Case Law Details
Huber + Sunher Electronics Pvt. Ltd Vs Principal Commissioner of Customs (CESTAT Delhi)
In a significant ruling, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Delhi has exonerated Huber + Sunher Electronics Pvt. Ltd. from a hefty penalty imposed by the Principal Commissioner of Customs. The case revolved around a typographical error in the Bills of Entry regarding the amperage of Internal Remote Electrical Tilt (iRET) switches. This ruling highlights the importance of accurate documentation and the potential consequences of minor errors in import documentation.
Detailed Analysis
Huber + Sunher Electronics Pvt. Ltd., a manufacturer of Base Transceiver Station (BTS) antennas, imports iRET switches crucial for adjusting antenna angles. Between February 2, 2018, and March 31, 2019, the company imported two models of iRET switches: Runshine RS-IRCU50D-1 and Runshine RS-IRCU50D-2. These imports were initially assessed under the benefit of Exemption Notification No. 50/2017-Cus (S.No. 427), which applies to switches with a contact rating of less than 5 amperes.
During a post-clearance audit, it was found that the Bills of Entry and accompanying documents erroneously stated the switches as having a contact rating of 5 amperes. This discrepancy led the authorities to believe that the company had incorrectly availed of the exemption notification, resulting in a demand for Rs. 96,74,804 under Section 28(1) of the Customs Act, 1962, along with a penalty of Rs. 9,00,000 under Section 112(b)(ii).
Huber + Sunher contended that the switches were indeed less than 5 amperes (specifically 1.3 amperes) and that the omission of the ‘<‘ sign in the documentation was an inadvertent error. The company provided multiple pieces of evidence to support their claim, including:
1. Test reports from the Electronics Regional Test Laboratory.
2. Product brochures of the iRET models.
3. A clarification letter from the overseas supplier acknowledging the typographical error.
4. An affidavit from a company employee confirming the actual amperage.
5. Documentation from clients such as Reliance Jio Infocomm Ltd. and Samsung Electronics Co. Ltd.
Despite these submissions, the Principal Commissioner dismissed the evidence, primarily on grounds that the invoices and Bills of Entry stated 5 amperes. The Commissioner held that exemption notifications must be strictly interpreted, and any benefit of doubt should favor the Revenue, as reinforced by the Supreme Court in Commissioner of Customs (Imports) Mumbai vs. Dilip Kumar & Company.
CESTAT Delhi, however, took a different view. The Tribunal considered the totality of the evidence presented, including the consistency of the product brochures and test reports with the claimed specifications. The Tribunal found the rejection of the supplier’s clarification letter and other supporting documents by the Commissioner to be erroneous.
CESTAT emphasized that customs duties should be levied based on the actual goods imported, not merely on what is stated in the documents, especially when a clear typographical error has been demonstrated. The Tribunal concluded that the switches imported were indeed less than 5 amperes and that the incorrect documentation was a genuine mistake without any intent to evade duty.
The CESTAT Delhi’s decision to set aside the penalty imposed on Huber + Sunher Electronics Pvt. Ltd. underscores the need for a holistic evaluation of evidence in customs disputes. This case serves as a crucial precedent for handling similar issues where minor clerical errors in documentation could lead to significant financial penalties. The ruling also reinforces the principle that duty should be assessed on the actual nature of the imported goods, ensuring fairness in the application of customs laws.
FULL TEXT OF THE CESTAT DELHI ORDER
M/s. Huber + Sunher Electronics Pvt. Ltd.1 filed this appeal to assail the order in original2 passed by the Principal Commissioner confirming a demand of Rs. 96,74,804 under section 28(1) of the Customs Act, 19623 and imposing penalty of Rs. 9,0,000/- under section 112(b) (ii) of the Act.
2. The appellant manufactures and sells Base Transceiver Station (BTS) antennas and for this purpose, imports Internal Remote Electrical Tilt Switches (iRET). These help in remotely tilting the angle of the antenna. During the period 2.2.2018 and 31.3.2019, the appellant imported iRETs of two models-Runshine RS-IRCU50D-1 and Runshine RS-IRCU50D-2, self assessed the duty on them applying the benefit of Exemption notification no. 50/2017-Cus dated 30.6.2017 (S.NO. 427) and cleared the goods.
