2022 (1) TMI 813 - AT - Customs

Revocation of Customs Broker License - forfeiture of the security deposit - penalty under Regulation 18 of the CBLR, 2018 - import of Cigarettes and Food Supplement/proteins - seeking clearance of goods declared as Food Stuff (Chocolate etc.) Cigarettes and Cosmetics - prohibited/restricted goods - benefit of N/N. 03/57-Cus. dated 08.01.1957 - Customs Circular No. 13/2007 dated 02.03.2007 - HELD THAT - It is incorrectly held that the appellant have violated the provisions of Regulation 10(d) of CBLR, 2018. Further, the appellant has exercised due diligence in carrying out his duties. The appellant knew that in case of diplomatic consignment etc. cigarette are exempt from payment of customs duty under Notification No. 3/57-Cus. dated 08.01.1957, when the same are imported for their personal use or use in the Diplomatic Mission. In the instant case, importer was First Secretary in the Embassy of Republic of Senegal and therefore they are eligible for the aforesaid exemption in so far as import of cigarettes is concerned. Further, the appellant did declare in the Bill of entry details of cigarette as per the import documents. Further, the importer has produced the exemption certificate dated 16.08.2018 in form 10A Customs Duty Exemption Certificate in respect of quota items (liquor/ Cigarettes/ flood stuff) imported for the personal use of entitled members of Diplomatic Mission. Thus, the finding of the Commissioner in the impugned order is erroneous that there is violation of Regulation 10(d)(e) and (f). Penalties under Section 114AA and 117 of the Customs Act, 1962 - HELD THAT - It is inconceivable that a CHA, whose job is only to file bill of entries, making the proper declarations as per the information given by the importer and to assist an importer for clearance of the goods, would be aware of the technical laws of production of various licences for an import of a particular item, so as to invoke penal action against him. In view of the findings of the learned Commissioner (Appeals) in the main show cause notice, wherein the said Diplomat was also a co-noticee, the appellant Customs Broker have been granted clean chit with full relief. Accordingly, the cause of action under the CBLR does not survive. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Forfeiture of security deposit and imposition of penalty on the appellant Custom Broker.
2. Mismatch and mis-declaration of goods in the Bill of Entry.
3. Examination and seizure of goods.
4. Diplomatic immunity and compliance with Customs regulations.
5. Liability and penalty under various sections of the Customs Act, 1962 and CBLR, 2018.

Issue-Wise Analysis:

1. Forfeiture of Security Deposit and Imposition of Penalty:
The appeal arises from the Order-in-original dated 06.02.2020, where the learned Commissioner ordered the forfeiture of the security deposit of ?75,000/- and imposed a penalty of ?50,000/- under Regulation 18 of the CBLR, 2018 on the appellant Custom Broker. The Commissioner refrained from revoking the CB License valid until 21.10.2027.

2. Mismatch and Mis-declaration of Goods:
The case involves the import of goods by a diplomat from the Embassy of the Republic of Senegal, where discrepancies were found between the invoice, Bill of Lading (B/L), Exemption Certificate, and Bill of Entry. The Bill of Entry declared items such as chocolates, food stuff, cigarettes, and cosmetics, but the examination revealed mis-declaration, particularly with the inclusion of 14,40,000 sticks of Gudang Garam cigarettes not covered under the Duty Exemption Certificate.

3. Examination and Seizure of Goods:
Following instructions for a 100% examination of the container, the goods were inspected in the presence of representatives from the Embassy, MEA, and Customs. The examination revealed that the declared chocolates and food stuff were actually food supplements and that the quantity of cigarettes was significantly under-declared. The cigarettes did not conform to the regulations under the Cigarettes and other Tobacco Products Act (COTPA) and were seized under Section 110 of the Customs Act, 1962, valued at ?72,00,000/-.

4. Diplomatic Immunity and Compliance with Customs Regulations:
The importer, a diplomat, claimed exemption under Notification No. 03/57-Cus. dated 08.01.1957. However, the exemption certificate did not cover cigarettes, and the goods were mis-declared. The MEA confirmed that the exemption certificate was only for food stuff. The Customs Broker, Mr. Rahul Bhardwaj, was found to have filed the Bill of Entry with incorrect declarations, leading to the seizure and subsequent legal proceedings.

5. Liability and Penalty under Various Sections of the Customs Act, 1962 and CBLR, 2018:
The Customs authorities found that the importer and the Customs Broker violated several provisions of the Customs Act, 1962, including Section 111 (m) for mis-declaration, Section 112 (a) for evasion of duty, and Section 114AA for using manipulated documents. The Customs Broker was also found to have violated Regulations 10(d), (e), and (f) of the CBLR, 2018.

Judgment:
The Tribunal set aside the impugned order, noting that the Customs Broker had advised the importer to comply with the Customs laws and that the importer had declared awareness of the relevant regulations. The Tribunal found no fault in the Customs Broker's actions, as the exemption for cigarettes was not explicitly excluded in the exemption certificate, and the Customs Broker had declared the goods based on the provided documents. The Tribunal referenced a similar case (M/s Trading Corporation Pvt. Ltd.) where the CHA was not penalized for filing Bill of Entry without knowing the technical laws. Consequently, the appeal was allowed with consequential benefits, and the miscellaneous application was disposed of accordingly.