2024:MHC:3229IN THE HIGH COURT OF JUDICATURE AT MADRAS

Order reserved on 26.07.2024

Order pronounced on 30.08.2024

CORAM

THE HONOURABLE MR.JUSTICE SENTHILKUMAR RAMAMOORTHY

W.P.Nos.28456, 28462 & 28465 of 2023

&

WMP Nos.27998, 27999 & 28000 of 2023 & 8522 of 2024

In all WPs

M/s.Asahi India Glass Ltd.

Plot No.F 76-81, SIPCOT Industrial Park

Sripeumbudur Taluk, Irungattukottai

Tamil Nadu-602 117

Represented by its Power of Attorney

Mr.Rahul Vashist ... Petitioner

-vs-

1.Commissioner of Customs, Chennai-II

Office of the Commissioner of Customs, Chennai-II (Import)

Custom House, No.60, Rajaji Salai,

Chennai-600 001.

2.Commissioner of Customs (Audit), Chennai

Custom House, No.60, Rajaji Salai

Chennai – 600 001 ... Respondents

PRAYER in W.P.No.28456 of 2023 : Writ Petition filed under Article

226 of the Constitution of India, to issue a writ of Certiorari , calling

for the records of the Impugned Show Cause Notice bearing SCN

No.74/2023 (DIN:20230873MX0000444BC1) dated 07.08.2023

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(“Impugned SCN”) issued by the 1

st

Respondent under Section 28(4)

of the Customs Act, 1962, and to quash the same.

PRAYER in W.P.No.28462 of 2023 : Writ Petition filed under Article

226 of the Constitution of India, to issue a writ of Mandamus

directing the Respondents to clear the subject goods being 'Light

Green Float Glass (Tinted Non Wired Type)' under CTH 70051010 in

view of the decisions of various authorities of the Customs

Department classify the goods under CTH 70051010.

PRAYER in W.P.No.28465 of 2023 : Writ Petition filed under Article

226 of the Constitution of India, to issue a writ of Declaration

declaring that the classification adopted by the Petitioner for the

imported goods, i.e. Light Green Float Glass (Tinted Non Wired

Type), under CTH 70051010 is correct and proper.

In all WPs

For Petitioner : Mr.Vijay Narayan, Senior Advocate

for M/s.Karthik Sundaram,

Mr.Jitendar Singh &

MrAnshumaan

For Respondents : Mr.Rajendran Raghavan

Senior Standing Counsel

COMMON ORDER

Background

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The petitioner is engaged in the business of manufacturing of

processed laminated and tempered glass, inter alia, for automotive

purposes. The petitioner also imports glass, including light green

tinted float glass, for its business operations, and such imports have

been made by the petitioner since 2011. While importing light green

tinted float glass, the petitioner classified and cleared the same under

Customs Tariff Heading (CTH) 70051010. An audit consultative letter

dated 01.05.2022 was issued to the petitioner seeking to classify

goods imported under 35 bills of entry detailed in the enclosed

worksheet under CTH 70052110 instead of CTH 70051010 and calling

for payment of Rs.1,14,03,577/-. Such communication was

responded to by the petitioner on 11.05.2022 by asserting that the

goods are non-wired and have an absorbent layer of tin on one side,

which is fluorescent under UV illumination, and also have a

microscopically thin non-reflecting layer of zinc sulphate coating on

the surface of the glass. Test reports were annexed in support of the

assertions. Consequently, it was stated that the classification in CTH

70051010 was in order. A subsequent detailed letter dated 06.03.2023

was also issued by the petitioner.

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2. According to the petitioner, on the erroneous basis that the

petitioner had not responded to the audit consultative letter, the first

respondent issued a show cause notice dated 07.08.2023, whereby the

extended period of limitation was invoked, and the petitioner was

called upon to show cause as to why the light green tinted float glass

imported under the bills of entry detailed in Annexure-I thereto (the

Relevant Goods) should not be classified under CTH 70052110. The

amount payable by the petitioner towards short-levy was computed

at Rs.11,78,27,642 in this show cause notice. The present writ

petitions were filed upon receipt of the aforesaid show cause notice.

In W.P.No.28456 of 2023, the petitioner seeks to quash the show

cause notice. In W.P.No.28462 of 2023, the petitioner seeks a

direction to permit clearance of light green tinted float glass under

CTH 70051010 in view of earlier decisions of various authorities of

the Customs Department classifying the goods under CTH 70051010.

In W.P.No.28465 of 2023, the petitioner seeks a declaration that the

classification adopted by the petitioner is correct and proper.

Counsel and their contentions

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3. Oral arguments on behalf of the petitioner were advanced

by Mr.Vijay Nayaran, learned senior counsel, assisted by Mr.Karthik

Sundaram, learned counsel. Oral arguments on behalf of the

respondents were advanced by Mr.Rajendran Raghavan, learned

senior standing counsel.

