IGST Demand Set Aside as Extended Limitation Not Applicable: CESTAT Kolkata

Madhepura Electric Locomotive Pvt. Ltd. Vs Principal Commissioner of Customs (Port) (CESTAT Kolkata)

The appeal was filed against an order confirming differential Integrated GST (IGST), interest, redemption fine and penalty in respect of imports made by Madhepura Electric Locomotive Pvt. Ltd., a joint venture between Alstom Transport India Ltd. and Indian Railways engaged in manufacturing and supplying electric locomotives. The dispute related to imports of Loco Tractor Lok 2.60, Loco Mover Crab 1500 and Battery Shunter from Italy under three Bills of Entry filed between November 2017 and January 2018. The appellant classified the imported goods under Chapter 86 of the Customs Tariff and cleared them on payment of basic customs duty at 10% and IGST at 5% after self-assessment under Section 17 of the Customs Act, 1962.

The Directorate of Revenue Intelligence (DRI), Lucknow commenced an investigation into the classification of similar rail-related vehicles imported by Alstom Transport India Ltd. The appellant received summons, produced invoices, Bills of Lading, Bills of Entry and catalogues, and subsequently paid differential IGST of ₹91,50,763 and interest of ₹19,84,648 under protest on 04.06.2019, informing DRI on the following day.

A show cause notice dated 29.07.2020 proposed rejection of the classification adopted by the appellant and reclassification of the imported goods under CTH 8709 1100. It sought recovery of differential IGST under Section 28(4) of the Customs Act, 1962, interest under Section 28AA and penalty under Section 112 or Section 114A. The adjudicating authority confirmed the differential IGST demand along with interest and imposed redemption fine and penalty, leading to the present appeal.

Before the Tribunal, the appellant submitted that the imported goods were correctly classifiable under Chapter 86. It argued that the goods were loco tractors and related equipment used for shunting rolling stock and metro trains and were not works trucks used in factories, warehouses, docks or airports for short-distance transport of goods. It was also contended that the imported tractors were not of the type used on railway station platforms for hauling small trailers but were specifically meant for shunting locomotives and metro trains. In support of its classification, the appellant relied upon Union of India v. Garware Nylons Ltd. [1996 (87) E.L.T. 12 (S.C.)].

The appellant further challenged invocation of the extended period of limitation. It submitted that the imports took place between November 2017 and January 2018, whereas the show cause notice was issued only on 29.07.2020 by invoking the extended limitation period. According to the appellant, classification of goods under a particular tariff heading could not amount to wilful misstatement or suppression of facts. Reliance was placed on the decisions in DIC India Ltd. v. Commissioner of Cus. (Port), Kolkata [2024 (9) TMI 186 – CESTAT, Kolkata], KPR Fertilizers Ltd. v. Commissioner of C.Ex., Cus. and S.T., Visakhapatnam-II [2023 (384) E.L.T. 216 (Tri. – Hyd.)], Icredible Unique Buildcon Pvt. Ltd. v. Commissioner of C.Ex. & S.T., Alwar [2022 (65) G.S.T.L. 377 (Tri. – Del.)], and Densons Pultretaknik v. Commissioner of C.Ex. [2003 (155) E.L.T. 211 (S.C.)].

The Revenue supported the impugned order.

The Tribunal observed that the imports had taken place between November 2017 and January 2018 and that the goods had been cleared for home consumption after assessment of the Bills of Entry. It held that the show cause notice issued on 29.07.2020 was barred by limitation. The Tribunal relied upon its earlier decision in DIC India Ltd. v. Commissioner of Cus. (Port), Kolkata [2024 (9) TMI 186 – CESTAT, Kolkata], wherein it had held that where Bills of Entry had been finally assessed, the Department had not challenged those assessments, and all relevant facts were within the Department’s knowledge, the classification could not later be reopened by invoking the suppression clause and the extended period of limitation.

Applying the same reasoning, the Tribunal held that the extended period of limitation was not invokable in the appellant’s case. Consequently, it held that the proceedings initiated against the appellant were not sustainable. On that basis, the Tribunal set aside the impugned order confirming differential IGST, interest, redemption fine and penalty and allowed the appeal with consequential relief, if any, as per law.

