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2016 (4) TMI 621 - CALCUTTA HIGH COURT

2016 (4) TMI 621 - CALCUTTA HIGH COURT - 2016 (336) E.L.T. 42 (Cal.) - Legality/validity of Circular No. 19/2013-CUS dated 9th May, 2013 - classification of Filters referred to as 'Disposable Sterilized Dialyzer' and 'Microbarrier' for filtering blood - Originally the goods being Dialysers were classified under CTH 90189031 which pertain to "Renal dialysis equipment (artificial kidneys, kidney machines and dialysers)" but after the circular dated 9th May, 2013, classified as above under Tariff I .....

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nce of the impugned circular. When a specific tariff heading for classification is available, the goods concerned cannot be classified under a generic tariff heading. In the instant case, the onus was on the department to justify the change of classification sought to be made by the impugned circular, which onus, in my opinion, has not been discharged by the Department. Thus, it is evident that the impugned circular is blatantly contrary to the said Rule and is thus, not sustainable. - Chall .....

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initially agreed with the Department's assessment, my decision would not have been any different. This is so because there can be no estoppel against the statute. S. 11A of the Customs Tariff Act does not countenance amendment of the First Schedule to the said Act by issuance of a mere departmental circular. The method in which the First Schedule has been sought to be amended is contrary to the method prescribed by S. 11A and as such the circular cannot be sustained. Hence, the fact that the pe .....

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the impugned circular is bad in law being without jurisdiction and cannot be sustained. The Circular No. 19/2013-CUS dated 9 May, 2013 is quashed and set aside. - Decided in favour of applicant - WP No. 496 of 2015 - Dated:- 7-4-2016 - Arijit Banerjee, J. For the Petitioner : Mr. Pranab Kr. Dutta, Sr. Adv. & Mr. S. Banerjee, Adv For the Respondent : Mr. R. Bharadwaj, Adv. & Md. T. M. Siddiqui, Adv JUDGMENT Arijit Banerjee, J. (1) In this writ application the petitioner challenges the le .....

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ialysers)". By the circular impugned in this application, it was directed the aforesaid two articles namely 'Disposable Sterilized Dialyzer' and 'Microbarrier' are classifiable under Heading 84.21 Sub- Heading 8421.29 and Tariff Item 84212900, attracting a higher rate of customs duty. The petitioner has also claimed refund of the differential duty collected by the authorities by classifying the goods imported by the petitioner under Customs Tariff Heading (in short CTH) 8421 .....

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plea that the said goods have to be classified under CTH 84212900 in terms of Circular No. 19/2013-CUS dated 9th may, 2013 instead of CTH 90189031. (4) For more than two months the department sat tight over the assessment of the bill of entry, as a result whereof, the petitioner had to suffer loss amounting to approximately ₹ 3 lacs on account of demurrage and detention charges. (5) Left with no other option, and to minimise his loss, the petitioner paid the duty under protest under cover .....

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ipermeable membrane, is anchored at each end into potting compound (a sort of glue). This assembly is then put into a clear plastic cylindrical shell with four openings. One opening or blood port at each end of the cylinder communicates with each end of the bundle of hollow fibers. This forms the 'blood compartment' of the dialyzer. Two other ports are cut into the side of the cylinder. These communicate with the space around the hollow fibers, the 'dialysate compartment.' Blood .....

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, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus and parts and accessories thereof. The goods imported by the petitioner are medical instruments and/or apparatus and cannot be termed as machinery and mechanical appliances or parts thereof as has been sought to be done by the department by issuing the impugned circular. (9) CTH 8421 speaks of centrifuges, including centrifugal dryers, filtering or purifying machinery and apparatus for .....

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31. (10) When a specific CTH is available for a particular good, such good cannot be classified under any other CTH having a generic description as has been wrongfully sought to be done by the department by issuing the circular under challenge. (11) The Central Board of Excise and Customs, by issuing the said circular has sought to change the classification of the goods in question from a CTH having a specific description to another CTH having a generic description. This is not permissible in la .....

