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TMI Blog2023 (9) TMI 668X X X X Extracts X X X X X X X X Extracts X X X X ..... s between IDDSL and TDAAL offended the Sales tax Act, as according to the said authorities the said transaction was effected while the goods in question were still in Singapore. It is also material to note that there is a serious dispute whether the sale transaction between IDDSL and TDAAL was incorrectly reflected as HSS. According to the appellant, the goods had been handed over to the carrier and thus, were outside the control of the Beetel and IDDSL. Thus, even though the goods had not left the shores of Singapore, the same would be in transit and therefore, their sale was correctly reflected as HSS. Even though it is considered that reflecting the sale as HSS is incorrect; the error is not of material consequence. Assuming that reflecting the sale and purchase transaction of goods in question while they are in Singapore, as a HSS, was erroneous; it is found difficult to accept that the same would require a seller to file the Bill of Entry and not the purchaser. The Revenue and the respondent have proceeded on the basis that because the goods did not left the shore of Singapore, when the sale and purchase agreement was entered into, thus there was no sale at all. And, the HSS A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CBLR-2013 ) were initiated against the appellant by the respondent on receipt of an offence report in the form of an Order-in-Original dated 15.03.2017 passed by the Additional Commissioner of Customs. 4. The controversy relates to clearance of goods imported under Bill of Entry No.8606801 dated 18.02.2017. The appellant had filed the said Bill of Entry on behalf of M/s Tim Delhi Airport Advertising Pvt. Ltd. (hereafter TDAAL ) in respect of the clearance of goods declared as 71 pieces of Samsung 65 LED Monitor of Model No. LH65QMFPLGC/XL (hereafter the goods ) declaring an assessable value of ₹1,50,59,101/-. TDAAL declared that the goods were purchased on High Sea Sales (HSS) basis from M/s Infosoft Digital Designs and Services Pvt. Ltd. (hereafter IDDSL ). IDDSL had imported the goods from M/s Beetel Teletech Singapore Private Limited, Singapore (hereafter Beetel ). TDAAL had purportedly purchased the goods from IDDSL under a Commercial Invoice No. 115 dated 16.02.2017 on HSS basis. 5. The goods were examined and there is no dispute that they confirmed to the declared description. 6. The appellant had filed the Bill of Entry on behalf of TDAAL and submitted a copy of the H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Design Services pvt. ltd. 12. The concerned authority found that HSS Agreement was not in accordance with relevant statute and IDDSL should have filed the Bill of Entry (and not TDAAL) and was therefore, liable to pay the duty. It was also held that IDDSL was not eligible for using the SFIS scrip in question as the same was issued to TDAAL and was not transferable. The aforesaid findings were in turn based on the findings that the goods were dispatched on 17.02.2017 and 18.02.2017, and the HSS Agreement was entered into prior to the said dispatch, that is, on 16.02.2017. On the aforesaid basis, the concerned authority, inter alia, imposed penalties on TDAAL as well as on the appellant. 13. The proceedings under the CBLR-2013 were initiated against the appellant. The Inquiry Officer submitted a report dated 18.08.2017, whereby it concluded that the appellant had violated various provisions of CBLR-2013. The respondent had held that the appellant had contravened the provisions of Regulation 11(d), 11(e) and 11(m) of CBLR-2013. The respondent, accordingly, revoked the appellant s CB License and also imposed a penalty of ₹25,000/-. 14. It was the appellant s case before the resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods by 2%. d. Whether the CESTAT was justified in passing the impugned order by following Strict Interpretation of the term High Sea Sale, since revocation of Custom Broker License has caused loss of employment and livelihood to its many employees. e. Whether, in the facts of the case and in law, the revocation of the Custom Broker license of the Appellants is commensurate with the alleged contravention of the CBLR, 2013. 18. Although the appellant has projected several questions for consideration of this Court, Mr. Jain, learned counsel appearing for the appellant had confined the challenge to the punitive measures imposed on the appellant on two grounds. First, that the learned CESTAT had failed to consider the appellant s case that the HSS Agreement between TDAAL and IDDSL was valid, on merits. And second, that the punishment of revocation of the appellant s CB License was harsh and disproportionate. 