2019 (2) TMI 775 - AT - Customs

Penalty u/s 112(a) and 114AA of the Customs Act - Suspension of CHA License - failure to oerform duties properly - the Department found that the appellant in connivance with the importer has not properly examined the goods as the goods were falling under e-waste or Hazardous waste - Circular No. 4/2008-Cus., dated 12-2-2008 issued by C.B.E. & C. - e-waste or Hazardous waste or not - Held that - The appellant has carried out the inspection of the goods as per the direction of the Commissioner in the presence of the Customs Officials who have also accepted the report and has countersigned the same. Further, the said goods have also been inspected by the other Chartered Engineer whose report is almost identical and they have also not certified the impugned goods as e-waste. Further, there was no specific direction that he has to examine each and every machine regarding its functionality. The appellant after the inspection has given the report that the remaining life of the machine is more than 5 years and in the past also these kinds of machines were imported and were cleared. There is no material on record which clearly points out the intelligence on the part of the appellant to perform his duty negligently. The report submitted by the appellant was accepted by the Customs Official and it has been countersigned by them - the impugned order regarding suspension is not sustainable in law - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against suspension of license by Commissioner of Customs for alleged negligence in inspection and valuation of imported goods.

Detailed Analysis:

Issue 1: Allegation of Negligence in Inspection and Valuation
The appellant, a Chartered Engineer, faced suspension of license by the Commissioner of Customs due to alleged negligence in inspecting and valuing imported goods. The appellant had conducted inspections of imported Digital Multifunctional Printer/Devices and suggested an increase in their value. Subsequently, the Department alleged that the appellant had not properly examined the goods, which were deemed as e-waste, leading to a show cause notice and penalties under the Customs Act. The appellant challenged this decision through a Writ Petition in the High Court, which directed a reconsideration of the suspension. The Tribunal later allowed the appeals filed by the appellant, emphasizing that there was no specific requirement to conduct 100% functionality tests on the machines during inspection.

Issue 2: Arguments and Defenses
During the proceedings, the appellant argued that the impugned order for continuation of suspension lacked legal sustainability as it was based on unsubstantiated grounds. The appellant contended that based on experience and visual inspection, it was feasible to identify potential damage or repairs in the machines without conducting full functionality tests. The appellant also highlighted that the inspection was carried out in the presence of Customs Officers, whose signatures were on the inspection report, and that the shelf life of the machines was determined to be over 5 years, hence not classified as e-waste. Moreover, the appellant raised concerns about discriminatory actions, as other agencies' reports were similar but faced no show cause notices.

Issue 3: Tribunal's Decision
After hearing both parties and examining the evidence, the Tribunal found that the appellant had conducted the inspection as directed by the Commissioner, with Customs Officials accepting and countersigning the report. Additionally, the report of another Chartered Engineer aligned with the appellant's findings, not categorizing the goods as e-waste. The Tribunal noted the absence of a specific directive to inspect each machine for functionality, emphasizing the acceptance of the report by Customs Officials. There was no substantial evidence indicating negligence or misconduct on the appellant's part, and past performance did not raise any concerns. Consequently, the Tribunal deemed the suspension order unsustainable in law and set it aside, allowing the appeal of the appellant.

In conclusion, the Tribunal's decision favored the appellant, highlighting the lack of substantial evidence to support the suspension of the license based on alleged negligence in inspection and valuation of imported goods. The judgment emphasized procedural adherence, absence of specific directives for functionality tests, and the acceptance of inspection reports by Customs Officials as key factors in overturning the suspension order.