Despite Duty Payment Under Protest cannot be treated as acceptance of re-assessment

Midas Treads (India) Pvt Ltd Vs Commissioner of Customs (CESTAT Bangalore)

The case of Midas Treads (India) Pvt Ltd vs. Commissioner of Customs, heard by the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) in Bangalore, revolves around the classification of imported goods and the acceptance of reassessment under protest. Here’s a detailed summary:

1. Background: Midas Treads imported 7,000 kilograms of insoluble Sulphur (Crystex HS OT 20) from Germany and claimed classification under CTH 2503.00.90 of the Customs Tariff Act, 1975. However, the assessing authority classified the goods under CTH 3812.30.30. Midas Treads objected to this classification but cleared the goods under protest, paying the duty. They then appealed the assessment to the Commissioner of Customs (Appeals), Cochin.
2. Commissioner’s Decision: The Commissioner of Customs (Appeals) rejected Midas Treads’ appeal, citing the absence of a request for a speaking order by the assessing officer. Essentially, the Commissioner didn’t delve into the merits of the classification but rejected the appeal based on procedural grounds.
3. Appellant’s Argument: Midas Treads argued that their goods should be classified under CTH 2503.00.90 as insoluble Sulphur, not under the broader category CTH 3812.30.30. They contended that the specific classification should prevail over the general one, citing Rule 3(a) of the General Rules of Interpretation. Additionally, they referenced previous tribunal decisions supporting their classification.
4. Appeal to CESTAT Bangalore: Midas Treads appealed the Commissioner’s decision to CESTAT Bangalore. They argued that the Commissioner erred in rejecting the appeal without considering the merits of the classification. They emphasized that their payment of duty under protest didn’t constitute acceptance of the reassessment.
5. CESTAT’s Decision: CESTAT Bangalore agreed with Midas Treads, finding that the Commissioner should have decided the appeal on its merits instead of rejecting it based on procedural grounds. CESTAT emphasized that the payment of duty under protest did not indicate acceptance of the reassessment. They referenced a Supreme Court judgment (ITC Ltd. vs. CCE, Kolkata-IV) which affirmed the appealability of assessment orders, including self-assessment. CESTAT directed the Commissioner to reconsider the classification issue on its merits, giving Midas Treads an opportunity to present their case.
6. Conclusion and Remand: CESTAT set aside the Commissioner’s orders and remanded the case back to the Commissioner for a fresh decision on the classification issue. They instructed the Commissioner to complete the proceedings within three months. The decision kept all issues open for further consideration.

In essence, the case highlights the importance of considering the merits of an appeal rather than dismissing it on procedural grounds. It also clarifies that payment of duty under protest does not equate to acceptance of reassessment, and parties have the right to appeal such assessments.

FULL TEXT OF THE CESTAT BANGALORE ORDER

This appeal has been filed against respective Orders-in-Appeal passed by the Commissioner of Customs (Appeals), Cochin.

2. Briefly stated the facts of the case are that the appellant imported 7,000 Kgs of insoluble Sulphur (Crystex HS OT 20) from Germany and filed Bill of Entry No.3978409 dt. 03.12.2013 claiming classification under CTH 2503.00.90 of Customs Tariff Act, 1975. They have declared the goods imported as insoluble Sulphur with trade name “Crystex HS OT 20 which is used as vulcanising agent for rubber. The assessing authority rejected the classification claimed by the appellant and assessed the goods finally under CTH 3812.30.30. The appellant objected to the said assessment; however cleared the goods on payment of duty ‘under protest’; later filed appeal before the learned Commissioner(Appeals) challenging the said assessment. The learned Commissioner(Appeals) without deciding the classification on merit, rejected their appeals on the ground that no request has been made by the appellant for speaking order by the assessing officer. Hence the present appeal.

