Cus - Optical Fibre Cables merit classification under CTH 9001 and not under CTH 8544 - benefit of notfn 24/2005 not available - Importer loses on classification issue but wins on ground of time bar: CESTAT
By TIOL News Service
MUMBAI, JAN 23, 2015: THE Commissioner of Customs (Imports), Nhava Sheva classified the optical fibre cables imported by the appellant under CTH 9001 and denied the benefit of notification No. 24/2005-Cus dated 1-3-2005 claimed by the appellant by classifying the product under CTH 8544.
Consequently,the adjudicating authority confirmed a differential duty demand ofRs.2.68crores and also confiscated the Optical Fibre Cables. Penalties were also imposed.
After considering the elaborate submissions made by both sides the CESTAT observed that there are two issues for consideration -
| What is the correct classification of OFCs imported - whether they merit classification under CTH 85447090 or under CTH 9001 of the Customs Tariff? |
+ The CESTAT noted that an identical issue was considered by the Tribunal in the case of Optel Communications Ltd. - 2005-TIOL-386-CESTAT-DEL.
+ After extensively extracting from the aforesaid decision and the ruling of the Advance Authority for Ruling in the case of Alcatel India Ltd. - 2006-TIOL-13-ARA-CUS the Bench observed - We agree entirely with the above technical and legal analysis made by the AAR in the Alcatel case and adopt the same in the present proceedings. Accordingly we hold that the correct classification of OFCs imported by the appellant is under CTH9001 of the Customs Tariff.
+ While placing reliance on the AAR decision, the Bench viewed -
We are well aware that the said decision is binding only the appellant and the department and cannot form a binding precedent. Nevertheless, the said decision examines in detail the various technical issues involved and has a significant persuasive value. The issue raised therein were also identical to those raised before us in the present case. Further, the technical expert of the appellant Mr. x x x in his statement recorded under section 108 by the investigating officer has also confirmed that the manufacturing process of optical fibre cables imported by their company was similar to the manufacturing process of OFC described in the Advance Ruling judgment in the case of Alcatel Ltd. and that described in the Optel communication case cited supra. In view of the above factual position, in our considered view the analysis of the issue in Alcatel case is very much relevant and applicable to the facts of the case before us.
| Whether extended period of time could be invoked for confirmation of duty demand and imposition of penalties in the present case? |
++ The appellant's contention is that they have been classifying the impugned goods under CTH 8544.70 even when the duty rates were the same on goods falling under CTH 8544 and CTH 9001 and the fact that the department has not sought to demand any differential duty in respect of OFCs imported by the appellant during the period prior to 1-3-2005 under 25 bills of entry also supports their contention. We find merit in this contention.
++ Though the principles of resjudicata and estoppel do not apply to tax assessments since the cause of action for each assessment is distinct, yet Revenue has to prove that the appellant mis-declared the description of the goods under import with an intent to evade payment of duty. No such evidence is forthcoming in the instant case and the only evidence adduced is that Mr. Manohar Rampal was aware that the goods merited classification under CTH 9001 as indigenously procured goods were being classified under the said heading.
++ We are afraid this evidence is not conclusive enough to establish the revenue's case of mis-declaration and suppression. In the present case, we find that the show cause notice for demand of differential duty has been issued only on 8-2-2007 for the imports made during March 2005 to January 2006. Thus the demand is hit by time bar and we hold accordingly.
Conclusion:
+++ Optical Fibre Cables imported by the appellant merit classification under CTH 9001 of the Customs Tariff and not under CTH 85447090;
+++ However, the differential duty demand on account of such re-classification is hit by time bar. As a result, the entire duty demand along with interest thereon is not sustainable in law. Consequently, the confiscation of the goods with an option to redeem the same on payment of fine and imposition of penalties on the main appellant and its employee are also not sustainable in law and are accordingly set aside.
(See 2015-TIOL-177-CESTAT-MUM)
