TMI Blog2022 (7) TMI 246X X X X Extracts X X X X X X X X Extracts X X X X ..... peal against all assessments, including self-assessment, what is the nature of this power under Section 28. This has been clarified by the Supreme Court in COMMISSIONER OF CUSTOMS VERSUS SAYED ALI [ 2011 (2) TMI 5 - SUPREME COURT] and M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT ] has a power to reopen an assessment already made. Such a power is not inherent in any officer and is available only when it is specifically conferred by law. It is for this reason that Section 28 has a system of issuing notice and passing of adjudication orders. There is no force in the argument of the learned Consultant of the appellant that the demand under Section 28 cannot be issued without challenging the self-assessment by the appellant before Commissioner (Appeals). Reliance on the judgment of Supreme Court in ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV [ 2019 (9) TMI 802 - SUPREME COURT] by the appellant is completely mis-conceived as this is not a case of refund, but is a case of demand of duty under Section 28, which is fully permissible. Learned Consultant also submitted that the Commissioner (Audit) of the Customs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir parts, should be classified under 8505 90 00. There are no Chapter Notes relevant to the dispute but Section note 2(a) of the relevant section states that parts which are goods included in any of the headings of Chapter 84 or 85 (other than headings 8409, 8431, 8448, 8466, 8473, 8487, 8503, 8522, 8529, 8538 and 8548) are in all cases to be classified in their respective headings - In this case, the disputed goods magnetic core are not goods in themselves under any of the headings. In fact, both the appellant and the Revenue classify them as parts only but under different headings. Section note 2(b) states that other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of heading 8479 or 8543) are to be classified with the machines of that kind or in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate. In this case, the disputed goods are child parts of the spark plugs and in our considered view, applying this rule, they should be correctly classified along with the spark plugs under 8511 which has a sub-heading for parts, viz., 85119000. Although it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Electric India Pvt. Ltd., Rewari (Haryana)[ appellant ] has filed this appeal assailing the order-in-original dated 24.12.2020 [ impugned order ] passed by the Principal Commissioner of Customs (Import), Inland Container Depot [ ICD ], Tughlakabad, New Delhi whereby he decided the proposal in the show cause notice dated 11.03.2020. The appellant had imported Magnetic Iron Centre Copper/Centre Core Assembly from Thailand through 79 bills of entry between the period 13.03.2018 and 06.03.2020. The appellant self-assessed the bills of entry and cleared the goods. Under the Customs Electronic Data Interchange [ EDI ] system bills of entry are either cleared based on the self-assessment or sent for re-assessment to the officers by the Risk Management System [ RMS ]. 2. In this case all bills of entry were self-assessed, and were subjected to post clearance audit. During post clearance audit, it was found that the appellant had classified the imported goods under 8505900 and paid basic customs duty [ BCD ] of 0% + 0% Social Welfare Surcharge [ SWS ] +18% integrated goods and services tax [ IGST ] availing the benefit of Sl. No. 1319 of Notification No. 46/2011-CUS dated 01.06.2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dment of the classification of the impugned goods in the notice. Therefore, the alleged short paid of duty cannot be recovered without amending or modifying the classification of the impugned goods ; (d) the Magnetic Iron Centre Core/Centre Core Assembly is correctly classifiable under Classification No. 85059000 and not under 85119000 as proposed by the Revenue ; (e) the impugned goods being part of electro magnet is classifiable CTH 8505900 instead of Customs Tariff Heading 85119000 ; (f) CBEC had clarified the parts of electromagnets, qua Soft Ferrite Articles, would be classifiable under CTH 8505 irrespective of their use by Circular No. 20/90-CX.4 dated 09.07.1990 and the Departmental officers are bound to follow this direction ; (g) assuming without admitting that the impugned goods are classifiable under 85119000 concessional rate of duty under Sl. No. 1335 of Notification No. 46/2011-CUS dated 01.06.2011, as amended, is available to the appellant, which has been denied by the Adjudicating Authority ; (h) the Commissioner (Audit) of the Customs Audit Commissionerate is not the proper officer to issue show cause notice under Section 28 of the Customs Act, 1962 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e other hand submits that a demand under Section 28 can be raised without having to assail the self-assessment by the importer. 11. We proceed to examine this issue. Learned Consultant for the appellant is correct in his submission that after 2011, Section 17 of the Customs Act was modified and a system of self-assessment was introduced in respect of imports and exports. Prior to this date, assessment had to be done by the proper officer. After the system of self-assessment was introduced a provision has been made under Section 17 (5) for the officers to re-assess the bills of entry with respect to valuation, exemption, notification etc. Unless the importer/exporter accepts the re-assessment in writing, the proper officer has to issue a speaking order within 15 days under Section 17 (5). Learned Consultant is also correct in his submission that the term assessment includes self-assessment . An assessment, is a quasi-judicial function performed by the officer and any assessment of bill of entry by an officer can be appealed against before the Commissioner (Appeals) by either side. 12. There would be occasions, where duty is paid in excess of what was due or short of what wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d there is a procedure for appeal against all assessments, including self-assessment, what is the nature of this power under Section 28. This has been clarified by the Supreme Court in Commissioner of Customs versus Sayed Ali [2011 (265) E.L.T. 17 (S.C.)] and Canon India Pvt. Ltd. versus Commissioner of Customs [2021 (376) E.L.T. 3 (S.C.)] as a power to reopen an assessment already made. Such a power is not inherent in any officer and is available only when it is specifically conferred by law. It is for this reason that Section 28 has a system of issuing notice and passing of adjudication orders. This power under Section 28 is subject to three limitations : (i) WHO - only the proper officer can issue a notice under Section 28 ; (ii) WHEN within the normal period of limitation normal or extended ; (iii) WHY to recover the duty so paid, short levied, not paid and levied or erroneously refunded. 