Pranav B Prem

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside customs duty demands and penalties against importers of polished marble slabs, holding that a beneficial circular clarifying their classification applies retrospectively. The bench comprising Ajayan T.V. (Judicial Member) and M. Ajit Kumar (Technical Member) ruled that while oppressive circulars are to be applied prospectively, beneficial circulars operate retrospectively. Thus, an assessee can insist on applying an adverse circular only from a future date, but can claim the benefit of a favourable clarification for past transactions as well.

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Background

The Directorate of Revenue Intelligence (DRI), Mumbai Zonal Unit alleged that the appellants — M/s Akash Stone Industries Ltd. (now Aakash Universal Ltd.), M/s Aashiva Contractors, and Shri Ramawatar Babulal Jajodia — misclassified polished (honed) marble slabs under CTH 6802 2110 to avail concessional countervailing duty (CVD) of ₹30 per square metre under Notification No. 04/2006-CE, instead of classifying them under CTH 6802 2190, which attracted 16% CVD.

The Commissioner of Customs (Seaport–Import), Chennai, reclassified the goods under CTH 6802 2190, denied the exemption, and raised differential duty demands — ₹58,03,339 against Akash Stone Industries and ₹6,71,121 against Aashiva Contractors — along with equivalent penalties under Section 112(a) of the Customs Act, 1962. Shri Jajodia was also penalised ₹6,50,000.

Appellants’ Case

The appellants argued that the Tax Research Unit (TRU) of the CBEC, through a D.O. letter dated 16 March 2012, had already clarified that polished marble slabs falling under CTH 6802 2190 were eligible for the concessional rate of ₹30 per square metre. They submitted that the notification’s wording — mentioning “marble slabs and tiles” but omitting CTH 6802 2190 — had caused genuine confusion. It was also pointed out that the Commissioner refrained from invoking the mandatory penalty under Section 114A, indicating that the extended limitation period under Section 28 was not justified. In the absence of mens rea, penalties under Section 112(a) were also unsustainable.

Tribunal’s Findings

The Tribunal noted that the TRU’s 2012 clarification was issued to remove doubt where the description of goods was mentioned but the relevant tariff heading was inadvertently omitted. Relying on its earlier rulings in Akash Stone Industries Ltd. v. Commissioner of Customs (2014) and Oriental Trimex Ltd. v. CCE, Noida (2018), the bench reaffirmed that polished marble slabs under CTH 6802 2190 were entitled to the exemption under Notification No. 04/2006-CE.

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Citing the Supreme Court’s decision in Suchitra Components Ltd. v. Commissioner (2007), the bench reiterated that “a beneficial circular has to be applied retrospectively while an oppressive circular has to be applied prospectively.” As the TRU circular was neither contrary to statute nor to judicial interpretation, it was binding on departmental authorities. Holding that the goods were eligible for exemption, the CESTAT quashed the Commissioner’s order, set aside the duty demands and penalties, and allowed the appeals with consequential relief.

Appearance

Counsel For Appellant: Stebin Mathew, Advocate

Counsel For Respondent: Anoop Singh, Authorized Representative

Cause Title: M/s. Akash stone Industries Ltd. V. Commissioner of customs (Import)

Case No: Customs Appeal No. 40620 of 2013

Coram: Ajayan T.V. [Judicial Member], M. Ajit Kumar [Technical Member]