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Customs - Case Laws
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2025 (5) TMI 669
Seeking refund of the differential amount of CVD paid by the appellant on imported goods - rejection on the ground that appellant filed the refund claims without challenging the self-assessed Bills of Entry - failure to prove that the burden of CVD paid by them has not been passed on to the customers(unjust enrichment - time limitation.
Refund claims filed without challenging the self-assessed Bills of Entry - HELD THAT:- The Principal Bench of this Tribunal has decided the issues in their favour observing that since the Department has not challenged the findings of the Commissioner(Appeals), it attained finality; therefore the same cannot be raised at a higher forum - reliance can be placed in Birla Corporation Ltd. Vs. Commissioner [2005 (7) TMI 104 - SUPREME COURT].
Principles of unjust enrichment - HELD THAT:- Ater referring to the Chartered Accountant Certificate which has been referred by the Hyderabad Bench and Ahmedabad Bench of this Tribunal and the order of the Deputy Commissioner, this Tribunal observed 'It is, therefore, not possible to accept the contention raised by the learned authorized representatives appearing for the department that the certificate of the chartered accountant produced by the appellant to substantiate the incidence of duty had not passed on to the buyers should not be accepted because the appellant did not produce any other corroborative evidence as required under sections 28C and 28D of the Customs Act.'
In the present case also, similar certificate has been issued by the same Chartered Accountant. Therefore, there is no reason not to accept the same to hold that the burden of duty has not been passed on to the customers in view of the consistent opinion expressed by various Benches of this Tribunal involving same appellant and similar certificates for different imports (more or less similar periods).
Time limitation - HELD THAT:- The additional duty of customs(CVD) has been paid by the appellant on 14.10.2014 and the refund claims were filed on 14.10.2015 i.e. within one year from the date of application seeking refund of the duty paid - In view of the Section 12 of the Limitation Act, 1963 read with Section 9 of the General Clauses Act, 1897, the day from which such period is to be reckoned ought to be excluded. In the present case under Section 27 of the Customs Act, 1962, the refund claim is required to be filed within the period before the expiry of one year from the date of such duty payment; hence the date of payment of duty is to be excluded from computing the period of one year. Thus, the refund claims are not barred by limitation.
Conclusion - The appellant is entitled to get refund of the differential duty paid under Notification No.12/2012-CE.
Appeal allowed.
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2025 (5) TMI 668
Smuggling - seized betel nuts of foreign origin - non-notified goods - shifting of burden to proof at any stage of the process of evaluation of the evidence - reliance placed upon a test report of Executive Officer, ARDF of Mangaluri, Karnataka wherein it is allegedly reported that majority of sample sent to them resembles to the betel buts of Mayanmar (Verma) origin - Confiscation - penalty - HELD THAT:- It is observed that 50 nos, of sacks containing total 4000 kgs. of betel nuts valuing Rs.8,00,000/- were seized on 5.3.18, during the course of its transportation through Saraighat Express, at New Jalpaiguri Railway Station. It is found that the said consignments of 'betel nuts' were despatched under 2 Tax Invoices Nos. 008/C and 009/C both dated 2.3.18 in favour of M/s. Bight Trading Company of 125, PurbaSinthi Road, Dum Dum, West Bengal and Parcel Way Bills Nos. C882551 & C88252. It is observed that the said goods were seized by the Customs Officers on the reasonable belief that the said goods were smuggled into the country without payment of applicable customs duties.
The department has not brought in any evidence to substantiate the allegation that the said goods were of foreign origin. The only evidence produced by the department in support of the allegation that the betel nuts were of foreign origin is the Report of ARDF. It is observed that the foreign origination of betel nut cannot be determined on the basis of the ARDF report - In the present case, it is observed that the goods in question are non-notified in nature and as such, the 'burden of proof lies upon the Revenue.
The Hon'ble High Court, Calcutta in the case of Ritu Kumar [2005 (12) TMI 110 - HIGH COURT AT CALCUTTA] has categorically held that such 'burden of proof' can never be shifted at any stage of the process of evaluation of the evidence. Similarly, in the case of Raj Kumar Jaiswal [2006 (5) TMI 39 - HIGH COURT, CALCUTTA], it was held that in case of non-notified goods, Revenue is at obligation first to substantiate the foreign origination of the goods and thereafter to establish smuggled character of the same and until both such predetermined are fulfilled, question of confiscation of non-notified goods under Section 111 of the Customs Act, 1962 cannot arise.
In the present case, it is found that if the report of ARDF is taken out of record, then there is no other evidence available on record to suggest that the goods were foreign origin. In such circumstances, the confiscation of the goods under Section 111(b) & (d) of the Customs Act, 1962 does not arise and accordingly, the same is set aside - Since confiscation of the goods is not sustained, imposition of penalty upon the appellant under Section 112 (b) of the Customs Act, 1962 does not arise and hence the same is set aside.
This view has been expressed by the Hon’ble High Court at Allahabad in the case of Commissioner of Cus. (Prev.) v. Maa Gauri Traders [2019 (8) TMI 1043 - ALLAHABAD HIGH COURT] wherein it was observed that 'The documents produced by the respondents indicated that the goods in question were purchased from local markets, and in support of the purchases they produced the market receipts which has not been doubted by the Revenue Authorities themselves at any stage of the proceedings. The report of the ARDF has also been held to be not reliable inasmuch as it could not be shown with any degree of certainty that the origin of the betel nuts could be established by testing in a laboratory, as is clear by the answer to the RTI query given by Directorate of Arecanut and Spice Development, Ministry of Agriculture and Farmers Welfare, Government of Kerala.'
The confiscation order under Section 111(b) & (d) of the Customs Act, 1962 is quashed due to lack of evidence of foreign origin and smuggling - The penalty imposed under Section 112(b) is set aside as it was contingent on the confiscation order.
