SP Agency Vs Commissioner of Customs (CESTAT Kolkata)
Introduction: The case involves SP Agency’s appeal against the suspension of its Customs Broker license by the Principal Commissioner of Customs, Kolkata. The dispute arose from the classification of imported goods, specifically small balloons, and the alleged intentional misclassification to evade customs duty.
Background:
i. Import and Examination: SP Agency, a Customs Broker, handled the bill of entry for the import of decorative items. Small balloons were declared under CTH 9505, leading to an allegation of misclassification to evade duty. The goods were provisionally released, and an offence report was prepared against SP Agency.
ii. Suspension Order: The suspension of SP Agency’s license occurred under Regulation 16(1) of the CBLR, 2018, citing immediate action necessity. The Commissioner’s order was based on the allegation of intentional misclassification to evade duty.
Appellant’s Argument:
i. Regulation 16(1) Compliance: The appellant argues that the suspension lacks merit as the immediate action requirement of Regulation 16(1) wasn’t fulfilled. The delay of almost two years between the cause of action and license suspension is emphasized.
ii. Interpretation of “Immediate Action”: The appellant challenges the Commissioner’s interpretation of “immediate action” and relies on decisions like K. Saha and Company vs. Commissioner of Customs and others. The argument emphasizes that immediate suspension is justified only when there’s an apprehension of interference during an ongoing investigation.
iii. Nature of Dispute: The appellant asserts that the classification issue is an interpretative dispute, not a deliberate attempt to evade duty. They contend that their role as a Customs Broker is limited to filing documents based on information provided by the importer.
Decision and Analysis:
i. Regulation 16(1) Compliance: The Tribunal finds that the suspension wasn’t an immediate action, as required by Regulation 16(1). The delay of almost two years raises questions about the necessity for urgent action.
ii. Interpretation of Goods Classification: The Tribunal recognizes that the dispute involves the interpretation of law regarding the classification of goods. It concludes that the misclassification wasn’t deliberate, given the nature of the interpretative dispute.
iii. Role of Customs Broker: The Tribunal underscores the limited role of a Customs Broker in guiding the importer on proper classification. It supports this argument with relevant legal precedents.
Conclusion: The Tribunal sets aside the suspension order, emphasizing the lack of immediate action and the interpretative nature of the goods classification dispute. The decision highlights the importance of distinguishing between deliberate evasion and interpretative disagreements in customs matters.
FULL TEXT OF THE CESTAT KOLKATA ORDER
The appellant is in appeal against the impugned order wherein the licence of the Customs Broker has been suspended by the Principal Commissioner of Customs (Airport & Administration), Kolkata.
2. The facts of the case are that the appellant is a Customs Broker and their licence was valid up to 15.07.2027.
2.1 M/s Garg Seasonwears filed bill of entry dated 13.07.2021 through the appellant for import of one consignment of decorative items such as balloons, banners, electric balloon pump, kid brush, mini-LED clips light, PVC wall decorative items, ribbon, inflatable PVC items etc. The said goods were examined and on examination, it was found that item at Sl. No.1 of the bill of entry declared as “Small Balloons (PAC)” to on the allegation of misclassification under CTH 9505 instead of CTH 9503 to evade payment of appropriate customs duty. Therefore, the consignment was confiscated and seized. The other goods were released and the disputed goods also allowed to be released provisionally.
2.2 Thereafter, an offence report dated 16.08.2023 against the Appellant was prepared alleging that the appellant intentionally misclassified, and mis-declared balloons under CTH 9505 instead of CTH 9503 to evade payment of appropriate customs duty.
2.3 It was alleged in the report that before 01.01.2021 i.e., when the mandatory BIS certification had not come into effect the appellant had facilitated clearance of balloons for different importers under CTH 9503 however, it is only after the mandatory BIS certification came into effect, the Appellant started classifying the balloons under CTH 9505 only to evade the mandatory registration condition.
2.4 It was also alleged that while the present investigation was pending, the appellant had filed two bills of entry dated 27.07.2021 and dated 30.07.2021 having similar nature of goods for the same importer and cleared the same under CTH 40169590.
2.5 Based on the above, violation of Regulations 10(d), (e) and (m) of the CBLR, 2018 was alleged against the appellant.
2.6 The said offence report was received by the Ld. Commissioner of Customs, Airport and ACC Commissionerate, Customs House, Kolkata on 17.08.2018. Thereafter, vide CB Order No.21/2023 dated 31.08.2023 by exercising power under Regulation 16(1) of the CBLR, 2018, the license of the CB was suspended, and the matter was fixed for post suspension hearing on 06.09.2023 in terms of Regulation 16(2) of the CBLR, 2018.
2.7 After hearing of post suspension, the order of suspension was confirmed.
2.8 Against the said order, the appellant is before us. The
3. The ld. Counsel for the appellant submits that the suspension of licence is not warranted in the instant case since the requirement of Regulation 16 (1) of the CBLR, 2018 has not been fulfilled. It is his submission that the action is required immediately and in this case, the suspension has been allowed between the date of cause of action and the date of suspension of licence. Therefore, such delay does not require action under Regulation 16 (1) of CBLR, 2018. This is more so, in the light of the fact that during this period, the investigation has been completed and even the Show-Cause Notice dated 25.08.2023 issued to the appellant as well as the importer. It is a settled law that immediate suspension of Customs Broker is warranted when there is an apprehension that the Customs Broker may interfere in investigation or tamper with evidence to prejudice the investigation. Upon conclusion of investigation and issuance of Show-Cause Notice, no such apprehension remains. Therefore, the suspension of the appellant’s license in the present case is legally untenable.
3.1 To support his contention, he relies on the following decisions :
