Case Law Details
Micromax Informatics Limited Vs Commissioner of Customs (CESTAT Delhi)
In the case of Micromax Informatics Limited vs Commissioner of Customs before CESTAT Delhi, Micromax appealed against a customs duty order by the Principal Commissioner. The order, dated August 30, 2019, denied Micromax’s claim for exemption on imported LED/LCD TV panels under Serial No. 432 of Notification No. 12/2012-CUS, asserting that the goods were incomplete panels and thus ineligible for the exemption. Customs argued the panels were merely open cells with T-con boards, which did not qualify as complete TV panels under customs classification item (CTI) 8529 90 90. Micromax countered by proposing an alternative classification of the goods under CTI 9013 80 10, arguing that these were liquid crystal display panels, qualifying for nil customs duty. Citing precedents, Micromax’s counsel contended that classification issues are questions of law and thus can be raised at any appellate stage, referring to the Supreme Court ruling in Rama Machinery Corporation vs Collector of Customs. Customs opposed, arguing the reclassification attempt was invalid as it wasn’t raised at the initial assessment stage. However, the CESTAT allowed Micromax’s request, relying on judgments from higher courts which held that an alternative classification plea could be made if substantiated by existing evidence. Consequently, the CESTAT permitted Micromax to include this alternative classification, allowing further examination under CTI 9013 80 10, potentially impacting the customs duty assessment on the imported goods.
FULL TEXT OF THE CESTAT DELHI ORDER
This appeal has been filed by M/s. Micromax Infornatics Limited1 to assail the order dated 30.08.2019 passed by the Principal Commissioner of Customs2 holding that the goods imported by the appellant are not complete LCD/LED TV panels and, therefore, not entitled to claim exemption under Serial No. 432 of the Notification No. 12/2012-CUS dated 17.03.20123. The order also seeks to confirm the demand of differential duty under section 28(4) of the Customs Act, 19624 with interest and penalty.
2. The appellant is engaged in imports of various goods, including LED/LCD TV panels and accessories. During the relevant period of dispute from 2012 to 07.05.2015, the appellant imported LED/LCD TV panels by classifying them under Customs Tariff Item5 8529 90 90 and claimed exemption of basic customs duty under Serial No. 432 of the Exemption Notification. This Notification was subsequently amended by notification dated 11.07.2014.
3. The department, however, believed that the appellant was not entitled to exemption under the Exemption Notification and, therefore, issued a show cause notice dated 12.05.2017. The appellant filed a reply denying the allegations made therein.
4. The basic issue that arose for consideration before the Principal Commissioner was whether the appellant was entitled to claim exemption under the Exemption Notification and in this connection, the Principal Commissioner examined whether the goods imported by the appellant were complete LCD TV panels or LED TV panels and found as a fact that as the benefit of the Exemption Notification is only available for complete LCD and LED TV panels, the goods imported by the appellant being not complete TV panels but open cell with the T-con Board, the benefit of the Exemption Notification would not be available.
5. This order passed by the Principal Commissioner has been assailed in this appeal.
6. The present application has been filed by the appellant for addition of a ground in the Memorandum of Appeal by raising an alternative classification of the goods under CTI 9013 80 10.
7. It has been pointed out that Customs Tariff Heading6 9013 covers liquid crystal display (LCD), which is not covered by under any other heading, and so the disputed goods would LCD manufactured by sandwiching the liquid crystal layer between sheets of glass. These are cut to special shapes so that they can be used as display modules of TVs. It has, therefore, been submitted that the LCD Panels imported by the appellant are liquid crystal devices and are also known as liquid crystal device panels in common trade parlance. They would, therefore, be correctly classifiable under CTI 9013 80 10 attracting nil rate of duty.
8. Shri B.L. Narasimhan, learned counsel for the appellant assisted by Shri Shubham Jaiswal, submitted that the classification of goods is a question of law and can be raised any stage. In support of this connection learned counsel placed reliance upon the judgment of the Supreme Court in Shri Rama Machinery Corporation (P) Ltd. Collector of Customs7. Learned counsel also placed reliance upon the decision of the Tribunal in Diamond Cements Ltd. vs. Collector of Customs8 and Collector of Central Excise, Kanpur vs. West Glass Works, Firozabad9.
9. Shri Mihir Ranjan, learned special counsel appearing for the department, however, submitted that the application should be Learned special counsel contended that a new plea at the appellate stage should not be permitted unless it is deemed necessary for proper adjudication of the case. According to the learned special counsel, the appellant had self-assessed the Bills of Entry under CTI 8529 90 90, but at the appellate stage they are seeking classification under CTI 9013 80 00, which would amount to re-assessment of the self-assessment done. Learned special counsel pointed that this has been done without getting the original assessment order modified or getting the Bills of Entry amended under section 149 of the Customs Act or modified under section 154 of the Customs Act.
10. The submissions advanced by the learned counsel for the application and the learned special counsel appearing for the department have been considered.