Conclusion - i) The burden of proof to establish smuggling and foreign origin for non-notified goods lies squarely on the Revenue and cannot be shifted. ii) Reports from non-accredited laboratories such as ARDF cannot be relied upon to determine the origin of goods for legal purposes. iii) Confiscation and penalty under the Customs Act require cogent and positive evidence; mere suspicion or uncorroborated laboratory reports are insufficient.
Appeal allowed.
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2025 (5) TMI 667
Revocation of Customs Broker license of the appellant - levy of penalty in terms of Regulation 18 of CBLR 2018 for violation of Regulation 10 (d) thereof - involvement of the Customs Broker in the fraud perpetuated with regard to alleged paper exports to Bhutan through the said LCS - violation of Regulation 10(d) and 10(e) of the CBLR 2018 - HELD THAT:- The appellant has not been able to furnish adequate evidence to justify his innocence.
The Hon’ble Apex Court in the case of Commissioner of Customs v KM Ganatra and Company [2016 (2) TMI 478 - SUPREME COURT] had held that the Customs Broker is supposed to safeguard the interest of both the importers and the customs. A lot of trust is kept in the CHA both by the import- export community as well as by government agencies. To ensure appropriate discharge of such trust, the relevant regulations are prescribed, which lists out the obligations of the Customs House Agent (now Customs Broker). Any contravention of such obligation, even without intent would be sufficient to invite upon the CHA/CB punishment as listed in the Regulations.
There is nothing in the defence of the appellant to indicate as to how he ensured compliance of the Regulation said to be contravened. Government evidence furnished through Bhutan agencies, as well as failure of any remittance received is good enough for reason to establish delinquency/complacency in the matter, on the part of the Customers Broker. The fact that details of export documents tendered, do not match with the reports received from Bhutan Customs vis-a-vis with the export documents is a clear pointer to the anomalous situation. The Customs Broker has not been able to prove his innocence. His culpability is evident.
Conclusion - While the Customs Broker is culpable for violations of Regulations 10(d) and 10(e) of CBLR 2018, the revocation of license is disproportionate under the circumstances. The license is ordered to be revived with conditions, and the penalty is moderated accordingly.
Appeal disposed off.
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2025 (5) TMI 666
Non-payment of interest while refunding pre-deposit made by the Appellant - Section 129-EE of the Customs Act, 1962 - HELD THAT:- On going through the judgment passed by the Hon'ble Supreme Court in the case of Coronation Spinning India (Respondent), [2015 (8) TMI 442 - SC ORDER] that was referred by Ahmedabad Bench of this Tribunal, it could be noticed that duty, interest and penalty were deposited on protest by the Respondent therein, who sought for its refund alongwith interest after it succeeded in the appeal preferred by the Department and that refund was admissible u/s. 11B, in which interest was payable u/s. 11BB of the Central Excise Act, which corresponds to section 27 & 27 A of the Customs Act respectively but in the instant case what was being paid as „pre-deposit‟ which is neither a duty nor a penalty since paid u/s. 129E against which payment of interest is a statutory remedy available to the Appellant after it succeeds in its appeal, apart from the fact that circular issued by the CBEC, Department of Revenue, Ministry of Finance dated 16.09.2014 on pre-deposit by its circular No. 984/08/2014 – CX, would go to show under para 5.2 that pre-deposit for filing an appeal is not a payment of duty and it would not be governed under section 11B of the Central Excise Act and therefore, refund with interest should be paid to the Appellant within 15 days of receipt of letter from the Appellant seeking refund and para 5.3 states that even if Department contemplates appeal also, such refund alongwith interest would still be payable unless stay is granted by the Competent Appellate Authority.
The CBCE circular No. 802/35/2004-CX issued on 8-12-2004 being self-explanatory, Respondent Department may apply the relevant provisions of the circular against the erring official but since deposit was made by the Appellant in favour of the Respondent Department it is duty bound to pay the interest as per provision of section 129-EE existing during the period, prior to amendment was brought into force in October, 2014.
Conclusion - The pre-deposit under section 129-E, even if relating solely to penalty, attracts statutory interest on refund under section 129-EE, and that the Department's delay in refunding such amounts with interest may result in disciplinary action and recovery of interest from responsible officials.
Appeal allowed.
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2025 (5) TMI 665
Levy of penalty u/s 112 (a) and Section 114 AA of the Customs Act, 1962 - alleged abetment of misdeclaration and undervaluation of imported goods - no reason/evidence given for imposition of penalty.
Levy of penalty u/s 112 (a) - HELD THAT:- Section 112(a) of the Customs Act includes two categories of persons, who may be liable for fine. The first category of persons are those who, in relation to any goods, do or omit to do any act which renders the goods liable for confiscation under Section 111 of the Customs Act. The second category of persons comprises of those who abet the doing or omission of such acts. In the present case, penalty has been imposed on the appellant on the allegation that he had abetted the act of misdeclaration of the imported goods. However, it is noted that the appellant had been regularly filing the Bills of Entry for the importer viz., M/s Jagadamba Enterprises and the goods had been cleared by the department. In the context of Section 112(a) of the Customs Act, by definition, the expression 'abet' means instigating, conspiring, intentionally aiding the acts of commission or omission that render the goods liable for confiscation. It is thus apparent that the knowledge of a wrongful act of omission or commission, which rendered the goods liable for confiscation under Section 111 of the Customs Act, is a necessary element for the offence of abetting the doing of such an act.