19. He contended that once the goods had been handed over to the airlines, they were beyond the control of the importer. The sale made thereafter, while the goods are in transit, would be HSS as the goods were in possession of the shipper and not in control of the exporter or the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1956, Sales of Goods Act, 1930 read with Section 14 of the Customs Act, and in terms of the Customs Manual on Self-Assessment 2011. It was alleged that the actual importer of goods was IDDSL and that it should have filed the Bill of Entry instead of TDAAL. The relevant extract of the offence report as also noted in the Order-in-Original dated 15.11.2017 is set out below: i. The High Sea Sale is not in accordance with the provisions of Central Sales Tax Act, 1956 and Sales of goods Act, 1930 read with section 14 of the Customs Act, 1962 and in terms of Customs Manual on Self-Assessment 2011 available in Public Domain. The actual importer of the goods in this case is M/s IDDSL who should have filed the B/E under Section 46 of the Customs Act, 1962. Therefore, M/s Infosoft Digital Designs Services (Pvt.) Ltd., 104-105, Suneja tower-1, District Centre, Janak Puri, Delhi, pin code-110058, is liable for payment of appropriate Customs Duty leviable under the provisions of The Customs Tariff Act, 1975. ii. M/s IDDSL is not eligible for the duty exemption by way of using the SFIS scrip, under Notification No. 91/2009- Customs dated 11.09.2009, which is not admissible for the goods impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imposed on the appellant. However, none of the authorities have discussed as to how the sale and purchase of the goods between IDDSL and TDAAL offended the Sales tax Act, as according to the said authorities the said transaction was effected while the goods in question were still in Singapore. 27. The term High Sea Sales has not been defined in the Customs Act or the Rules. The respondent s case is, essentially, based on the Customs Manual on Self Assessment 2011 although the relevant extract of the said Manual has not been quoted in either of the concerned orders the offence report, the orders passed by the respondent, and the impugned order. 28. The concerned authorities referred to HSS at Page 20 of the Customs Manual on Self-Assessment 2011, which was reportedly available in Public Domain. The reference to HSS is in Article 14 of the said manual, which contains provisions for valuation of goods. Article 14 essentially contains provisions to ensure that the goods are correctly valued. Article 14 of the said Manual, as placed in public domain, is reproduced below for ready reference: 14. For importers / exporters: Valuation of Goods [For levy of correct duty / cess if levy is on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly declared in parameters such as description, quality, quantity, country of origin, year of manufacture or production, brand, grade, specifications that have relevance to value. (iv) Documents establishing Customs accepted value of identical / similar goods imported at or about the same time in comparable quantities incomparable commercial transactions. (v) Documents evidencing costs and services listed under Rule 10, if warranted. Examples are: commission, cost of containers, packing cost, freight etc. (vi) For goods Sold on High Seas i.e. sale by the consignee while the goods are yet on high seas or after their dispatch abroad and before their arrival in India: (a) Actual high-seas-sale-contract price paid by the last buyer as evidence of the transaction value under Rule 3(1) of Customs Valuation Rules, 2007; and (b) In the absence of original invoice, high sea sale contract etc. valuation can be done as per the Valuation Rules. [Refer Circular No. 32/2004- Customs dated 11-5-2004.] (vii) For sale / transfer of imported goods after warehousing: Into-Bond Bill of Entry showing the original transaction value since duty will be charged on the original transaction value. [Refer Cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riginal dated 15.11.2017 as well as the impugned order does not indicate any issue regarding valuation of the goods imported. This Court had also pointedly asked the respondent whether there was any question as to valuation of the goods or the quantum of duty payable on the said goods. The learned counsel fairly responded in the negative. 30. It was also not disputed that IDDSL could have sold its right to TDAAL at any time prior to the said goods leave the shores of Singapore. The learned counsel for the Revenue did not dispute that in such a case, TDAAL would be entitled to file the Bill of Entry and pay the duty on the assessable value of the goods. 