3. During post clearance audit, it was noticed that the iRETs imported by the appellant were declared in the Bills of Entry and all the other documents such as invoice, packing list, etc. to be of ‘5 amperes’ whereas the exemption notification 50/2017 (S.No.427) was available only to switches of less than 5 amperes. The relevant entry in the exemption was as follows:
“ switches with contact rating less than 5 amperes at voltage not exceeding 250 volts AC or DC”
4. Therefore, it was felt that the appellant had incorrectly applied this notification and duty must be paid but for this exemption notification. Therefore, a consultative letter dated 21.2.2019 was issued to the appellant and the appellant responded to it. However, the dispute could not be resolved through consultations. Therefore, Show Cause Notice4 dated 26.11.2019 was issued to the appellant covering the period 2.2.2018 to 31.3.2019 and demanding the duty allegedly short paid and proposing to impose penalty. This culminated in the impugned order.
5. We have heard learned counsels for the appellant and the learned authorised representative for the Revenue and perused the records.
6. There is no dispute on the facts of the case. The appellant imported iRET switches and claimed the benefit of the notification and cleared them. In the invoices, packing lists, Bills of Entry, etc. it was mentioned that they were of 5 amperes. The notification was available only to switches of less than 5 amperes.
7. The submission of the appellant is that the switches were actually of < 5 amperes (1.3 amperes) but ‘<’ sign was inadvertently missed by its supplier in all the documents and the appellant also copied the same mistake while describing the goods in the Bills of Entry. In subsequent imports, they corrected this mistake and in all imports they mention the actual amperage and all the Bills of Entry were assessed and cleared accordingly.
8. To support its contention that the imported switches were of less than 5 amperes, the appellant had submitted before the Commissioner and has also submitted in this appeal, the following documents:
(a) Test Reports of the two models of the imported iRETS from the Electronics Regional Test Laboratory of the Ministry of Communication and Information Technology, Government of India
(b) Product brochures of the two iRETs
(c) A letter from the supplier of the goods
(d) An affidavit of the employee of the appellant who has been dealing with the subject asserting that the imported goods were of less than 5 amperes.
(e) Customer requirement document issued by M/s. Reliance Jio Infocomm Ltd. to whom the appellant had supplied its goods
(f) Installation manual for the antenna supplied to another of the appellant’s customers –M/s. Samsung Electronics Co. Ltd.
9. It is the case of the appellant that based on these documents it is clear that the imported iRETs had less than 5 Amperes and there was only an error in the invoices, packing lists, etc. of its overseas supplier and also in the Bills of Entry filed by the appellant.
10. The submission of the Learned authorised representative for the Revenue is that the declaration in the Bills of Entry cannot be modified based on these documents and therefore, based on the declarations made in the Bills of Entry, duty should was determined in the impugned order and the short paid duty was ordered to be recovered. The impugned order therefore, calls for no interference.
11. The question before us, therefore, is whether the amperage of the iRETs imported by the appellant were of 5 Amps as declared in the Bills of Entry or were of less than 5 Amps as now asserted by the appellant relying on the aforesaid documents. The Principal Commissioner had not accepted in the impugned order the appellant’s contention that the iRETs were of less than 5 Amperes for the following reasons:
(a) The appellant had itself, declared in the Bills of Entry were of 5 amperes.
(b) The overseas supplier, M/s. HSADC certified “we would like to bring in your notice that shipment made under mentioned invoice No found to have error in description. Contact description should be “<5 Ampere Switch” (as actual current rating is Max. 1.3 Ampere). Wehave observed that “<” is missing in all invoices. We are really sorry for the same & regret the inconvenience casued”.
(c) However, this clarification of HSADC is not acceptable because the invoices are issued as per the goods supplied and they cannot claim to have issued invoices for goods which were not dispatched.
(d) The affidavit of Mr. Anil Dua, technical person of the appellant is not acceptable because it is not an independent view but a declaration of the appellant’s own employee. The affidavit is also vague as it does not mention that all the goods imported in all the Bills of Entry were of less than 5 amperes.
(e) The test report of the Electronics Regional Testing Laboratory of the Ministry of Communications cannot be used as an evidence to prove that at any voltage below the stipulated limit of 250 volts, all the switches of the said model will have a contact rating of less than 5 amperes. Therefore, the test report is not acceptable.
(f) The tender floated by Reliance Infocomm does not support the appellant’s case because there is no relationship between the imported goods and the tender floated by Reliance Infocomm.
(g) The user manual issued by Samsung laying down the guidelines for installing and operating Remote Radio Head used as radio frequency circuitry of base station also does not establish that the iRETs imported by the appellant in the Bills of Entry were of less than 5 amperes.
(h) The product brochures which specify the amperage for the two models of iRETs imported are not acceptable because they were not submitted or uploaded on e Sanchit at the time of clearance of the goods. Therefore, they cannot be said to in existence at the time of clearance of the goods.