In Amrit Lakshmi Machine Works vs. The Commissioner of Customs (Import), Mumbai [2016 (2) TMI 57 - BOMBAY HIGH COURT] a Full Bench of the Bombay High Court had considered the aforesaid issue and held that the word 'abetment' is required to be assigned the same meaning as under Section 3(1) of the General Clauses Act, 1897 - In the instant case, it is seen that the appellant had simply facilitated the customs transaction on behalf of the importer/exporter and no evidence has been led by Revenue to establish that the he was directly involved in any wrongdoing in respect of the impugned consignment. Consequently, the penalty under Section 112(a) cannot be upheld.
Levy of penalty u/s 114 AA of the Customs Act, 1962 - HELD THAT:- The appellant was in possession of the required KYC documents as mandated by the provisions of the law. The said KYC documents have not found to be fake or forged. It is an admitted fact that the appellant had in the past filed customs clearance documents for the said importer which had been cleared by the authorities. Revenue has not been able to clearly establish either active or passive role or any deliberate or mala fide act on part of the appellant. The allegations that the appellant did not physically verify the premises of the importer, are not sufficient to fasten the appellant with the penalty. It has not been established that the appellant handled this consignment with any malafide motive. It is essential to establish an intentional or deliberate act or omission and to the act of abetment for imposition of penalty under Section 114AA of the Customs Act.
Conclusion - Where a Customs Broker has complied with the due diligence requirements and obtained proper authorization and KYC documents, penalties under Sections 112(a) and 114AA cannot be imposed merely on the basis of acts of third parties or misuse of IEC by others.
The impugned order and the penalties imposed on the appellant set aside - appeal allowed.
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2025 (5) TMI 664
Levy of penalty - petitioner had prior knowledge about the mis declaration of the goods or not - foreign seller communicated a recall of the cargo due to erroneous loading prior to examination of the goods - appellants relinquished their ownership rights - HELD THAT:- It was not coming out from the facts of the case that the custom broker was intimated for 100% examination and left without information. In that circumstances, it cannot be held that the appellants were having prior knowledge of mis declaration of the goods as the foreign supplier admitted his mistake and the appellant is not claiming the ownership of the said consignment - In that circumstances, benefit of doubt comes in favour of the appellant. Therefore, the appellant is not at fault for mis-declaration found in bill of entry no. 5405619 dated 11th September, 2021 - no penalties can be imposed on the appellant having act of mis declaration in bill of entry.
The demand of duty against the bill of entry no. 5257900 dated 31st August, 2021 is set aside and no penalty is imposable on the appellants. In that circumstances impugned order qua demand of duty against the bill of entry no. 5257900 dt. 31st August, 2021 is set aside and no redemption fine and penalties were imposable against the said bill of entry.
Conclusion - An importer who relinquishes ownership rights upon timely communication of a foreign seller's error and without knowledge of mis-declaration cannot be held liable for penalties or duty demands under the Customs Act.
Appeal allowed.
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2025 (5) TMI 663
Levy of penalty u/s 112(a) and 112(b) of the Customs Act, 1962 - Smuggling of foreign origin gold bars - appellant submitted that in the present case, neither was the gold recovered from his possession nor had he claimed ownership of the said gold - admissible and reliable statemnet or not - HELD THAT:- In this case, two (02) gold bars, each weighing 1000 grams, were seized from Shri Rajesh Bhagat on 06.04.2018. In his statement dated 06.04.2018, Shri Ashish Lakhotia had inter alia informed that the gold was supposed to be sold to the appellant. However, it is observed that during the course of cross examination, the said Shri Ashish Lakhotia has informed that his statement was not voluntary. Accordingly, the said statement cannot be relied upon against the appellant.
It is also found that other than the said statement, there is no other corroborative evidence available on record to implicate the appellant in the alleged offence of smuggling gold bars of foreign origin into the country.
It is observed that there is no evidence against the appellant to indicate that he was the intended purchaser of the gold bars in question. Under these circumstances, no penalty is imposable on the appellant.
Same view has been expressed by this Tribunal in the case of Gagan Karel v. Commissioner of Customs (Preventive), Kolkata, [2025 (1) TMI 1104 - CESTAT KOLKATA] where, under similar facts and circumstances, this Tribunal has set aside the penalty - the penalty of Rs.10,00,000/- imposed on the appellant under Section 112(a) and 112(b) of the Customs Act, 1962 is not sustainable and accordingly, the penalty imposed on the appellant is set aside.
Conclusion - The statement cannot be relied upon against the appellant. There is no other corroborative evidence available on record to implicate the appellant in the alleged offence of smuggling gold bars of foreign origin into the country. The penalty imposed on the Appellant by invoking the provisions of Section 112(a) and (b) of the Act is not sustainable.
Appeal allowed.
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2025 (5) TMI 662
Change of classification of the imported goods - water meters - to be classified under Customs Tariff Item (CTI) 9026 1010 (flow meters) as claimed by the appellants, or CTI 9028 2000 (liquid supply meters) as held by the department in the impugned order? - demand of differential customs duty under section 28(4) of the Customs Act, 1962 - invocation of extended period of limitation.
Classification of goods - HELD THAT:- The Hon’ble Supreme Court in Collector of Central Excise, Shillong Vs. Wood Craft Products Limited [1995 (3) TMI 93 - SUPREME COURT] has held that the tariff entry is patterned on HSN explanatory notes which are preferable even to ISI glossary in case of Conflict. The Hon’ble Supreme Court in this case has perused the statements of objects and reasons of Central Excise Tariff Bill, 1985 which led to the enactment of Central Excise Tariff Act, 1985 and held that the Central Excise Tariff is based on HSN, the internationally accepted nomenclature which has been taken into account in the said statement of objects and reasons so as to reduce disputes on account of tariff classification. Accordingly, the Hon’ble Court held that for resolving any dispute relating to tariff classification, a safe guide is the internationally accepted nomenclature emerging from the HSN.
