TMI Blog2020 (7) TMI 325X X X X Extracts X X X X X X X X Extracts X X X X ..... re other Natural Gum . As the exemption Notification No. 96/2008 Customs dated 13 August 2008 exempts only Gum Arabic, classifiable under CTH 13012000 from the levy of the customs duty and it is established that the consignments are not Gum Arabic but other Natural Gum, it has to be held that the imported consignment were classifiable under Chapter sub-heading 13019019 and are not entitled for exemption notification benefit under Notification No. 96/2008 Customs dated 13 August 2008. Thus, there are no infirmity in the order of the Commissioner (Appeals) and, accordingly, we uphold the findings made in this regard. Incorrect details and declarations regarding the description and classification under CTH 13012000 or not - HELD THAT:- The custom house agent firm namely M/s Bharti Freight Forwarders Pvt. Ltd. and its Director Anil Kumar Tiwari only described the goods in the bills of entry as provided in the bills of landing and the invoices. It is also a matter of record that in the show cause notice no evidence has been brought forward to indicate that the clearing agent and its Director had conscientiously done anything to evade the customs duty - No malafide can be attache ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mption from Counter Veiling Duty (CVD), taking shelter of CBEC Circular dated 28 June 2007. At the time of import of the consignments, a representative sample was drawn and sent for chemical examination to the Central Revenue Chemical Laboratory, Vizag for determination of the true nature and description of the import consignment. The chemical examiner in the examination reports dated 24 April 2016 and 28 October 2016 reported that each of the samples under reference (U/R) does not meet the requirements for Gum Arabic as per standard specification of IS 6795-2007 . 2. Thus, on the basis of the above-mentioned chemical examination reports, two show cause notices came to be issued. The details are given below :- Sl. No. Show Cause Notice No. Date Amount involved CVD (including Ed. Cess S H Ed. Cess) (Rupees) (in Rupees) SAD Total (Rupees) 1. VIII (6-a) Import CUS/ BL/RPR/03/2014/254-59 dated 07/09/2016 2,66,659/- 96,964/- 3,63,623/- 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28 of the Customs Act, 1962 readwith Section 18 (2) of the Customs Act, 1962 ; (iii) The interest on confirmed demand of ₹ 34,69,456/- (Rupees Thirty Four Lacs Sixty Nine Thousand Four Hundred and Fifty Six only) at Sr. No. 1 above is confirmed in terms of Section 18 (3) of the Customs Act, 1962 readwith Section 28AB of the Customs Act, 1962 ; (iv) The penalty of ₹ 34,69,456/- (Rupees Thirty Four Lacs Sixty Nine Thousand Four Hundred and fifty Six only) is imposed upon the Respondent No. 1 in terms of under Section 114A of the Customs Act, 1962 ; (v) The penalty of ₹ 9,00,000/- (Rupees Nine Lacs only) is imposed upon the Respondent No. 2 in terms of Section 112 (b) (v) of the Customs Act, 1962 ; (vi) The penalty of ₹ 9,00,000/- (Rupees Nine Lacs only) is imposed upon the Respondent No. 3 in terms of Section 112 (b) (v) of the Customs Act, 1962 ; (vii) The imported goods valued at ₹ 2,13,22,787/- are confiscated under Section 111 (m) of Customs Act, 1962 and fine of ₹ 22,00,000/- (Rupees Twenty Two Lacs only) in lieu of confiscation is imposed upon Respondent No. 1 in terms of Section 125 of the Customs Act, 1962. In respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tificate for clearance of the import consignment. 7. The Appellant has further stated that the examination report of the chemical examiner of the Central Revenue Chemical Laboratory only states that as per IS 6795-2007, the imported consignments do not comply with food grades Gum Arabic . They have also stated that they have not imported food grade Gum Arabic , but this does not disqualify them from availing the benefit of Exemption Notification dated 13 August 2008 since for availing the exemption under the said notification, the consignment need only to be of Gum Arabic nature and not necessarily fit for human consumption. 8. It has further been contended that the Commissioner (Appeals) failed to appreciate that during the course of cross-examination, the learned chemical examiner was asked whether the Gum Arabic rejects and Arabic Gum had any defined chemical parameters or any chemical definition in the relevant literature. The examiner replied that though Gum Arabic is not chemically defined but as per the definition given under Indian Standards IS 6795-2007, Gum Arabic has been defined as : the Arabic (Acacia) Gum shall be a dried gummy exudation obtained from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tural Resins and Gums, Namkum Ranchi vide their letter dated 10/09/2018 informed that they were unable to ascertain that the impugned goods are GUM ARABIC . The content of the letter is : It is further added that estimation of quality parameters here are not sufficient enough to ascertain that the given material is of Gum Arabic. Only testing of quality parameters related to Gum Arabic sample may be taken up on charge basis as per BIS standards but without affirming that the supplied material is Gum Arabic . 