Case Law Details
Madhu Silica Pvt Ltd Vs C.C.-Ahmedabad (CESTAT Ahmedabad)
Introduction – A recent CESTAT Ahmedabad decision has highlighted the importance of following proper procedures in the classification of imported goods. In the case of Madhu Silica Pvt Ltd Vs C.C.-Ahmedabad, CESTAT has ordered a fresh adjudication to correctly classify the imported Malvern Master Sizer. This article will delve into the details of the case and discuss its potential implications.
Background of the Case
Madhu Silica Pvt Ltd imported a Malvern Master Sizer and sought to classify it under Tariff Heading 90275090, related to instruments for physical and chemical analysis. The department initially wanted to change this to Heading No 90318000, which covers other instruments and appliances. When the matter went to the Commissioner (Appeals), a third heading was introduced—90314900—under which the product was finally classified, without additional inquiry or opportunity for the appellants to respond.
Legal Aspects
The Commissioner (Appeals) has the power under Section 128A(3) of the Customs Act to modify orders after making a ‘just and proper’ inquiry. This is to ensure that decisions are made in accordance with natural justice and after giving reasonable opportunities to the appellants.
CESTAT’s Stance
The tribunal pointed out that no inquiry had been conducted regarding the product or its details. The ruling emphasized that the change of heading by the Commissioner (Appeals) without affording the opportunity for proper inquiry was improper.
The Principle of Natural Justice
One of the significant takeaways from this case is the emphasis on following the principles of natural justice, which mandate that an individual should be given a fair chance to present their case, especially when a decision could adversely affect them.
Conclusion
The CESTAT Ahmedabad ruling in Madhu Silica Pvt Ltd Vs C.C.-Ahmedabad serves as a reminder for authorities to adhere strictly to procedural laws and natural justice. A fair and thorough inquiry is crucial for accurate classification under the Customs Tariff Act, and this decision could serve as a precedent for similar cases in the future. The matter has been remanded for fresh adjudication, highlighting the tribunal’s focus on setting clear legal standards for customs classification.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
Appellants are aggrieved with the impugned order and have filed the present appeal. The issue involved in the present case is that the appellants imported Malvern Master Sizer, which they sought to be classified under Tariff Heading 90275090, which pertains to instruments & apparatus for physical and chemical analysis. Same was initially sought to be changed by the department to Heading No 90318000 i.e. Other instruments, appliances and machines. It is further stated that, at this stage when the matter was taken up by them before the Commissioner (Appeals), it came up with third heading, which is 90314900, which pertains to others under heading 9031. The Commissioner finally changed and decided Heading 90314900. And the same was done without affording additional opportunity despite the fact that department had proposed to classify the product under heading 90318000.
2. Learned AR relied upon the order, and he has no objection to remand the matter, in the specific factual background of the matter.
3. We find that the Commissioner (Appeals) has the power under Section 128A (3), to modify order but only after inquiry which should be Just & Proper, which is reproduce below:
“128A (3) [The Commissioner (Appeals) shall, after making such further inquiry as may be necessary, pass such order, as he thinks just and proper, confirming, modifying or annulling the decision or order appealed against:] Provided that an order enhancing any penalty or fine in lieu of confiscation or confiscating goods of the greater value or reducing the amount of refund shall not be passed unless the appellant has been given a reasonable opportunity of showing cause against the proposed order:
Provided further that where the [Commissioner (Appeals)] is of opinion that any duty has not been levied or has been short-levied or erroneously refunded, no order requiring the appellant to pay any duty not levied, short-levied or erroneously refunded shall be passed unless the appellant is given notice within the time-limit specified in section 28 to show cause against the proposed order.”
- The relevant clause was retained even after amendment bestowing power to remand: (with effect from 29.03.2018) In the Customs Act, in section 128A, in sub-section (3), for the words “just and proper, confirming, modifying or annulling the decision or order appealed against”, the following shall be substituted, namely:—
“Just and proper,—
(a) confirming, modifying or annulling the decision or order appealed against; or
(b) referring the matter back to the adjudicating authority with directions for fresh adjudication or decision, as the case may be, in the following cases, namely:—
(i) where an order or decision has been passed without following the principles of natural justice; or
(ii) where no order or decision has been passed after reassessment under section 17; or
(iii) where an order of refund under section 27 has been issued by crediting the amount to Fund without recording any finding on the evidence produced by the applicant.”.
3.1 Therefore, while Commissioner (Appeals) is within its powers to confirm the decision or order appealed against or modify the same, but there is an initial requirement that he should make further inquiry as may be necessary and pass such order i.e just and proper. In the present instance, no inquiry it appears was conducted about the product or details and the matter has been decided without opportunity to the appellants. Appellants too are agreeable and seek remand, but with rider of opportunity about correct classification on (even of third head).
4. In view of this, we find that change of heading by the Commissioner (Appeals), without affording opportunity is improper, and same can only be done after conducting proper inquiry and following natural justice.
5. Matter therefore is remanded in the interest of settling classification at the earliest.
6. Miscellaneous applications filed by the appellants has been withdrawn by the Learned Advocate. Miscellaneous application is disposed off.
7. Appeal is allowed by way of remand.
(Dictated & Pronounced in the open Court)