The HSN Explanatory note to 9028 clearly states that household water supply meters measuring volumetric units are covered under CTH 9028. HSN Explanatory note to 9026 says that the heading excludes apparatus which merely indicate the total amount of liquid delivered by the period, which is classified as ‘supply meters’ in heading CTH 9028 - both from the entries in the Customs Tariff and the corresponding explanatory notes of HSN, it is evident that meters which are primarily designed to measure the rate of flow of the liquids are classifiable under CTI 9026 1010 while those which measure the volume of flow are classifiable under CTI 9028 2000.
What is the nature of the meters which were imported? - HELD THAT:- The water meters measuring volume per duration of time are simply water meters and the water meters measuring speed of the liquid per unit of time are the flow meters. It has also been observed that all water meters are flow meters but not vice versa. Thus, the imported goods were the one to be supplied to Delhi Jal Board for measuring the volume of domestic supply of water and thus the product is water meter clearly covered under CTH 9028.
It is also observed that ISO 4064 applies to water meters based on electrical or electronic principles and to water meters which based on mechanical principles incorporating electronic devices are used to measure the actual volume flow of cold portable water and hot water. Thus, the imported goods merit classification under CTI 9028 2000.
Confirmation of demand under section 28(4) of the Act invoking extended period of limitation - HELD THAT:- Assessments can be modified either through an appeal to the Commissioner (Appeals) under section 128 or modified undersection 28. The submission of the learned counsel, if accepted, will result in absurd consequences. If a notice under section 28 is issued, after considering the reply and hearing the noticee, the proper officer (commissioner or additional commissioner or joint commissioner or deputy commissioner or assistant commissioner) has to adjudicate the matter and pass an order. If the assessment is already appealed against before Commissioner (Appeals) under section 128 and is either affirmed or annulled or modified, the assessment order merges with the order of the Commissioner (Appeals) which must be honoured. The question of the proper officer again issuing a notice under section 28 on the same issue after the Commissioner (Appeals) had decided the matter does not arise because the proper officer cannot sit in judgment over the order of the Commissioner (Appeals).
There is no force in the submission of the learned Chartered Accountant that a notice demanding duty under section 28 cannot be issued without first assailing the self-assessment before Commissioner (Appeals) under section 128. It needs to be rejected and is rejected.
Considering the facts of the case, the intention of the importer to evade paying duty by deliberate mis-classification of the goods is evident and therefore extended period of limitation was correctly invoked in this case. The confirmation of demand invoking extended period of limitation with interest was correct.
Confiscation of imported goods under section 111(m) - HELD THAT:- The imported goods were classifiable under CTI 9028 2000 and they were instead classified under CTI 9026 1010 in the Bills of Entry (which is an entry made under the Act). Such incorrect classification is, usually considered as a matter of opinion and goods are not held liable to confiscation for mis-classification. However, in the peculiar facts of the case, where the importer had, deliberately changed the classification of the goods and engaged a new Customs Broker and gave written instructions to classify the goods under CTI 9026 1010, it is found that Section 111(m) squarely applies to the imported goods and they were liable confiscation. In the impugned order, the imported goods were correctly confiscated under section 111(m) wherever they were available. Where they were not available, the goods were held to be liable to confiscation but were not actually confiscated.
Penalties under section 112, 114A, 114AA and 117 - HELD THAT:- Penalty under section 112 can be imposed for acts which render the goods liable to confiscation. Since we have upheld the confiscation of the goods/holding that the goods were liable to confiscation, section 112 squarely applies. Penalty under section 114A can be imposed if the duty was not paid or short paid by reason of collusion or any wilful mis-statement or suppression of facts. These factors are the same as those required to invoke extended period of limitation under section 28. Since, considering the peculiar facts of this case, the invocation of extended period of limitation is upheld, the penalties imposed under section 114A also upheld.
Penalty under section 114AA can be imposed for knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material. In this case, the appellant deliberately caused incorrect CTI to be indicated in the Bills of Entry and hired a new Customs Broker and instructed him to indicate wrong CTI in the Bills of Entry. Therefore, section 114AA squarely applies to this case. As far as penalty under section 117 is concerned, it is a residual penalty imposable where there is no other provision. Since penalties were found to be imposable and were imposed under other sections, penalty imposed under section 117 cannot be sustained.
Conclusion - i) The goods imported under the disputed Bills of Entry at three of the ports were the water meters and NOT flow meters. The correct classification of these meters is CTI 9028 2000. ii) The benefit of nil rate of BCD in terms of Notification No. 24/2005 dated 01.03.2005, entry at Sr. No. 31 was available only to the flow meters under CTH 9026. The rate of duty for water meters under CTH 9028 is @ of 7.5%. iii) The appellant had deliberately changed the classification of the goods from CTI 9028 2000 to CTI 9026 1010 and hired a new Customs Broker and gave him instructions accordingly in order to evade duty; therefore, extended period of limitation under section 28 was correctly invoked. iv) The goods were correctly confiscated/held liable to confiscation under section 111(m). v) All penalties except penalty under section 117 were correctly imposed and are upheld. Penalties imposed under section 117 are set aside.
Appeal allowed in part.
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2025 (5) TMI 591
Pinciple of Constructive Res Judicata - Determination of rewards for informers - Constitutional validity of Clause 3.3 of the Guidelines for Grant of Reward to Informers and Government Servants, 2015 - HELD THAT:- The principle of Constructive Res Judicata is an extension of the principle of Res Judicata. The origin of this principle in law can be found in the provisions contained in Order II Rule 2 read with Section 11 of the CPC - Order II Rule 2 pertains to relinquishment of part of claim, according to which, in a situation where a plaintiff omits to sue in respect of, or intentionally relinquishes, any portion of his claim, he cannot afterwards sue in respect of the omitted portion of his claim or the claim which has been relinquished.