12. The learned Counsel, therefore, submitted that it is wrong to conclude that subject goods were not Gum Arabic. 13. The learned Counsel appearing on behalf of the appellant Nos. 2 and 3, namely Anil Kumar Tiwari, Director and M/s Bharti Freight Forwarders Pvt. Ltd., which is a CHA firm, contended that the Commissioner (Appeals) has not gone into the details of the facts and without appreciation has imposed penalty on the clearing agent and its Director without establishing that the appellants were having knowledge or reason to believe about the mis-classification and wrong availment of the exemption notification. 14. It is further been submitted that in the ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) (2) (3) (4) (5) 1301 Lac; natural gums, resins, gum-resins and oleoresins (for example, balsams) 1301 20 00 Gum Arabic Others Natural gums Asian gum African gum Asafoetida Kg 30% 20% 1301 90 1301 90 11 Kg. 30% -- 1301 90 12 Kg. 30% -- 1301 90 13 Kg. 30% -- 1301 90 14 Benjamin ras Kg. 30% -- 1301 90 15 Benjamin cowrie Kg. 30% -- 1301 90 16 Karaya gum (Indian tragacanth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oned, but, the fact remains that none of the accompanying import documents describe the subject import consignment as Gum Arabic and, therefore, in a way the classification of Natural Gum under CTH 13012000 (which is specific to Gum Arabic) becomes arbitrary. 20. We find that the Department did not reject the claim of the appellant for classifying the subject consignment under the CTH 13012000 straight away at the time of filing of the bills of entry, though there is no document which may indicate that import consignments are Gum Arabic. The goods were assessed provisionally as per the importers claim and sent for chemical examination for determining the true nature of the import goods. The test report given by the chemical examiner is a detailed report and it is reproduced below :- As per the query raised by you, the detailed study done on the test results of the samples U/R and verified standard technical literature available in the laboratory. The following findings are submitted for your kind perusal. Natural Gums are polysaccharides of natural origin, capable of causing a large increase in a solution s viscosity, even at small concentrations. In the food ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of the import goods. It is an established trade practice that the goods negotiated need to be specifically described in the accompanying import documents such as letter of credit, invoice, Bill of lading and packing list. This is a necessary and legal requirement in case of any dispute that may arise between parties in the course of business. The Natural Gums have several varieties, such as Asafoetida, Benjamin ras, Karaya gum as well as Gum Arabic. It is a common knowledge that market price of all these Natural Gum differ widely and, therefore, the import consignments have to be invoiced as per their actual nomenclature and not by a general name like Natural Gum . Thus, we understand that by giving a general description to the import consignments, the importer had not made a true description of the import consignments. We, therefore, find that the appellant is not justified in claiming that consignment pertained to Gum Arabic and accordingly claiming classification under CTH 13012000. The Appellant has also not adduced any evidence to claim that consignment is Gum Arabic. The import documents and the chemical examination report of the consignments establish that consignm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111, shall be liable, - (i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty [not exceeding the value of the goods or five thousand rupees], whichever is the greater; [(ii) in the case of dutiable goods, other than prohibited goods, subject to the provisions of section 114A, to a penalty not exceeding ten per cent. of the duty sought to be evaded or five thousand rupees, whichever is higher : Provided that where such duty as determined under sub-section (8) of section 28 and the interest payable thereon under section 28AA is paid within thirty days from the date of communication of the order of the proper officer determining such duty, the amount of penalty liable to be paid by such person under this section shall be twenty-five per cent. of the penalty so determined;] [(iii) in the case of goods in respect of which the value stated in the entry made under this Act or in the case of baggage, in the declaration made under ..... 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