Claiming Customs Exemption or Classification on Bill of Entry Not Mis-Declaration: CESTAT rules No Suppression when Identical Consignments Cleared Earlier [Read Order]
Demanding duty on past clearances merely on the basis of the present test report is to base a decision on assumptions and presumptions which is not permissible in law.
Bill - entry - Taxscan
Bill - entry - Taxscan
The Chennai Bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has clarified that merely claiming a particular exemption or classification in a bill of entry does not amount to mis-declaration or suppression of facts.
The Tribunal held that when past consignments with identical descriptions had been cleared by the Customs Department under the same classification and exemption, the importer cannot be accused of intent to evade duty.
The appellant, Gravity Ventures Pvt. Ltd., a Coimbatore-based importer, filed a bill of entry in April 2020 for importing various non-woven interlining materials such as chemical bond, embroidery paper, and double-dot fabric.
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The importer classified the goods under Chapter Heading (CTH) 5603 of the Customs Tariff, based on the country of origin certificate and the foreign supplier’s invoice, and claimed the benefit of duty exemption under Notification No. 46/2011-Cus, available for imports from ASEAN countries.
The Customs authorities, however, disputed the classification, reclassified the goods under headings 4823 and 560311/312, and demanded differential duty.
The Additional Commissioner invoked Section 28(4) of the Customs Act, alleging mis-declaration, and raised a demand of ₹3.92 lakh for the impugned consignment along with ₹5.04 lakh for thirteen earlier consignments imported under similar descriptions. Redemption fine and penalties under Sections 112(a) and 114AA of the Act were also imposed. The Commissioner (Appeals) upheld the order, leading to the present appeal before CESTAT.
The appellant submitted that its classification was bona fide, supported by import documents such as invoices, packing lists, and the country of origin certificate. It pointed out that the same goods had been previously cleared by Customs under identical descriptions, and even if Customs later reclassified them, such disputes could not amount to mis-declaration or suppression.
The Tribunal noted that Customs had already dealt with an identical matter involving the same importer in July 2024, where the Commissioner (Appeals) had ruled in favour of the importer. In that case, it was held that even if Customs’ classification prevailed, the goods would still attract nil basic customs duty under the same exemption notification, negating any motive to evade duty.
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The Tribunal stated that reassessment or change of classification based on a test report cannot, by itself, sustain a charge of willful mis-declaration.
It observed that the Supreme Court in Northern Plastic Ltd. Vs Collector of Customs & Central Excise held that “claiming an exemption or a certain classification on a bill of entry is not mis-declaration or suppression of facts. If a previous identical consignment was cleared with the same description and exemption, it cannot be said that the appellant tried to evade duty.”
“Further demanding duty on past clearances merely on the basis of the present test report is to base a decision on assumptions and presumptions which is not permissible in law. Hence, we are of the opinion that a demand for duty for the extended period or imposition of fine and penalty, for misdeclaration or suppression of fact cannot be sustained” said the bench.
On this basis, the Tribunal set aside the impugned order, quashed the demands of duty, fine, and penalties, and allowed the appeal.
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