The principle of res judicata though appears to be technical or artificial prescribed by the Code of Civil Procedure, however, the said principle is founded on considerations of public policy as well, because in case the doctrine of Constructive Res Judicata is not applied to writ proceedings, it may lead to a situation where a party will be entitled to take one proceeding after another and urge new grounds every time which will be inconsistent with the consideration of public policy.
The Hon’ble Supreme Court in the judgment rendered in the case of Devilal Modi v. Sales Tax Officer, Ratlam and Others, [1964 (10) TMI 43 - SUPREME COURT] has clearly held that principle of Res Judicata would be applicable to the writ proceedings as well, though fundamental rights guaranteed in Part III of the Constitution of India are a significant feature of our Constitution and the High Courts under Article 226 are bound to protect these Fundamental Rights.
Constructive Res Judicata is based on the principle inter-alia that the parties to a proceeding should present their entire case in one go to avoid multiplicity of litigations over the same issue, and that if a party could have raised a particular issue in a prior proceeding but failed to do so, even due to negligence or oversight, in our opinion, such a party will be deemed to have lost the right to raise it in a later proceeding. Such a doctrine has been developed to permit finality in legal proceedings and prevent parties from repeatedly litigating. The principle of Constructive Res Judicata does not require a final judgment on the issue which was not raised earlier. It operates on the premise that, the issue should have been included in the earlier proceedings.
Challenge to Clause 3.3 of the Guidelines, having been omitted by the petitioner in earlier round of litigation, in our opinion, by applying the principle of Constructive Res Judicata, the instant writ petition, where a prayer to strike down Clause 3.3 of the Guidelines as being unconstitutional has been made, will not be maintainable. If such a challenge is permitted, there will be no end to the litigation between the petitioner and the respondents. The principle of Constructive Res Judicata has evolved as a matter of public policy to prevent multiplicity of litigations on an issue.
Conclusion - The writ petition challenging Clause 3.3 of the Guidelines for Grant of Reward to Informers and Government Servants, 2015, is barred by the principle of Constructive Res Judicata and is dismissed as not maintainable.
The prayer made in the present writ petition is barred by the principle of Constructive Res Judicata and, therefore, the writ petition is not maintainable - Petition dismissed.
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2025 (5) TMI 590
Penalty imposed on a deceased assessee survives after his death - fiscal enactment where the Statute must contain a specific and enabling provision to assess and recover tax/duty - recovery of penalty from the legal representatives of the deceased assessee - HELD THAT:- Section 142 provides for the recovery of sums due to the Government by a person. The term ‘person’ is not defined under the Act. However, and on an application of first principles, since an assessment of duty and levy of penalty can be with respect to a ‘person’ alone, the recovery contemplated under Section 142 is also expected to be from the same person and no other unless the concerned enactment provides for the continuance of the proceedings for assessment/recovery in the hands of any other person. Even for recovery to be continued/taken, the concerned Department must specifically be enabled by way of a mechanism.
The Supreme Court in the Judgement in Shabina Abraham and others V Collector and Central Excise and Others [2015 (7) TMI 1036 - SUPREME COURT] was concerned with the recovery of arrears of Central Excise in the hands of the appellant, who was the legal representative of an assessee who had died - The argument of the revenue in that case, similar to that advanced before us, was that the Central Excise and Salt Act provided for recovery of amounts due to the Department from an assessee by various methods including attachment and sale of excisable goods belonging to the assessee. The Department relied on the provisions of Section 11 contending that that provision would enable the revenue to continue with assessment proceedings and, should such proceedings be concluded adverse to the assessee represented by the legal representative, then the demand as raised, could be recovered from the legal representatives of the deceased assessee.
In the present case, the proceedings have been concluded in the hands of the assessee. To that extent the facts are a little different. However, the difference is no so much, so as to make a difference to the legal position as there is no provision in the Customs Act for continuing proceedings even for recovery, in the hands of the legal heirs. To that extent, the ratio of the judgment supra, that the concerned enactment must contain suitable machinery to enable certain actions to be taken, would be equally applicable in this case as well.
The scheme of the Act thus contemplates recovery only as set out under Section 142 or Section 142A, read with the Rules. Pre-2011, the Department could embark on recovery in the manner as set out under the Rules, in the case of those Assessee’s where Certificates had been drawn up and the procedure as contemplated under the Rules. Post 2011, the demands raised after the date of insertion of Section 142A will be a charge on the property of an assessee. However, Sections 142, 142A and the Rules are silent as to the impact of the recovery provisions in the case of demise of an assessee, and Legislature has consciously not provided for such a situation - The assessments in the present case have been framed as early as on 24.10.2002 when there was no enabling provision under the Customs Act stipulating that the demands under those orders could be enforced as a first charge. In such circumstances, and on the facts of the present case, Section 142A of the Act also cannot come to the aid of the Department.
Conclusion - The appeals abate. In the absence of a mechanism under the Act prior to 2011 for enforcement of the demand of duty, penalty, interest or any other sum payable by an assessee or a person under Customs Act, 1962, the demands raised under orders dated 24.10.2002 lapse.
The appeals abate.
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2025 (5) TMI 589
Origin of imported goods - goods loaded in containers at China have come to India merely with change of Bills of Lading (BL) at Malaysia - honoring of COO certificate issued under Free Trade Agreement by another sovereign country - mis-declaration of transaction value along with mis-declaration of actual weight of the goods imported - actual importer of the goods - confiscation - extended period of limitation.
