2024 (9) TMI 946 - AT - Customs

Levy of penalty - filing shipping bills with incorrect classification intentionally with the aim of getting higher MEIS benefits - violation of provisions of Regulations 10(d) and 10(e) of CBLR 2018 - HELD THAT - The appellant has filed Shipping Bill classifying the goods under the CTH 36050010 whereas the department proposed the classification under CTH 36050090. The appellant submits that it is not the responsibility of the CHA to file the appropriate classification. The department is free to modify the classification adopted by the appellant and finalize the benefit under the MEIS eligible to them. It is found the appellant cannot be held responsible for misdeclaration of classification, if any, in the Shipping Bill. It is the responsibility of the proper officer of customs to decide the classification of the goods. Accordingly, the allegation in the impugned order that the appellant has contravened the Regulation 10 (d) and 10(e) of CBLR 2018 is not sustainable. Thus, the penalty imposed on the appellant under 18(1) of the CBLR, 2018 is also not sustainable. This view is supported by the decision of the Tribunal in the case of M/s. Max Miller Agencies Vs Commissioner of Customs 2024 (1) TMI 1220 - CESTAT CHENNAI wherein this Tribunal has held that 'once it has been observed by the learned Commissioner that there is no mens rea on the part of the appellant then in that case imposition of penalty of Rs.25,000/- for violation of Regulation 10 (d) and 10(e) of CBLR 2018 is not sustainable in law.' The appellant has not violated the provisions of Regulations 10(d) and 10(e) of CBLR, 2018 and hence the penalty imposed on the appellant under Regulation 18(1) of the CBLR, 2018 is not sustainable - the penalty imposed on the appellant is set aside - appeal allowed.

Summary

Issues:
Imposition of penalty on the appellant for incorrect classification in shipping bills.

Detailed Analysis:
The appellant filed an appeal against the penalty imposed on them in the Order-In-Original passed by the Commissioner of Customs. The Show Cause Notice alleged that the appellant intentionally misclassified goods in shipping bills to obtain higher benefits. The penalty was imposed under section 18(1) of CBLR, 2018. The appellant argued that it was the duty of the proper officer to decide the classification, and they had no role in misdeclaration. They cited a Tribunal decision in a similar case where the penalty was set aside. The Appellate Tribunal found that the appellant classified goods under one code while the department proposed a different code. It held that the appellant cannot be held responsible for misclassification in the shipping bill as it is the customs officer's duty to decide classification. The Tribunal concluded that the penalty under Regulation 18(1) of CBLR, 2018 was not sustainable.

The Tribunal referred to a previous decision involving similar facts where it was held that there was no non-compliance of Customs Act provisions by the exporter. The Tribunal emphasized that classification is a question of law and cannot be considered misdeclaration. The Tribunal also noted that other exporters followed the same classification, and even DGFT authorities approved the MEIS benefits, indicating no wrongdoing in classification. The Commissioner did not follow an advisory advising against issuing show cause notices in cases of interpretative disputes regarding classification. The Tribunal held that there was no mens rea on the appellant's part and set aside the penalty for violating Regulation 10(d) and 10(e) of CBLR, 2018 based on the precedent and legal principles.

By relying on previous decisions, the Tribunal concluded that the appellant did not violate Regulations 10(d) and 10(e) of CBLR, 2018, and therefore, the penalty imposed under Regulation 18(1) was not sustainable. The Tribunal allowed the appeal, setting aside the penalty imposed on the appellant.

In summary, the Appellate Tribunal ruled in favor of the appellant, setting aside the penalty imposed for incorrect classification in the shipping bills. The Tribunal emphasized that classification is a legal question and not a misdeclaration, and the appellant cannot be held responsible for misclassification. The decision was based on legal principles and precedents, ultimately allowing the appeal and overturning the penalty.