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Judgment
P. Dinesha, Member (J)
Brief facts are that the appellant had filed a Bill of entry for the clearance of consignment declared as Plastic Bottle Stick and Accessories, Soap Water Solution and Whistle, which was later on taken up for investigation by the officers of Special Investigation and Intelligence Branch. The apparent reason for the investigation by Special Investigation and Intelligence Branch is, that plastic bottle stick toys/plastic bubble stick toys were being imported in Semi Knock Down condition, (SKD) mis-declaring as Plastic Bottle Stick and Accessories, Soap Water Solution under different Customs Tariff Heading, (CTH) which attracted lesser Basic Customs Duty (BCD). During the investigation, the goods under the consignment in question, samples drawn and sent for examination to National Accreditation Board for Testing and Calibration (NABL) accredited laboratory.
The appellant appears to have claimed that what is imported was only Plastic Bottle Stick and Accessories, Soap Water Solution and Whistle which are only parts and not plastic toys and that he being only a trader in the imported goods would sell such goods as it is. It is the case of the revenue that the goods in question were the parts which could not be used without assembling, the parts were therefore being imported in semi knock down (SKD) condition to circumvent the rigors of import policies and hence, the goods were required to be classified as plastic toys alone, which attracted higher Basic Customs Duty (BCD) at 60%.
A show-cause notice was issued which the appellant challenged before the Hon’ble High Court and as per the directions of the Hon’ble High Court, the Original authority passed Order-in-Original, wherein he confirmed the imported goods as plastic toys falling under Customs Tariff Heading (CTH) 95030030, also imposed penalties. It appears that the appellant approached the first appellate authority, but however, even the first appellate authority order in appeal, having appealed the order in original, thereby rejecting their appeal, the present appeal has been filed before this forum.
Shri Derrick Sam, ld. Advocate appeared for the appellant and Shri N.Sathyanarayanan, ld. Asst. commissioner defended the impugned order.
Having heard the rival contentions, we have carefully perused the documents placed on record. The issues to be decided by us are, (i) “Whether the revenue was justified in classifying the imported goods as plastic toys under CTH 95030030?”
(ii) “Whether there was willful mis-declaration of the goods whereby the larger period of limitation under Section 28(4) of the Customs Act, 1962 can be invoked?”.
The appellant is undoubtedly running a Plastic Store and as noted by the Hon’ble High Court in its Order dated 20.12.2021. The appellant is a regular importer of parts of Plastic toys, Soap Water Solution, and Whistle for school supplies. Further, it is not the case of the appellant that such parts of plastic toys which were imported by or could be used as it is individually; rather they are marketable only when they are assembled, to form toys. We find from the record that there was a second opinion obtained by the revenue from a government registered valuer/chartered engineer, who has opined that the goods in question which were referred for his opinion, on visual inspection, were found to be parts of plastic bubble toy. It is thus clear that the appellant in order to overcome the rigors of the import policies insofar as plastics are concerned, has chosen to import in semi knock down condition, which was claimed to have been sold as it is, by the appellant.
Further, the appellant, as observed by us, has nowhere spelt out as to how/where such imported parts were used. If it is to be used as it is, then it is incumbent upon the importer, to at least explain the purpose and the usage of such parts so imported, to buttress its claim that they are not at all plastic toys. On the other hand, the importer has very conveniently avoided admitting about the same while sticking to his ground that goods in question were only parts of plastic toys and not plastic toys, per se. On the other hand, there is considerable force in the submissions made by Revenue and stated at para 8 of the impugned order that as per Rule 2(a) of the General Rules of Interpretation of the Import Tariff, any reference in a heading to an article shall be taken to include a reference to that article,
“ 2. (a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished articles has their essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), presented unassembled or disassembled”.
The appellant claims that it does not sell the goods as toys; it is only a trader and sell the goods as imported. What is important is as to how the imported goods are known or understood in the market? Are they known as toys or just parts only?
The specific import policy perhaps restricts the import of plastic toys and therefore, to prevent the import of the same, the duty liability is pegged at 60%. So, just because the goods were imported in semi knock down condition, does not by itself carve out an exception.
The point therefore to be considered is the import and not what happens thereafter, that is, whether the parts are sold as it is or in assembled condition. The appellant has heavily relied upon the earlier imports to contend that they were all being in the nature of contemporaneous imports, the assessments of which had become final since the revenue had accepted the declared goods as such. It is a well settled principle that there is no res judicata in tax matters; if that was a mistake on the part of the revenue, then a mistake committed once cannot perpetuate forever, and in any case, it is always open for the department to have a fresh look at each import to assess the goods imported, properly.
The appellant has also contended that the differential duty has been confirmed even in respect of the past consignment/s, which is in contravention to the order of the High Court. The first paragraph of the order of Hon’ble High Court in W.P. No.25292 of 2021 reads thus:
“The petitioner has filed this Writ Petition to direct the second respondent herein to forward the case file, concerning the Bill of Entry No.5903739 dated 19.10.2021 to the first respondent albeit provisionally, pending any further investigation by the office of the second respondent and by also considering the representation of the petitioner dated 02.11.2021 and also to further consider the request of the petitioner for waiver of demurrage/ storage/ warehouse charges, concerning the Bill of Entry No.5903739 dated 10.10.2021.”
[emphasis added by us]
Further, the Hon’ble High Court has ordered for assessing the bill of entry dated 19.10.2021, as is clear from paragraph 12 of the same order. However, in its Order dated 12.04.2022, the Hon’ble High Court has directed the revenue to go ahead with the assessment and pass orders only in respect of goods covered in the Bill of Entry dated 19.10.2021 alone. However, the same is not arising out of the order impugned before us.
In so far as the prayer for waiver of the demurrage / detention charges, we find that the same was not an issue before the original authority but was taken up before the High Court as recorded in para 1 of the order of Hon’ble High Court supra – which is extracted in the earlier para herein. However, there is no order by the Hon’ble High Court in this regard. Moreover, this being a case of willful misdeclaration of the imported goods, we also do not find it proper to interfere with the demurrage/detention charges if any, payable by the appellant, if any. Even otherwise, we find that this ground is not arising out of the impugned order.
In so far as the 2nd issue is concerned, we find that it is a case of mis-declaration obviously to avail the benefit of lesser Basic Customs Duty. Further, in the show-cause notice itself, the original authority has at para 21 recorded the modus operandi and brought out on record that to evade import duty thereby bypass compulsory compliance of Toys (Quality Control Order), 2020 and Policy Condition No.2 to Chapter 95 of ITC(HS) 2017-Schedule 1 (Import Policy), the goods were imported in parts only, in semi knock down condition by the appellant; the importer has evaded duty and compulsory Bureau of Indian Standards (BIS) certification compliance by suppression of facts. From the above observation, it is clear that the mis-declaration was only to evade duty, which is clearly hit by the Section 28(4) ibid. Thus, we are satisfied that the demand within the meaning of Section 28(4) is just and proper and hence, the 2nd issue is also answered against the appellant.
In the result, we do not find any merit in the appeal and hence, we dismiss the same.