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TMI Blog2020 (7) TMI 325X X X X Extracts X X X X X X X X Extracts X X X X ..... ic customs duty is exempted treating it as 'Gum Arabic' falling under Customs Tariff Chapter Heading No. 13012000. The appellant also sought exemption from Counter Veiling Duty (CVD), taking shelter of CBEC Circular dated 28 June 2007. At the time of import of the consignments, a representative sample was drawn and sent for chemical examination to the Central Revenue Chemical Laboratory, Vizag for determination of the true nature and description of the import consignment. The chemical examiner in the examination reports dated 24 April 2016 and 28 October 2016 reported that 'each of the samples under reference (U/R) does not meet the requirements for Gum Arabic as per standard specification of IS 6795-2007'. 2. Thus, on the basis of the above-mentioned chemical examination reports, two show cause notices came to be issued. The details are given below :- Sl. No. Show Cause Notice No. & Date Amount involved CVD (including Ed. Cess & S&H Ed. Cess) (Rupees) (in Rupees) SAD Total (Rupees) 1. VIII (6-a) Import - CUS/ BL/RPR/03/2014/254-59 dated 07/09/2016 2,66,659/- 96,964/- 3,63,623/- 2. VIII (6-a) Import - CUS/ BL/RPR/06/2016/10368-72 dated 04/10/2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firmed in terms of Section 18 (3) of the Customs Act, 1962 readwith Section 28AB of the Customs Act, 1962 ; (iv) The penalty of Rs. 34,69,456/- (Rupees Thirty Four Lacs Sixty Nine Thousand Four Hundred and fifty Six only) is imposed upon the Respondent No. 1 in terms of under Section 114A of the Customs Act, 1962 ; (v) The penalty of Rs. 9,00,000/- (Rupees Nine Lacs only) is imposed upon the Respondent No. 2 in terms of Section 112 (b) (v) of the Customs Act, 1962 ; (vi) The penalty of Rs. 9,00,000/- (Rupees Nine Lacs only) is imposed upon the Respondent No. 3 in terms of Section 112 (b) (v) of the Customs Act, 1962 ; (vii) The imported goods valued at Rs. 2,13,22,787/- are confiscated under Section 111 (m) of Customs Act, 1962 and fine of Rs. 22,00,000/- (Rupees Twenty Two Lacs only) in lieu of confiscation is imposed upon Respondent No. 1 in terms of Section 125 of the Customs Act, 1962. In respect of SCN F. No. VIII (6-a) Import-CUS/RPR/03/2014/2054-58 dated 07 September 2016 ; (i) The impugned goods imported by the Respondent No. 1 are held as classifiable under chapter sub-heading 13019019 of Customs Tariff as 'Natural Gum - Others' ; (ii) The demand of Customs d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tated that they have not imported food grade 'Gum Arabic', but this does not disqualify them from availing the benefit of Exemption Notification dated 13 August 2008 since for availing the exemption under the said notification, the consignment need only to be of 'Gum Arabic' nature and not necessarily fit for human consumption. 8. It has further been contended that the Commissioner (Appeals) failed to appreciate that during the course of cross-examination, the learned chemical examiner was asked whether the Gum Arabic rejects and Arabic Gum had any defined chemical parameters or any chemical definition in the relevant literature. The examiner replied that though Gum Arabic is not chemically defined but as per the definition given under Indian Standards IS 6795-2007, Gum Arabic has been defined as : 'the Arabic (Acacia) Gum shall be a dried gummy exudation obtained from the stems and branches of Acacia Senegal (L) Wild, Acacia Seyal (L) Wild or of related species of Acacia (Fam Laguminosae). Acacia Gum consists chiefly of a high molecular weight polysaccharides and their calcium, potassium and magnesium salts which hydrolysis yield arabinase, galactase, rhymmase and glycuronic acid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Gum Arabic. Only testing of quality parameters related to Gum Arabic sample may be taken up on charge basis as per BIS standards but without affirming that the supplied material is Gum Arabic'. 12. The learned Counsel, therefore, submitted that it is wrong to conclude that subject goods were not Gum Arabic. 13. The learned Counsel appearing on behalf of the appellant Nos. 2 and 3, namely Anil Kumar Tiwari, Director and M/s Bharti Freight Forwarders Pvt. Ltd., which is a CHA firm, contended that the Commissioner (Appeals) has not gone into the details of the facts and without appreciation has imposed penalty on the clearing agent and its Director without establishing that the appellants were having knowledge or reason to believe about the mis-classification and wrong availment of the exemption notification. 