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TMI Blog2025 (5) TMI 662X X X X Extracts X X X X X X X X Extracts X X X X ..... l Board of Indirect Taxes and Customs appointed the Principal Commissioner as the common adjudicating authority to decide the proposals in the SCN and accordingly, he passed the impugned order. 1.1 Appeal no. 50851 of 2021 is filed by M/s. SMPL Infra Ltd. [Importer], the company / importer challenging the change of classification of the imported goods, demand of differential customs duty under section 28(4) of the Customs Act, 1962 [Act] invoking extended period of limitation, confiscating the imported goods/ holding the imported goods liable for confiscation under section 111(m) of the Act on the allegation of wrong classification and imposing penalties under section 114A and 114AA of the Act. Appeal no. 50852 of 2021 is filed by Shri Sushil Sethi, Managing Director of M/s. SMPL Infra Ltd.to challenge the order of imposition of penalties upon him under section 112(a) (ii), 114AA and 117 of the Act. The facts which culminated into the impugned order are as follows: - 1.2 M/s SPML Infra Ltd. is engaged in execution of water supply projects. For this purpose, it imported AMR/Non-AMR (automated meter reading apparatus) water meters from M/s Arad Technologies Ltd., Israel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suring the domestic consumption of water, which are classifiable under CTI90282000. 1.5 Investigations revealed that the importer had previously (during 2012) imported the same goods, i.e. AMR water meters as samples for testing from the same foreign supplier, M/s Arad Technologies Ltd. classifying them under CTI 90282000. Those consignments were cleared through their Customs Broker M/s. Shailendra Jain C&F Pvt. Ltd., New Delhi. 1.6. Thereafter, the importer changed its Customs Broker to M/s. P.S. Bedi &Co. Pvt. Ltd., New Delhi through whom it cleared the goods imported through the disputed Bills of Entry by classifying them under CTI 9026 1010. Shri Deepak Kumar Jain admitted in his statement that the goods imported through the disputed Bills of Entry and the goods which they had previously imported were identical. 1.7 The invoices issued by the supplier M/s. Arad Technologies Ltd. indicated four-digit HSN code of 9026 but the Certificates of Country of Origin issued by the authorities in exporting country clearly indicated HSN code 9028. Further investigation showed that the invoices issued for the past consignments by the same supplier indicated HSN code 9028. 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proposed to be recovered under section 28 of the Act invoking extended period of limitation along with the interest under section 28AA of the Act. Penalties were proposed to be imposed on the importer company under section 114A, 114AA of the Act. Penalty was proposed to be imposed on Shri Sushil Sethi was proposed under Sections 112, 114AA and 117 of the Act. Penalty against custom broker was also proposed under section 112 and section 114AA of Custom Act 1962. The proposals in the SCN were confirmed by the impugned order dated 08.01.2021. We have before us, only appeals of M/s. SMPL Infra Ltd and of Shri Sushil Sethi. There is no appeal by the Customs Broker M/s. P.S. Bedi & Co. 2. We have heard Shri Bhaskar Thakkar, learned Chartered Accountant representing the appellants and Sh. SK Rahman, learned authorized representative of the department and perused the records. Submissions on behalf of the appellants 3. Learned Chartered Accountant appearing on behalf of the appellants submitted as follows: 3.1 The Appellant importer had purchased and imported water meters under various Bills of Entry imported during the period FY 2015-16 for execution of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... voking extended period on the ground of suppression of facts. The question arises that when the Bills of entry were finally assessed from three different location i.e. ICD Tughlakabad, Air Cargo Complex, New Delhi, Nhava Sheva Port. Thus, three different officers having rank of Assistant Commissioner or above have dealt with such classification issue and accepted the same, then just because DRI have different interpretation it does not tantamount to "Suppression" Reliance is placed on Incredible unique Buildcon Pvt. Ltd. versus Commissioner of C. Ex. & S.T., Alwar 2022 (65) G.S.T.L. 377 (Tri. - Del.). 3.5 The impugned order may be set aside and both the appeals may be allowed. Submissions of Revenue 4. Rebutting these submissions, Ld. Authorised Representative (AR) for the department submitted as follows. 