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4212900 speaks of goods which are filtering or purifying machinery and apparatus for liquids or gases. Such goods are meant purely for industrial purpose and do not have any medical use. On the other hand, CTH 90189031 specifically classifies goods as 'Renal dialysis equipment (artificial kidneys, kidney machines and dialysers)'. Hence, the Circular under challenge is contrary to the provisions of the Customs Tariff Act, and thus, liable to be set aside. (13) In the trade, in common parl .....

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ential duty even for the importations which were made prior to the date of the impugned Circular. (15) Before issuance of the impugned Circular, the goods in question were classified under CTH 90189031. Even after issuance of the said Circular the customs authorities in the other ports of the country including the Calcutta Customs have cleared the goods under CTH 90189031. In this connection, the petitioner has relied on a document at pages 19/20 of the affidavit-in-reply. (16) The impugned Circ .....

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des that when goods are, prima facie, classifiable under two or more Headings, the Heading which provides, inter alia, the most specific description shall be preferred to the Headings providing a more general description. The impugned Circular is blatantly contrary to the said Rule and as such the show cause notice issued on the basis of the said Circular is contrary to law. In this connection, reliance was placed on the decision in the case of HPL Chemicals Ltd.-vs.-Commissioner of Central Exci .....

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that case Heading No. 25.01, the same could not be classified under the residuary heading. Rule 3(a) of the Interpretative Rules was referred to and the Supreme Court reiterated that the Heading which provides the most specific description shall be preferred to the Heading providing a more generic description. In this connection, the Supreme Court also referred to its earlier decision in the case of M/s. Bharat Forge and Press Industries (P) Ltd.-vs.- Collector of Central Excise, Baroda reporte .....

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t in some other manner. In this connection reliance was placed on the Supreme Court decision in the case of Ramchandra Keshav Adke (dead) by LRs-vs-.Govind Joti Shavere,(1975) 1 SCC 559. (c) A Circular cannot take away the effect of a notification statutorily issued. In this connection reliance was placed on a decision of the Hon'ble Supreme Court in the case of Sandur Micro Circuits Ltd.-vs.-Commissioner of Central Excise, Belgaum, 2008 (229) ELT 641. (d) Executive instruction has no statut .....

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annot be enforced. (e) Although, the High Court normally would not interfere with a show cause notice, in certain circumstances, even at the show cause stage, the High Court would intervene. These are (i) When the show cause notice ex facie or on the basis of admitted facts does not disclose the offence alleged to be committed. (ii) When the show cause notice is without jurisdiction. (iii) When the show cause notice suffers from an incurable infirmity. (iv) When the show cause notice is contrary .....

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bearing No 1938969 dated 29th January, 2015 along with other necessary documents for clearance of the goods for home consumption classifying the goods under CTH 90189031. (18) Subsequently, on 6th April, 2015 the respondent authority assessed the said Bill of Entry and classified the goods under CTH 84212900 in terms of the impugned circular and thereby assessed duty to the tune of ₹ 2,18,470.80 instead of ₹ 1,45,647.20 which had been calculated as duty by the petitioner. On 6th Apr .....

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th April, 2015. (19) It is submitted that the petitioner having agreed to the assessment as made by the Department, subsequently the petitioner cannot be allowed to turn around and challenge such assessment. The petitioner has not approached the court with clean hands since he has suppressed the fact that on 6th April, 2015 he agreed to the assessment as made by the Department. (20) Section 17 of the Customs Act, 1962 lays down the procedure for assessment of duty. Sub-Section (1) states that an .....

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Sub-Section (5) provides that where the re-assessment made is contrary to the assessment, the proper officer shall pass a speaking order on the re-assessment within 15 days from the date of re-assessment excepting those cases where the importer confirms his acceptance of such re-assessment in writing. In the instant case, the entire dispute started since the petitioner initially agreed in writing and confirmed the re-assessment of duty through proper online submission on the portal of the Custo .....

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e duty of the proper officer is to give 'out of charge' order subject to payment of the differential duty by the assessee. Upon issuing such order the proper officer becomes functus officio. This is what happened in the instant case. Had the assessee not agreed with the re-assessment, the proper officer would have passed a speaking order in writing within 15 days from the date of re-assessment. Such an order is appealable under the provisions of the Customs Act. (21) In the instant case, .....

