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New India Shipping Services Versus Commissioner of Customs

2015 (6) TMI 1003 - CESTAT BANGALORE

Revocation of Customs Broker (CB) licence - Mis-declaration of goods - Import of chemicals/ Laboratory reagents - Whether to be classified as Pharmaceutical Reference Stands under CTH 38220090 and claim benefit of exemption Notification No.21/2002-Cus. dt. 01/03/2002 and exemption Notification No.12/2012-Cus. dt. 17/03/2012 - Appellant produced a set of Bills of Entry but department contended non-availability of documents in the dockets - Held that:- description of the goods had the chemical nam .....

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nd the Bill of Entry are not supported by any technical opinion. If the invoice does not have the description CRM but merely gives the chemical names and the HSN code number, then the case for the Department becomes weak. This is because the PRS can fall under 2852 or 3822 as mentioned in the notification itself. Moreover it was also submitted that even prior to addition of CRM in CTH 3822, the appellants were importing PRS and it is the submission on behalf of the appellants that PRS can fall u .....

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aration does not get detected, the commercial invoices would not have been placed in the dockets (assuming that the dockets were not seen by the Customs officers but prepared and placed in the Customs Office by the Customs Broker). Because there is a difference of description between commercial invoice and the Bill of Entry, the whole case has been made out. Therefore, the Customs Broker has not aided or abetted the importer in evasion of duty by mis-declaring the description. Also the penalty i .....

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of an authorization from M/s. LGC Promochem India Pvt. Ltd., Bangalore (hereinafter referred to as importer ) CB filed several Bills of Entry for import of chemicals/ Laboratory reagents. The appellants claimed the chemicals as Pharmaceutical Reference Stands (PRS, for short) and classified the same under CTH 38220090. The benefit of exemption Notification No.21/2002-Cus. dt. 01/03/2002 (Sl.No.138 Condition No.l7 for the period upto 16/03/2012 ) and exemption Notification No.12/2012-Cus. dt. 17 .....

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er Customs Act, 1962 and against the appellant also. Besides initiating action under Customs Act, proceedings were initiated against the appellant under Customs Broker License Regulations, 2013 (CBLR). After an enquiry as per the directions of the Commissioner and based on the report of the enquiry officer and after following the due process of law, impugned order has been passed against the appellant. The licence issued to the appellant has been revoked with immediate effect. The security depos .....

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ct, 1962 and without reaching conclusion, initiation of parallel proceedings under CBLR was not proper; 3.2. The observations of the Commissioner in the order that the decision in OIO dt. 28/08/2014 revealed that the appellant had committed and abetted in the evasion of customs duty and reached a conclusion on that basis under CBLR was not proper and therefore is liable to be set aside; 3.3. Appellants were not put to notice about the conclusions reached in the order dt. 28/08/2014 and this resu .....

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therefore this conclusion is assumptive in nature; 3.7. It was submitted that the revocation of licnece on the ground that the appellants had aided and abetted in mis-declaration of description of the goods imported thereby facilitating availment of benefit of exemption notifications is not correct since the importer did not accept the classification or denial of benefit of exemption and has challenged the same and appeals filed by the importer are already before the Tribunal on this issue; 3.8 .....

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ot Certified Reference Material (CRM) as neither certificate of analysis nor data relevant to the use of the products as defined by the Ph.Eur. monograph are provided with the reference standard; 3.10. They also submitted copies of Bills of Entry along with relevant commercial invoices in support of their submission that benefit of exemption notification has been extended right from the year 2011 to 2014 wherein invoices showed that what was imported was PRS and in some cases the invoices did no .....

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e belief that the chemicals imported by them were eligible for exemption under Notification No.21/2002 and Notification No.12/2012 Customs (the words used for exemption PRS are same in both the notifications); 3.13. It was also submitted that according to Regulations, revocation coupled with forfeiture of security deposit and imposition of penalty is not allowed and if the licence is revoked, forfeiture of security and penalty cannot be resorted to. 4. Learned AR would submit that the Customs Br .....