4.1 The appellant imported disputed goods by declaring them as "AMR or non-AMR water flow meters" at various ports namely ICD Tughlakabad, ACC Delhi &Nhava Sheva Port. The appellant has declared CTI90261010 and claimed benefit of notification S.No. 31 of notification No. 24/2005-Cus dated 01.03.2005 as amended and paid basic customs duty [BCD] of 0%. The correct CT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s between appellant-importer and Delhi Jal Board and the word "flow meter" was not mentioned in the said contract. 4.8 The CTH 9028 talks of 'liquid meters'. Water is a liquid. Hence, 9028 heading is appropriate for water meters. Reliance is placed on the case law of the case of Dunlop India Ltd. & Madras Rubber Factory Ltd. Versus Union of India and Others reported as 1983 (13) E.L.T. 1566 (S.C.) 4.9 Goods must be classified as understood by the people in trade and commerce in the usual course. In the instant case, the imported goods are used to measure volume of water flowing. It is immaterial even if they can, in addition, also measure the rate of flow. Hence, the imported goods were correctly classifiable under CTI 9028 2000 and there is no infirmity in the impugned order which may be upheld and the appeals may be dismissed. 5. We heard the submissions advanced by both sides and perused the records. The issues to be decided in this appeal are: (i) Which is the correct classification of the disputed goods- CTI 9026 1010 (as claimed by the appellants) or CTI 9028 2000 (as held in the impugned order)? (ii) If the classification in the impugned order is correct, has th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven to ISI glossary in case of Conflict. The Hon'ble Supreme Court in this case has perused the statements of objects and reasons of Central Excise Tariff Bill, 1985 which led to the enactment of Central Excise Tariff Act, 1985 and held that the Central Excise Tariff is based on HSN, the internationally accepted nomenclature which has been taken into account in the said statement of objects and reasons so as to reduce disputes on account of tariff classification. Accordingly, the Hon'ble Court held that for resolving any dispute relating to tariff classification, a safe guide is the internationally accepted nomenclature emerging from the HSN. 8. The relevant HSN notes to the two entries are as follows. CTH 9026: Instruments and apparatus for measuring or checking the flow, level, pressure or other variables of liquid or gases (for example, flowmeters, level gauges, mano-meters, heat meters), excluding instruments and apparatus of heading 90.14, 90.15, 90.28 or 90.32. 9026.10 - For measuring or checking the flow or level of liquids 9026 10 10 For measuring or checking the flow or level of liquids: Flow meters 9026.20 - For measuri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls, chimneys, furnaces and conduits in general, and consisting essentially of a bladed fan and a calibrated dial. In some devices the measured values are converted into electrical signals. CTH 9028: Gas, liquid or electricity supply or production meters, including calibrating meters thereof 9028.10 - Gas meters 9028.20 - Liquid meters 9028.30 - Electricity meters 9028.90 - Parts and accessories These meters are generally fitted with a device driven at a speed proportional to the rate of fluid flow or to the electrical quantity being measured. They are often fitted in a bypass or shunt off the main or connected to measuring transformers, so that only part of the flow passes through them, but are calibrated so as to indicate the total quantity passing through the service pipes or through the main. Gas, liquid or electricity supply or production meters fall in this heading whether or not fitted with a clockwise recording device or with a simple mechanical or electrical device for bringing controlling, signaling, etc., appliances into action. (I) Gas or Liquid Supply or Production Meters These meters are used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in municipal area straight reading supply of AMR water meters. Thus, it becomes clear that the contract itself is simply talking about the requirement of meters meant for measuring the volume of water supplied to the household in the municipal area over a period of time. It is nowhere talks about the flow meters. Jal Board is otherwise not suppose to measure the speed of the water. It required meters to be installed domestically for revenue billing, it otherwise coming out of the contract itself. 12. As already observed above that water meters measuring volume per duration of time are simply water meters and the water meters measuring speed of the liquid per unit of time are the flow meters. It has also been observed that all water meters are flow meters but not vice versa. Thus, the imported goods were the one to be supplied to Delhi Jal Board for measuring the volume of domestic supply of water and thus the product is water meter clearly covered under CTH 9028. 