Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (6) TMI 1003 - CESTAT BANGALORE

2015 (6) TMI 1003 - CESTAT BANGALORE - 2016 (333) E.L.T. 170 (Tri. - Bang.) - 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 docume .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

is a mis-declaration because of difference in the description in the invoice and 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 importin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

appellant's intention was to deliberately evade duty and ensure that mis-declaration 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 im .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

oker (CB) holding a Customs Broker License valid upto 23/09/2016. On the basis 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f exemption notifications, proceedings were initiated against the importer under 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 issu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tion in the proceedings against the importer and the appellant under Customs Act, 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s not correct since this fact was not brought out in the show-cause notice and 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 ap .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

30/09/2014 stating that the reference standard supplied by EQDM supplier are not 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 invoic .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

orter as well as the appellants had reasonable grounds to entertain a bona fide 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ioned that the imported chemicals were CRM and in many of the other invoices, 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the correctness of the information provided. Therefore the customs broker has 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 h .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

der:- 3822 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 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 … …. .. .. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

produces a 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 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

g them as Pharmaceutical Reference Standards claiming classification under CTH 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

failed to seek any clarification from the importer as to why the nomenclature 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 s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r dockets of the import clearances. He found that in none of the dockets of Bills 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 avai .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of documents in the dockets cannot lead to the conclusion that they were not seen 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 me .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the examination report dt. 11/11/2011, once again the result of examination of 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 insti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

try No.8715244 dt. 10/12/2012: In this case also, the examination order is similar 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 t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ndards. 11. What emerges from the verification of Bills of Entry, examination 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, the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s in the docket can lead to a conclusion that at the time of importation, the 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. Self-assessment procedure was introduced in Customs Act with effect from 08/04/2011 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 suc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ascertainment which is in his power to produce or furnish, and thereupon, the 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-secti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ill of entry or the shipping bill, as the case may be. (6) Where re-assessment 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 se .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

officer also may require the importer to produce documents or evidence or furnish 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/ Custom .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

with the provision under Section 17(5) of the Act, in respect of re-assessment 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

fact that documents were not found in the dockets would show that the defence 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. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sioner has examined some Bills of Entry and found that the documents are not available, 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 w .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ing officer since he was required to get the documents to support the exemption 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ted as CRM in the commercial invoice. In the case of invoices examined by us, 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 ob .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t it does not make it clear whether the supplier had mentioned the goods as CRM 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 su .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ver 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 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ole case has been made out. Therefore it is difficult to uphold, in fact, impossible 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e submissions made before us and in such a situation we cannot specifically say 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ese observations, in our opinion, are not sustainable on the basis of the evidence 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 Pharmace .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ication of the products mentioned in the invoice and other documents; (v) if no 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 bel .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and as per the instructions of the importer, they had filed the Bills of Entry. 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 t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s was found out and admittedly the dockets contained only the commercial invoices 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 En .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

goods actually were PRS. If there was an intended evasion, in our opinion, the 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version