14. It is further been submitted that in the instant case they have been provided with import consignment documentation as invoice, packing list, Bill of landing by the importer and all the import documents were prepared on the basis of such documents. The appellants have not changed or added any false description and/or classification in the matter and they have gone by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an tragacanth) hastab Kg. 30% -- 1301 90 17 Tragacanth (adraganth) Kg. 30% -- 1301 90 18 Storax Kg. 30% -- 1301 90 19 Other Kg. 30% -- 18. A perusal at the above scheme of classification makes it clear that only 'Gum Arabic' is classifiable under Chapter sub-heading No. 13012000 and for other natural gums the classification are provided under the Chapter CTH 130190 and its sub-headings. The sub-classification under CTH 13019011 to 13019018 are for specific categories of natural gums such as Asian gum; Asafoetida (Hing), Karaya gum etc. and the other natural gums. Since, natural gum without any specific description is classifiable under 13019019, for which customs duty exemption is not available and accordingly the Department formed a view that since the consignment imported are not of the Gum Arabic but that other natural gums it classified the import consignment under CTH 13019019 and denied the benefit of exemption Notification No. 96/2008 - Customs dated 13 August 2008. 19. With regard to appellant No. (i) i.e. importer - appellant, the only issue before us for decision is whether the imported consignment are Gum Arabic or other Natural Gum. In this regard so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the woody elements of plants or in seed coatings. * Natural gums can be classified according to their origin. They can also be classified as uncharged or ionic polymers (polyelectrolytes). * Gum Combretum is Combretum nigricans occurring throughout tropical West Africa, particularly in northern Nigeria, Mali and Niger, is the major source of combretum gum. Gum combretum is selling it under false names like 'gum Niger' or 'Dark Nigerian gum arabic No. 2' or actually mixing it with gum Arabic as a adulterant. * Gum Arabic is having Bureau of Indian Standards IS 6795-2007 and International specification published by Food and Agriculture Organization of the United Nations (FAO, 1990), defines gum Arabic as the 'dried exudation obtained from the stems and branches of Acacia Senegal (L) Willdenow or closely related species'. * Gum Arabic is a Natural Gum but All Natural gums are not Gum Arabic * Combretum gum is very different from Gum Arabic. Vigilance is necessary to detect such misrepresentations because Combretum gums differ greatly from gum Arabic. (Acacia Senegal (L) Wild). Moreover, because there is no toxicological evidence for their safety in use, Combretum gums are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifiable under Chapter sub-heading 13019019 and are not entitled for exemption notification benefit under Notification No. 96/2008 - Customs dated 13 August 2008. Thus, we find no infirmity in the order of the Commissioner (Appeals) and, accordingly, we uphold the findings made in this regard. 22. Coming to the appeals filed by the Custom House Agent firm and Anil Kumar Tiwari, the only allegation which has been levelled against the said appellants is that they presented import documents to the custom house which contained incorrect details and declarations regarding the description and classification under CTH 13012000 and thereby they colluded with the appellant - importer in an attempt to evade the customs duty by mis-declaration of the description and chapter heading of the import consignments. 23. We find from a perusal of the records that the custom house agent firm namely M/s Bharti Freight Forwarders Pvt. Ltd. and its Director Anil Kumar Tiwari only described the goods in the bills of entry as provided in the bills of landing and the invoices. It is also a matter of record that in the show cause notice no evidence has been brought forward to indicate that the clearing agen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exceeding the value of the goods or the difference between the declared value and the value thereof or five thousand rupees], whichever is the highest; (v) in the case of goods falling both under clauses (ii) and (iii), to a penalty [not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or five thousand rupees], whichever is the highest.]' 25. From the entire proceedings, we find that none of the requirements provided under Section 112 (b) have been established against the clearing agent. Since the importer - appellant himself has sought benefit of the exemption notification by classifying the goods under chapter sub-heading CTH 13012000, which was allowed by provisionally assessing the Bills of entry subject to chemical test by the Department itself, the Department is not justified in alleging any malafide on the part of the CHA firm and its Director. Thus, there is no ground to levy any penalty on the appellant CHA firm - M/s Bharti Freight Forwarders Pvt. Ltd. and its Director - Anil Kumar Tiwari. The penalty which has been imposed by the impugned order-in-appeal is, accordingly, set aside. 26. As a resul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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