Quality Systems And Equipments Pvt. Ltd. Vs Commissioner of Customs (CESTAT Mumbai)
In Quality Systems And Equipments Pvt. Ltd. Vs. Commissioner of Customs–Nhava Sheva (CESTAT Mumbai), the appeal challenged the confirmation of differential IGST of ₹63,36,223 demanded under Section 28(4) of the Customs Act, 1964, along with interest under Section 28AA, redemption fine of ₹1 crore under Section 111(m), and penalties under Sections 114A, 114AA and 112(a). The dispute concerned imports of “Poultry Keeping Machinery” and its parts between September 2017 and December 2021, classified under CTSH 84362900 and 84369100, on which IGST at 12% was paid under Serial No. 199 of Schedule II of Notification No. 1/2017-IGST (Rate) dated 28.06.2017. During post-clearance audit, the department alleged that parts were liable to 18% IGST under Serial No. 453 of Schedule III.
The appellant contended that the GST Council had recommended coverage of machinery parts under Serial No. 199 and that CBIC Circular No. 229/23-2024/GST dated 15.07.2024 clarified that tariff item 84369100 attracted 12% GST. A subsequent circular dated 11.10.2024 further clarified that in cases of competing rates, payment at the lower rate would be treated as full payment for the regularised period, and past cases were to be regularised on an “as is where is basis.” The appellant relied on Supreme Court rulings in Suchitra Components Ltd. and Ranadey Micronutrients to argue that beneficial circulars are binding on departmental officers and have retrospective application.