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he imported consignment which is the subject matter of the instant writ petition, the petitioner had imported 21 other consignments by filing 21 Bills of Entry. The respondent Department had issued a show cause cum demand notice dated 21st April, 2014 for those earlier Bills of Entry and served the said notice to the authorised representative of the petitioner by hand on the same date and also sent a copy of the notice through speed-post. The said notice was issued relying on the Circular which .....

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it cannot be said that the petitioner is aggrieved by the said Circular. It is to be determined whether or not the said Circular is applicable in the petitioner's case and that cannot be done without going through the proper fact finding i.e. adjudication process. Thus, in the instant writ petition, the petitioner cannot say that he is aggrieved by the said Circular. (24) As regards the decisions cited by the petitioner's Ld. Counsel in support of the contention that in an appropriate ca .....

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in question fall under CTH 90189031 or under 84212900. Court's View:- (25) I have considered the rival contentions of the parties. (26) It is not in dispute that originally the goods in question, being Dialysers were classified under CTH 90189031. The impugned circular has sought to change such classification by bringing Dialysers under CTH 84212900. The question that falls for determination in this writ application is whether or not the impugned circular is legally valid. (27) Chapter 90 o .....

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icial kidneys, kidney machines and dialysers). (28) Chapter 84 of the Customs Tariff Act has the caption 'nuclear reactors, boilers, machinery and medical appliances; parts thereof.' Heading 8421 under Chapter 84 pertains to 'centrifuges, including centrifugal dryers; filtering or purifying machinery and apparatus, for liquids or gases.' CTH 84212900 talks of 'filtering or purifying machinery and apparatus for gases.' (29) Thus, CTH 90189031 specifically provides for dial .....

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itioner that when a specific tariff heading for classification is available, the goods concerned cannot be classified under a generic tariff heading. A heading with a more specific description of the goods in question shall be preferred to and prevail over a heading with a more general description. Just as a special law in a particular field would prevail over a general law that may be operational in that field, a heading with a more specific description would prevail over a heading with a more .....

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at since the goods in question were covered by a specific heading, the same could not be classified under the residuary heading. The Hon'ble Apex Court further held that if the Department intends to classify the goods in question under a heading which is different from the heading under which an assessee classifies such goods, the burden of proof is on the Department which has to be discharged by adducing proper evidence. In the instant case, the onus was on the department to justify the cha .....

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al Government is satisfied that it is necessary so to do in the public interest, it may, by notification in the Official Gazette, amend the First Schedule: Provided that such amendment shall not alter or affect in any manner the rates specified in that Schedule in respect of goods at which duties of customs shall be leviable on the goods under the Customs Act, 1962 (52 of 1962). (2) Every notification issued under sub-Section (1) shall be laid, as soon as may be after it is issued, before each H .....

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e case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that notification." Thus, the said Section specifies the manner in which the first schedule to the Customs Tariff Act may be amended. Such amendment may be carried out by notification in the Official Gazette and such notification must be placed before both the Houses of the Parliament for their approval. It is trite law that where a statute empower .....

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given to the decision of the Hon'ble Apex Court in the case of Ramchandra Keshav Adke (dead) by LRs-vs.- Govind Joti Chavare (supra). (31) In the present case, the Department sought to amend the first schedule to the Customs Tariff Act by issuing the impugned circular. This falls foul of S. 11A of the said Act and on this ground also the impugned circular must be set aside. (32) I am inclined to accept the submission of Ld. Sr. Counsel for the petitioner that a circular cannot take away the .....

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urt in the case of Rajasthan State Industrial Development and Investment Corporation-vs.-Subhash Sindhi Cooperative Housing Society, Jaipur (supra). (34) Two points have been urged by Ld. Counsel for the Department in opposing this writ application. Firstly, he submitted that on 6 April, 2015 the petitioner agreed with the decision of the Department and recorded so in writing. It was only two days later i.e. on 8 April, 2015 that the petitioner wrote a letter stating that he was paying the reass .....

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