Aspam Petronergy Pvt Ltd Vs C.C.-Kandla (CESTAT Ahmedabad)
In a recent case, Aspam Petronergy Pvt Ltd Vs C.C.-Kandla, before the CESTAT Ahmedabad, an important issue regarding the mis-declaration of the country of origin surfaced, raising questions about the liabilities of the importer in such instances. The case delved into various aspects including classification of imported goods, valuation, and penalties imposed on the importer. However, one of the pivotal points of contention was the incorrect mention of the country of origin in the bills of entry filed by the appellant.
The dispute stemmed from the mis-declaration of the country of origin in the bills of entry, wherein the goods were declared to have originated from UAE while they actually hailed from Iran. The Revenue argued that this mis-declaration warranted penalties and further actions against the importer. However, the appellant contended that the incorrect declaration was unintentional and was based on documents received from the supplier.
The Tribunal scrutinized this issue along with other pertinent matters and rendered a comprehensive judgment, shedding light on the legal implications of mis-declaration of country of origin by importers. The tribunal’s decision underscores several key points:
- Technical Nature of Mis-Declaration: The tribunal acknowledged that mis-declaration of country of origin is a technical issue and does not necessarily implicate the importer in fraudulent activities unless proven otherwise. It emphasized that the mis-declaration, especially in cases where no preferential rate of duty is claimed, does not significantly impact revenue.
- Lack of Intentional Wrongdoing: It was noted that there was no evidence to suggest deliberate intent on the part of the importer to provide incorrect information about the country of origin. The appellant had relied on documents furnished by the supplier, indicating a lack of malice or fraudulent intent.
- Precedent and Legal Basis: The tribunal referred to previous judgments and legal precedents to bolster its decision. It cited cases where importers were absolved of penalties and fines in similar circumstances, reinforcing the principle that inadvertent mis-declaration does not warrant severe punitive actions.
- Penalty Exemption: Ultimately, the tribunal ruled that in cases where mis-declaration of country of origin does not result in revenue loss or confer undue benefits to the importer, penalties and fines cannot be imposed. It set aside the penalties imposed on the importer, highlighting the absence of intent to defraud or evade duties.
- Implications on Importer Liability: The decision reaffirms the principle that while importers are responsible for accurate declarations, inadvertent errors, especially in technical aspects such as country of origin, should not attract severe penalties unless there is evidence of intentional wrongdoing or revenue loss.
In conclusion, the case of Aspam Petronergy Pvt Ltd Vs C.C.-Kandla serves as a significant precedent highlighting the nuanced approach required in cases of mis-declaration by importers. It underscores the importance of considering intent, precedent, and legal principles in determining importer liabilities, especially in matters concerning technical discrepancies such as the country of origin declaration.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
This group of appeals are preferred against the common impugned Order-In-Appeal KDL/COMMR/SKA/23/2017-18 dated 03.01.2018 passed by the Learned Commissioner (Appeals) wherein he upheld the classification of Rubber Processing Oil (RPO) under Chapter heading 27079900 of Custom Tariff Act and enhancement the value of imported RPO. The Learned Commissioner (Appeals) further upheld that the appellant mis-declared the country of origin in the bills of entry. Consequently, the Learned Commissioner (Appeals) upheld the finding of the Adjudicating Authority and dismissed the appeal preferred by the appellant. Therefore, the present appeals.
1.2 The following four issues are involved in the present appeals:-
(i) Whether the Rubber Processing Oil imported by the Appellant is classifiable under Chapter Heading No. 27101990 as classified by the Appellants or under Chapter Heading No. 27079900 as classified by the Revenue.
(ii) Whether the value of the imported RPO can be enhanced based on the consent letters given by the directors of the Appellants at the time of release of the goods, without following the due process of law as contemplated under Section 14 of the Customs Act read with Customs (Determination of Value of imported value) Rules, 2017.
(iii) Whether the Appellants mis- declared the Country of Origin in the Bills of entry filed by them.
(iv) Whether the quantum of penalties and redemption fine imposed disproportionate to differential duty involved in the matter
1.3 The order of the Adjudicating Authority was based on the test report of Custom House Laboratory at Kandla. Few test reports of Custom House Laboratory, Kandla and the statements of the Director of the appellant M/s. Aspam Petronergy Pvt Ltd and statements of CHA.
2. Shri Salil Arora, Learned Counsel along with Shri Sudhanshu Bissa, Learned Advocate appearing on behalf of the Appellant submits that the Custom Department has relied upon the Chapter Note 2 of Chapter 27 for rejecting the classification under Chapter Heading 27101990. He submits that the revenue has wrongly classified the RPO under Chapter Heading 27079900 the custom department distinguishes the appellant’s case from Shah Petroleum Ltd. vs. Commissioner of Customs – 2017 (358) ELT 483 (T) stating that product in Shah Petroleum was classified as Raw RPO whereas the Appellants goods do not meet the requirement of RPO. He further states that the Appellants test report result clearly states that the sample has characteristics of aromatic type petroleum based oil for Rubber Industry thus takes support of the case of Commissioner of Customs, Kandla vs Rajkamal Industrial Pvt Ltd 2022 (381) ELT 318 wherein it was held that so long as the department has been able to establish its case with such a degree of preponderance, the existence of a fact could be said to have been proved.
2.2 As regard the enhancement of the value of the goods, he submits that both the lower authorities enhanced the value based on the consent letters by the director of both the importers. It is settled law that the burden lies upon the revenue to show that the value declared by the importer is incorrect. Once, it is found that value declared by the appellant is incorrect, proper methodology as provided under Section 4 read with Customs Act read with Customs (Determination of Value of Import Goods) Rules, 2007 is to be followed for ascertaining correct value of the imported goods. The lower authorities ought to have ascertained value of the contemporaneous goods before relying upon the consent letters given by the directors of the appellant. He takes support of the following judgments:-
