2026-VIL-1443-CESTAT-ALH-CU
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CUSTOMS CESTAT Cases

Customs – Import of consignments of stainless steel products - Supplementary Show Cause Notice - Scope and Limitation of Fresh Proposals – Appellant received initial Show Cause Notice proposing recovery of differential Customs duty with quantum of duty demand at one amount. Subsequently a Supplementary Show Cause Notice was issued which introduced fresh proposals regarding rejection of declared value on ground of mis-declaration and denial of benefit of Notification No.46/2011-Cus dated 01.06.2011 and duty demand was substantially enhanced. Corrigenda to the SCNs were issued after considerable time lapse and were not received by Appellant even after filing replies and additional submissions. Adjudication order was passed immediately after issuance of corrigenda – Whether Supplementary Show Cause Notice introducing fresh and substantive grounds of denial of preferential exemption was issued within permissible scope of original notice and within limitation period – HELD - The Supplementary Show Cause Notice has introduced fresh and substantive ground by proposing denial of preferential exemption under Notification No.46/2011-Cus and by enhancing duty demand. Such course is beyond limited scope of supplementary notice and amounts to issuance of fresh Show Cause Notice in guise of supplementary notice. The original Show Cause Notice did not contain any proposal for denial of benefit of Notification or necessary factual foundation for such denial. Moreover Supplementary SCN was issued after one year of original Show Cause Notice. Corrigenda were issued after about two years of original SCN and approximately one year after Supplementary SCN. Appellant contended that corrigenda were not received even after filing replies and additional submissions. Impugned order has been passed in clear violation of principles of natural justice - The demands confirmed on basis of fresh proposals in Supplementary Show Cause Notice and Corrigenda are liable to be set aside on ground of limitation and not following principles of natural justice – The demands confirmed on basis of fresh proposals introduced through Supplementary Show Cause Notice are set aside - Customs - Country of Origin Certificates - Genuineness and Authentication - Retro-assessment based on Subsequent Verification – Appellant imported consignments of stainless steel products from suppliers in Malaysia and submitted Country of Origin Certificates - Goods were examined by proper officer of Customs and consignments were released after assessment and verification of COO Certificates. Subsequent to clearance by more than two years, investigation officers conducted verification and alleged COOs are fake – Whether the validity of COO Certificates can be questioned by Customs authorities at later stage – HELD - As per Rules of Origin if certificates were valid at time of import their validity cannot be questioned by Customs authorities at later stage. COOs submitted by Appellant were issued by suppliers and were authenticated by Authorized Officials of Malaysian Government whose signatures were verified by Customs officials before allowing clearance. Requirements under Notification have been met on date of import and cannot be negated by subsequent communication received from Malaysia after more than two years without details of contravention and action being taken against the issuing authority - Once COOs were found to be genuine, appellant would be eligible for benefit of Notification No.46/2011-Cus – All COO Certificates furnished by Appellant are authentic and acceptable. Appellant is eligible for benefit of exemption under Notification No.46/2011-Cus for all consignments - The findings of the Respondent with regard to levy of CVD under Notification No. 1/2017-Cus holding the goods actually of Chinese origin is not sustainable and is liable to be dropped - Customs - Classification of Imported Goods - Tariff Heading – Appellant classified goods imported namely Decorative and Design Sheet Article of Wall Panel and Decorative Design Stainless Steel Profiles under Customs Tariff Heading 7326. Department alleged that correct classification of goods should be under Customs Tariff Heading 7219 – Whether goods imported by Appellant are classifiable under CTH 7326 as claimed by Appellant and whether Department has discharged burden of producing proper evidence to support re-classification under CTH 7219 – HELD - The Proper officer has examined goods and accepted classification as declared in Bills of Entry and no objection was raised at time of clearance. If Department wants to re-classify goods imported and cleared, there must be specific reasons supported by evidence. In absence of any test report or expert opinion, finding that goods were classifiable under CTH 7219 is based merely on assumptions and presumptions and is not supported by opinion of any technical experts – The goods in question were coated with PVD (Physical Vapour Deposition) to impart desired colour. Thus, it is clear that the goods are further worked than cold rolled sheets and hence they become out of the purview of CTH 7218, 7219 or 7220 - When Department seeks different classification, it must produce proper evidence; mere assertion is not sufficient – The goods imported by appellant are appropriately classifiable under CTH 7326. Re-classification of goods under CTH 7219 is not sustainable - Customs - Valuation of Goods - Rejection of Transaction Value - Adjudicating Authority rejected declared transaction value and enhanced value on basis of contemporaneous imports – Whether declared transaction value can be rejected and re-determined without following procedure set out in Customs Valuation Rules and without evidence of undeclared payments – HELD - Valuation of goods declared by Appellant cannot be rejected and re-determined without following procedure set out in Valuation Rules. Adjudicating Authority has not followed provisions of Rule 9 of Customs Valuation Rules, 2007 for enhancement of value. There is no evidence available on record that Appellant has paid any amount over and above declared invoice prices. There is no documentary evidence available to show that Appellant has paid any amount over and above declared value. In circumstances rejection of transaction value declared by Appellant is legally not sustainable – The value declared by Appellant in Bills of Entry is acceptable and enhanced value re-determined by Revenue is set aside - Customs - Imposition of Penalties - HELD - Penalties have been imposed on allegation of mis-declaration and undervaluation of impugned goods by Appellant. Suppression of facts with intention to evade tax has not been established in this case. It has been held that allegations of mis-declaration and undervaluation of impugned goods are not sustained in view of findings regarding authenticity of COOs, proper classification of goods under CTH 7326, and acceptable declared value of goods. Therefore no penalty is imposable on Appellant for said allegations.
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