4. Learned senior counsel referred to the impugned show cause

notice and pointed out that float glass falls within CTH 7005 and that

the Relevant Goods fall within the six digit entry 700510 of the CTH

set out in paragraph 7 of such show cause notice, which relates to

non-wired glass, having an absorbent, reflecting or non-reflecting

layer. At the eight digit level, he submitted that it falls within

70051010, which relates to tinted glass having the characteristics

described in CTH 700510. Without considering the petitioner's reply

to the audit consultative letter, he contended that the first respondent

has called upon the petitioner to show cause as to why the Relevant

Goods should not be classified under CTH 700521 (at the six digit

level), which pertains to float glass coloured throughout the mass

(body tinted), opacified, flashed or merely surface ground. He also

pointed out that the respondents seek to re-classify the Relevant

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Goods in CTH 70052110, at the eight digit level, which relates to

tinted float glass having the other characteristics specified in 700521.

By further referring to paragraph 17 of the show cause notice,

learned senior counsel submitted that reference is made therein to a

recent test report and the results thereof (Ref. No.GC/TCC/TR-

3448/22-23 dated 11.04.2023) from the Council of Scientific and

Industrial Research(CSIR)-Central Glass and Ceramic Research

Institute(CGCRI), Kolkata in relation to bill of entry no. 8261250

dated 13.04.2022. Out of the features listed in the test results at

paragraph 17, he submitted that the features mentioned under

clauses (c), (d), (j), (k) &(l) are relevant. He also submitted that these

features establish that the petitioner's classification is correct.

5. With regard to earlier imports of light green tinted float

glass, learned senior counsel submitted that an audit consultative

letter dated 27.03.2019 was issued by the Assistant Commissioner,

Circle-II, Customs Audit Commissionerate, ICD, Patparganj,

Gazipur, Delhi-96. After examining relevant material, he pointed out

that the Commissioner, Customs Audit Commissionerate, by

communication dated 12.04.2021, informed the Commissioner of

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Customs, ICD Patparganj & Other ICDs, New Delhi, that the office is

accepting the view of the Assistant Commissioner (SIIB), ICD-

Patparganj, and that the audit proceedings were being closed by

accepting the classification of the goods under CTH 700510, as

declared by the importer.

6. In spite of the above communication, he submitted that an

order dated 04.09.2021 was issued by the Deputy Commissioner of

Customs, ICD Rewari, rejecting the petitioner's self-classification

under CTH 70052110 in respect of 315 bills of entry and reclassifying

such goods under CTH 70052110. As against the order dated

04.09.2021 and subsequent orders dated 23.10.2021 and 16.03.2022,

he pointed out that appeals were filed before the Commissioner of

Customs (Appeals), New Delhi. By referring to the appellate order,

learned senior counsel pointed out that the appellate authority

allowed all three appeals and set aside the respective order in

original. While allowing the appeals, learned senior counsel

submitted that the appellate authority concluded that the

classification adopted by the petitioner was valid and that,

consequently, the petitioner was entitled to the benefit of Sl.No.934 of

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notification No.46/2011-Customs dated 01.06.2011. Learned senior

counsel also referred to the order of the Commissioner of Customs

(Appeals) in December 2022 in respect of other bills of entry relating

to the Relevant Goods, wherein the same conclusion was reached.

After pointing out that these appellate orders attained finality

because further appeals were not filed, learned senior counsel

submitted that the impugned show cause notice, which relates to the

same product and is based on test reports disclosing the same

features/characteristics, is liable to be interfered with.

7. He also referred to an order dated 27.03.2024 of the Customs

Excise & Service Tax Appellate Tribunal (CESTAT), Chennai, in

Bagrecha Enterprises Ltd. v. Commissioner of Customs, Customs Appeal

No.40203 of 2023. He pointed out that the said case related to the

import of clear float glass by classifying the same under CTH

70051090, whereas, the Customs Department took the stand that the

goods were classifiable under CTH 70052990. As in the present case,

he pointed out that the test reports disclosed the features specified in

(c), (d), (j), (k) &(l) of the test results of the present case. In those

circumstances, he submitted that the CESTAT recorded a finding

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that the test results disclosed that there was an absorbent tin layer

and that the classification by the appellant therein was correct. He

also pointed out that the Court concluded that the Customs

Department was not justified in invoking the larger period of

limitation in the factual context of the Customs Department having

finalized the assessment in respect of the same goods for the same

party previously by accepting the classification under CTH 70051090.

A substantially similar judgment of the CESTAT, Kolkata, in a batch

of appeals, including Customs Appeal No.75536 of 2023, was also

relied upon for the same proposition.

