In order to invoke the extended period of limitation, there must be a positive act and not merely a failure to pay duty, which is not on account of any fraud, collusion, or willful misstatement or suppression of facts.

JUDGMENT :

DHIRAJ SINGH THAKUR, J.

1. With the consent of learned counsel for the parties, the appeal is taken up for final hearing at the admission stage itself.

2. This is a Custom Appeal under section 130 of the Customs Act, 1962 (hereinafter referred to as ‘the Customs Act’) against the order, dated 25th September 2020 passed by the Customs Excise and Service Tax Appellate Tribunal, Mumbai (‘CESTAT’).

3. The following questions of law have been proposed for our consideration:

(i) Whether in the facts and circumstances of the case, CESTAT was right in setting aside the demand for extended period of limitation, despite holding the case on merits in favour of the Appellant-department?

(ii) Whether the CESTAT, being last fact finding authority, has passed unreasoned and non-speaking order?

4. Briefly stated the material facts are as under:

(i) The respondent-M/s. Signet Chemicals Pvt. Ltd. an importer, had imported the good namely “Neutral Pellets” during the period March 2012 to February 2015, classifying the same under Custom Tariff Heading (‘CTH’) 17029090.

(ii) A show cause notice came to be issued to the respondent, pursuant to an investigation wherein, it was alleged that the classification declared by the respondent against 20 bills of entry, during the relevant period under ‘CTH 17029090’ was incorrect and that the correct classification proposed was ‘CTH 17019990’. A differential duty of Rs. 1,44,84,424/- was sought to be recovered under section 28 of the Customs Act with interest, besides a proposed penalty under section 112(a) and 114A of the Customs Act.

(iii) The Commissioner of Customs (Import), Mumbai, on adjudication, confirmed the demand with interest and imposed penalty of an equal amount under section 114A of the Customs Act.

(iv) The order was challenged before the CESTAT. The CESTAT decided two appeals, namely Custom Appeal No. 89829 of 2018 and 85493 of 2019.

The CESTAT, vide its order impugned confirmed that the imported goods in the shape of Neutral Pellets fell under CTH 17019990 and consequently, it proceeded to confirm the demand of duty as also interest for the said period. However, the CESTAT held that the imposition of penalty was uncalled for and unwarranted and set aside the order to that extent. This was in reference to Custom Appeal No. 89829 of 2018.

The present appeal has been preferred against the order of the CESTAT, dated 25th September 2020 questioning only the view expressed in regard to Custom Appeal No. 85493 of 2019, which is relevant to the present controversy.

5. The issue in Appeal No. 85493 of 2019 related to the claim of the respondent that the demand in the said appeal was barred by limitation. The CESTAT allowed the appeal fled by the respondent and set aside the demand which had been confirmed in the order impugned before it by invoking the extended period of limitation. What was held by the CESTAT is reproduced hereunder:

“17. The next question relates to the claim of the appellant that the demand in the case of Appeal No. C/85493/2019 is barred by limitation. The appellant during the period March, 2012 to February, 2015, admittedly from time to time fled Bills of Entry declaring their product under CTH 17029090. They have submitted that the product in question had been physically examined by the department; also the assessing officer on few occasions called for the literature on the composition, process of manufacture etc. to complete the assessment under the declared heading. It is their contention that at no point of time the description of the goods was misstated or mis-declared by the appellant or any facts relating to the said product suppressed from the department. They classified the product according to their best understanding and Department was well aware of the said classification, and assessments were completed accordingly. Hence, on a change of view by the department, allegation of mis-declaration or suppression of facts in classifying the product at the times of its import u