The Customs, Excise & Service Tax Appellate Tribunal, Chennai ( CESTAT ) recently clarified that extended period of limitation cannot be invoked in matters involving issues surrounding precise interpretation of the law. The obiter was rendered by the CESTAT while quashing Demand and Customs Duty Confirmation Orders issued against Hyundai by the Customs Department.
The decision was rendered by CESTAT while hearing multiple Customs Appeals filed by Hyundai Motors India Ltd. (Hyundai), Kanchipuram, a prominent manufacturer of passenger motor cars against the Commissioner of Customs and vice versa. Hyundai imports various parts and accessories for use in their passenger motor cars and is involved in a number of taxation processes to facilitate their business.
The Directorate of Revenue Intelligence (DRI), on the basis of intelligence received by them, alleged that Hyundai had misclassified various goods imported by them to illicitly avail Basic Customs Duty (BCD) exemption in light of exemption Notification No. 152/2009-Customs dated 31.12.2009. The Notification provides Exemption of Customs duty on certain goods when imported into India from the Republic of Korea.
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Hyundai had opted self-assessment scheme for importers wherein they themselves are responsible to ensure correct declaration of description of the goods, their classification, applicable rate of duty, value and correctly claim the applicable rate of duty, value and the benefits of notifications if any in respect of the imported goods while presenting the bill of entry.
The two-member Bench of CESTAT, Chennai comprising P. Dinesha, Judicial Member and M. Ajit Kumar, Technical Member observed that the allegation of suppression has been made by the Adjudicating Authority solely on the basis of disagreement with some of the classification of the goods imported by Hyundai.
Subsequent to investigation conducted by DRI, Hyundai agreed to change the classification made by them and pay the differential duty in terms of the misclassification. The Adjudicating Authority sought to leverage such submission, averring that the Hyundai had failed to comply with the Procedures as set out in the Customs Act, 1962.
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CESTAT further observed that the misclassification was not an excuse given by Hyundai, rather a result of a genuine interpretative issue.
In light of the findings, the Bench held that Hyundai is not involved in a blameworthy act and cannot be accused of misdeclaration or suppression of facts and neither can the impugned goods be confiscated invoking extended period of Demand in reference to the Supreme Court decision in Northern Plastic Ltd. v. Collector of Customs & Central Excise (1998) and Uniworth Textiles Ltd. v. Commissioner of Central Excise, Raipur (2013).
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