13. We have also seen the scope of ISO 4064 specification which was brought on record by the appellant itself, the international standards thereof. We observe that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could be raised under section 28. Supreme Court held that all assessments including self-assessments can be appealed against before the Commissioner (Appeals) and no refund can be sanctioned unless the assessment is modified. 18. Assessments can be modified either through an appeal to the Commissioner (Appeals) under section 128 or modified undersection 28. The submission of the learned counsel, if accepted, will result in absurd consequences. If a notice under section 28 is issued, after considering the reply and hearing the noticee, the proper officer (commissioner or additional commissioner or joint commissioner or deputy commissioner or assistant commissioner) has to adjudicate the matter and pass an order. If the assessment is already appealed against before Commissioner (Appeals) under section 128 and is either affirmed or annulled or modified, the assessment order merges with the order of the Commissioner (Appeals) which must be honoured. The question of the proper officer again issuing a notice under section 28 on the same issue after the Commissioner (Appeals) had decided the matter does not arise because the proper officer cannot sit in judgment over the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that a notice demanding duty under section 28 cannot be issued without first assailing the self-assessment before Commissioner (Appeals) under section 128. It needs to be rejected and is rejected. 22. The other submission of the learned Chartered Accountant is that classification of imported goods is a matter of opinion which, even if it is wrong, cannot result in a presumption of malafide and invocation of extended period of limitation under section 28. As per section 28, a demand can be raised only within the normal period of limitation and demand for extended period of limitation can be raised only if the short payment of duty is due to (a) collusion; or (b) any wilful mis-statement; or (c) suppression of facts 23. This submission of the appellant looks attractive on a first look but a deeper examination of the facts would show otherwise. Generally speaking, merely assessing the duty by claiming an incorrect classification of the goods in the Bill of Entry does not mean that the importer had any intention to evade payment of duty. However, the facts of a case may prove such an intention. 24. In this case, the appellant was fully aware of the nature a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eliberately changed by the appellant importer, its intention to evade duty by mis-classifying the goods is evident. We draw support from the judgment of the Supreme Court in Commissioner of Central Excise, Ahmedabad vs Urmin Products Pvt. Ltd and others -2023 (10) TMI 1112 - SUPREME COURT. In that case, Revenue assailed the orders passed by the CESTAT deciding the classification of the goods in favour of the assessee respondents. After detailed examination, the Supreme Court held the classification in favour of the Revenue. On the question as to whether extended period of limitation could be invoked for issuing a demand under section 11A of the Central Excise Act, 1944, the Supreme Court found that the respondents had changed the classification of the manufactured goods consequent upon the budgetary changes in order to take ineligible benefit and under those circumstances, and held that extended period of limitation could be invoked. Relevant paragraphs of this judgment are reproduced below: 42. It is an admitted fact that till the filing of this letter, the Assessee continued to classify the product as 'zarda/jarda scented tobacco' falling under CET SH 2403 9930. It is f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion of facts are concerned, they are clearly qualified by the word 'wilful', preceding the words " misstatement or suppression of facts" which means with intent to evade duty. The next set of words 'contravention of any of the provisions of this Act or Rules' are again qualified by the immediately following words 'with intent to evade payment of duty.' Therefore, there cannot be suppression or misstatement of fact, which is not wilful and yet constitute a permissible ground for the purpose of the proviso to Section 11A. Misstatement of fact must be wilful." It is this hiding of the fact and not specifying the details in their letter that led to the issuance of the show cause notice and invocation of Section 11A and Section 11 AC of the CE Act, by the Department. It cannot be ignored that till filing of the letter dated 30.03.2006, the Assessee itself was classifying the product as 'zarda/jarda scented tobacco' falling