8. The next contention of learned senior counsel was that the

reply dated 20.05.2022 to the consultative letter and subsequent letter

dated 06.03.2023 were disregarded while issuing the impugned show

cause notice. After pointing out that the consultative letter was in

respect of only 35 bills of entry and that the short-levy was confined

to Rs.1,14,03,577/-, he submitted that sub-section (4) of Section 28 of

the Customs Act, 1962 (the Customs Act), was unlawfully invoked in

relation to a classification dispute and that the short levy was

computed in a sum of Rs.11,78,27,642 in the impugned show cause

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notice. By pointing out that sub-section (4) may be invoked only in

cases where there is fraud, collusion or wilful mis-statement, learned

senior counsel submitted that the said provision cannot be invoked in

cases wherein there is reasonable basis to classify the goods under a

particular tariff heading (such as CTH 70051010 here), especially if

the goods were classified and cleared for more than a decade under

such classification. In this regard, learned senior counsel submitted

that the Customs Department does not allege that the petitioner

imported a different commodity after declaring that light green float

glass was being imported.

9. Learned senior counsel referred to and relied upon the

judgment of the Hon'ble Supreme Court in Union of India v.

Kamalakshi Finance Corporation(Kamalakshi Finance), 1991 (55) ELT 433

(SC), particularly paragraph 6 thereof, for the proposition that

judicial discipline requires that orders of higher appellate

authorities should be followed by subordinate authorities. He also

relied upon the judgments of the Hon'ble Supreme Court in

Commissioner Of Central Excise, Nagpur v. Vicco Laboratories('Vicco

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Laboratories'), (2005) 4 SCC 17 , particularly paragraph 4 thereof, and

Siemens Ltd. v. State of Maharashtra, (2006) 12 SCC 33, regarding

circumstances under which a show cause notice may be interfered

with by a writ court. He relied on the judgment of the Supreme Court

in Commissioner Of Customs, Central Excise & Service Tax v. Ashwani

Homeo Pharmacy (Ashwani Pharmacy), 2023 SCC OnLine SC 558,

particularly paragraphs 99 and 100 thereof, for the proposition that a

long standing classification cannot be changed without change in the

tariff structure or in the composition of products. He concluded his

submissions by contending that a show cause notice should not be

issued with a predetermined mind. In support of this contention, he

relied upon the judgment of the Hon'ble Supreme Court in Oryxs

Fisheries Pvt. Ltd. v. Union of India, 2011 (266) ELP 422, (SC),

especially paragraphs 28 and 29 thereof.

10. In response to these submissions, Mr.Rajendran Raghavan,

learned senior standing counsel, submitted that float glass should be

non-wired and have an absorbent, reflecting or non-reflecting layer

to be classified under CTH 700510. By referring to paragraphs 19 &

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20 of the show cause notice, he contended that unless a microscopic

thin coating was applied to the glass by using chemical vapour

deposition, it cannot be classified under CTH 700510. He also pointed

out that it is recorded in paragraph 20 of the show cause notice that

the layer of zinc sulphate is a protective layer, which does not work

as an absorbent, reflecting or non-reflecting layer; and that the goods

cannot be classified under CTH 700510 in the absence of an

absorbent, reflecting or non-reflecting layer. His next contention was

that each consignment of goods is required to be examined to

ascertain whether the characteristics necessary for classification

under CTH 70051010 are present. Consequently, he contended that

the self-classification by the petitioner cannot be accepted merely

because such classification was accepted in respect of goods

imported under earlier bills of entry. Put differently, his contention is

that the examination should be on goods-specific basis. He relied on

the judgment of the Calcutta High Court in Stores Supply (India)

Agency v. Assistant Collector of Customs, 1985 0 Supreme (Cal) 55, for

the proposition that jurisdiction to decide on the validity of

classification is vested in the competent customs authorities and,

consequently, the court would not interfere unless there is an

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apparent mistake. He also contended that the judgment of the

Hon'ble Supreme Court in Vicco Laboratories is distinguishable

because the issue of classification had been conclusively decided

earlier therein.

11. Since the challenge is to a show cause notice, learned senior

standing counsel also submitted that interference is not warranted

unless the show cause notice was issued without jurisdiction or

further proceedings would not be justified even assuming without

admitting that all the statements in the show cause notice are correct.

According to him, the present case does not fall within either

category. As regards jurisdiction, he submitted in conclusion that

sub-section (4) of Section 28 confers the right on the Customs

Department to invoke the larger period of limitation even in cases of

misclassification if such misclassification is a result of suppression of

facts or wilful misstatement.

Discussion, analysis and conclusion

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12. The challenge in W.P.No.28456 of 2023 is to a show cause

notice. The settled legal position is that a writ court would not, as a

rule, interfere therewith. This rule is not without exceptions as held

by the Hon'ble Supreme Court in Vicco Laboratories. Since paragraphs

31 to 34 of the Vicco Laboratories are relevant in the context of this

dispute, the said paragraphs are set out below:

“31. Normally, the writ court should not interfere

at the stage of issuance of show-cause notice by

the authorities. In such a case, the parties get

ample opportunity to put forth their contentions

before the authorities concerned and to satisfy

the authorities concerned about the absence of

case for proceeding against the person against

whom the show-cause notices have been issued.

Abstinence from interference at the stage of

issuance of show-cause notice in order to

relegate the parties to the proceedings before the

concerned authorities is the normal rule.

However, the said rule is not without exceptions.