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the invoices did not specifically mention that they had imported PRS. He also drew our attention to the observations of the Commissioner that in the relevant dockets of several Bills of Entry, the documentary evidences showing the eligibility of the importer for exemption were not available. It was also submitted that once broker was advised that the exemption is not available and especially in view of the fact that in many cases the importer paid duty at merit rates, the customs broker should h .....

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clearly violated Regulation 11(e) also. He also submitted that because of the omissions and commissions on the part of the appellant, there was evasion of customs duty amounting to ₹ 10,86,08,476/- and therefore the revocation of licence and penalties imposed and forfeiture of security is appropriate and proper. 5. From the submissions of both the sides, what emerges is the fact that most important aspect that has to be decided is whether there was a mis-declaration on the part of the imp .....

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or laboratory reagents whether or not on a backing, other than those of heading 3002 or 3006; certified reference materials 3822 00 - Diagnostic or laboratory reagents on a backing, prepared diagnostic or laboratory reagents whether or not on a backing, other than those of heading 3002 or 3006; certified reference materials. - For medical diagnosis: 3822 00 11 - Pregnancy confirmation reagents … …. .. .. Kg. 10% - 3822 00 12 - Reagents for diagnosing AIDS … … &hellip .....

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ubstantiate that the organization or institution from where the Reference Standard has been imported is approved by the World Health Organization or International Organization for Standards. 8. The description of the item and the condition remain the same till date and there is no change for the past 12 years. The disputed period for recovery of revenue for more than ₹ 10.86 crores on the ground that the importer is not eligible for the exemption starts from the year 2010 onwards. In parag .....

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38220090 together with the benefit of Sl. No.138 of Notification No.21/2002 dated 1.3.2002 (Condition No.17) and Sl. No.164 of Notification No.12/2012 dated 17.3.2012 (Condition No.12) for the corresponding periods. As per the conditions of the Notifications, the importer shall produce (a) A Certificate of Reference Standard and (b) Copies of the documents to substantiate that the Organization or the Institution from where the Reference Standard has been imported is approved by the World Health .....

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used by the supplier was so altered and had acquiesced to the mis-declarations of the importer. The CB also failed to bring these facts to the notice of the Assistant/Deputy Commissioner of Customs and failed to produce the requisite documents. Thus, the CB appears to have been an active party to the misclassification, wrong claim of concession and thereby to evasion of duty. It is further alleged that the fact that same CB handled Bills of Entry filed by the importer paying merit rate of duty .....

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lls of Entry filed and assessed and taken up for examination by him during the previous 5 years, certificates/copies of documents required as per the conditions of notification were available. On this basis, he observed that the claim of the appellants that all the requisite documents were shown to the proper officer at the time of assessment has no basis. There was no explanation as to why these documents are not available in any of the dockets. He also takes note of the fact that during the pr .....

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een by the officers. The appellants produced a set of Bills of Entry and commercial invoices (for Customs purposes) running into 105 pages. On going through randomly selected documents, the observations can be summarized as under:- Bill of Entry No.4852963 dt. 07/10/2011: In the examination order, it has been mentioned that mandatory compliance requirements have to be verified. In the examination report, there is no mention about verification of documents. The examination report dt. 10/10/2011 s .....

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f package has been reported. In this case also, the invoice gave the description of the content as above and the invoice number tallied with the invoice number given in the Bill of Entry. Bill of Entry No.7815467 dt. 31/08/2012: In this case, the examination order is more detailed. It specifically mentioned that certificate of the reference standard and copies of documents to substantiate that the organization or institution from where the reference standard has been imported is approved by the .....

