TMI Blog2024 (1) TMI 257X X X X Extracts X X X X X X X X Extracts X X X X ..... has no merits. Power to grant the MEIS rewards/benefit - HELD THAT:- The Scrips can be used for payment of various Customs and Central Excise duties and fees as specified. In the impugned case no dispute on the classification heading of the goods under the schedule to the Customs Tariff Act 1975 has been raised. In fact, it is mentioned that as soon as the discrepancy in the classification heading was pointed out the exporter has paid the excess MEIS benefits claimed. In the era of self-assessment any wrong declaration including that of the classification of the goods which is done deliberately in the Shipping Bill / Bill of Lading for earning undue benefit on export of goods can be examined and penal action taken against all the persons concerned by Customs if so warranted. Such blame worthy acts ultimately affect the payment of Customs and Excise duties through use of freely transferable ineligible scrips, thus defrauding the exchequer. Hence while grant of rewards to the exporter is by the DGFT preventing the leakage of revenue is the concern of Customs. Therefor while the power to grant the MEIS rewards/benefit is conferred on the DGFT authorities, action for violation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HAT:- Sec. 113 [i] provides for goods attempted to be exported liable for confiscation when the exporter mis-declares the material particulars or its value this is not the case here - Section 113 (i) of the Customs Act 1962, provides for the confiscation of goods entered for exportation which do not correspond in respect of value or in any material particular with the entry made under this. Material particulars would include the CTH of the goods as it has a bearing on the benefits accruing to the appellant. Hence a mis-declaration relating to the classification of the goods is also actionable under the said section. Onus of proving that the appellant had intentionally or knowingly made any false declaration or statement - HELD THAT:- The onus of proving that the appellant had intentionally or knowingly made any false declaration is on the Department. However, when people collude to do a blame worthy act it is always hatched in secrecy, and it is impossible to adduce direct evidence of the same. The offence can be largely proved from inferences drawn from acts or illegal omission or commissions made - While it is true that Appellate bodies should not interfere with the penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom 2017 to December 2020. Department alleges that although the only specific Customs Tariff Heading (CTH) under the Customs Tariff Act, 1975, for safety matches is under CTH 3605 0010 and there is no other competing heading, the goods were misclassified in the Shipping Bill (SB) under CTH 3605 0090 with the intention of getting MEIS reward / incentive of 7% (1.11.2017 to 31.12.2019) and 5% (1.1.2020 to 31.12.2020) as against MEIS benefit for CTH 3605 0010 of 3%. A common show cause notice dated 08.06.2022 was issued seeking to impose penalties on the appellant contending that they were aware of the Act, rules and notification but had failed to correctly advise the exporter to declare the correct classification of the goods in the SB. Further, by not refusing to file the subject SB with CTH 3605 0090 or bringing the matter to the Departments notice they have thereby colluded with the exporter to claim higher MEIS scrips. After due process of law, the adjudicating Commissioner imposed penalty among other noticees on the Customs Broker of Rs.10,00,000/- (Rupees ten lakhs) under section 114 and Rs.10,00,000/- (Rupees ten lakhs) under section 114AA of the Customs Act, 1962 for filing i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is admitted that the goods were properly declared as Safety Matches; the onus of proving that the appellant had intentionally or knowingly made any false declaration or statement is cast on Revenue which has not been discharged hence the disproportionate and harsh penalties imposed are totally bad and liable to be vacated; imposing penalties both under Section 114 and Section 114 AA on both of the CB and the exporter together for the same act has led to double jeopardy and grave mis-carriage of justice. He cited various case laws in support of their stand namely, Metal Industries Vs. CCE [2008 (232) ELT 71] ; Kunal Travels Vs. CC [2017 (354) ELT 447; KVS Cargo Vs. CC [2019 (365) ELT 392] which states that a CHA cannot be visited with any penalty under Section 114/114 AA of the Act for any omission or commission which is not wanton or intentional. He hence prayed that their appeal be allowed by setting aside the order of the respondent and render justice 3.2 Shri Anoop Singh, learned Deputy Commissioner (AR) submitted that, the classification of the goods declared in the Bill of Lading and in Bill of Entry is Safety Matches with CTH 36050090, when there is only one specific h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant-firm has not been retracted. 