(i) Any exemption notification must be strictly construed and any benefit of doubt should go to the Revenue and against the assessee as held by the Supreme Court in Commissioner of Customs (Imports) Mumbai vs Dilip Kumar& Company5. Therefore, the benefit of the exemption notification is not available to the appellant. The demand must be confirmed.
12. We find that the undisputed facts of the case are that iRETs of the two models were imported against the disputed Bills of Entry and the Bills of Entry as well as the other documents such as Invoice and Packing List issued by the supplier specified ‘5 amperes’. If they were of 5 amperes, the benefit of the notification will not be available. The case of the appellant is that they were of less than 5 amperes but in the invoice and packing list “<” sign was inadvertently missed and the same mistake was also repeated in the Bills of Entry. In support of its contention, the appellant has the product brochure which gives the specification as less than 5 amperes, the test reports of the models from a laboratory under the Ministry of Communications which also establishes that they were of less than 5 amperes. The appellant submitted a letter from its overseas supplier that missing ‘<’ in the invoices was an inadvertent error.
13. The appellant also produced some other supporting evidence in the form of an affidavit by Mr. Dua, the technical person of the appellant stating that the amperage of the part is less than 5 amps and some other documents from its customers viz., a tender floated by Reliance Infocomm to show its requirement specifications and an installation manual for the antennas from Samsung.
14. The Commissioner has, in our considered view, not appreciated the evidence in totality. If it is not disputed that the imported goods were of two models and the product brochures of these two models show that they were of less than 5 amperes, we find no reason to hold otherwise. It is not the case of the department that some other models were imported. The Commissioner, however, refused to accept the product brochures on the ground that these were not uploaded at the time of clearance of the goods. Be that as it may, once the SCN has been issued, the appellant has a right to produce evidence in support of its assertions. The Commissioner committed an error in rejecting the product brochures.
15. The Commissioner has also wrongly declined to accept the test report of a government laboratory of another Ministry which certifies the amperage of the iRETs of the two models which were imported. The Commissioner has also declined to accept the clarificatory letter from the overseas supplier that due to a typographical error ‘<’ was not typed in all the invoices although the letter also clarifies that the actual amperage was 1.3 amperes. The logic of the Commissioner in declining to accept the letter of the supplier is that the supplier can only supply goods which are in its inventory and invoices are issued accordingly and he cannot now claim to have supplied iRETs of a different amperage. In our considered view, the Commissioner has gravely erred in not accepting the clarification from the supplier when it is consistent with the technical specifications in the product brochure and also consistent with a test report from a Government laboratory. If the supplier contended that a typographical error was committed in preparing the invoices and this assertion is supported by the product brochures, it was incorrect for the Commissioner to have rejected the clarification.
16. As the product brochures, the test reports and the letter from the supplier all confirm that the iRETs which were imported were of less than 5 amperes, it is not necessary for us to examine the other evidence adduced by the appellant. Clearly, there was a typographical error in the Bills of Entry and the invoices which has resulted in the audit objection, the SCN and the impugned order.
17. Duties of Customs are to be charged on the goods imported into India (section 12) and not on the goods said to have been imported into India. Section 12 reads as follows:
“12. Dutiable goods.—(1) Except as otherwise provided in this Act, or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under the Customs Tariff Act, 1975 (51 of 1975)], or any other law for the time being in force, on goods imported into, or exported from, India.
(2) The provisions of sub-section (1) shall apply in respect of all goods belonging to Government as they apply in respect of goods not belonging to Government.”
18. Thus, if there is a discrepancy between what is stated to have been imported in the documents and the Bill of Entry and what is actually imported, duty can be charged on what is actually imported and not on what is said to have been imported. For instance, if 80 MT of goods are said to have been imported in the Bill of Entry and actually 100 MT of goods are imported, duty has to be charged on 100 MT and not on 80 MT. Similarly, if silver is declared to have been imported and actually gold is imported, duty has to be charged on gold and not on silver.
19. In this case, if the Bill of Entry, invoice, packing list, etc. mention 5 amperes but there is no dispute that the goods were of particular models and the product literature as well as the test reports show that they are of less than 5 amperes, it is not open to the department to charge duty treating the goods as of 5 amperes merely because the Bill of Entry and other documents say so due to a typographical error.
20. In view of the above, the appeal is allowed and the impugned order is set aside with consequential relief to the appellant.
(Order pronounced in open court on 26.04.2024)
Notes
1 Appellant
2 Impugned order
3 Act
4 SCN
5 2018(261) ELT 577 (SC)
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