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TMI Blog2015 (6) TMI 1003X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the bills filed by the broker on behalf of the importer were facilitated through RMS at Air Cargo Complex, Bangalore. During the course of post-clearance audit of the Bills of Entry filed by them, it was observed that the goods had been mis-classified. Taking a view that mis-classification was done wrongly to avail the benefit of exemption notifications, proceedings were initiated against the importer under Customs Act, 1962 and against the appellant also. Besides initiating action under Customs Act, proceedings were initiated against the appellant under Customs Broker License Regulations, 2013 (CBLR). After an enquiry as per the directions of the Commissioner and based on the report of the enquiry officer and after following the due process of law, impugned order has been passed against the appellant. The licence issued to the appellant has been revoked with immediate effect. The security deposit in full has been forfeited and a penalty of Rs. 50,000/- has been imposed. This appeal is challenging the impugned order. 2. Heard both the sides. 3. The learned counsels for the appellant made detailed submissions. Submissions and the contents of the appeal memorandum brought out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rence standard; 3.10. They also submitted copies of Bills of Entry along with relevant commercial invoices in support of their submission that benefit of exemption notification has been extended right from the year 2011 to 2014 wherein invoices showed that what was imported was PRS and in some cases the invoices did not even mention that the goods imported were PRS; 3.11. It was also submitted that contrary to the observations of the Commissioner in the impugned order, examining officers were required to call for the documents and certificates as per the conditions (12 and 17 of the notifications) and the examining officers had seen the documents as per the examination report submitted by them; 3.12. Under the circumstances, the importer as well as the appellants had reasonable grounds to entertain a bona fide belief that the chemicals imported by them were eligible for exemption under Notification No.21/2002 and Notification No.12/2012 Customs (the words used for exemption PRS are same in both the notifications); 3.13. It was also submitted that according to Regulations, revocation coupled with forfeiture of security deposit and imposition of penalty is not allowed and if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been importing these materials right from 1996 onwards and the items always have been classified under CTH 3822. CTH 3822 at present reads as under:- 3822 Diagnostic or laboratory reagents on a backing, prepared diagnostic or laboratory reagents whether or not on a backing, other than those of heading 3002 or 3006; certified reference materials 3822 00 - Diagnostic or laboratory reagents on a backing, prepared diagnostic or laboratory reagents whether or not on a backing, other than those of heading 3002 or 3006; certified reference materials. ---- For medical diagnosis: 3822 00 11 ---- Pregnancy confirmation reagents ... .... .. .. Kg. 10% - 3822 00 12 ---- Reagents for diagnosing AIDS ... ... ... .. .. Kg. 10% - 3822 00 19 ---- Other... ... ... ... Kg. 10% - 3822 00 90 ---- Other Kg. 10% - 7. Initially, the heading did not contain CRM and the sub-headings. These were introduced subsequently. At Sl.No.164 of Notification No.21/2002, a concessional rate of 5% was provided for PRS falling under Chapter 2852 or 3822 subject to condition No.12. The condition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to have been an active party to the misclassification, wrong claim of concession and thereby to evasion of duty. It is further alleged that the fact that same CB handled Bills of Entry filed by the importer paying merit rate of duty for the same goods further substantiates the position that the CB intentionally suppressed the facts and was an active party to mis-declaration and duty evasion. 9. The Commissioner has taken a view that the description of the goods was mis-declared as PRS on the Bills of Entry even though the supplier had indicated the same as CRM on the invoices. To come to this conclusion, Commissioner has observed that he called for dockets of the import clearances. He found that in none of the dockets of Bills of Entry filed and assessed and taken up for examination by him during the previous 5 years, certificates/copies of documents required as per the conditions of notification were available. On this basis, he observed that the claim of the appellants that all the requisite documents were shown to the proper officer at the time of assessment has no basis. There was no explanation as to why these documents are not available in any of the dockets. He also takes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the notification number have to be verified. In this case also, the examination report dt. 01/09/2012 did not give any comments regarding document verification but specifically says that packages were opened and examined. In this case also the description of the content is given as dangerous goods in excepted quantities. Bill of Entry No.8715244 dt. 10/12/2012: In this case also, the examination order is similar to the one given for the earlier Bill of Entry discussed above. Once again the examination report talks of opening the package and verifying the contents. Bill of Entry No.6005890 dt. 03/07/2014: In this case also, the examination order was detailed as in the case of earlier Bills of Entry but the examination report mentioned pharmaceutical reference standard description and part number were as per documents. In this case also in the invoice, description of the content is dangerous goods in excepted quantities. & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Customer Broker. Self-assessment procedure was introduced in Customs Act with effect from 08/04/2011 by Section 38 of the Finance Act, 2011. The section is reproduced below for better appreciation:- SECTION 17. Assessment of duty. - (1) An importer entering any imported goods under section 46, or an exporter entering any export goods under section 50, shall, save as otherwise provided insection 85, self-ssess the duty, if any, leviable on such goods. (2) The proper officer may verify the self-assessment of such goods and for this purpose, examine or test any imported goods or export goods or such part thereof as may be necessary. (3) For verification of self-assessment under sub-section (2), the proper officer may require the