14. In view of the above, there is no force in the argument of the learned Consultant of the appellant that the demand under Section 28 cannot be issued without challenging the self-assessment by the appellant before Commissioner (Appeals). Reliance on the judgment of Supreme Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under challenge before the High Court of Delhi in the case of Mangali Impex Ltd. versus Union of India [2016 (335) E.L.T. 605 (Del.)] The High Court upheld its validity except to the extent of its retrospective application. The present case pertains to the period after the introduction of this sub-section and therefore, the Commissioner (Audit) is the proper officer to issue a notice under section 28. 19. The next question which arises is whether the Commissioner (Audit) is the proper officer as laid down in Canon India. It has been laid down by the Supreme Court in Canon India that a notice under section 28 can be issued by not any proper officer but the proper officer , i.e., the one who has assessed the Bill of Entry in the first place. 20. In Canon India, the Bills of Entry were assessed by the officers and thereafter a show cause notice under Section 28 was issued by the officers of DRI. It was held that only the proper officer can issue a show cause notice under section 28 because it is a case of review or reopening of an assessment already made and it can be done by only such officer who has assessed in the first place or his successor in office. The present cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proper officer and a speaking order is issued which will be the first quasi-judicial process. In such a case, if a show cause notice under section 28 is subsequently to be issued, it can be issued only by the proper officer who has done the assessment. In the present case and in similar cases of clearances based on self assessment, the audit, preventive or other officers who look into the assessment post clearance and who issues the show cause notice under Section 28 will be the proper officer and there is no the proper officer before that. Hence, the Commissioner (Audit) was fully competent to issue the show cause notice in this case. 21. We now proceed to discuss the issue of classification of the Magnetic Iron Centre Copper/Centre Core Assembly imported by the appellant. The appellant classified the imported goods under 85059000, while the Revenue classified it under 85119000 of the Customs Tariff. Tariff heading 8505 deals with electro-magnets including their parts while Tariff heading 8511 deals with the spark plugs and their parts. Undisputedly, the imported goods are a child part of spark plugs. The spark plugs have, as a part an electro-magnet of which the impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8511 90 00 Parts 23. It often happens that while attempting to classify goods, there could be two or more entries into which the goods may fall. The Rules of interpretation lay down how to classify such goods. Rule 1 states that the Titles of Sections, Chapters and Sub-Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes, provided such headings or Notes do not otherwise require, according to the following provisions (of the Rules). Thus, if the Section or Chapter Notes resolve the conflict, subsequent Rules need not be referred to. The tariff is divided into sections and each Section is further divided into Chapters. The Section Notes apply to all the Chapters in the Section and each Chapter may further have its own Notes. We find that in this case, both the conflicting entries are in the same Chapter 85 of Section XVI of the Tariff Act. Chapter 85 has no Notes which resolve this dispute. Section XVI, however, has a Section Note which is relevant as it deals with how the parts of goods should be classified. It reads as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial or substance shall be according to the principles of rule 3. Goods such as chemicals and pharmaceuticals are often not 100% pure and are mixed with other substances. Despite the admixtures, they should be classified as the substance. If there is more than one substance in the imported goods and they are classifiable under separate headings, then Rule 3 resolves the conflict. 26. Rule 3 states that when by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: (a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. (b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a sub-heading for parts, viz., 85119000. 28. Although we find that Rule 1 of Interpretation read with Section Note 2 itself resolves the classification dispute, we have also examined some other Rules of interpretation to see if they would require a different view to be taken. Rule 2(a) is not relevant to this case as the imported goods are not an unfinished article but only a part. Rule 2(b) is also not relevant because the disputed goods are not mixture. Rule 3 deals with cases which cannot be resolved by applying Rule 2(b) or for any other reason and the goods are classifiable under more than one heading. Rule 3(a) states that specific entry should be preferred over a more general entry. Rule 3(b) deals with mixtures or composite articles which is not relevant to this case. Rule 3(c) states that if the classification cannot be done using either Rule 3(a) or 3(b), then the last entry in the tariff is the correct entry. Applying Rule 3 (a), we find that the disputed goods, being child part of spark plugs are a more specific description of part of electro-magnets. Further, applying Rule 3(c), the last of the competing entries would be the correct entry. Thus, viewing from any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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