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of <h1>Customs Broker Penalties Set Aside, Importer's Case Remanded for Reconsideration</h1> <h3>EVERSHINE CUSTOMS (C & F) PVT LTD. and THE TWO STEP TRADING CO. Versus COMMISSIONER OF CUSTOMS, NEW DELHI</h3> EVERSHINE CUSTOMS (C & F) PVT LTD. and THE TWO STEP TRADING CO. Versus COMMISSIONER OF CUSTOMS, NEW DELHI - TMI Issues Involved:1. Mis-declaration of goods in the Bill of Entry.2. Importer’s liability for incorrect goods sent by the overseas supplier.3. Demand of differential duty under Section 28(4) before goods are cleared for home consumption.4. Demand of differential duty under Section 28(4) on goods seized from the importer’s shop.5. Competence of DRI to issue Show Cause Notice (SCN) under Section 28.6. Validity of confiscation of seized goods.7. Validity of penalty imposition under Section 114A on the importer.8. Validity of penalty imposition under Section 112(a) on the Customs Broker (CB).9. Violation of principles of natural justice.Detailed Analysis:1. Mis-declaration of Goods in the Bill of Entry:The examination of the imported goods revealed discrepancies in quality and quantity compared to the Bill of Entry. The CB filed the Bill of Entry based on documents provided by the importer. The goods were mis-declared, and the CB could not explain the discrepancy. The responsibility for accurate declaration rests with the importer under Section 46 of the Customs Act.2. Importer’s Liability for Incorrect Goods Sent by the Overseas Supplier:The importer argued that the incorrect goods were sent by the supplier. However, the importer is responsible for the accuracy of the declaration. Section 46 and Section 23 provide safeguards for the importer to examine goods before filing the Bill of Entry or to relinquish title to the goods if they are not as ordered. The importer’s argument was rejected.3. Demand of Differential Duty Under Section 28(4) Before Goods Are Cleared for Home Consumption:Customs duty is assessed under Section 17, and goods are cleared for home consumption under Section 47. A demand under Section 28(4) is a review of the assessment and can only be issued after goods are cleared for home consumption. Since the goods were not yet cleared, the demand under Section 28(4) was premature and not sustainable.4. Demand of Differential Duty Under Section 28(4) on Goods Seized from the Importer’s Shop:Goods seized from the shop had already been cleared for home consumption, making them subject to a demand under Section 28. However, only the proper officer who assessed the goods under Section 17 or his successor can issue such a demand. The SCN issued by the DRI was invalid as per the Supreme Court’s decision in Canon India.5. Competence of DRI to Issue SCN Under Section 28:The Supreme Court in Canon India held that only the proper officer who assessed the goods can issue a demand under Section 28. The DRI officer was not the proper officer who assessed the goods under Section 17, making the SCN invalid.6. Validity of Confiscation of Seized Goods:Confiscation under Section 111 and penalties under Sections 112 and 114A require a notice under Section 124. The SCN must be accompanied by Relied Upon Documents (RUDs) and follow the procedure under Section 138B. The case was remanded to the original authority to complete the procedure under Section 138B for each statement relied upon.7. Validity of Penalty Imposition Under Section 114A on the Importer:The penalty under Section 114A on the importer was remanded for reconsideration following the procedure under Section 138B.8. Validity of Penalty Imposition Under Section 112(a) on the CB:The penalty on the CB for failing to fulfill obligations under CBLR 2013 cannot be imposed under Section 112. The penalty was set aside as CBLR 2013 has its own provisions for penalties.9. Violation of Principles of Natural Justice:The appellants argued that they were not given an opportunity to be heard. The matter was remanded to ensure compliance with principles of natural justice and to follow the procedure under Section 138B.Conclusion:- Penalty on the CB under Section 112 was set aside.- Demand of duty under Section 28(4) for goods not cleared for home consumption was set aside.- Demand of duty under Section 28(4) for goods seized from the shop was set aside.- Confiscation and penalties on the importer were remanded for reconsideration following Section 138B procedures.Disposition:The appeals were disposed of with specific directions for remand and setting aside certain penalties and demands.
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