11. Learned counsel for the appellant has placed reliance upon the judgment of the Supreme Court in Rama Machinery Corporation to contend that the alternative plea about classification can be raised. The Supreme Court made the following observations:
“3. The controversy before us relates only to the additional duty payable under Section 3 of the Customs Tariff Act, 1975. The assessee appellant had claimed that no excise duty was payable in respect of the material imported by it on the ground that it was scrap. It appears that the goods have been classified under Item 73.16(1) of the Customs Tariff Act and this has not been specifically challenged by the appellant. However, the appellant’s contention was accepted by the Collector of Customs who held that “since the material imported constituted used and second-hand scrap (even though they be rails) they cannot be deemed to be manufactured for levy of central excise duty”. The Department preferred an appeal from the order of the Collector. By the time the Tribunal came to decide the appeal it had the benefit of this Court’s judgment in the case of Khandelwal Metal & Engineering Works v. Union of India – 1985 (Supp.) 1 S.C.R 750. In view of this decision, the Tribunal came to the conclusion that even if the product represented scrap it was liable to excise duty. Faced with this situation the appellant sought to raise a point before the Tribunal that in case it was scrap, it would fall under Section 68 of the Central Excise Tariff Act and not under Item 26AA. It raised this argument because there is a difference in the duty leviable under the two items. The Tribunal, however, refused permission to the assessee to raise this ground and, having come to the conclusion that the goods though scrap are dutiable under the Central Excise Act, allowed the department’s appeal.
4. The assessee has preferred the present appeal. The main contention urged is that the appellant should have been permitted to raise the additional ground that the goods in question should have been classified under Item 68 and not under Item 26AA. We think there is substance in this contention. It was originally contended that the appellant was not chargeable to excise duty at all. It was, therefore, entitled to put forward an alternative contention before the Tribunal that, even if dutiable, it was dutiable under Item 68 and not under 26AA.
5. Learned counsel for Union of India submits that the assessee had not disputed the classification of the goods under Tariff Item No. 73 for the purposes of customs duty. We do not see how this can preclude the appellant from raising the present contention. We, therefore, set aside the order of the Tribunal and remand the matter so far as this aspect is concerned. The appeal is restored to the file of the Tribunal for considering the contention that the goods are dutiable for the purpose of excise duty under Tariff Item 68 and not under Item 26AA. The Tribunal will decide the issue on merits. It will be open to the respondent to urge before the Tribunal, if so advised, that the classification for purposes of customs duty should also be taken into account in deciding the classification for the purposes of excise duty. The appeal is disposed of accordingly. There will be no order as to costs.”
(emphasis supplied)
12. It is clear from the aforesaid judgment of the Supreme Court that though Rama Machinery Corporation had claimed one classification before the adjudicating authority but had claimed an alternative classification before the Tribunal. This was not permitted by the Tribunal. This view of the Tribunal was not accepted by the Supreme Court and it was held the Tribunal should have permitted the appellant to raise this alternative classification.
13. In Diamond Cements, which examining whether the appellant could be permitted to raise an alternative plea about classification, the Tribunal observed that permission could be granted. The observations are as follows:
“5. We have heard both the sides and have gone through the facts and circumstances of the case. The appellant proposes to raise this additional ground of appeal seeking the classification of the goods under heading 8503 of the Customs Tariff and under Heading 8483.10 and not under Heading 8483.30. Hon’ble Andhra Pradesh High Court in the case of Commissioner of Income Tax, A.P. v. Gangappa Cables Ltd. reported in 116 ITR 778 had held that fresh plea can be taken before the Tribunal for the first time on the basis of the material already available on record. Relevant extract from the said judgment is reproduced below:-
“The Appellate Tribunal disposing of an appeal under the I.T. Act has got the power to allow the assessee to put forward a new claim, notwithstanding the fact that such a claim was not raised by him before the ITO or the AAC, provided there is sufficient material on record to allow such a claim.
The assessee, for the first time, raised a plea in second appeal before the Appellate Tribunal that the expenditure incurred by the assessee before it went into commercial production was an admissible deduction for the purpose of S.80J(1) of the I.T. Act. The revenue resisted the claim on the ground that the said claim having not been put forward by the assessee before the ITO or the AAC, it could not be raised in second appeal. The Tribunal held that the directors’ report accompanied by balance sheet and profit and loss account and other statements were filed by the assessee before the ITO and practically all the details for allowing a claim under S.80J(1) of the Act were on record and hence it was open to the Tribunal to allow such a claim. On a reference:
Held, that the Tribunal was correct in allowing the claim of the assessee as there was material on record for allowing the same.
“We are also of the view that additional ground of appeal can always be taken at the appellate forum.
6. In view of the above discussion and the judgment of the Hon’ble Supreme Court in the case of Add. CIT v. Gurajargravures P. Ltd. (1978) 111 ITR 1 (SC), we allow the appellants’ request for raising the additional ground of appeal and we order that additional ground No. (xxv) should be read as under:-
“The imported goods being parts suitable for the use solely or principally in the DG Set of 4000 KVA rating make NIIGATA, Japan are components and parts and cannot be classified as bearings/bushes and will fall under 8503 or 8483.10 being a specific item covering chem shafts and crank shafts. Hence under no event these items can be classified under Heading 8483.30.”
7. In the result, the miscellaneous application for raising of the additional ground of appeal is allowed.”
(emphasis supplied)
14. In view of the aforesaid decisions of the Supreme Court and the Tribunal, it is not possible to accept the contention advanced by the learned special counsel for the department that the application should be rejected.
15. The application is, accordingly, allowed. The appellant is permitted to raise the alternative classification of the goods under CTI 9013 80 10 by adding a ground.
Order Pronounced on 16.10.2024
Notes:
1. the appellant
2. the Principal Commissioner
3. the Exemption Notification
4. the Customs Act
5. CTH
6. CTH
7. 1992 (57) E.L.T. 369 (S.C.)
8. 1990 (50) E.L.T. 190 (Tribunal)
9. 1984 (17) E.L.T. 368 ((Tribunal)
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