Whether the impugned goods loaded in containers at China have come to India merely with change of BL at Malaysia and therefore, these goods are not of Malaysian Origin? - HELD THAT:- The appellants have stated that the statements do not show any concrete proof and are general in nature. They do not disclose any specific evidence correlating the documents to the goods imported by them. They have been taken from different people with different education qualifications all in English and by different officers, but the words and phrases used in the statements are identical including in the handwritten portion, hence they appear to be prepared to suit the departments needs and are hence not dependable - A statement cannot be taken as gospel truth without any factual corroboration. There is a difference between admissibility and acceptability of evidence. Admissibility refers to whether a piece of evidence can be legally introduced in a legal proceeding. Acceptability, on the other hand, pertains to whether the authority will consider the evidence credible and relevant in deciding the case. If the statement is properly corroborated and discussed in the OIO, then while the burden of proof would still be that of the department, the onus of proof to show otherwise or even to justify the retraction, would then shift to the appellant.
The appellant has stated that as per the COO certificate the goods were consigned from M/s Topaz Plastic Industries and M/s Malaya Winds Plastics both of whom are manufacturers of PVC flex banners in Malayasia. Proof of the same was also submitted in the reply to SCN. Payments were also made through banking channels to the said Co’s as evidenced from the bank statements and mentioned in their reply to SCN. It is found that the regarding the alleged payments for shipments, no verification of available bank statements have been discussed neither have records and details of direct payment to Chinese manufacturers been mentioned. The findings in the impugned order hence contains conclusions made without relevant factual evidence being discussed and hence do not succeed in establishing the Chinese origin of the goods.
Whether the COO certificate issued under Free Trade Agreement by another sovereign country needs to be honored and if there are doubts, then, procedure set out in the relevant Rules need to be followed? - HELD THAT:- The judicial pronouncements and the irrefutable evidence brought out during the course of investigation, buttress the case of the department.” What were this irrefutable evidence has not been discussed. There is nothing more by way of explanation and analysis regarding the COO certificate being improper other than a statement. If it is the alleged movement of goods from China to India that is being additionally referred to, then it should have been clearly stated. The appellant has stated that the COO certificate have not been verified by the department with Malayasia as per the procedure provided in the Rules of 2009, and none of the certificates were found to be false. Further the goods were cleared by Malaysian Customs after verifying all the documents.
The Hon’ble Supreme Court in Smt. J. Yashoda Vs. Smt. K. Shobha Rani [2007 (4) TMI 11 - SUPREME COURT], stated the ‘Rule of Best Evidence’ as the rule which is the most universal, namely that the best evidence, the nature of the case will admit shall be produced. ‘So long as the higher or superior evidence is within your possession or may be reached by you, you shall give no inferior proof in relation to it.’ Although a strict compliance of the Evidence Act will not apply to a quasi-judicial proceedings, on the scale for evaluation of evidence, a certificate issued by an authorised entity carries more value than an allegation in a third-party statement or of documents that are not correlated to the BE’s.
Revenue has relied on the judgment of the Hon’ble High Court of Gujrat in Trafigura India Private Ltd Vs UOI [2023 (12) TMI 196 - GUJARAT HIGH COURT] to support their stand. It has been stated that the substantive provisions of the Customs Act like Section 148 and Section 28 will have dominion over the procedural aspects of the Rules of Origin notified by Rules and Notifications - The Hon’ble High Court held that misrepresentation became suppression which provided solid basis for the Customs authorities to proceed under section 28(4) of the Customs Act. However as discussed above in this case, there is no proof of any wrong doing or manipulation of data or any action by the Malaysians Authorities in issuing a fake certificate. Hence the judgment is distinguished.
Thus, revenue has not proved that the impugned goods are not of Malaysian Origin or that the COO is false.
Whether the transaction value has been mis-declared along with mis-declaration of actual weight of the goods imported? - HELD THAT:- The omission by the officers to find out the central core weight has resulted in the alleged variation in the net quantity of the materials imported. Apart from the above, the appellants have submitted information regarding the Malaysian Suppliers and the manufacturing facility, they have for manufacturing PVC Flex Banner Sheets. In the light of the above, there is no evidence, whatsoever, to establish that these goods are not of Malaysian Origin or the value and quantity were mis-declared and the impugned order is hence not sustainable - it is found that the weighment process does not inspire confidence in its accuracy and extrapolating it to a larger number of cleared containers is likely to magnify the error. Hence the benefit of doubt must be given to the appellant and the weighment results rejected.
There was no detailed discussion in the impugned order showing the description, quantity and quality of the goods as imported by the Bhandari Brothers and those of the appellants. Bland statements and generalities alone would not provide the specific detail required to compare the goods. The statements are dependable when correlated with other evidence sufficient to discard the values declared. Neither was a comparison with contemporaneous import prices and current international prices done utilizing the NIDB data to form an opinion on the necessity for re-assessment.
Thus, revenue has not succeeded in proving that the value of the imported goods needs to be re-assessed and that the re-assessment based on the seized documents was done correctly under Rule 5 of CVR 2007.
Who is the actual importer of the goods and whether goods are liable to confiscation and the appellants are liable to penalty and whether the extended period is invokable? - HELD THAT:- The appellant Rajesh Surana of Tech Zone Global has averred that as per the documents on record, it is seen that the respective importers themselves have placed orders with the manufacturers and the BL, invoice and BE were in the importers’ name. They satisfy the definition of ‘importer’ as per section 2(26) of the Customs Act, 1962. No documents were provided to the contrary. Liability to duty cannot be based on statements alone and that too which were not factually corroborated. Further the order itself demands duty from the said importers jointly and/ or severally and not from him alone - the said averments have not been discredited by any evidence other than the statements of those allegedly involved in letting out their IEC to Tech Zone, while the entire documentation was in the name of the IEC holders. Evidences, of ownership of the goods post-importation and its disposal have not been examined. The whole discussion hence suffers from the same weakness as discussed above. Hence the impugned goods were not liable to confiscation neither were the appellants liable to penalty. The question of invoking the extended period to demand duty hence does not survive.