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ilar to the one given for the earlier Bill of Entry discussed above. Once again the examination report talks of opening the package and verifying the contents. Bill of Entry No.6005890 dt. 03/07/2014: In this case also, the examination order was detailed as in the case of earlier Bills of Entry but the examination report mentioned pharmaceutical reference standard description and part number were as per documents. In this case also in the invoice, description of the content is dangerous goods in .....

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reports and the examination orders is that as is the normal practice in the customs, in this case also, the examination order required the officer examining the consignment to check the description of the goods and also verify documents which are required to be produced before clearing the goods. The conclusion of the Commissioner is based on the fact that in the dockets of Bills of Entry verified by him at random, these documents were not available. Apparently the examining officer was satisfie .....

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appellants did not produce the documents. The examining officer would have definitely seen the commercial invoices, because it is one of the examination requirements. If the examining officer had seen the commercial invoice, he would have definitely noticed the difference in the description of the goods in the certificate, bill of entry and the commercial invoice. In any case, if the examining officer has verified the test report for the reference standard and the documents required as per the c .....

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04/2011 by Section 38 of the Finance Act, 2011. The section is reproduced below for better appreciation:- SECTION 17. Assessment of duty. - (1) An importer entering any imported goods under section 46, or an exporter entering any export goods under section 50, shall, save as otherwise provided insection 85, self-ssess the duty, if any, leviable on such goods. (2) The proper officer may verify the self-assessment of such goods and for this purpose, examine or test any imported goods or export goo .....

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importer, exporter or such other person shall produce such document or furnish such information. (4) Where it is found on verification, examination or testing of the goods or otherwise that the self- assessment is not done correctly, the proper officer may, without prejudice to any other action which may betaken under this Act, re-assess the duty leviable on such goods. (5) Where any re-assessment done under sub-section (4) is contrary to the self- assessment 25 done by the importer or exporter .....

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has not been done or a speaking order has not been passed on re- assessment, the proper officer may audit the assessment of duty of the imported goods or export goods at his office or at the premises of the importer or exporter, as may be expedient, in such manner as may be prescribed. Explanation.- For the removal of doubts, it is hereby declared that in cases where an importer has entered any imported goods under section 46 or an exporter has entered any export goods under section50 before th .....

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nish any information. From the documents produced before us, it can be seen that in several cases there was examination order requiring the officer examining the packages to verify the documents and the eligibility for exemption. Therefore it cannot be concluded that in all the cases there was no examination of the goods and there was no examination or reconsideration of the self-assessment done by the importer/ Customs Broker. 14. Further it was also brought to our notice that on 23/01/2014, in .....

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of Bill of Entry duly observing the principles of natural justice and re-assessment should be based on statutory provisions and facts on record. 15. The observations above would show that self-assessment does not mean or does not give complete freedom to an importer to take the goods out of Customs charge without the knowledge of the Customs or without producing the documents which are required by Customs and when we see the fact that the OIA passed by the Commissioner(Appeals) covered 13 Bills .....

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of the Customs Broker is nothing but an afterthought does not emerge from the facts and circumstances. The conclusion that there is no doubt that Customs Broker did not obtain necessary documents and did not produce the same is also not a conclusion that can emerge, especially in view of the fact that in the case of Bills of Entry produced before us, the examining officer was specifically directed to get the documents. It is quite possible that in some Bills of Entry the examination order may no .....

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vailable, we cannot say that itself is sufficient to come to the conclusion that there was a mis-declaration. The non-availability of documents in the dockets, in our opinion, cannot lead to a conclusion of attempt to evasion in view of the observations made by us and the analysis made by us hereinabove. In paragraph 14.4.1 of his order, the Commissioner has observed that Customs Broker has described the goods as PRS which was different from the nomenclature used by the supplier of the goods. No .....

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n claim and examining the same, it cannot be said that merely because the Customs Broker had described the goods differently in the Bills of Entry, he could have enabled the importer to successfully evade the duty. 18. Further we also find that the Commissioners observation that the allegation made in the show-cause notice that the goods were declared as CRM on the respective invoices but importer / Customs Broker had declared them as PRS on the Bills of Entry is not coming out of his observati .....

