The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai, comprising M. Ajit Kumar (Technical Member) and Ajayan T.V. (Judicial Member), has set aside a customs duty demand, holding that the show cause notice was time-barred and the extended period of limitation was not applicable in the classification dispute. The appeal was filed by TTK Protective Devices Ltd., a manufacturer of contraceptives, against an order of the Commissioner of Customs, Chennai-IV, which had reclassified imported natural rubber latex concentrate and confirmed differential duty of ₹92,18,355 along with interest and equal penalty for the period April 2011 to March 2012.
The appellant had imported natural rubber latex concentrate from Malaysia and self-assessed the goods under Customs Tariff Heading 4001 29 10, applicable to Hevea rubber. During a post-clearance audit, the department took the view that the goods were wrongly classified and should fall under heading 4001 10 20, attracting a higher rate of duty. Based on this, a show cause notice was issued and the demand was confirmed.
Before the Tribunal, the appellant contended that the demand was barred by limitation as the show cause notice was issued in March 2015 for imports made during the financial year 2011–12, well beyond the normal period of one year. It was also argued that identical goods had earlier been assessed and cleared by the department itself under the same tariff heading, and therefore there was no suppression or wilful misstatement.
The Tribunal noted that at least two of the disputed Bills of Entry were filed before the self-assessment regime came into force and were assessed by departmental officers. It observed that the department was aware that the appellant was importing rubber latex concentrate with 60% dry rubber content of Hevea origin, and there was no material to show that the goods were different from those cleared earlier.
The Bench further observed that the dispute involved interpretation of tariff entries and there could have been a genuine divergence of views regarding classification. It held that the burden of proving misclassification lay on the revenue and that no positive act indicating suppression or wilful misstatement by the importer had been established. The Tribunal also took note of the appellant’s status as an Accredited Client Programme importer, observing that such entities are granted facilitation only after demonstrating consistent compliance and therefore allegations of misconduct must be supported by cogent evidence.
Relying on settled law, the Tribunal held that mere interpretational differences in classification cannot justify invocation of the extended limitation period. It concluded that the show cause notice was time-barred. Having held the demand to be barred by limitation, the Tribunal declined to examine the classification issue on merits and set aside the impugned order. The appeal was allowed, and the appellant was granted consequential relief as per law.
Cause Title: TTK Protective Devices Ltd. Versus Commissioner of Customs
Case No.: Customs Appeal No. 40356 of 2016
Coram: M. Ajit Kumar (Technical Member) and Ajayan T.V. (Judicial Member)