Where a show-cause notice is issued either

without jurisdiction or in an abuse of process of

law, certainly in that case, the writ court would

not hesitate to interfere even at the stage of

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issuance of show-cause notice. The interference

at the show-cause notice stage should be rare

and not in a routine manner. Mere assertion by

the writ petitioner that notice was without

jurisdiction and/or abuse of process of law would

not suffice. It should be prima facie established

to be so. Where factual adjudication would be

necessary, interference is ruled out.

32. Case of the respondent that the classification

of the said products having attained finality

pursuant to the decision of this Court, the

appellants have no jurisdiction to issue impugned

show-cause notice on the ground on which it has

been issued and it virtually amounts to reopening

of the issue which stands concluded by the

decision of this Court, and that therefore it is an

abuse of process of law. The High Court after

referring to the history of litigation rightly

concluded that the matter stood concluded by

judgments of this Court and the High Court in

respondent's case.

33. In the earlier judgment this Court had given

liberty to the Department in the following terms:

(Vicco Laboratories case, pp.20-21, paras 9-11)

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"9. Although the adjudicating authority

had found in the course of the hearing that the

market survey indicated that the product in

question was known as a cosmetic, we do not go

into the question as this was not the ground on

which the show-cause notice was issued.

10. The show-cause notices having

proceeded on a misapprehension of the tests laid

down in Shree Baidyanath's case, the same

cannot be sustained.

11. The appeals are accordingly dismissed

without any order as to costs. It will be open to

the Department to take such test if otherwise so

entitled in respect of the products for the purpose

of classifying the products under the appropriate

tariff heading as they may be advised."

However, as rightly observed by the High Court

the impugned show cause notice was nothing but

a repetition of the earlier show-cause notices with

slight variations which in no way was relatable to

any different test.

34. When the factual scenario is considered in the

background of the legal principles set out above,

the inevitable conclusion is that the appeal is sans

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merit, deserves dismissal, which we direct. Costs

made easy.”

13. One of the principles formulated by the Hon'ble Supreme

Court in Vicco Laboratories is that interference may be justified at the

show cause stage if the authorities concerned seek to resurrect an

issue that was previously concluded by a decision of the Court. Such

conclusions were recorded in the context of a classification issue.

Whether interference with the impugned show cause notice is called

for, either on the basis of the ratio laid down in Vicco Laboratories or

otherwise, is considered next by examining the material facts.

14. It is common ground that the subject of the show cause

notice is goods imported by the petitioner (the Relevant Goods),

under the bills of entry detailed in Annexure-I to the show cause

notice, by labelling the goods as light green float glass (tinted non-

wired type), and by classifying such goods under CTH 70051010 and

availing concessional rate of basic customs duty vide Sl.No.934 of the

ASEAN Free Trade Agreement Notification No.46 / 2011 dated

01.06.2011. Such show cause notice was issued on the basis of test

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report bearing Reference No.GC/TCC/TR-3283/21-22, dated

30.04.2021 of the CSIR-CGCRI, Kolkata. The said test report pertains

to bill of entry No. 54 dated 30.03.2020. The test results are set out

below:

“a. From complete analysis it can stated that, the

composition of the glass is soda-lime silica based

glass containing other minor components as

given in the complete chemical analysis report.

b. The measured average thickness of glass plates

is observed to be 2.45 mm.

c. The Tin side is detected under UV

illumination using tin detector.

d. The glass is float glass.

e. As received glass is light green as per

transmission spectral profile with average visible

transmission to 85.96% and with Fe2O2 content

of 0.86%.

f. The glass is light green glass without opacified

or surface ground.

g. The glass is light green coloured throughout

the mass (body tinted)

h. It is non-wired glass.

i. No absorbent layer is observed other than

tin layer on one side of the glass which is

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fluorescent under UV illumination.

j. No reflecting or non-reflecting layer.”

(emphasis added)

15. By relying on the above test results, the first respondent

recorded the prima facie conclusion that the Relevant Goods do not

have an absorbent layer, other than the tin layer observed in the

above extracted test results. This tin layer was, however, construed in

the show cause as inherent to the production of float glass and,

consequently, not a valid basis for the classification. As regards the

zinc sulphate layer, it was prima facie recorded that it is a protective

layer and, therefore, not an absorbent, reflecting or non-reflecting

layer. As a corollary to the above interpretation of the test results, the

prima facie finding that the Relevant Goods were wrongly classified

under CTH 70051010 was recorded. On the basis of the prima facie

conclusion that the Relevant Goods are non-wired glasses not having

an absorbent, reflecting or non-reflecting layer and coloured

throughout the body, it was recorded that the Relevant Goods are

prima facie classifiable under CTH 70052110. A more recent report

bearing reference No.GC/TCC/TR-3448/2022-23 dated 11.04.2023

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from CSIR-CGCRI, Kolkata, in respect of bill of entry No.8261250

dated 13.04.2022 was also referred to in the impugned show cause

notice. The test results thereof are as under:

“The test results are given below:

a. From complete analysis it can stated that, the

composition of the glass is soda-lime silica based

glass containing other minor components as

given in the complete chemical analysis report.

b. The measured average thickness of glass plates

is observed to be 2.86 mm.

c. The Tin side is detected under UV

illumination using tin detector.

d. The glass is float glass.

e. As received glass is light green float glass as

per transmission spectral profile with average

visible transmission of 85.19% and with Fe2O3

content of 0.62%.

f. The glass is non-wired glass.

g. The glass is light green coloured throughout

the mass (body tinted), glass is not opacified or

not merely surface ground.

h. No reflecting or non-reflecting layer exist.

i.The glass is annealed glass for

decorative/industrial/automotive purposes.