Cases Discussed

• DIC India Ltd. v. Commissioner of Cus. (Port), Kolkata (CESTAT Kolkata), [2024 (9) TMI 186 – CESTAT, Kolkata]
• KPR Fertilizers Ltd. v. Commissioner of C.Ex., Cus. and S.T., Visakhapatnam-II, [2023 (384) E.L.T. 216 (Tri. – Hyd.)]
• Icredible Unique Buildcon Pvt. Ltd. v. Commissioner of C.Ex. & S.T., Alwar, [2022 (65) G.S.T.L. 377 (Tri. – Del.)]
• Densons Pultretaknik v. Commissioner of C.Ex. (SC), [2003 (155) E.L.T. 211 (S.C.)]
• Union of India v. Garware Nylons Ltd. (SC), [1996 (87) E.L.T. 12 (S.C.)]

FULL TEXT OF THE CESTAT KOLKATA ORDER

The appellant is in appeal against the impugned order demanding differential I.G.S.T., along with interest and imposing redemption fine and penalty.

2. The facts of the case are as under: –

(i) M/s. Madhepura Electric Locomotive Pvt. Ltd. (hereinafter referred to as the “appellant”) is a joint venture company between Alstom Transport India Ltd., and Indian Railways. The appellant is engaged in the manufacture and supply of electric locomotives to the Indian Railways.

(ii) The appellant had imported the following goods viz., Loco Tractor Lok 2.60, Loco Mover Crab 1500, Battery Shunter classifying the same under Chapter 86 of the First Schedule to Customs Tariff Act, from M/s Zephir S.p.A Socio Unico, Italy under three Bills of Entry, the details of which are as under: –

iii. The appellant submitted all the relevant documents through the Customs ICEGATE system and declared the appropriate description wise value of imported goods in the relevant bills of entry and self-assessed the custom duties payable towards import of said goods as prescribed under Section 17 of the Customs Act, 1962.

iv. The imported goods were cleared on payment of basic customs duty at the tariff rate of 10% and Integrated Tax (IGST) at the rate of 5% as prescribed under Schedule-I to the Notification No. 01/2017- Integrated Tax (Rate) dated 28.06.2017.

(v)The Directorate of Revenue Intelligence, Lucknow commenced investigation on classification of the vehicles imported by one of the joint venture partners of the appellant viz. Alstom Transport India Ltd (ATIL). ATIL vide an e-mail dated 07.03.2019 and a letter dated 15.03.2019 informed DRI, Lucknow that they had received similar letters/notices from DRI, Coimbatore wherein they had commenced investigation on the imports including the classification of the rail-cum-road vehicles imported by ATIL.

vi. Thereafter, DRI, Lucknow vide letter dated 07.05.2019 issued summons to the appellant with respect to the imported goods, which was duly attended. The concerned person working in the appellant-company appeared before the DRI, Lucknow and submitted hard copies of the said invoices, Bills of Lading, Bills of Entry and catalogue pertaining to imported goods.

vii. Subsequently, the appellant suo moto determined the differential integrated tax amounting to Rs. 91,50,763/- and interest amounting to Rs. 19,84,648/- and paid the same under protest vide a demand draft on 04.06.2019. On 05.06.2019, the appellant intimated DRI, Lucknow about the payment of differential duty.

2.1. Thereafter, a Show Cause Notice dated 29.07.2020 was issued to the appellant, proposing to reject the classification adopted by the appellant on the imported goods and thereby re-classifying the same under CTH 8709 1100. The Notice further proposed to demand the differential integrated tax amounting to Rs. 91,50,763/- under Section 28(4) of the Customs Act, 1962 along with interest under Section 28AA of the Customs Act, 1962 and penalty under Section 112 or Section 114A of the Act.

2.2. The matter was adjudicated and by way of the impugned order, the demand of differential IGST was confirmed, along with applicable interest, imposition of redemption fine and penalty.

