CESTAT sets aside penalty on customs broker employee in tobacco classification dispute under section 112(a)

CESTAT Mumbai set aside penalty imposed u/s 112(a) of Customs Act, 1962 on customs broker employee. The case involved classification dispute of imported cut tobacco between CTH 2403 9970 and Roll Your Own Tobacco. The tribunal held that responsibility for proper goods declaration lies with importer, not customs broker. Since goods were sought for examination on First Check basis and broker followed importer's instructions, no mis-declaration occurred warranting penalty. The Commissioner's contradictory findings regarding wilful mis-declaration were deemed without merit. Appeal allowed.

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Issues Involved:
1. Classification of Imported Goods
2. Imposition of Penalty on Customs Broker's Employee
3. Responsibility for Mis-declaration and Duty Evasion

Summary:

1. Classification of Imported Goods:
The appellant, an employee of a Customs Broker, filed a Bill of Entry for imported goods declared as 'cut-tobacco' under Customs Tariff Item 2403 9970. Upon examination, customs authorities found the goods to be 'Roll Your Own Tobacco' in retail pouches. The authorities disputed the classification and noted the absence of necessary declarations under the Legal Metrology Act. The goods were seized, and a show cause notice was issued.

2. Imposition of Penalty on Customs Broker's Employee:
The Commissioner of Customs imposed a penalty of Rs.10,000/- under Section 112(a) of the Customs Act, 1962, on the appellant for the current consignment and Rs.50,000/- for past consignments involving 16 Bills of Entry. The Commissioner found that the appellant, as an employee of the Customs Broker, should have been aware of the proper classification and advised the importer accordingly.

3. Responsibility for Mis-declaration and Duty Evasion:
The Tribunal found that the responsibility for proper declaration lies with the importer, especially since the goods were to be examined by customs authorities before assessment. The Commissioner's findings were contradictory, as he did not impose a penalty on the importer due to a lack of evidence of intentional mis-declaration but penalized the Customs Broker's employee for not advising the importer correctly.

Conclusion:
The Tribunal concluded that there was no basis for imposing a penalty on the appellant under Section 112(a) of the Customs Act, 1962, as the responsibility for the declaration lies with the importer, and the goods were subject to first check examination. The appeal was allowed, and the impugned order was set aside to the extent of the penalty imposed on the appellant.

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