2019 (8) TMI 497 - AT - Customs

Revocation of CHA License - forfeiture of security deposit - Import of restricted item or not - import of assorted birthday candles - on examination, the goods appeared to be classifiable under Chapter heading 3604 fireworks, signalling flares, rain rockets, fog signals and other pyro-technic articles - violation of Regulation 11(d) and (e) of CBLR, 2013. Whether the imported goods i.e. assorted birthday candles can actually be classified as fireworks/pyrotechnics? - HELD THAT - The impugned goods are assorted candles makes it clear that the impugned goods neither can be called as firework nor are the pyrotechnic substance. The reports have admission that goods in question are candles. However, the Central wig of the candles contains such chemicals as are the contents of fireworks. Thus, the goods are such that a small part thereof contains such chemical as are required to manufacture fireworks. If similarity of contents is the criteria to classify than even match stick should be classified as firework, in the given circumstances and in view of the principle of common parlance/ in terms of trade we hold that goods are not fireworks - Admittedly the essential use of impugned goods is as that of birthday candles. The introduction of Nitrogen, Potassium, Calcium, etc. is intended to just add on the sparkle to that candle and to add on a musical feature to the candles. The object is neither fireworks show for entertainment nor to have the explosions/bursts nor even to use the sparkle as fog lamp or signalling apparatus as are the characteristics of fireworks as per Head note of CTH 3604. This further corroborates our opinion that the impugned good cannot be classified under Chapter 36 CTH 3604 i.e. fireworks, signalling, flares, rain rockets, fog signals and other pyrotechnic articles. Rather these fall under Chapter 34 CTH 3406 candles, tapers and the like. Thus, G-Card Holder, Shri Kuber Nath Rai had a bonafide belief for the impugned goods to be assorted birthday candles simplicitor as the earlier two consignments had also been cleared rather on the basis of the reports of the Customs officers acknowledging the goods to be assorted birthday candles only. Above all, the present appellant admittedly has no concern with the interecepted consignment - No doubt, CHA is a link between the Customs Authorities and the importers and the CBLR Regulations imposes obligation upon them which have to be taken as mandatory but law is also settled that not any and every infraction of the CHA Regulations either Regulation 13 or elsewhere leads to the revocation of license rather in line with a proportionality analysis and only grave and serious violation justify revocation. Here no reason appears for the cancellation of appellant s CHA license - The penalty is also opined to be far beyond the proportion. Hence, same is also held liable to be set aside - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Whether the appellant failed to inform the correct classification about the impugned birthday candles to the importer intentionally and as such, the license has rightly been revoked.
2. Whether the imported goods, i.e., assorted birthday candles, can actually be classified as fireworks/pyrotechnics.

Issue-wise Detailed Analysis:

1. Failure to Inform Correct Classification and License Revocation:
The appellant's license was revoked on the grounds of failing to advise the importer regarding the correct classification of assorted birthday candles under CTH 3604 (fireworks) instead of CTH 3406 (wax candles). The Department argued that the Customs Broker failed to inform the clients about the import of fireworks, which are restricted and require necessary NOC. The Tribunal observed that the appellant's consignments were never intercepted or examined, and the penalty was imposed based on the assumption that the goods were similar to those examined under Bill of Entry No. 5222876. The Tribunal found that the appellant, M/s. Jaiswal Import Cargo Services Limited, was not involved in the consignment intercepted later and that the revocation of the license based on the subsequent interception of similar goods was unjustified and barred by the principle of estoppel.

2. Classification of Imported Goods as Fireworks/Pyrotechnics:
The Tribunal examined whether the imported assorted birthday candles could be classified as fireworks/pyrotechnics. The definitions of fireworks and pyrotechnics from various sources, including the Cambridge Dictionary and Wikipedia, were considered. The Tribunal concluded that the impugned goods could not be classified as fireworks or pyrotechnic substances. The CFSL report indicated the presence of chemicals in the central wick of the candles, but the Tribunal held that the essential use of the goods was as birthday candles, not fireworks. The introduction of chemicals was intended to add sparkle and musical features to the candles, not to serve as fireworks. The Tribunal referred to Rule 3(a) of the General Rules of Interpretation Customs Tariff Act, emphasizing the essential use criteria, and concluded that the goods fell under Chapter 34 CTH 3406 (candles, tapers, and the like) rather than Chapter 36 CTH 3604 (fireworks, signaling, flares, etc.).

The Tribunal also noted that the Assistant Commissioner's initial opinion did not classify the goods as fireworks or firecrackers. The adjudicating authority's decision to revoke the CB license and forfeit the security deposit was found to be contradictory and unjustified. The Tribunal emphasized that not every infraction of CHA Regulations leads to license revocation and highlighted the need for proportionality in punishment. The absence of due diligence or intentional violation on the part of the appellant was not established, leading to the conclusion that the cancellation of the appellant's CHA license and the imposed penalty were disproportionate and unjustified.

Conclusion:
The Tribunal set aside the Order under challenge, allowed the Appeal, and pronounced the decision in open Court on 07.08.2019.