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j. An absorbent layer is observed on tin side

of the glass which is fluorescent under UV

illumination.

k. Glass is Tinted

l. The glass is found to be coated with ZnSO4

film on the side oppose to tin side as

protective layer.”

(emphasis added)

16. Several test reports of samples taken from other bills of

entry relating to the import of light green tinted float glass have been

enclosed by the petitioner in the paper book. By way of illustration,

the results from the sample tested in respect of bill of entry

No.2052662 from test report dated 22.05.2019 and bearing reference

No.GC/3127/TCC/3427-3428/2019-20 are set out below:-

“Based on the test results and analysis, following

points can be drawn:

a) From complete chemical analysis it can be

stated that, the composition of the glass is soda-

lime silica based glass containing other minor

components as given in the complete chemical

analysis report.

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b) The measured average thickness of glass plates

is observed to be 2.91 mm.

c) The Tin side is detected under UV

illumination using tin detector.

d) The glass is float glass.

e) As received glass is transparent glass as per

transmission spectral profile with average visible

transmission of 85.23% and with Fe2O3 content

of 0.61%.

f) The glass is transparent glass without opacified

or surface ground.

g) The glass is coloured throughout the mass

(body tinted)

h) It is non-wired glass.

i) An absorbent layer (Tin) is observed on one

side of the glass which is fluorescent under

UV illumination.

j) The glass is found to be coated with ZnSO4

film on opposite to tin side as protective

layer.” (emphasis added)

17. On comparison of these test results, especially the three

extracted in this order, the characteristics of the imported light green

float glass, as reported therein, are substantially identical, except for

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one observation. The test report dated 30.04.2021 pertaining to bill of

entry No.7094656 contains an observation that no absorbent layer is

observed other than tin layer on one side of the glass. Even as

regards this observation, it is noticeable that an absorbent tin layer

was noticed. It bears reiteration that this absorbent tin layer was,

however, construed in the impugned show cause notice as prima facie

inherent to the production of float glass. Since such interpretation

appears to be the primary basis of the show cause notice, it is

instructive to examine whether and, if so, how such test results were

previously interpreted.

18. From the paper book of the petitioner, it follows that a final

assessment was made by the Assistant Commissioner, Noida

Customs Commissionerate, and the classification under CTH

70051010 was accepted by communication dated 25.03.2021, on the

basis of the test report in respect of bill of entry No.8990366. Shortly

thereafter, by communication dated 12.04.2021, audit proceedings

were closed by the Commissioner, Customs Audit Commissionerate,

Delhi. Later, the Deputy Commissioner of Customs, ICD Rewari, by

order dated 04.09.2021, rejected the self-assessment of the petitioner

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in respect of 315 bills of entry and concluded that the goods are liable

to be reclassified under CTH 70052110. This order and two other

similar orders were appealed against before the Commissioner of

Customs (Appeals). The order in appeal dated July 2022 has been

placed on record. The relevant discussion and findings of the

appellate authority are set out below:

“5.2 The issue involved is correct classification of

goods viz. “”Light Green Float Glass/Coloured

Float Glass”. Before going into merits of correct

classification, I note from the impugned orders

itself that the dispute originated on the basis of

post clearances audit. Though there is mention of

consultative letters issued to the appellant for

differential duty but the same have not

culminated in issuance of SCN to the appellant. I

concur with the appellant that the Adjudicating

Authority has not bothered to find or mention

about the culmination of consultative letters

issued by the Audit Commissionerate. Wheareas,

it is a fact on record that the Audit

Commissionerate had concluded the proceedings

vide their letter dated 12.04.2021 issued by the

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Commissioner (Audit) and accepted their

classification under CTH 700510.

A plain reading of the above letter reveals that the

Audit Commissionerate had accepted the

classification made by the Appellant under CTH

700510. In fact, as per the said letter, the

executive Commissionerate viz. Office of the

Commissioner, ICD Patparganj & Other ICDs

was also in agreement with the said classification.

Further, it is seen from record of hearing that the

appellant specifically prayed for issuance of Show

Cause Notice. Still, no reasons have been brought

on record as to why no SCN was issued. Further,

there is no mention in the entire order about

providing of said SIIB report or Test reports to

the Appellant.

