Premature Decision on Import of items Cleared through Provisional Assessment: CESTAT grants Relief to Hyundai from "piece-meal" Penal Proceedings [Read Order]

In a notable decision, the Customs, Excise & Service Tax Appellate Tribunal, Chennai (CESTAT) rebuked an adjudication order passed against Hyundai Motors India Ltd., on the basis of premature classification of imported goods through provisional assessment, subsequently vitiating the scope of piece-meal adjudication of issues.

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. 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), upon intelligence received by them, alleged that Hyundai was involved in misclassification of various goods that had been imported by them to illicitly avail Basic Customs Duty (BCD) exemption in light of exemption Notification No. 152/2009-Customs dated 31.12.2009 which provides Exemption of Customs duty on certain goods when imported into India from the Republic of Korea.

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Hyundai submitted before CESTAT that the classification of the goods had been made on provisional assessment prior to final assessment to be carried out in terms of Section 18(1A) of the Customs Act, 1962 read with Customs (Finalisation of Provisional Assessment) Regulations, 2018. Hyundai averred the demand of differential duty on such Bills of Entry (BE) to  be bad in law.

The two-member Bench of CESTAT, Chennai comprising P. Dinesha, Judicial Member and M. Ajit Kumar, Technical Member observed that classification of goods under the Customs Tariff is an integral part of determining the dutiability of Export-Import (EXIM) goods under the EXIM policy and other overarching laws.

In light of such observation, Customs, Excise & Service Tax Appellate Tribunal held that benefits of duty-free clearances are determined on the basis of exemption notifications and the same may only be gauged by checking the quantity and value of goods and their dutiability.

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The Bench further rebuked the decision of the Customs in undertaking a piece-meal manner to finalize the classification of 7 imported Electronic Control Units provisionally assessed Bills of Entry without duly concluding the dutiability of the EXIM goods and set aside the same.

Additionally, CESTAT held that the invocation of Penal Proceedings tangentially with regards to the same goods and persons involved for different reasons is in violation of EXIM Policy. The same was held to be unreasonable and arbitrary, averring that splitting up issues and details of the same transaction and adjudicating them separately may prejudice the Assessee.

To Read the full text of the Order CLICK HERE

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