2018 (11) TMI 1303 - AT - Customs

Imposition of penalty u/s 112(a) of Customs Act, 1962 - mis-declaration of the imported consignment - classification of the goods which were imported by the M/s Universal Enterprises. Held that - After going through the impugned order and SCN, it is found that the Adjudicating Authority has not clearly defined the omissions and commissions made by the appellant while filing documents for clearance of goods from the Customs as CHA. In this case the appellant have declared the imported goods to be the Zinc Sulphate and classified the goods accordingly. After the information that the goods were mis-declared the samples were drawn and sent for test so as to arrived at the chemical nature and composition thereof. From the record of the case it is not clear as to how the appellants were have colluded and attempted to evade the Custom duty as the same has not been specifically brought out in the adjudication order - the premises of the appellant were search by the Customs Department and it is also on record that nothing incriminating were found. The appellants have not acted in any manner so as to make themselves liable for Penal action under Section 112 (a) of the Customs Act - appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of imported goods, Alleged mis-declaration, Liability of Customs House Agent (CHA) under Customs Act, Allegations of connivance and evasion of duty, Compliance with CHLR regulations, Search of appellant's premises, Adjudicating Authority's findings.

Classification of imported goods:
The case involved a dispute over the classification of imported goods by M/s Universal Enterprises. The appellants, acting as Customs House Agents (CHA), filed the Bill of Entry based on information provided by the importer. The Adjudicating Authority did not clearly specify the omissions and commissions made by the appellants during the clearance process. The imported goods were initially declared as Zinc Sulphate, but subsequent tests revealed the presence of 'Imidacloprid,' a banned substance. The Adjudicating Authority confiscated the banned item and released the Zinc Sulphate. The tribunal found discrepancies in how the appellants were alleged to have colluded and attempted to evade customs duty, as no specific evidence was presented in the adjudication order.

Alleged mis-declaration and liability of CHA:
The appellants were accused of conniving with the importer in mis-declaring the description and value of imported goods, leading to evasion of customs duty. The Adjudicating Authority imposed a fine under Section 112(a) of the Customs Act, 1962. The appellants argued that they acted in accordance with the information provided by the importer and fulfilled their obligations as CHA under the CHLR regulations. They contended that they were not expected to independently verify the nature and value of the goods beyond the information provided. The tribunal noted that no malafide intent could be attributed to the appellants, and the Adjudicating Authority failed to specify the omissions that warranted penalties under the Act.

Compliance with CHLR regulations:
The appellants maintained that they followed the necessary procedures and declarations as required under the CHLR regulations. They argued that they acted professionally as CHA based on the information supplied by the importer, emphasizing that they could not be held responsible for discrepancies in the goods' nature and value discovered after testing. They contended that the Customs House Laboratory and IIT Kharagpur tests revealed the actual composition of the goods, which differed from the initial declaration.

Search of appellant's premises and Adjudicating Authority's findings:
The Customs Department searched the appellant's premises but found no incriminating evidence. The tribunal observed that if no evidence of collusion was found even after the search, it undermined the allegations of improper conduct by the appellants. The tribunal concluded that the appellants had cooperated with the investigation and had not engaged in actions warranting penalties under Section 112(a) of the Customs Act. Consequently, the impugned order was set aside, and the appeal was allowed.