2025 (2) TMI 567 - AT - Customs

Custom Broker Cleared of Liability for Misclassification and Penalties Under Section 112(a) of Customs Act, 1962

Guru Prakash Enterprise Versus C.C. -Ahmedabad

Guru Prakash Enterprise Versus C.C. -Ahmedabad - TMI The issues presented and considered in the legal judgment are as follows:1. Whether the appellant, acting as a Custom Broker on behalf of the importer, correctly classified the goods under the Customs Tariff Heading (CTH).2. Whether the appellant is liable for penalty under Section 112(a) of the Customs Act, 1962 for alleged contraventions and misdemeanors, specifically regarding the failure to affix stickers declaring the Retail Selling Price (RSP) on imported goods.Issue-Wise Detailed Analysis:Issue 1: Classification of Goods- Relevant legal framework and precedents: Customs Act, 1962- Court's interpretation and reasoning: The Adjudicating Authority initially dropped the demand, holding that the goods were correctly classified under CTH 1704. However, the Commissioner (Appeals) reversed this decision and held that the goods were misclassified under CTH 2106.- Key evidence and findings: The Panchanama noted that containers were sealed before being opened by the Directorate of Revenue Intelligence (DRI).- Application of law to facts: The Court found that the appellant had no means to verify the classification of goods as they were sealed before inspection.- Treatment of competing arguments: The appellant argued that they had no prior knowledge of any misclassification, relying on the Prime Forwarders case.- Conclusions: The Court sided with the appellant, setting aside the Commissioner's decision and holding that the appellant was not liable for misclassification.Issue 2: Liability for Penalty under Section 112(a)- Relevant legal framework and precedents: Customs Act, 1962- Court's interpretation and reasoning: The Commissioner (Appeals) imposed a penalty on the appellant for failing to affix stickers declaring RSP on imported goods, citing deliberate misstatement and misrepresentation.- Key evidence and findings: The Customs Broker aided in the alleged misstatement of facts.- Application of law to facts: The Court considered the lack of evidence proving the appellant's complicity in the misstatement.- Treatment of competing arguments: The appellant argued that they acted based on the documents provided by the importer and had no prior knowledge of any misrepresentation.- Conclusions: The Court agreed with the appellant, setting aside the penalty imposed by the Commissioner (Appeals) and ruling in favor of the appellant.Significant Holdings:- The Court concluded that the appellant was not liable for misclassification of goods and penalty under Section 112(a) of the Customs Act, 1962.- The Court emphasized that the actions taken by the Custom Broker were based on the information provided by the importer, absolving them of any penalty.In summary, the Court found in favor of the appellant, ruling that they were not liable for misclassification of goods or penalty under Section 112(a) of the Customs Act, 1962. The decision was based on the lack of evidence proving the appellant's complicity in the alleged misstatements and the reliance on information provided by the importer.