The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the voluntary part payment of differential duty by the importer can never be a ground for imposition of penalty upon the Customs House Agent (CHA).
The bench of Rachna Gupta (Judicial Member) and P.V. Subba Rao (Technical Member) has observed that the burden of proof that the product is classifiable under a particular head is on the department. The penalty even under 114AA has wrongly been imposed upon the appellant-CHA, it is liable to be set aside.
Table of Contents
Background
The appellant/assessee as the Customs House Agent (CHA) of M/s. Nestle India Ltd. had filed a Bill of Entry No.2047404 dated 06.05.2013 for clearance of goods declared as “LC PUFA Mix Oil with Sofinol (edible grade)” having declared value of Rs.10,56,801/-.
No examination was prescribed for the said Bill of Entry when it got facilitated by RMS. However, at the time of “out of charge‟ of this consignment it was observed from the import documents that the importer had classified the goods under CTH 15079010 which covers the refined soyabean oil of edible grade but the goods in question was LC PUFA Mix Oil. The Mixed Oils are not covered under the CTH 150721515.
The appropriate heading for classification of mix oil is CTH 15179090. Since the supplier of goods also mentioned the CTH 1517.90 in their invoice, the Department formed an opinion that the goods have wrongly been classified.
The goods were seized under section 110 of the Customs Act 1962 on the reasonable belief that the same are liable to confiscation under section 111 of the Customs Act.
The importer in the statement had accepted the classification under CTH 1517.90 even for the past 6 Bills of Entry and thus deposited a sum of Rs.38,43,921/- (including interest) which includes the amount involved in the Bill of Entry in question.
The Department, however, found 19 past Bills of Entry having similar wrong declaration and involving an amount of Rs.2,46,75,612/-.
Alleging that the importer deliberately and intentionally classified their goods under wrong CTH to evade the Customs duty and alleging that appellant being their CHA is an interested party in the clearance of the imported goods as no clearance from PHO/ FSSAI was taken in respect of the said clearances, that the Show Cause Notice bearing No.71/2013 dated 08.08.2013 was issued not only on the importer but also on the CHA, present appellant proposing the imposition of penalty upon the appellant under section 112 (b) and Section 114 AA of the Customs Act, 1962.
Argument
The appellant conetnded that the classification of goods has to be decided by the importer only. The importer herein i.e. M/s. Nestle India Ltd. is an expert in the field of nutrition. The composition, nature and characteristics of the goods imported by them were known to them only. Appellant has never been privy to those facts. The appellant was purely acting upon the instructions, documents and the clarification given by the importer.
The appellant placed the reliance upon the contract dated 01.05.2007 between the appellant and the importer wherein the scope of contract is that the appellant shall prepare/ file Bills of Entry on receipt of necessary documents from the importer to get the Bills of Entries appraised and finalized and to take clearance from the concerned officers. The moment Department alleged that the classification mentioned in the Bills of Entry is wrong, the appellant CHA immediately tried to get clarifications from the importers.
The department contended that it is the Custom Broker / CHA who apart from filing the Bills of Entry is responsible for various activities including unloading and dispatch of said goods. He has to exercise due diligence as per the requirement of provision of Customs Broker License Regulation 2018 (CBLR). Scrutiny of documents is also the responsibility of the CHA. It is impressed upon that the supplier of the goods had mentioned the correct CTH but the appellant chose not to adopt the correct classification. Changing the correct CTH can have no other outcome except evasion of Customs Duty. CHA was supposed to advice the importer correctly.
Conclusion
The tribunal while allowing the appeal held that there is no technical expert report produced by the Department. The voluntary part payment of differential duty by the importer can never be a ground for imposition of penalty upon the CHA.
Can penalty be imposed on Customs House Agent for Payment Of Differential Duty By Importer?
The voluntary part payment of differential duty by the importer can never be a ground for imposition of penalty upon the Customs House Agent (CHA)
Case Title: M/s. A.V. Global Corporation Pvt. Ltd. Versus Commissioner Of Customs
Case No.: Customs Appeal No. 50181 Of 2016
Date: 01/10/2024
Counsel For Appellant: L.B. Yadav
Counsel For Respondent: Rakesh Kumar