under CET SH 2403 9930 and being a large-scale manufacturer and paying large sums of amount as duty, to contend that it was unaware of the difference between these two products, or to contend that it had classified the product as &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 4A of CE Act by issuance of Notification 16 of 2006 dated 11.07.2006. It is for this precise reason that the act of the Assessee was held to be a deliberate and accordingly wilful misstatement was alleged on part of the Assessee, with an intention to evade duty payable Under Section 4 of the CE Act, which would attract the extended period of limitation, namely proviso to Section 11A (1) being invoked. The adjudicating authority has examined the issue of invoking an extended period of limitation, in the background of the communication dated 30.03.2006 which has been very heavily relied upon by the Assessee to stave off the allegation of misrepresentation or wilful misstatement of facts and the adjudicating authority opined as under: "It can be seen that the Assessee had very cleverly drafted the letter and did not mention any details of the product which they were manufacturing at that material time i.e.,'Jarda scented tobacco'. On reading this letter, any person could conclude that they have started a new product 'Chewing tobacco' which they have classified in 2403 9910 as it is the, correct subheading of Chewing tobacco. On a plain reading of the lett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the proviso to Section 11A (1) of the Central Excise Act, 1944 to recover the differential duty along with interest Under Section 11 AB for the larger period upto 5 years and has also rendered themselves liable to penalty Under Section 11 AC of the Central Excise Act 1944. I, accordingly hold that the Assessee is liable to penalty Under Section 11AC of the Central Excise Act, 1944." However, the tribunal has proceeded to hold that limitation would apply and show cause notice should not have been issued beyond one year in view of the fact that the Assessee intimated their intention to change - vide Paragraph 22 of the impugned order, without addressing the aforesaid issues which has been dealt in detail hereinabove. In other words, the tribunal by cryptic order has negatived the contentions of the Revenue and held that the invocation of the extended period of limitation was not warranted. This finding, not being in consonance with the facts obtained on the hand, we are unable to subscribe our views to the judgment of the tribunal. In that view of the matter, we are of the considered view that Question No. 1 is to be answered against the Assessee and in favour of the Revenue and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 111(m) wherever they were available. Where they were not available, the goods were held to be liable to confiscation but were not actually confiscated. We uphold these decisions in the impugned order. Penalties under section 112, 114A, 114AA and 117 32. These sections read as follows: SECTION 112. Penalty for improper importation of goods, etc .- Any person, - (a) who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act, or (b) who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111, shall be liable, - (i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty not exceeding the value of the goods or five thousand rupees, whichever is the greater; (ii) in the case of dutiable goods, other than prohibited goods, subject to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant deliberately caused incorrect CTI to be indicated in the Bills of Entry and hired a new Customs Broker and instructed him to indicate wrong CTI in the Bills of Entry. Therefore, section 114AA squarely applies to this case. As far as penalty under section 117 is concerned, it is a residual penalty imposable where there is no other provision. Since penalties were found to be imposable and were imposed under other sections, penalty imposed under section 117 cannot be sustained. 34. In the light of entire above discussion, we hold as follows: (i) The goods imported under the disputed Bills of Entry at three of the ports were the water meters and NOT flow meters. (ii) The correct classification of these meters is CTI 9028 2000. (iii) The benefit of nil rate of BCD in terms of Notification No. 24/2005 dated 01.03.2005, entry at Sr. No. 31 was available only to the flow meters under CTH 9026. The rate of duty for water meters under CTH 9028 is @ of 7.5%. (iv) The submission of the learned Chartered Accountant that unless the self-assessed Bills of Entry are assailed before Commissioner (Appeals) under section 128, no SCN demanding duty under section 28 can be issued is n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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