3.1. The learned advocate for the appellant has submitted that the assessing officer has wrongly rejected their classification under CTH 2503.00.90 and classified the product under CTH 3812.30.30 when all the relevant documents and invoices clearly show that the goods are classifiable under CTH 2503.00.90 being insoluble Sulphur. The classification adopted by the Department is a broad description, hence the classification declared by the appellant being specific; therefore as per Rule 3(a) of the General Rules of Interpretation, the specific entry be preferred to the general entry in the Tariff. Further he has submitted that the issue is covered by the decision of this Tribunal in the case of Collector of Customs Vs. CEAT Tyres [1989 (44) ELT 333] and in the case of Apollo Tyres Ltd. Vs. Collector of Customs [1990(45) ELT 502]. Subsequently, similar orders have been passed by the Tribunal following the aforesaid judgments.

3.2. He has also submitted that the learned Commissioner (Appeals) without going into merits of the case on a mis-interpretation of Section 17(5) of the Customs Act, 1962 observing that the appellant had accepted the reclassification of the product; rejected their appeals. Further he has submitted that in view of the judgment of the Hon’ble Supreme Court in the case of ITC Ltd. Vs. CCE, Kolkata-IV [2019(368) ELT 216 (SC)], the assessment order is appealable.

4. Learned AR for the Revenue reiterated the findings of the learned Commissioner(Appeals).

5. Heard both sides and perused the records.

6.1. The short question involved in the present case is whether the learned Commissioner(Appeals) is justified in rejecting the appeals without deciding the issue on merits taking the recourse of Section 17(5) of the Customs Act, 1962. The said provision is as follows:-

“17. Assessment of duty. –

1. ….

2. ….

3. ….

4. ….

5. Where any assessment done under sub­section (2) is contrary to the claim of the importer or exporter regarding valuation of goods, classification, exemption or concessions of duty availed consequent to any notification therefor under this Act, and in cases other than those where the importer or the exporter, as the case may be, confirms his acceptance of the said assessment in writing, the proper officer shall pass a speaking order within fifteen days from the date of assessment of the bill of entry or the shipping bill, as the case may be.

6.2. In the present case, we find that after rejection of the classification of the appellant declared in their Bills of Entry, they paid the duty under protest and preferred appeal before the learned Commissioner(Appeals). Therefore, the learned Commissioner(Appeals) ought to have decided the appeals on merits instead of rejecting the same by observing that the appellant has accepted the re-assessment. Further, the Hon’ble Supreme Court in the case of ITC Ltd. (supra) has held that Revenue as well as appellant can prefer an appeal against the order of the assessment. Their lordships have observed as:

43. As the order of self-assessment is nonetheless an assessment order passed under the Act, obviously it would be appealable by any person aggrieved thereby. The expression ^„Any person‟ is of wider amplitude. The revenue, as well as assessee, can also prefer an appeal aggrieved by an order of assessment. It is not only the order of re-assessment which is appealable but the provisions of Section 128 make appealable any decision or order under the Act including that of self-assessment. The order of self-assessment is an order of assessment as per Section 2(2), as such, it is appealable in case any person is aggrieved by it. There is a specific provision made in Section 17 to pass a reasoned/speaking order in the situation in case on verification, self-assessment is not found to be satisfactory, an order of re­assessment has to be passed under Section 17(4). Section 128 has not provided for an appeal against a speaking order but against “any order” which is of wide amplitude. The reasoning employed by the High Court is that since there is no lis, no speaking order is passed, as such an appeal would not lie, is not sustainable in law, is contrary to what has been held by this Court in Escorts (supra).

7.In view of the above, the impugned orders are set aside and the case is remanded to the learned Commissioner(Appeals) to decide the issue of classification on merit, after affording an opportunity of hearing to the appellant. since the assessment involved in the appeals is more than a decade old, it is directed that the remand proceeding be completed within three months from the date of communication of this order. All issues are kept open. Appeal is allowed by way of remand.

(Order dictated and pronounced in Open Court.)