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IN THE HIGH COURT OF JUDICATURE AT MADRAS
Senthilkumar Ramamoorthy, J.
M/s. Asahi India Glass Ltd. Represented by its Power of Attorney Mr.Rahul Vashist - Petitioner
Vs.
Commissioner of Customs, Chennai-II Office of the Commissioner of Customs, Chennai - Respondent
W.P.Nos.28456, 28462 & 28465 of 2023 & WMP Nos.27998, 27999 & 28000 of 2023 & 8522 of 2024
Decided On : 30-08-2024
Customs - Classification - Customs Act, 1962 - Sections 28(4) - The court interpreted Section 28(4) of the Customs Act, emphasizing that it applies only in cases of fraud or wilful misstatement, not mere classification disputes, influencing the decision to quash the show cause notice.
Fact of the Case:
The petitioner, engaged in manufacturing glass, imported light green float glass classified under CTH 70051010. Following an audit, a show cause notice was issued to reclassify the goods under CTH 70052110, prompting the petitioner to challenge the notice.
Finding of the Court:
The court found that the show cause notice was issued without considering the petitioner's previous responses and established classifications, thus violating the principles of judicial discipline and the proper application of Section 28(4).
Issues: Whether the show cause notice issued under Section 28(4) of the Customs Act was valid given the absence of fraud or wilful misstatement in the classification of the imported goods.
Ratio Decidendi: The court held that Section 28(4) can only be invoked in cases of fraud or wilful misstatement, not in classification disputes where the classification had been accepted previously.
Result: The court quashed the show cause notice and directed clearance of the goods under the previously accepted classification.
ORDER :
PRAYER in W.P.No.28456 of 2023 : Writ Petition filed under Article 226 of the Constitution of India, to issue a writ of Certiorari, calling for the records of the Impugned Show Cause Notice bearing SCN No.74/2023 (DIN:20230873MX0000444BC1) dated 07.08.2023 (“Impugned SCN”) issued by the 1st Respondent under Section 28(4) of the Customs Act, 1962, and to quash the same.
PRAYER in W.P.No.28462 of 2023 : Writ Petition filed under Article 226 of the Constitution of India, to issue a writ of Mandamus directing the Respondents to clear the subject goods being 'Light Green Float Glass (Tinted Non Wired Type)' under CTH 70051010 in view of the decisions of various authorities of the Customs Department classify the goods under CTH 70051010.
PRAYER in W.P.No.28465 of 2023 : Writ Petition filed under Article 226 of the Constitution of India, to issue a writ of Declaration declaring that the classification adopted by the Petitioner for the imported goods, i.e. Light Green Float Glass (Tinted Non Wired Type), under CTH 70051010 is correct and proper.
The petitioner is engaged in the business of manufacturing of processed laminated and tempered glass, inter alia, for automotive purposes. The petitioner also imports glass, including light green tinted float glass, for its business operations, and such imports have been made by the petitioner since 2011. While importing light green tinted float glass, the petitioner classified and cleared the same under Customs Tariff Heading (CTH) 70051010. An audit consultative letter dated 01.05.2022 was issued to the petitioner seeking to classify goods imported under 35 bills of entry detailed in the enclosed worksheet under CTH 70052110 instead of CTH 70051010 and calling for payment of Rs.1,14,03,577/-. Such communication was responded to by the petitioner on 11.05.2022 by asserting that the goods are non-wired and have an absorbent layer of tin on one side, which is fluorescent under UV illumination, and also have a microscopically thin non-reflecting layer of zinc sulphate coating on the surface of the glass. Test reports were annexed in support of the assertions. Consequently, it was stated that the classification in CTH 70051010 was in order. A subsequent detailed letter dated 06.03.2023 was also issued by the petitioner.
2. According to the petitioner, on the erroneous basis that the petitioner had not responded to the audit consultative letter, the first respondent issued a show cause notice dated 07.08.2023, whereby the extended period of limitation was invoked, and the petitioner was called upon to show cause as to why the light green tinted float glass imported under the bills of entry detailed in Annexure-I thereto (the Relevant Goods) should not be classified under CTH 70052110. The amount payable by the petitioner towards short-levy was computed at Rs.11,78,27,642 in this show cause notice. The present writ petitions were filed upon receipt of the aforesaid show cause notice. In W.P.No.28456 of 2023, the petitioner seeks to quash the show cause notice. In W.P.No.28462 of 2023, the petitioner seeks a direction to permit clearance of light green tinted float glass under CTH 70051010 in view of earlier decisions of various authorities of the Customs Department classifying the goods under CTH 70051010. In W.P.No.28465 of 2023, the petitioner seeks a declaration that the classification adopted by the petitioner is correct and proper.
Counsel and their contentions
3. Oral arguments on behalf of the petitioner were advanced by Mr.Vijay Nayaran, learned senior counsel, assisted by Mr.Karthik Sundaram, learned counsel. Oral arguments on behalf of the respondents were advanced by Mr.Rajendran Raghavan, learned senior standing counsel.
4. Learned senior counsel referred to the impugned show cause notice and pointed out that float glass falls within CTH 7005 and that the Relevant Goods fall within the six digit entry 700510 of the CTH set out in paragraph 7 of such show cause notice, which relates to n
The classification of goods for customs duty purposes must be based on evidence and specific legal standards; the burden of proving misclassification rests on the revenue, not the importer.
The court affirmed that the power under Section 28 of the Customs Act allows for the determination of duties without requiring prior verification of self-assessment under Section 17.
The classification of goods for customs duty requires adequate evidence, and previous test results are binding unless challenged appropriately.
Show cause notices issued after excessive delay are deemed lapsed, and final assessments cannot be reopened without a valid appeal, emphasizing timely adjudication and adherence to binding precedents....
The main legal point established in the judgment is that there was no mis-declaration or suppression of facts by the Assessee, and thus the show cause notice dated 30.01.2004 was set aside.
The main legal point established in the judgment is that the Settlement Commission's decision was influenced by the admission made by the petitioner in the show-cause-notice, and the court did not ad....
The DGFT is the competent authority for adjudicating classification disputes under the FTDR Act, and customs authorities cannot question MEIS certificates without a prior determination by the DGFT.
Appeal cannot be disposed of by Tribunal on superficial evaluation of issues raised in appeals.
Order of Detention and seizure quashed - Absence of any proper opportunity to petitioner also, the civil liabilities of petitioner company demanding the huge amount of custom duty would be impermissi....
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