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we have indicated that the description of the content are given in the commercial invoices. But we could not find the HSN code number in the invoices placed before us. In fact in the invoices seen by us, there is a remark: The importer shall be personally responsible for the tariff classification in the country of import and will assume the ensuing regulatory, fiscal, health and safety obligations . We reproduce the observations of the Commissioner in respect of one Bill of Entry, below:- Bill o .....

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M in the description. Apparently description of the goods had the chemical names and it appears that CRM reference is taken out from HSN code. It has to be noted that there is no specific term PRS used in the tariff heading. Whether a chemical is PRS has to be based on documentary evidence. Further some PRS materials are classifiable under CTH 28 also. While we have a certificate from the supplier that the chemicals supplied are PRS only, observations of the learned Commissioner in support of hi .....

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appellants were importing PRS and it is the submission on behalf of the appellants that PRS can fall under CTH 3822 or 2852 as the case may be. When so many conclusions are possible and when we find that goods have been examined, documents have been examined, even though there is no mention, if the examiner of the packages has called for the other documents, he would have definitely seen the invoice also. Moreover the Commissioner himself agrees that commercial invoices were available in the doc .....

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ssible to uphold the conclusion of the learned Commissioner that this establishes the deliberate attempt of the Customs Broker to help the importer to evade the tax. 20. As regards the observations of the learned Commissioner in paragraph 14.5 that in some cases, goods were reassessed and merit rate of duty was collected and importer had paid the duty and did not challenge, it was submitted that importer had challenged it. It is in support of this submission that appellants have produced the cop .....

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y anything about 50,000 consignments since they are the subject matter of another appeal. Further it was also submitted that appeals filed by the importer challenging the classification is also before the tribunal and amount involved is more than ₹ 10 crores. 21. The Commissioner has also dealt with the letter dt. 30/09/2014 issued to the importer. He observes that the catalogues do not correspond to any material imported by the importers but are general in nature and how to use reference .....

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ence placed before us, documents before us and submissions made before us. Further he goes on to observe that the Customs Broker had not explained as to why they did not seek clarification from the importer throughout the period and were filing the Bills of Entry. At this juncture, it would be appropriate to consider the statement made by Shri S.S. Prasad and he had stated that: (i) There was no description as Pharmaceutical Reference Standard in the invoice; that the importer had confirmed that .....

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o specific entry was available in the HSN, based on the technical write-up, the classification would be decided by them in consultation with the importer; and (vi) that they were fully aware of the Customs requirements with regard to the correct classification. 22. The statement is in line with the submissions made by Customs Broker referred to by the Commissioner in paragraph 15.3 and his observation is reproduced below:- The CB has submitted that the imported goods always carried the labels as .....

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y. While the Commissioner observes that in respect of the examined documents, the Customs Broker should have verified with the importer, the question that arises is in spite of the fact that goods were examined and examination orders required detailed examination of goods and documents, how the Customs officers also missed the difference in description between the invoice and the bills of entry and also the labels on the goods. There is no observation as to whether goods were allowed to be clear .....

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ces and the Bills of Entry. 24. The discussion above would show that it is not possible to come to the conclusion that the Customs Broker has aided or abetted the importer in evasion of duty by misdeclaring the description. If the Customs Broker was knowledgeable about Customs procedure which he is expected to be, he would have ensured that the description in the invoices tallied with the description in the Bills of Entry. Therefore, the submission of the Broker that they were advised by the imp .....

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e difference between the customs invoice and the Bill of Entry itself should have facilitated revision of classification or questioning the eligibility for exemption and matter could not have and should not have continued for a period of 5 years. The only omission, we can find is that the Customs Broker did not ensure that they had evidence to show that they had advised the importer suitably and importer had given the clarification to them and the difference between the Bill of Entry and the inv .....

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