a section on piper longum, discusses the medicinal properties and uses thus : "The berries are a cardiac stimulant, carminative, alterative, tonic, laxative, digestive, stomachic, and antiseptic. It is given with honey in doses of 5 to 10 gr for indigestion, dyspepsia, flatulent colic, cough, chronic bronchitis, chest affections, and in asthma. It is also very useful in enlarged spleen, palsy, gout, rheumatism, and lumbago. Fruit is vermifuge and also used after childbirth to check post-partum haemorrhage." (4) VEGETABLE DRUGS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tained from manufacturers of Ayurvedic medicines, to whom the appellants had sold the imported goods. He also relied on a letter dated 23-4-2003 of the Ministry of Health and Family Welfare, which stated that "Pippali" was used in the preparation of Ayurvedic medicines. The learned counsel also referred to an appendix to the Prevention of Food Alteration Rules 1955 to show that "Pippali" or "Long Pepper" did not figure in the list of spices. The learned counsel for the appellants also referred to the statements given by them under Section 108 of the Customs Act. It was contended that, before classifying the goods under Heading 09.04, the department had to discharge the burden of proving that it was not a product of Heading 12.11. This contention was based on Note 2 of Chapter 9 of the Tariff Schedule. In this connection, the learned counsel argued that the relevant headings in the Tariff required to be interpreted and applied in the light of Section Notes and Chapter Notes which were said to have an overriding effect on the Tariff headings as held by the Tribunal's Larger Bench in the case of Saurashtra Chemicals, Porbandar v. Collector of Customs, Bombay - 1986 (23) E.L.T. 283 (Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w.e.f. 1-3-2003 would become redundant. He argued that Chapter Note 2 could not be so construed as to render the 8 digit classification of "Long Pepper" under SH 0904 11 10 redundant. According to the learned SDR, if "Long Pepper" is classifiable under SH 0904 11 10 from 1-3-2003, it can only be classified under SH 0904.11 pre-1-3-2003. In this manner, it was argued that the Tribunal's decision in Ganesh International (supra) was squarely applicable to the period of dispute involved in this case. 10.3 The learned SDR also relied on HSN Notes under Heading 12.11 in order to show that fruit of "Long Pepper" was not included in Heading 12.11. It was pointed out that only roots and underground stems of "Long Pepper", and not its fruit, figured in the list of products included in Heading 12.11 as per HSN Notes. The learned SDR. contended that, as fruit of "Long Pepper" was not included in Heading 12.11, its classification under Heading 09.04 was not in any way affected by Note 2 to Chapter 9. 10.4 After giving careful consideration to the submissions, we are of the view that the view taken by the Tribunal in regard to classification of fruit of "Long Pepper" in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d" and classified under the entry 0904.11 in the erstwhile 6 digit scheme. In other words, "Long Pepper, neither crushed nor ground" was specifically classified under SH 0904.11 under Heading 09.04 in the 6 digit scheme of classification, pre-1-3-2003. In our view, the effect of Note 2 to Chapter 9 must be examined in this background. In Ganesh International [2004 (169) E.L.T. 284], the Tribunal observed that Chapter Note 2 could not be read to mean that the chapter excluded even those products which were specifically mentioned under Heading 09.04 and that the intention of the legislature was not to first mention a product under one of the entries and then exclude it by a chapter note. The Bench further observed that the Chapter Note should be read to mean that the legislature was speaking of those products which were not specifically mentioned under the heading. We are inclined to adopt the same reasoning in the present case wherein we have already held that "Long Pepper, neither crushed nor ground" was specifically covered by SH 0904.11 (pepper, neither crushed nor ground) under Heading 09.04 in the First Schedule to the Customs Tariff Act prior to 1-3-2003. 10.5 Note 2 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pper is a product excluded from Heading 12.11. The learned counsel has argued that, as the above list of products is not exhaustive, it cannot be said that fruit of "Long Pepper" is not included in Heading 12.11. The same argument was rejected by this Tribunal in Ganesh International's case (supra) by observing thus : "True, it is not exhaustive in so far as the plants are concerned, but it is exhaustive, in so far as the products of the plants mentioned therein are concerned. We notice that the list mentions fruits of some other plants and not of long pepper. It is for this reason we consider that the entry 'others' under Chapter Heading 12.11 of the Customs Tariff may not be referring to fruits of long pepper". We have no reason to take a different view. Thirdly, the Tribunal's unchallenged finding in the case of Ganesh International that the fruit of Long Pepper is generally used as a condiment is binding on them. Therefore, ultimately, the fact