Conclusion - The impugned order has failed to cogently discuss the evidence and its relevance to the facts of the case relating to all the appellants. Duty cannot be collected on assumptions and presumptions or on the basis of statements that have not been properly linked to evidence to establish its veracity and accuracy. Hence the charge against all the appellants fails. No tax can be imposed by inference. Revenue has failed to prove that the impugned goods were imported from China to India and documents manipulated to show that they had been shipped from Malayasia; that the COO certificate was obtained fraudulently; that the good were mis-declared for weight or value. Hence no action survives against the appellants.
The impugned order set aside - appeal allowed.
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2025 (5) TMI 588
Time Limitation - adjudication order passed after an inordinate delay of nearly 13 years from the issuance of the show cause notice (SCN) - Classification of “Loose Tube Optical Fibre Cables” imported by the importer - to be classified under CTH 9001 or not - denial of benefit of Customs Notification No.24/2005 dated 01.03.2005 - HELD THAT:- The Hon’ble Bombay High Court in Lanvin Synthetics Pvt. Ltd. [2015 (8) TMI 387 - BOMBAY HIGH COURT] held that 'In the present case the show cause notice was kept dormant and the notice for personal appearance was issued 18 years ago. The dicta as laid down is clearly applicable to the facts of the present case. There is no dispute and cannot be any dispute regarding the above position of law laid down in these decisions. The petition was admitted and Rule was issued, and thus, the position has continued for 25 years.'
The impugned order has not been passed in time, but with inordinate delay which is not at all explained by Revenue. Consequently, the demand therefore cannot sustain. The impugned order therefore, requires to be set aside - Appeal allowed.
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2025 (5) TMI 587
Confiscation of gold - imposition of penalty - existence of reasonable belief or not - shifting of burden of proof - section 123 of the Customs Act 1962 - HELD THAT:- In cases not covered by section 123, the burden of proving that any goods are smuggled rests on the Revenue because it is Revenue that asserts that they are smuggled. In this case, it is found that the belief under which the officers have seized the gold is the information which they had received and the test report. There is nothing on record to show that there is anything else based on which they formed the opinion that the gold and other goods were of smuggled origin. The information which was received by the officers was confidential information and it is not part of the evidence. It helped the officers start the investigation and examine the goods. That, by itself, cannot give an officer reasonable belief that any goods were of smuggled origin. The second document which they had was the test report, which categorically states that it cannot be determined if the gold is of foreign origin or of Indian origin.
Conclusion - The entire case was built on the basis of seizure without reasonable belief that the goods in question were smuggled goods. Once such belief does not exist, section 123 would not apply and it is for the department to establish that they were smuggled goods. There is no evidence, whatsoever, in the entire case that the seized goods were smuggled goods.
The impugned order upholding the OIO, insofar as it pertains to the confiscation of the gold of the appellant and imposition of penalty on the appellant is set aside - Appeal allowed.
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2025 (5) TMI 586
Valuation - Calculation of Customs duty - Inclusion of Design and Drawing charges / Royalty paid to the supplier are connected to the imported components in the transaction value of imports - Rule 10 [1] [b] [iv] of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - HELD THAT:- It would appear that the original authority has presumed that addition is mandated by Rule 10(1)(b)(iv) of CVR, 2007 while the lower authority felt that the charges are includible in assessable value of the imported goods in terms of Rule 10(1) (e) of CVR,2007. Neither in Section 14 of the said Act nor in the Valuation Rules is there any provision which provides that the cost of designs and drawings/Royalty required for procurement or manufacture of goods in India by the importer or which relates to post-importation activities for assembly, construction, erection, operation and maintenance of the plant are to be included in the price of equipments for determining their transaction value and consequently their assessable value for the purpose of levy of customs duty under the said Act.
As per sub-rule (1), value of certain costs of goods and services are includible only if the same, as provided in the further sub-rule (b) when such goods and services are supplied by the buyer i.e., the importer, either free or at reduced costs and such goods and services are used for the production of import goods and in which case, as provided in clause (iv), if such goods and services are in the form of Designs and Development that are necessary for the production of imported goods. However, in the present case, no goods and services were supplied by the appellants that are used in the form of Design and Development in the production of import goods. On the other hand, the Design and Drawings supplied by the foreign supplier are meant for the production of customized wet processing textile machines and not related to imported goods. The condition of sale too is absent. As the design and Development charges were not paid for production of standardized products but rather for customer specific products it could not have been paid as a condition of sale in any manner.
It is pertinent to note that in terms of the cited clauses 8 and 12 of the agreement, the Appellant has a discretion not to buy certain raw materials from their parent company and will have to pay royalty on manufactured goods whether or not there are imports from the overseas supplier in a given period. This shows that the royalty payment is not related to and is not the condition of sale for the imported goods and therefore, Rule 10(1)(c) conditions are not satisfied. Hence, royalty is not includible in the value of the imported goods.
In the case of Brembo Brake India Pvt. Ltd. vs. CC, [2014 (11) TMI 22 - CESTAT MUMBAI], it was held that royalty and other charges not includible in assessable value if Payment of royalty and other charges not for imported goods and not a condition of sale of goods.
Conclusion - Design and Drawing Charges / Royalty, is not includible in the transaction values of imported goods in terms of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.
Appeal allowed.
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2025 (5) TMI 585
Smuggling of R-22 gas - jurisdiction of Appellate Tribunal to issue a show cause notice - alleged offence was committed outside India, prior to the amendment of the Customs Act effective 29.03.2018 - penalty imposed on the basis of statements of co-noticees - appellant was not provided an opportunity of cross examination of the co-noticees - violation of principles of natural justice - HELD THAT:- The learned Commissioner has confirmed the role of the appellant in the impugned case of smuggling of R-22 gas and has imposed penalties on the grounds that the appellant along with Shri Bhavesh Thakkar was the mastermind and chief strategist; Shri Vipan Kumar Garg stated that the appellant came up with the offer of sale of R-22 gas during the meeting and that he was physically present when the impugned goods were loaded.