5.3 It is not clear as to on what basis, the said

letter was ignored by the Adjudicating Authority

in the impugned order dated 04.09.2021 issued

subsequent to above letter and in other two

orders. None of the impugned orders mention or

counter the said letter at all. The Adjudicating

Authority, despite being subordinate to the

Commissioner proceeded to overrule the findings

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of Audit, without countering or mentioning the

same. I find this action to be of gross

insubordination. If the Adjudicating Authority

had any disagreement with the Audit

Commissioner, the same should have been clearly

brought out. I also note that Adjudicating

Authority even did not elaborate as to what was

recommendation or findings of the SIIB in their

letter dated 17.06.2021.

5.Now coming to merits of issue, the contesting

entries viz. 70051010 (as declared by the

appellant) and 70052110 (as per the Assessing

Authority) from the Customs Tariff are

reproduced below:-

Upto 31.12.2019

7005 Float glass and surface ground or polished glass, in sheets,

whether or not having an absorbent, reflecting or non-

reflecting layer, but not otherwise worked

700510-Non-wired glass, having an absorbent, reflecting or non-

reflecting layer:

70051010---Tinted

70051090---Other

- Other non-wired glass:

700521-- Coloured throughout the mass (body tinted) opacified,

flashed or merely surface ground:

70052110--- Tinted

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It is pertinent to mention that w.e.f. 01.01.2020

(as amended vide Finance Act, 2019 and made

applicable as per Notf.89/2019-Cus.(N.T.), dated

10.12.2019), the sub-heading 700521 was

amended to read as under:- “--Coloured

throughout the mass (body tinted), opacified,

flashed or merely surface ground:”

Thus, specifically a comma was inserted in

the said sub-heading. The said amendment was

not given retrospective effect.

5.4.1 Chapter Note 2 of chapter 70 is reproduced

below-

“2. For the purposes of headings 7003, 7004 and

7005:

(a) ..................

(b) ..................

(c) the expression “absorbent, reflecting or non-

reflecting layer' means a microscopically thin

coating of metal or of a chemical compound (for

example, metal oxide) which absorbs, for example,

infra-red light or improves the reflecting qualities

of the glass while still allowing it to retain a

degree of transparency or translucency; or which

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prevents light from being reflected on the surface

of the glass.”

5.4.3 A Plain reading of CTH 7005 would reveal

that 70010 covers non-wired glass having

absorbent, reflecting or non-reflecting layer. A

clear conclusion is that single clash entry after

70051090 i.e “-- other non-wired glass” would

cover non-wired glasses without absorbent,

reflecting or non-reflecting layer.

5.4.4 The Adjudicating Authority has held that

CTH 700521 covers glass which may or may not

have absorbent or reflecting or non-reflecting

layer. The Adjudicating Authority has contended

that the impugned goods are coloured throughout

body (i.e. body tinted) and thus covered by CTH

700521 and articles of CTH 700521 may or may

not have absorbent/reflecting layers. This

interpretation itself is erroneous in light of

scheme of CTH under 7005 and explanation

given in 5.4.3 above.

5.4.5 It is settled position of law that burden of

proof of classification is on the Department. The

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classification has been changed on the basis of

Test Reports. I have carefully going through the

copies of Test Reports from CGCRI, Kolkata. I

find that said Test Reports are not conclusive

enough to reject the declared classification by the

Appellant. Rather, the said Reports do mention

the presence of Layer. The exact findings of some

of the Test Reports in this regard are as under:.-

“c) The Tin Side is detected under UV

illumination using tin detector.

i) An absorbent layer (Tin) is observed ion

one side of the glass which is fluorescent

under UV illumination.

j) The glass is found to be coated with

ZnSO4 film on opposite to tin side as

protective layer.”

The Test Reports have clearly established

that impugned goods were having absorbent

layer (Tin) on one side. This fact is not

disputed. Accordingly, I find absolutely no reason

to exclude these goods from 700510 & classify

them under 700521. Rather, the said goods viz.

“Light Green Float Glass/Coloured Float Glass”

with absorbent Layer of Tin on one side would

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merit classification under Sub-heading 7005 and

more precisely under CTH 7001010.

(emphasis added)

....

5.6 The classification issue in the favour of the

appellant is further supported by the stand of

other Assessing Authorities for the similar goods

imported by the Appellant. For instance, they

have submitted a copy of letter

C.No.VIII(30)Cus/ICD DD/Gr-3/Asahi/106/2020

dated 25.03.2021 issued by the Assistant

Commissioner (Gr.-3), Noida Customs, wherein

it has been decided that the goods in question are

liable to be classified under CTH 700510. A

scanned copy of said letter is pasted below:-

5.7 As the declared classification of the appellant

has been upheld, hence the benefit of S.No.934 of

the Notification No.46/2011-Cus. Dated

01.06.2011 is held to be applicable.

Consequentially the demand of differential duty

does not survive. Accordingly, the interest

liability under section 18(3) also does not

survive. Thus, all the three impugned orders are

liable to be set aside.