remains that fruit of "Long Pepper" is outside the ambit of the expression, "other products of Heading 12.11", and consequently it cannot be held that the commodity in question should be excluded from Chapter 9 of the First Schedule to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be said that, in the shift from 6 digit scheme to 8 digit scheme of classification of goods, there was any significant change of law warranting exclusion of "Long Pepper" from Chapter 9 of the Tariff Schedule, the goods imported by all the appellants prior to 1-3-2003 are liable to be classified in the same way identical goods imported by M/s. Ganesh International after 1-3-2003 was classified by this Tribunal vide 2004 (169) E.L.T. 284. Accordingly, we hold that the goods imported by the appellants should be classified under SH 0904.11 of the Tariff Schedule as claimed by the Revenue. The issue is held in favour of the Revenue. 11. Issue No. (iii) : 11.1 This issue arises in Appeal No. C/1191/06 filed by M/s. Radha V. Company. This appellant imported 2 consignments, described as "Pippali" and classified under SH 1211.90, in September and November 2002. The goods were assessed to duty on the basis of the importer's declaration and the duty so assessed in terms of SH 1211.90 was debited from DEPB scrips produced by the importer. The show-cause notice in this case was issued on 20-12-2005 i.e. after more than 3 years from the date of clearance of the goods. This sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... English with a view to classifying the item under SH 1211.90 and clearing it on payment of duty at lower rate than what was applicable to "Long Pepper" classifiable under SH 0904.11. It was also submitted that the proprietor, in this statement under Section 108 of the Customs Act, clearly admitted the classifiability of the goods under SH 0904.11. In the circumstances, the extended period of limitation was rightly invoked for recovery of differential duty from the appellant. 11.5 We have carefully considered the submissions. The appellant has submitted that, before their importation, other importers were also importing the same commodity by describing it as "Pippali" in their Bills of Entry and that the Custom House had assessed those Bills of Entry on the basis of the Assistant Drugs Controller's Certificate wherein the goods was certified to be "crude drug" and its release was recommended. These averments contained in the memo of appeal are found to be consistent with the statement dated 11-12-2002 given by the proprietor of Radha V. Company under Section 108 of the Customs Act, wherein Shri Biharilal G. Ghura (proprietor) stated thus : "I come to know that "Pippali" was b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ught to have examined on merits the contention of the party that they did not misdeclare the description of the goods for monetary gain and hence the proviso to sub-section (1) of Section 28 of the Customs Act was not applicable. We, therefore, remit the issue of limitation to the lower appellate authority for a speaking order, thereon. It goes without saying that, for the extended period of limitation to be invoked in the case, it has to be established that the appellant misdeclared the description of the goods in the Bills of Entry with intent to evade payment of the differential duty. The issue relating to confiscation and penalty are also left open for the Commissioner's fresh decision. 12. Issue No. (iv) : 12.1 This issue is involved in Appeal No. C/1049/2007 filed by M/s. Radha V. Company. The learned counsel for the appellant submitted that, where the goods were not available for confiscation, no redemption fine was liable to be imposed under Section 125 of the Customs Act. We heard the learned SDR also. 12.2 It is not in dispute that the goods imported by the appellant were allowed to be cleared on payment of duty based on their declaration, without any bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellants has referred to literature on "piper longum" (Long Pepper) in this context also. 'THE INDIAN MATERIA MEDICA' gives the nomenclature as "Pippali" in Sanskrit and "Long Pepper" in English. 'MEDICINAL PLANTS' by S.K. Jain also provides the Sanskrit name of J "Long Pepper" as "Pippali". 'VEGETABLE DRUGS OF INDIA' by D. Sanyal and R. Ghose also states the Sanskrit name of "piper longum" as 'Pippali'. The name of the commodity in Hindi is also seen as 'Pippali' in this book. It is, therefore, not deniable that what is known in English as "Long Pepper" is known as 'Pippali' in Sanskrit as well as in our national language. Therefore, we are of view that the description of Long Pepper as 'Pippali' by these appellants in the Bills of Entry would not amount to 'misdeclaration' to attract Section 111(m) of the Customs Act and, consequently, no penalty can be imposed on these appellants under Section 112 of the Act. The Commissioner's order confiscating the goods and imposing penalties on the importers viz. Ganesh International and Gautam Overseas is, therefore, liable to be set aside. 14. Accordingly, it is ordered as follows : (a) The goods importe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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