TMI Blog2022 (9) TMI 1109X X X X Extracts X X X X X X X X Extracts X X X X ..... e in classification undertaken in adjudicating the proposal to take recourse to an alternate entry should have adhered to the judicially established rules of engagement. Instead of deliberating on the validity, and appropriateness, of a tariff item in the First Schedule to Customs Tariff Act, 1975 other than that claimed in the bills of entry after due notice to the importer, the adjudicating authority adopted a process of elimination of the enumeration of descriptions in the Schedules to the integrated tax rate notification, and ignoring the scheme of its presentation, with the erroneous assumption of jurisdiction to place goods within the ambit of the residuary entry in Schedule III of the integrated tax rate notification. Insofar as the imported goods are concerned in the light of statutory circumscribing of levy of integrated tax', and there being no prejudice to interests of revenue thereby, the declared classification of the imported goods prevails. Legislative intent is not imposition of burden of integrated tax on the person importing goods and the onus for altering classification has not been discharged. The charge of misdeclaration of goods does not sustain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purposes of assessment to basic duties of customs is not controverted in the show cause notice despite which, and after conceding it to be so, the adjudicating authority chose to render a finding that the goods should appropriately have been classified against tariff item 3822 0090 of First Schedule to Customs Tariff Act, 1975, and, by all appearances, in defence of having ventured beyond the usual remit to re-classify, solely for the purpose of denying the claim for inclusion among drugs or medicines including their salts and esters and diagnostic kits, specified in List 1 appended to this Schedule corresponding to serial no.180 in schedule I of notification no. 01/2017 Integrated Tax (Rate) dated 28th June 2017 chargeable to tax at 5% on the assessable value of goods together with basic customs duty as assessed in so far as the former two are concerned and of coverage within all diagnostic kits and reagents corresponding to sl no. 80 of schedule II of notification no. 01/2017 Integrated Tax (Rate) dated 28th June 2017 chargeable to tax at 12% on the assessable value of goods together with basic customs duty as assessed for the remaining goods. For confirming that liabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted tax of 12%. It is his contention that, as far as the latter is concerned, the adjudicating authority erred in appropriating the qualifying expression diagnostic to reagents without the support of any acceptable rule or even logic. He averred that the intent of covering all reagents within this description is evidenced by the recommendation of the Goods and Services Tax (GST) Council at its 45th meeting held on 17th September 2021 and communication dated 6th October 2021 of the Government of India in Department of Revenue. Likewise, it was also submitted that decisions of the Advance Ruling Authority for Goods and Services Tax (GST), as well as of Commissioner of Customs, Benguluru, preclude scope for resort to contrary view taken in the impugned order as held by the Hon ble Supreme Court in Damodar J Malpani v. Collector of Central Excise [2002 (9) TMI 144 SUPREME COURT]. 6. Learned Counsel enumerated the impugned goods and, pointing out to undisputed coverage under heading 3822 of First Schedule to Customs Tariff Act, 1975 described thus diagnostic or laboratory reagents on a backing, prepared diagnostic or laboratory reagents whether or not on a backing, other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under the same provision which offered no scope for dispute on the valuation already accepted by the assessing authority for determination of basic customs duty under section 14 of Customs Act, 1962. The former, too, did not offer any discretionary determination as far as value was concerned and, even with multiplicity of rates of duty, the scope for dispute on classification was non-existent owing the alignment of the relevant schedules in content and design. No proper officer worth his salt would have considered separate tariff items under the respective schedules for any imported goods. But it appears that, not by the content but with the presentation, there is some template discordance in the tariff of Goods and Service Tax (GST) offering traction for disputes such as this. 10. It is in the light of this incompatibility that Mr Lakshmikumaran submitted that the notifications impugned in this order constitutes the tariff comprising of schedules that are mutually exclusive and incorporating a residuary entry for the almost highest rate of duty which is where the adjudicating authority chose to place the impugned goods to their detriment. We may also be permitted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned under the said Act at the point when duties of customs are levied on the said goods under section 12 of the Customs Act, 1962. in section 5 of the Integrated Goods and Services Tax (IGST) Act, 2017 not considered essential for the erstwhile authority to charge either of the additional duties. The legislative intent in placement of the said proviso, as a particular departure from 5. (1) Subject to the provisions of sub-section (2), there shall be levied a tax called the integrated goods and services tax on all inter-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 of the Central Goods and Services Tax Act and at such rates, not exceeding forty per cent., as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person:' of Integrated Goods and Services Tax (GST) Act, 2017, indicates that section 3(7) of Customs Tariff Act, 1975 needs to carefully examined for its scope. Doubtlessly, it charges a liability on the goods under import but circumscribed by section 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of recovery under Customs Act, 1962, would be in excess of jurisdiction to venture into determination of rate of duty under a law that is outside jurisdictional competence. This perspective on the enabling provision is not prejudicial to revenue for reasons discussed supra and it is only such prejudice that may prompt an alternative perspective. Learned Authorized Representative has not been able to demonstrate so. 13. The rate of duty for levy of integrated tax is prescribed under the authority of section 5 of Integrated Goods and Services Tax (IGST) Act, 2017. Our appellate jurisdiction is limited, as far as rate of duty is concerned, to those prescribed in Customs Tariff Act, 1975, Central Excise Tariff Act, 1985 or in Finance Act, 1994. This appellate jurisdiction originates with exercise of adjudicatory authority under Customs Act, 1962, Central Excise Act, 1944 and Finance Act, 1944 thereby binding the original, and first appellate, authorities therein to such jurisdictional circumscribing. Central tax officers appointed under Central Goods and Services Tax (CGST) Act, 2017 are subject to a different appellate structure. We would consider it inappropriate for us to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olumnar reference to any Chapter of the First Schedule to Customs Tariff Act, 1975. The question that begs an answer, and in the context of the rules for interpretation of the Customs Tariff Act, 1975 as well as the Explanations therein being applicable to the placement of goods in the Schedules to the integrated tax rate notification combined with absence of such residuary entry in the First Schedule to Customs Tariff Act, 1975, is the significance of the very resort that Revenue seeks shelter within. From the scheme of the integrated tax rate notification, it appears that the rates enumerated therein are to be read as corresponding to the tariff items in the First Schedule to Customs Tariff Act, 1975 and with the default rate or residuary rate of 18% to be read as corresponding to any tariff item lacking in such rates. This follows from the mandate of Article 269A of the Constitution and the provisions of section 5 of Central Goods and Services Tax (CGST) Act, 2017 that eliminates any scope for perceiving the rates as an exemption notification which the adjudicating authority appears to have adopted as the guiding prism. 16. It is not the case of Revenue that any or all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eciated. As we have stated, no evidence was led on behalf of the Revenue. There is, therefore, no good reason to remand the matter. stipulating the rules of engagement in adversarial contentions on classification of goods for assessment. Hence, the classification proposed, and adopted, in the impugned proceedings must first pass muster as an appropriate description of the impugned goods before revision can be approved. 18. The exercise in classification undertaken in adjudicating the proposal to take recourse to an alternate entry should have adhered to the judicially established rules of engagement. Instead of deliberating on the validity, and appropriateness, of a tariff item in the First Schedule to Customs Tariff Act, 1975 other than that claimed in the bills of entry after due notice to the importer, the adjudicating authority adopted a process of elimination of the enumeration of descriptions in the Schedules to the integrated tax rate notification, and ignoring the scheme of its presentation, with the erroneous assumption of jurisdiction to place goods within the ambit of the residuary entry in Schedule III of the integrated tax rate notification. 19. We, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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