When a consistent classification of imported goods has been historically accepted by the revenue authorities through repeated assessments, the department cannot invoke the extended period of limitation for wilful suppression based solely on a subsequent change in classification stance.

Per Mr. VASA SESHAGIRI RAO

The present three appeals arise out of common Order-in-Original No.22512/2013 dated 19.11.2013 passed by the Commissioner of Customs (Seaport-Import), Chennai and are therefore taken up together for disposal through this common order. Customs Appeal No.C/40129/2014 filed by M/s. Arjun Chemicals Pvt. Ltd. (“Appellant A1”) challenges the differential duty demand, confiscation and penalties imposed upon the importer company, while Customs Appeal Nos.C/40130/2014 and C/40132/2014 filed by M/s. Nippon Sea Freight Systems (“Appellant A3”) and Shri P.L. Ganeshan (“Appellant A2”) respectively challenge the penalties imposed upon them under Section 112(a) of the Customs Act, 1962.

2. The brief facts of the case are that M/s. Arjun Chemicals Pvt. Ltd. imported “Alkyl Ketene Dimer (AKD Wax)” from China during the period from 18.10.2007 to 30.07.2012 and classified the same under CTH 29141990. Based on investigation conducted by the DRI, the Department alleged that the goods were more appropriately classifiable under CTH 34049090 and that the description “paper finishing chemicals” was intentionally used to evade customs duty. Pursuant to investigation, including recording of statements under Section 108 of the Customs Act, 1962, Show Cause Notices dated 22.10.2012 was issued proposing recovery of differential duty of Rs.2,07,54,839/- with interest, confiscation and penalties. The adjudicating authority confirmed the demand, ordered confiscation and imposed penalties including separate penalties of Rs.5,00,000/- each upon M/s. Nippon Sea Freight Systems and Shri P.L. Ganeshan under Section 112(a) of the Customs Act, 1962, against which the present appeals have been filed.

3. The Ld. Advocate Shri S. Murugappan appearing for M/s. Nippon Sea Freight Systems and Shri P.L. Ganeshan, submits that the classification under Chapter 29 had been consistently adopted and accepted by the Department over several years even after assessment and testing of samples and therefore suppression or deliberate misdeclaration cannot subsequently be alleged. It is further submitted that there is no evidence establishing conscious knowledge, collusion or deliberate abetment on the part of the CHA or Shri P.L. Ganeshan and that mere mention of the expression “paper sizing / finishing chemicals” in the Bills of Entry cannot justify penalty under Section 112(a) of the Customs Act, 1962. Shri S. Kannan, learned Resolution Professional appearing for M/s. Arjun Chemicals Pvt. Ltd., submitted that CIRP proceedings are continuing before the Hon’ble NCLT, Chennai Bench and that the present appeal is being pursued on behalf of the Corporate Debtor to protect its assets and interests. He accordingly pleaded that the appeal may be decided on merits in accordance with the law. Though the appeal filed by M/s. Arjun Chemicals Pvt. Ltd. has been pending before this Tribunal since 2014, no independent submissions on merits were advanced on their behalf at any point of time. However, since detailed grounds of appeal and statement of facts had already been filed challenging the impugned Order-in-Original on merits as well as on limitation, the factual and legal contentions raised therein have been taken into consideration while adjudicating the present appeal.

4. Per contra, the Ld. Authorized Representative Mr. Sanjay Kakkar reiterates the findings contained in the impugned order and submits that the imported goods were consciously described as “AKD Wax (paper finishing chemicals)” in the Bills of Entr