5. The relevant portions of sections that are involved in the resolution of this dispute are listed below: 114. Penalty for attempt to export goods improperly, etc. Any person who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 113, or abets the doing or omission of such an act, 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 three times the value of the goods as declared by the exporter or the value as determined under this Act, 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 su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecoverable by the Customs Department under the Customs Act. In addition to action by the Customs Department, the licensee is liable to penal action by DGFT under the FTDR Act 1992, for not fulfilling the conditions of the licence issued. Hence in respect to the violations under the individual provisions of the two Acts, levy of penalty or confiscation, may be initiated under the Customs Act apart from penal action being taken under Section 11 of the Foreign Trade (Development and Regulation) Act, 1992 including the suspension or cancellation of the license issued under the FTDR Act, 1992. The Merchandise Exports from India Scheme (MEIS) Scheme is designed to provide rewards to exporters to promote the manufacture and export of notified goods/ products. The Duty Credit Scrips and goods imported/ domestically procured against them is freely transferable. The Scrips can be used for payment of various Customs and Central Excise duties and fees as specified. In the impugned case no dispute on the classification heading of the goods under the schedule to the Customs Tariff Act 1975 has been raised. In fact, it is mentioned that as soon as the discrepancy in the classification heading w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion as per law. Hence the onus is on the assessee and not on the Customs Officer. In cases, where the importer or exporter is not able to determine the duty liability / make assessment for any reason, he may request the proper officer for assessment of the same under Section 18(a) of the Customs Act, 1962. The appellant has not shown that overwhelmed by the complex questions of law he had advised the exporter to request for assessment under Section 18(a) ibid. This is perhaps because as pointed out by Revenue, there can be no confusion with only one specific heading for Safety Matches in the Customs Tariff and in the MEIS schedule i.e. CTH 3605 0010. Hence the averments of the appellant is not correct. 6.5 Action against the CB can be taken only under the CBLR and not under the Customs Act. Action taken by a broker in terms of the license requirements are actionable under CBLR, but for actions relating to intentionally using incorrect documents etc. collusion with exporters for defrauding the exchequer etc. the cause of action is different and separate action can be taken under the Customs Acy 1962. 6.6 GST having only two sub-heading namely hand-made safety machines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s classification was suddenly changed to CTH 3605 0090. The MEIS reward / incentive for CTH 3605 0090 was 7% (1.11.2017 to 31.12.2019) and 5% (1.1.2020 to 31.12.2020) as against MEIS benefit for CTH 3605 0010 of 3%. During the investigation Shri S Selvaraj, Managing Partner of the Appellants firm gave a statement on 11/03/2023. Replies to questions 4, 5, 6 and 8 which are relevant to this issue are reproduced below:- Q.4 Are you aware of the CTI of safety matches being exported by the exporter? A.4 Yes. Safety matches are classifiable under CTI 36050010. The exporters were also regularly exporting safety matches under CTI 36050010. But during period they asked us to file shipping bills under CTI 36050090. When we asked about the change of CTI, they told us that they are manufacturing machine made safety matches and hence the correct classification should be 36050090. Hence as per their instruction we filed these shipping bills under CTI 36050090. However, after that they said that they had realized their mistake and again asked us to file under CTI 36050010. Q.5 Are you are aware of the difference between CTI 36050010 and 36050090? A.5 Yes we are aware of the same. CTI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atement above it seen that the appellant was not a willing collaborator with the exporter. He did question the exporter about the change in classification and it was as per the exporters instructions that the SB was filed showing the classification of the goods under CTH 3605 0090. Knowing the illegal gain being made by the exporter he could have refused to file the SB and have brought it to the notice of the department. In Director of Enforcement vs. MCTM Corporation Pvt. Ltd. [(1996) 2 SCC 471], the Hon'ble Supreme Court quoted the following passage with approval: In Corpus Juris Secundrum. Vol.85 at page 580, para 1023, it is stated thus: A penalty imposed for a tax delinquency is a civil obligation, remedial and coercive in its nature, and is far different from the penalty for a crime or a fine or forfeiture provided as punishment for the violation of criminal or penal laws. While it is true that Appellate bodies should not interfere with the penalty imposed by the Original Authority just because another view is possible, at the same time the legal principle is that penalty ought always to fit the misconduct. While the penalty when warranted should act as a deter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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