ORDER

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6.0 In view of the above discussion and findings,

the instant three (03) appeals filed against the

respective OIO are allowed and the said Orders

are set aside. The impugned bills of entry should

be finalized and re-assessed with classification of

impugned goods under CTH 70051010 with

application of S.No.934 of Notification

No.46/2011-Cus. Dated 01.06.2011, as amended,

along with consequential relief, as per law.

19. As is evident from the above extracts, the factual position in

those appeals was that the Commissioner of Customs, Customs

Audit Commissionerate, had accepted the petitioner's classification.

Although a consultative letter was issued to the appellant imposing

differential duty, it did not result in the issuance of a show cause

notice. Therefore, the appellate authority noticed that the letter of the

Commissioner of Customs, Customs Audit Commissionerate, was

ignored by the adjudicating authority while issuing the order

impugned therein on 04.09.2021. On the merits, the appellate

authority recognised that the burden of the proof of classification is

on the Customs Department. The appellate authority further

examined the test reports from CGCRI, Kolkata and concluded that

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the test reports do not warrant rejection of the declared classification

by the appellant. The appellate authority extracted the features /

characteristics disclosed in the test report. Those

features/characteristics are identical to the features/characteristics

disclosed in test report dated 11.04.2023 as (c), (j) and (l). The

appellate order was issued on 20.07.2022. The respondents have not

placed any material on record to indicate that such appellate order

was appealed against.

20. In effect, without filing an appeal, by initiating proceedings

pursuant to the impugned show cause notice, the respondents are

endeavouring to reopen an issue that was determined by the

appellate authority in relation to the same goods on the basis of test

results disclosing substantially similar characteristics of the goods.

This course of action is in violation of the requirement that a

subordinate authority should act in accordance with the conclusions

of an appellate authority unless the order of such appellate authority

is successfully challenged by approaching the Tribunal or High

Court. This is the ratio of the decision in Kamalakshi Finance.

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21. As held in Vicco Laboratories, a show cause notice is not

ordinarily interfered with in exercise of discretionary jurisdiction

under Article 226. Nonetheless, such general rule is not without

exception. One of the exceptions recognized in Vicco Laboratories is

when a settled issue is sought to be resurrected. Moreover, in

Ashwani Pharmacy, the Supreme Court held that a change in

classification is not justified where the characteristics and

composition of the product remain unchanged. In the case at hand,

there has been no change in the characteristics or composition of the

Relevant Goods or in the customs tariff headings. The classification

of light green tinted float glass under CTH 70051010 was accepted by

the appellate authority in the appeals referred to above. Without

challenging such appellate orders in accordance with law, the same

issue is sought to be resurrected in respect of the same party by

issuing the impugned show cause notice on the basis of test reports

that disclose substantially similar findings as the test reports that

were relied upon in earlier proceedings. Therefore, this justifies

interference. The issues relating to pre-notice consultation and the

invoking of the enlarged period of limitation remain to be considered.

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22. The issuance of a notice prior to the show cause notice is

regulated by the Pre-Notice Consultation Regulations, 2018 (the Pre-

Notice Regulations). Significantly, the definition of “notice” in

Regulation 2(c) thereof is restricted to a show cause notice under sub-

section (1) of section 28. The petitioner received an audit consultative

letter dated 01.05.2022 in respect of 35 bills of entry. While the said

letter does not make express reference to the Pre-Notice Regulations,

it makes express reference in paragraph 4 to waiver of show cause

notice and penalty if payment is made pursuant to the audit

consultative letter. This is a clear indication that the audit

consultative letter was issued under sub-section (1) of section 28

because such waiver is provided in sub-section (2) of section 28 only

in respect of proceedings under sub-section (1). The short-levy was

computed at Rs.1,14,03,577/- in this document. Although the

petitioner replied thereto on 11.05.2022 and asserted that the

classification was valid for reasons set out therein, such reply and the

subsequent letter dated 06.03.2023 were not taken into account while

issuing the impugned show cause notice under sub-section (4) of

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section 28. This aspect assumes significance while examining the

validity of the impugned show cause notice.

23. Section 28 of the Customs Act enables recovery inter alia of

duty not levied or not paid or short-levied or short-paid. As per sub-

section (1), recovery proceedings may be initiated by issuing a show

cause notice within two years from the relevant date. Sub-section (4)

empowers the proper officer to initiate recovery proceedings within

five years from the relevant date where inter alia non-levy, non-

payment, short-levy or short payment is on account of collusion, any

wilful mis-statement or suppression of facts. Sub-section (4) and

Explanation 1, in relevant part, are as under:

“(4) Where any duty has not been levied or not

paid or has been short-levied or short-paid or

erroneously refunded, or interest payable has not

been paid, part-paid or erroneously refunded, by

reason of, -

(a) collusion; or

(b)any wilful mis-statement; or

(c) suppression of facts

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by the importer or the exported or the agent or

employee of the importer or exporter, the proper

officer shall, within five years from the relevant

date, serve notice on the person chargeable with

duty or interest which has not been so levied or

not paid pr which has been so short-levied or

short-paid or to whom the refund has erroneously

been made, requiring him to show cause why he

should not pay the amount specified in the

notice.”