importer, exporter or any other person to produce any contract, brokers note, insurance policy, catalogue or other document, whereby the duty leviable on the imported goods or export goods, as the case may be, can be ascertained, and to furnish any information required for such ascertainment which is in his power to produce or furnish, and thereupon, the importer, exporter or such other person shall produce such document or furnish such info ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht to our notice that on 23/01/2014, in the case of several Bills of Entry, the importer was required to pay duty at the merit rate without allowing the exemption and therefore since no order was passed, the importer filed an appeal before the Commissioner(Appeals) after paying duty under protest. Commissioner(Appeals) in his OIA No.22 to 57/2014 Cus(B) dt. 28/04/2014 passed an order directing the adjudicating authority to pass speaking order in compliance with the provision under Section 17(5) of the Act, in respect of re-assessment of Bill of Entry duly observing the principles of natural justice and re-assessment should be based on statutory provisions and facts on record. 15. The observations above would show that self-assessment does not mean or does not give complete freedom to an importer to take the goods out of Customs charge without the knowledge of the Customs or without producing the documents which are required by Customs and when we see the fact that the OIA passed by the Commissioner(Appeals) covered 13 Bills of Entry of the importer, it would show that even though the self-assessment procedure was adopted by the importer, Department had not accepted and allowed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely because the Customs Broker had described the goods differently in the Bills of Entry, he could have enabled the importer to successfully evade the duty. 18. Further we also find that the Commissioners observation that the allegation made in the show-cause notice that the goods were declared as CRM on the respective invoices but importer / Customs Broker had declared them as PRS on the Bills of Entry is not coming out of his observations on the Bills of Entry selected by him. The invoices and the Bills of Entry produced before us also show that in none of the invoices CRM was mentioned. Whether CRM and PRS are one and the same and what would be the implication on demand for duty is not the subject before us. However, in the Bills of Entry examined by the Commissioner, in none of the cases he has recorded that the description of the goods was indicated as CRM in the commercial invoice. In the case of invoices examined by us, we have indicated that the description of the content are given in the commercial invoices. But we could not find the HSN code number in the invoices placed before us. In fact in the invoices seen by us, there is a remark: "The importer shall be personally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al invoices would not have been placed in the dockets (assuming that the dockets were not seen by the Customs officers but prepared and placed in the Customs Office by the Customs Broker). Because there is a difference of description between commercial invoice and the Bill of Entry, the whole case has been made out. Therefore it is difficult to uphold, in fact, impossible to uphold the conclusion of the learned Commissioner that this establishes the deliberate attempt of the Customs Broker to help the importer to evade the tax. 20. As regards the observations of the learned Commissioner in paragraph 14.5 that in some cases, goods were reassessed and merit rate of duty was collected and importer had paid the duty and did not challenge, it was submitted that importer had challenged it. It is in support of this submission that appellants have produced the copy of the OIA which we referred to earlier, directing reassessment and passing of a speaking order by the adjudicating authority. It has been mentioned in the order, more than 50,000 consignments have been considered and conclusion has been reached that there was a need for reclassification and demand for duty. We can only conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard to the correct classification. 22. The statement is in line with the submissions made by Customs Broker referred to by the Commissioner in paragraph 15.3 and his observation is reproduced below:- The CB has submitted that the imported goods always carried the labels as "Reference Standards" and they had perused the certificates furnished by the importer before submitting the same to the assessing officers and such certificates always carried the words "Pharmaceutical Reference Standards". 23. What the Customs Broker stated is that in the imported chemicals, the label mentioned the item as PRS and in their discussion with the importer, they were told that these are PRS and on that basis and as per the instructions of the importer, they had filed the Bills of Entry. While the Commissioner observes that in respect of the examined documents, the Customs Broker should have verified with the importer, the question that arises is in spite of the fact that goods were examined and examination orders required detailed examination of goods and documents, how the Customs officers also missed the difference in description between the invoice and the bills of entry and also the labels ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout manipulating the invoice and ensuring that the description in the invoice and the Bill of Entry tallies, it cannot be said that there was a deliberate attempt to evade duty and hoodwink the Customs authorities who invariably verified the invoices and in this case at least in the sample Bills of Entry produced before us, even the documents supporting the claim for exemption have been asked for. While we agree that the appellants have not fulfilled their obligations to the extent expected, we do not agree with the quantum of punishment. Regulations 11(d) and 11(e) specify the following obligations of the Customs Broker. 11. Obligations of Customs Broker A Customs Broker shall ...... ..... ..... (d) advise his client to comply with the provisions of the Act and in case of non-compliance, shall bring the matter to the notice of the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be; (e) exercise due diligence to ascertain the correctness of any information which he imparts to a client with reference to any work related to clearance of cargo or baggage; ..... ..... 25. In our opinion, a penalty of Rs. 25,000/- wou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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