3. Against the said order, the appellant is before us.

4. The Ld. Counsel appearing on behalf of the appellant submits that the imported goods rightly merit classification under Chapter 86. It is his contention that for the goods in question, i.e., supply and commissioning of Loco Tractor Model 2.60, supply and commissioning of Loco Mover CRAB 1500 and supply and commissioning of Batter Shunter from the foreign supplier vide the three Bills of Entry, they classified the goods under CTH 8602 9090, CTH 8604 0000 and CTH 8607 9990 respectively. He submits that although it is alleged by the Department that in terms of Section Note 4(a) to Section XVII of the Tariff Schedule vehicles specially constructed to travel on both road and rail are to be classified under the appropriate heading of Chapter 87, the same is not applicable to the instant case for the following reasons:

a. The imported goods are in the nature of loco tractors which are used for shunting of rolling stock/metro trains and they are not in the nature of works trucks of type used in the factories or warehouse or dock areas or airports for shirt distance transport of goods.

b. Though the imported goods are in the nature of tractors, they are not of the type used in railway station platforms to haul small trailers. The imported goods are for shunting of locomotives/metro trains.

He relied on the decision in the case of Union of India

Garware Nylons Ltd. [1996 (87) E.L.T. 12 (S.C.)].

4.1. He further submitted that the extended period of limitation is not invokable in the facts and circumstances of the case; the import took place during November, 2017 to January, 2018 whereas the Show Cause Notice has been issued on 29.07.2020 by invoking the extended period of limitation. It is his contention in this regard that claim of classification under a particular Customs Tariff would not amount to wilful suppression or mis-statement or suppression of facts. To support this contention, he relied upon the decisions of this Tribunal in the following cases: –

i. DIC India Ltd. v. Commissioner of Cus. (Port), Kolkata [2024 (9) TMI 186 – CESTAT, Kolkata]

ii. KPR Fertilizers Ltd. v. Commissioner of C.Ex., Cus. and S.T., Visakhapatnam-II [2023 (384) E.L.T. 216 (Tri. – Hyd.)]

iii. Icredible Unique Buildcon Pvt. Ltd. v. Commissioner of C.Ex. & S.T., Alwar [2022 (65) G.S.T.L. 377 (Tri. – Del.)]

iv. Densons Pultretaknik v. Commissioner of C.Ex. [2003 (155) E.L.T. 211 (S.C.)]

5. On the other hand, the Ld. Authorised Representative of the Revenue supported the impugned order.

6. Heard the parties and considered their submissions.

7. We find that it is a fact on record that the import took place during the period from November, 2017 to January, 2018 and the goods were cleared for home consumption by assessment of the Bills of Entry. Therefore, we observe that the Show Cause Notice issued on 29.07.2020 is highly barred by limitation. The same view has been taken by this Tribunal in the case of DIC India Ltd. v. Commissioner of Cus. (Port), Kolkata [2024 (9) TMI 186 – CESTAT, Kolkata] vide Final Order No. 76782 of 2024 dated 28.08.2024 in Customs Appeal No.75652 of 2015 (CESTAT, Kolkata) wherein it has been observed as under: –

“8.We observe that the appellant has imported the goods viz. “SCRIPTANE PW 28/32H (Petroleum Hydro-treated Middle)” and classified the said goods under Chapter Heading 2709. In respect of the 17 Bills-of-Entry filed by the appellant during the period from February 2010 to September 2010, we observe  that the Bills of entry were assessed finally classifying the goods under Chapter Heading 2709.  We observe that the Department did not raise any doubt about the classification of the goods in respect of these 17 Bills-of-Entry when the goods were  assessed finally. These final assessments were not challenged by the department and hence the  assessment attained finality. We observe that the  department cannot re-open the classification of the  goods imported vide these 17 Bills of Entry later by invoking suppression clause. We observe that the  appellant has not suppressed any information from  the department when the goods were imported under these 17 Bills of entry and all the relevant facts were well within the knowledge of the  Department. Thus, we hold that there is no  suppression of facts with intention to evade payment of tax established in this case and hence, we hold that the Show Cause Notice issued on 26.12.2013  by invoking the extended period of limitation is not sustainable. Thus, we hold that the re-classification of the imported goods vide the 17 Bills of entry under CTH 2710, on the basis of Test Report received from IIT, Kharagpur, is not sustainable. Accordingly, we set aside the demands confirmed in the impugned order in respect of all these 17 Bills of Entry.”

(Emphasis supplied)

7.1. In view of this, we hold that the extended period of limitation is not invokable in the case. Consequently, the proceedings against the appellant are not sustainable.

8. In view of this, we set aside the impugned order and allow the appeal with consequential relief, if any, as per law.

(Operative part of the order was pronounced in open court)