FTA Benefit Available On Import Of Clear Float Glass From Malaysia, Eligible For BCD Exemption: CESTAT

The Chennai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the Free Trade Area (FTA) benefit is available on the import of clear float glass (CFG) from Malaysia, and the assessee is eligible for Basic Custom Duty (BCD) exemption.

The bench of Sulekha Beevi C.S. (Judicial Member) and Vasa Seshagiri Rao (Technical Member) has observed that the CFG is rightly classifiable under CTH 70051090 as identical imports of CFG were initially assessed provisionally in terms of Section 17 of the Customs Act, 1962, and were later finalized after the receipt of the test report from CGCRI-CSIR. The Department, which was of the view that the CFG is rightly classifiable under CTH 70051090, changed its stand and initiated action consequent to the raising of the audit objection by CAG.

The appellant/assessee had imported “Clear Float Glass” (CFG) from Malaysia, classifying them under CTH 7005-1090. The assessee cleared the goods at the Nil rate of BCD, availing exemption under Notification No. 46/2011-Cus dated June 1, 2011 (Serial No. 934) as the country of origin of the subject import goods is Malaysia, a country notified for the benefit of the ASEAN India Free Trade Area (AIFTA). In total, during the period from October 2017 to March 2022, 89 imports were made by the appellant of Clear Float Glass of Malaysian origin.

Most of the imported consignments were provisionally assessed at the time of imports, and subsequently, based on a test report by CSIR-CGCRI, Kolkata, assessments were finalized, classifying the goods under CTH 70051090. However, during the course of the audit conducted by Customs Revenue Audit (CRA), it was noticed that the imported floated glass is classifiable under CTH 7005 2990, attracting 10% BCD, and consequently not eligible for the benefit under the exemption notification. Hence, it was alleged that the CFG imported from Malaysia was wilfully misclassified under CTH 70051090 for the purpose of availing undue FTA benefit of the exemption notification, resulting in a short levy of applicable customs duty.

A Show Cause Notice was issued to the Appellant proposing to reject the classification of CFG under CTH 70051090 adopted by the Appellant for the imports and to re-classify it under CTH 70052990 by denying the benefit of Notification No. 46/2011-Cus dated June 1, 2011.

The adjudicating authority confirmed all the proposals put forth in the Show Cause Notice and imposed a redemption fine of Rs. 3,10,00,000 in lieu of confiscation under Section 125 of the Income Tax Act, ibid., and imposed a penalty equal to the duty confirmed in terms of Section 114A.

The assessee contended that the show cause notice was partly time-barred in respect of bills of entry pertaining to 2018–2020. The facts of the case cannot be said to have warranted the invocation of an extended period of limitation under Section 28(4) of the Customs Act, 1962, as there was no collusion, wilful misstatement, or suppression of facts. The facts were always available with the department as the subject goods were provisionally assessed and test reports were submitted as early as 2019. Hence, the ingredients for invoking the extended period were unjustified inasmuch as the order had not brought anything on record to prove the same.

The department contended that the primary condition for classifying the imported CFG under CTH 70051090 was not satisfied. If the tin layer is treated as the absorbent layer, which is inherent in the manufacturing process of every float glass, the words “whether or not having an absorbent, reflecting, or non-reflecting layer” will become redundant. It is not legal to interpret the tin layer itself as an absorbent layer, which is automatically formed in the manufacturing process of every float glass.

The tribunal held that after finalization of assessments relying on the Test Report, it is not open for the Department to invoke the larger period of limitation as these assessments have undergone the rigors of provisional assessment and subsequent finalization for the same product and for the same reason.

The tribunal, while allowing the appeal, held that Clear Float Glass is more appropriately classifiable under Customs Tariff Heading 7005-1090 of the Customs Tariff Act, 1975, and thus is eligible for exemption of the benefit of the exemption notification.

Counsel For Appellant: Shrayashree T.

Counsel For Respondent: R. Rajaraman

Case Title: M/s. Swastik Glass Traders Versus Commissioner of Customs

Case No.: Customs Appeal No. 40654 of 2023

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