The role of the appellant was confirmed on the basis of the allegations that he along with Shri Bhavesh Thakkar was the mastermind. However, we find that CESTAT vide Final Order No. 70593-70596/2024 has set aside the penalty on Shri Bhavesh Thakkar. If Shri Bhavesh Thakkar, who along with the appellant was alleged to be the mastermind of the illegally import of R-22 gas, was not held liable for penalty, it is difficult to believe that the appellant is liable for penalty. Conspiracy alleged to have been entered into two persons cannot be now restricted to one person. It is a matter of common sense that no conspiracy will be possible with one conspirator. Therefore, the moment penalty imposed on one of the two-conspirators has been set aside, it would not be possible to sustain the same on the other.
The case against the appellant is based on the statements, of different persons involved in the case, including the above. Therefore, denying the cross examination violates principles of natural justice, more so looking into the fact that the adjudicating authority has also not examined the said persons under the provisions of Rule 9D of Central Excise Act.
Conclusion - i) Revenue has not made out any case for imposition of penalty on the appellant under Section 112(a)(i) of CA, 1962. ii) The appellant having not filed any declaration/form under the provisions of Customs Act cannot be fastened with the penalty under Section 114AA.
Appeal allowed.
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2025 (5) TMI 559
Levy of penalty on Custom Broker - no proper allegations in the SCN as to which of the regulations has been violated - HELD THAT:- There is a requirement in terms of the judgment in Prabhat Zarda Factory Co. and Ors. v. Commissioner of Central Excise, [2018 (5) TMI 1670 - DELHI HIGH COURT] which followed Kranti Associates P. Ltd. v. Masood Ahmed Khan [2010 (9) TMI 886 - SUPREME COURT] that facts have to be dealt with by CESTAT.
A perusal of the extraction from the impugned order would reveal that there is no discussion on facts in the therein. The Court would have been inclined to entertain this appeal only on the ground of the impugned order lacking any discussion on merits. However, considering the following i.e., - (i) the total amount alleged to have been wrongly availed by the Respondent by way of drawback is only Rs. 57,201/-; and (ii) the penalty is imposed in the Order-in-Original is Rs.50,000/-, while the Respondent may have committed violations in principle, having regard to the negligible quantum involved, the Court is not inclined to entertain the present appeal.
Appeal disposed off.
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2025 (5) TMI 492
Refund claim - fulfilment of the condition of filing Appeals against the self-assessed Bills of Entry as a pre-requisite to entertain the refund claim or not - classification of goods Pisum Sativum [Peas] - to be classified under Sl No.20 or under Sl No.20A during the period under dispute? - The Tribunal rejected the Revenue's argument that the importers had not filed appeals against the self-assessed Bills of Entry - Delay of 471 & 116 days respectively in filing the Civil Appeals - HELD THAT:- There is a gross delay of 471 & 116 days respectively in filing the Civil Appeals which has not been satisfactorily explained by the appellant.
The Civil Appeals are, accordingly, dismissed on the ground of delay.
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2025 (5) TMI 455
Classification of imported Quick Lime - to be classified under CTH 2522 1000 or under CTH 2825 9090? - HELD THAT:- Based on the Tariff Headings and the Explanation given in the HSN Notes, it is very clear that “Quick Lime” is classifiable under CTH 2522 unless the chemical analysis proves that it has purity of 98% calcium oxide.
Admittedly, in the present case, the purity is only 92%. Moreover, there is a specific classification of the product “Quick Lime” under CTH 2522 1000 while the classification prompted by Revenue is 2825 9090 is only a ‘Residuary Entry’, and taking into consideration the Interpretative Rules of Classification, specific heading is to be preferred to the residuary entry unless it is established that the product is pure calcium oxide.
The decision in the case of CCE, Hyderabad-III vs. Bhadradri Minerals Pvt Limited [2015 (10) TMI 1836 - CESTAT BANGALORE] relied upon by the appellant has been brushed aside only on the ground that the product there was 80%, on the same analogy that the calcium oxide with purity less than 98% does not merit classification under CTH 2825.
Conclusion - The chemical analysis clearly states that the purity is only 92% and accordingly, the product “Quick Lime” is rightly classifiable under CTH 2522 1000.
Appeal allowed.
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2025 (5) TMI 426
Levy of penalty CFS / Customs Cargo Service Provider (CCSP) - Loss of revenue - on Smuggling - Red Sanders - Recovery of value of the lost goods from the Appellant - the High Court dismissed the appeal, affirming the appellant's liability to indemnify the Commissioner for the loss of goods and upholding the penalties imposed under both Regulation 12(8) and Section 117 - HELD THAT:- It is not inclined to interfere with the impugned judgment passed by the High Court. Hence, the Special Leave Petition is dismissed.
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2025 (5) TMI 425
Grant of scrips under the Merchandise Exports from India Scheme (MEIS) for the period June 2017 to August 2020 at the prescribed rate of 5% of FOB value - delay in filing two specific MEIS applications, allegedly caused by delayed uploading of Bank Realization Certificates - HELD THAT:- The Respondents are directed to forthwith allow 39 applications and issue the MEIS scrips in respect thereof to the Petitioner at the earliest and in any case not later than 7 days from today.
The Petitioner is directed to attend the office of Respondent No. 3 on Friday, 02.05.2025 with all the documents pertaining to the said 2 applications referred to in paragraph 5 above and substantiate their claim before Respondent No. 3 - List for compliance on 07th May 2025.
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