31. It is thus material to consider whether any added advantage was derived by any of the parties at the cost of the revenue, in reflecting the sale of the goods in question as HSS that is, on assumption that the goods had left the territories of Singapore but had not arrived in the territory of India instead of reflecting them as a sale in Singapore. The answer to the same stated in negative. Concededly, both the transactions were revenue neutral. In other words, it made no difference for the purpose of the Customs Act whether the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner 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; (m) discharge his duties as a Customs Broker with utmost speed and efficiency and without any delay; 37. Insofar as the violations of Regulation 11 of the CBLR-2013 is concerned, the respondent relies on the provisions of Customs Manual on Self-Assessment 2011 to allege that the sale transaction between TDAAL and IDDSL was not a HSS and therefore, the Bill of Entry ought to have been filed in the name of IDDSL. Thus, according to the respondent, filing a Bill of Entry in the name of TDAAL had violated the provisions of the Act. 38. As noted above, there is no impediment in IDDSL transferring its rights to TDAAL prior to the goods being dispatched. Thus, even if it is accepted that HSS Agreement was not a HSS Agreement, but is treated as an agreement while the goods were still in Singapore (which is the only ground for not accepting the agreement between TDAAL and IDDSL as an HSS); filing the Bill of Entry in the name of TDAAL would not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erce, which had allegedly brought discredit to the reputation of the appellant. In this context, the Supreme Court observed that the federation had made a mountain out of a mole hill and made a trivial matter into one involving loss of its prestige and reputation . The Court upheld the decision of reinstating the employees. Similarly, in Hind Construction and Engineering Co. Ltd. v. Their Workmen AIR 1965 SC 917 , workmen were dismissed as the workmen were absent on a particularly date treating the same to be a holiday. The Court held that no reasonable employer would impose the extreme punishment of dismissal. In Coimbatore District Central Cooperative Bank v. Coimbatore District Central Cooperative Bank Employees Association Anr. (2007) 4 SCC 669, the Supreme Court noted the earlier decisions and had observed that it is clear that our legal system also has accepted the doctrine of proportionality . The court observed as under: 17...One of such modes of exercising power, known to law is the doctrine of proportionality . 18. Proportionality is a principle where the court is concerned with the process, method or manner in which the decision-maker has ordered his priorities, reached ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om broker of his livelihood. 44. As noted above, the Commissioner has discretion in imposing an appropriate measure of punishment. Coupled with this power is a duty to exercise this discretion to ensure that the punishment imposed is commensurate with the custom broker s contravention of his obligations. 45. It is also well settled that the Court in exercise of judicial review would normally not interfere with the quantum of punishment and do so only if it is found that it shocks one s conscience (See: State of U.P v. Sheo Shanker Lal Srivastava Others (2006) 3 SCC 276 ).It is also trite law that Article 14 of the Constitution of India strikes at the arbitrariness because an action, that is, arbitrary must necessarily involve negation of equality (See: Andhra Pradesh Dairy Development Corporation Federation v. B. Narasimha Reddy Others (2011) 9 SCC 286 ). 46. In the oft quoted decision in Associated Provincial Picture Houses v. Wednesbury Corporation [1948] 1 KB 223, the Court had observed as under: It is true the discretion must be exercised reasonably. Now what does that mean? Lawyers familiar with the phraseology commonly used in relation to exercise of statutory discretions oft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner of Customs (I G) 2014 SCC OnLine Del 1161, the Co-ordinate Bench of this Court had, in case of concerning revocation of Custom House Agent license, observed as under: 9. The consequence of revocation being serious, the proportionality doctrine must inform the Commissioner s analysis. This is also the exercise the Court must undertake, though with a measure of deference towards the Commissioner s conclusions. 50. On the anvil of the aforesaid standard, we find that the punishment imposed was not justified. The learned CESTAT had failed to consider whether the punishment imposed was disproportionately high, as contended by the appellant. We are of the view that the punishment of revocation of appellant s CB License, is disproportionately excessive. 51. We were inclined to remit the matter to the learned CESTAT for examining the appellant s contention whether it has violated any provisions of the Customs Act or Rules in filing the Bill of Entry on the basis of the HSS Agreement between TDAAL and IDDSL. However, considering that Mr. Jain, learned counsel appearing for the appellant has submitted that the appellant would accept the levy of penalty and confine the relief to ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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