Explanation 1: For the purposes of this section,

“relevant date” means,-

(a) in a case where duty is not levied or not paid

or short-levied or short-paid or interest is not

charged, the date on which the proper officer

makes an order for the clearance of goods;”

24. The show cause contains the following reasons for invoking

section 28(4) of the Customs Act:

“26....The Customs department can scrutinize the

documents after the clearance of goods for any

short levy/non-levy as per section 28 of Customs

Act, 1962 and take appropriate action to

safeguard the revenue. It appears that the

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importer in this case had wilfully mis-classified

the imported goods with a malafide intention to

evade applicable customs duty by wrongfully

claiming benefit under ASIAN-INDIA FTA vide

notification no.46/2011-Customs.

27. The importer is in the business dealing in

Glass for a long period and very well conversant

with the manufacturing process of Float Glass. As

the importer was aware of the fact that Tin layer

would be invariably present while manufacturing

of Float Glass and also there are other special

methods of Coating a Float Glass like “Chemical

Vapour Deposition”, he would have known that

the goods would not fall under CTH 7005.10.

Hence, it appears that importer have wilfully/

intentionally misclassified the goods CTH

70051010 and suppressed the relevant facts from

department about the process involved in the

manufacture of Float glass with an intent to

evade the applicable customs duties. For their

wilful suppression of facts and misstatement, the

provisions under section 28(4) of the Customs

Act 1962 appear to be rightly invocable in this

case for demanding duty for the extended

period....”

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25. The admitted position is that the petitioner has imported

light green float glass by classifying the same under CTH 70051010

since about 2011. The respondents did not question such

classification by undertaking verification, and consequential

reclassification under section 17 of the Customs Act. Earlier final

assessments accepting the self-classification were not challenged. As

discussed earlier, even appellate orders dated 20.07.2022 and

29.12.2022 accepting the petitioner's classification have not been

challenged. While the impugned show cause notice refers to the audit

consultative letter, it does not refer to the two replies thereto and

wrongly records that no reply was received. No reasons were

recorded for issuing the audit consultative letter under sub-section

(1) of section 28 and, thereafter, issuing a show cause notice under

sub-section (4) thereof. Out of the two test reports referred to in such

show cause notice, even the report dated 30.03.2020, on which strong

reliance is placed by the respondents to justify the show cause notice,

records the observation that there is no absorbent layer other than the

tin layer. The other more recent report dated 11.04.2023 refers to an

“absorbent layer ... on the tin side of the glass”. When these facts and

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circumstances are considered cumulatively, invoking the enlarged

period of limitation is erroneous and qualifies as an additional reason

to interfere with the show cause notice.

26. In W.P.No.28462 of 2023, a direction is prayed for to clear

light green float glass (tinted non-wired type) under CTH 70051010.

Subject to the customs authorities being satisfied that the products

sought to be imported are light green float glass (tinted non-wired

type), clearance thereof should be permitted under CTH 70051010

unless the earlier classification by the customs appellate authority is

reversed in further appeal. In W.P.No.28465 of 2023, the petitioner

seeks a declaration that the classification adopted by it is correct.

Such declaration would not ordinarily be granted in proceedings

under Article 226 because it would entail detailed examination of the

characteristics of the goods, including by subjecting such goods to

testing, and other factual issues. Since the review undertaken in this

jurisdiction is confined to the decision making process, this request

cannot be countenanced merely on the basis of decisions made in

other fora on the classification of light green float glass.

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27. In the result:

(i) W.P.No.28456 of 2023 is allowed by quashing the show

cause notice bearing SCN No.74 / 2023 dated 07.08.2023.

(ii) W.P.No.28462 of 2023 is disposed of by directing the

respondents to clear goods labelled as Light Green Float Glass

(tinted non-wired type) under CTH 70051010 subject to being

satisfied that the consignments actually contain light green float

glass (tinted non-wired type). Such direction is, however, subject to

the appellate orders accepting the classification under CTH 70051010

in respect of the above goods not being reversed in further appeal.

(iii) W.P.No.28465 of 2023 is dismissed for reasons set out in

this order. No costs.

30.08.2024

Index : Yes/No

Internet : Yes/No

Neutral Citation : Yes/No

kal

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To

1.Deputy Commissioner of Income Tax,

TDS Circle 2(1),

BSNL Building No.120,

Greams Road, Chennai,

Tamil Nadu – 600 006.

2.The Commissioner of Income Tax, TDS,

BSNL Building No.120,

Greams Road, Chennai,

Tamil Nadu-600 006.

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SENTHILKUMAR RAMAMOORTHY J.

kal

Pre-delivery order made in

W.P.Nos.28456, 28462 & 28465 of 2023

&

WMP Nos.27998, 27999 & 28000 of 2023 & 8522 of 2024

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30.08.2024

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