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TMI Blog2024 (1) TMI 257X X X X Extracts X X X X X X X X Extracts X X X X ..... 0010 of 3%. A common show cause notice dated 08.06.2022 was issued seeking to impose penalties on the appellant contending that they were aware of the Act, rules and notification but had failed to correctly advise the exporter to declare the correct classification of the goods in the SB. Further, by not refusing to file the subject SB with CTH 3605 0090 or bringing the matter to the Departments notice they have thereby colluded with the exporter to claim higher MEIS scrips. After due process of law, the adjudicating Commissioner imposed penalty among other noticees on the Customs Broker of Rs.10,00,000/- (Rupees ten lakhs) under section 114 and Rs.10,00,000/- (Rupees ten lakhs) under section 114AA of the Customs Act, 1962 for filing incorrect declaration and misclassifying the goods. Aggrieved by the said order, the appellant is before this Tribunal. 2.1 No cross-objection has been filed by the respondent-department. 3. Shri N. Viswanathan, learned counsel appeared for the appellant and Shri Anoop Singh, learned Deputy Commissioner (AR) appeared for the Department. 3.1 The learned Counsel in his submission both oral and written and rejoinder statements has stated that section 28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uble jeopardy and grave mis-carriage of justice. He cited various case laws in support of their stand namely, Metal Industries Vs. CCE [2008 (232) ELT 71] ; Kunal Travels Vs. CC [2017 (354) ELT 447; KVS Cargo Vs. CC [2019 (365) ELT 392] which states that a CHA cannot be visited with any penalty under Section 114/114 AA of the Act for any omission or commission which is not wanton or intentional. He hence prayed that their appeal be allowed by setting aside the order of the respondent and render justice 3.2 Shri Anoop Singh, learned Deputy Commissioner (AR) submitted that, the classification of the goods declared in the Bill of Lading and in Bill of Entry is 'Safety Matches' with CTH 36050090, when there is only one specific heading for "Safety Matches" in the Customs Tariff and in the MEIS schedule i.e. CTH 360500 10. Hence there is no ambiguity or question of interpretation and it was only a case of misdeclaration. The Exporter was earlier regularly exporting the said goods under CTH 360500 10. The Custom Broker admitted being aware that correct CTH of the goods was 360500 10 and also of the resultant excess MEIS benefits accruing to the exporter due to the wrong classification. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich any prohibition is in force under this Act or any other law for the time being in force, to a penalty not exceeding three times the value of the goods as declared by the exporter or the value as determined under this Act, whichever is the greater; (ii) in the case of dutiable goods, other than prohibited goods, subject to the provisions of section 114A, to a penalty not exceeding ten per cent. of the duty sought to be evaded or five thousand rupees, whichever is higher: Provided that where such duty as determined under sub-section (8) of section 28 and the interest payable thereon under section 28AA is paid within thirty days from the date of communication of the order of the proper officer determining such duty, the amount of penalty liable to be paid by such person under this section shall be twenty-five per cent. of the penalty so determined; (iii) in the case of any other goods, to a penalty not exceeding the value of the goods, as declared by the exporter or the value as determined under this Act, whichever is the greater. ***** ***** ***** 114AA. Penalty for use of false and incorrect material - If a person knowingly or intentionally makes, signs or uses, or ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n) Act, 1992 including the suspension or cancellation of the license issued under the FTDR Act, 1992. The Merchandise Exports from India Scheme (MEIS) Scheme is designed to provide rewards to exporters to promote the manufacture and export of notified goods/ products. The 'Duty Credit Scrips' and goods imported/ domestically procured against them is freely transferable. The Scrips can be used for payment of various Customs and Central Excise duties and fees as specified. In the impugned case no dispute on the classification heading of the goods under the schedule to the Customs Tariff Act 1975 has been raised. In fact, it is mentioned that as soon as the discrepancy in the classification heading was pointed out the exporter has paid the excess MEIS benefits claimed. In the era of self-assessment any wrong declaration including that of the classification of the goods which is done deliberately in the Shipping Bill / Bill of Lading for earning undue benefit on export of goods can be examined and penal action taken against all the persons concerned by Customs if so warranted. Such blame worthy acts ultimately affect the payment of Customs and Excise duties through use of freely transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Revenue, there can be no confusion with only one specific heading for "Safety Matches" in the Customs Tariff and in the MEIS schedule i.e. CTH 3605 0010. Hence the averments of the appellant is not correct. 6.5 Action against the CB can be taken only under the CBLR and not under the Customs Act. Action taken by a broker in terms of the license requirements are actionable under CBLR, but for actions relating to intentionally using incorrect documents etc. collusion with exporters for defrauding the exchequer etc. the cause of action is different and separate action can be taken under the Customs Acy 1962. 6.6 GST having only two sub-heading namely hand-made safety machines under 3605 0010 and others which covers the machine-made safety- matches under 3605 0090. The IGST schedule is adopted for the purpose of customs tariff schedule also hence the declaration in the respective shipping bills as per the exporters request could not be faulted at all. Classification under two different Acts cannot be compared. Both the tariff schedules are not aligned and are hence not pari materia for purposes of classification of export goods. In Hari Khemu Gawali v. Deputy Commissioner of Polic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lassifiable under CTI 36050010. The exporters were also regularly exporting safety matches under CTI 36050010. But during period they asked us to file shipping bills under CTI 36050090. When we asked about the change of CTI, they told us that they are manufacturing machine made safety matches and hence the correct classification should be 36050090. Hence as per their instruction we filed these shipping bills under CTI 36050090. However, after that they said that they had realized their mistake and again asked us to file under CTI 36050010. Q.5 Are you are aware of the difference between CTI 36050010 and 36050090? A.5 Yes we are aware of the same. CTI 36050010 is for safety matches and the CTI 36050090 is for goods falling under "others" category. Q.6 Are you aware of the MEIS benefits available for goods exported under CTI 36050010 and CTI 36050090? A.6 Yes, we are aware of the same. The rates of MEIS benefit for CTI 36050010 and 36050090 during 1.11.2017 to 31.12.2019 were 3% FOB value and 7% of FOB value respectively. ***** ***** ***** Q.8 By not advising the exporter to follow the correct procedures on export of safety matches, and also not informing the Assistant Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following passage with approval: In Corpus Juris Secundrum. Vol.85 at page 580, para 1023, it is stated thus: "A penalty imposed for a tax delinquency is a civil obligation, remedial and coercive in its nature, and is far different from the penalty for a crime or a fine or forfeiture provided as punishment for the violation of criminal or penal laws." While it is true that Appellate bodies should not interfere with the penalty imposed by the Original Authority just because another view is possible, at the same time the legal principle is that penalty ought always to fit the misconduct. While the penalty when warranted should act as a deterrent it should not be disproportionate. It has not been brought out that the appellant illegally profited from the act. The appellant was also not seen to be a part of a conspiracy to defraud the exchequer, however he has made a mistake by a conscious disregard of the illegality and in not distancing himself from the act and reporting the matter that he knew was wrong and this blameworthy conduct warrants a penalty. However, the penalty imposed in this case is shocking and requires to be modified. 6.9 Imposing penalties both under Section 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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