2016 (8) TMI 925 - AT - Customs

Tribunal overturns penalty on Customs House Agent for misclassifying goods, deeming penalty unwarranted

M/s Him Logistics Pvt. Ltd. (CHA) Versus CC, New Delhi

The Tribunal set aside the penalty imposed on the Customs House Agent (CHA) for incorrectly classifying imported goods as 'Medicaments' instead of 'Food ... Imposition of penalty - Classification of imported goods – medicaments – food supplements - filing of bill of entry as well as classification made by CHA – entire duty paid on declared goods – Held that: - The Appellant is mainly a CHA and the issue of classification is of complex nature. It cannot be said that the CHA should have information that the goods were 'Food Supplements' and not 'Medicaments'. It is for the Customs Department to classify the goods. Hence, no reason to sustain the penalty – appeal disposed off – decided in favor of appellant. Issues: Penalty imposition on CHA for incorrect classification of imported goodsAnalysis:The case involved a Customs House Agent (CHA) who filed a bill of entry on behalf of an importer, declaring the goods as 'Medicaments', while the Customs Department considered them as 'Food Supplements'. The Department imposed a penalty of Rs. 20,000 on the CHA for this classification discrepancy. The main issue was whether the penalty on the CHA was justified for failing to exercise due diligence in determining the correct classification of the imported goods.The Appellant's counsel argued that the CHA had paid the duty on the declared goods and that a previous Tribunal decision had set aside a similar penalty in the case of the same assessee. On the other hand, the Department supported the penalty imposed in the impugned order.Upon reviewing the impugned order, it was noted that the penalty was levied because the CHA allegedly did not exercise due diligence in ascertaining the correct classification of the goods. The Tribunal observed that the issue of classification was complex, and it was primarily the Customs Department's responsibility to classify the goods. The Tribunal found it unjustified to penalize the CHA for not having information that the goods were 'Food Supplements' instead of 'Medicaments'.Citing a previous Tribunal decision from 2016 where a similar penalty was set aside, the Tribunal concluded that there was no valid reason to uphold the penalty in this case. Therefore, the Tribunal set aside the impugned order and disposed of the appeal accordingly.