Allowed

Commissioner of Customs v. Sri Manjunatha Shipping Pvt. Ltd.

Karnataka HC10 Feb 2023CSTA/9/2019

Case brief

AI extract

What is this about?

This appeal by the Revenue against an order setting aside a forfeiture of security and penalty upheld the impugned order. The court found the Tribunal erred in overlooking violations of the Customs Brokers Licensing Regulations regarding misdeclaration and misclassification of goods, and described the direction to examine a license renewal as perverse given no such application was received.

What did the court decide?

The appeal is allowed; substantial questions of law answered in favour of the Revenue.

Commissioner of Customs Vs Sri Manjunatha Shipping Pvt… — Customs and Excise | Karnataka HC (2023)

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CSTA No.9/2019

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 10^TH DAY OF FEBRUARY, 2023 PRESENT

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THE HON’BLE MR. JUSTICE P.S. DINESH KUMAR

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AND

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THE HON’BLE MR. JUSTICE G BASAVARAJA

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CSTA NO.9 OF 2019

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BETWEEN:

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COMMISSIONER OF CUSTOMS OFFICE OF THE COMMISSIONER OF CUSTOMS BANGALORE CITY COMMISSIONERATE P.B. NO.5400 CENTRAL REVENUE BUILDING QUEENS ROAD BANGALORE-560 001. …APPELLANT (BY SHRI. AMIT ANAND DESHPANDE, ADVOCATE)

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AND:

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SRI. MANJUNATHA SHIPPING PVT LTD NO.342, SECOND FLOOR ABOVE SBI BANK HAL AIRPORT EXIT ROAD BANGALORE-560 017 KARNATAKA …RESPONDENT (BY SHRI. A.K. JAIRAJ, ADVOCATE [ABSENT])

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THIS CSTA IS FILED UNDER SECTION 130 OF THE CUSTOMS ACT, 1962, ARISING OUT OF ORDER DATED:11.12.2018 PASSED IN FINAL ORDER NO.21867-21868/2018 IN APPEAL NOS. C/23262/2014-DB; C/21534/2015, PRAYING TO THEREFORE, THIS HON'BLE COURT MAY BE PLEASED TO ANSWER THE SUBSTANTIAL

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CSTA No.9/2019

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QUESTION OF LAW FRAMED THEREIN IN FAVOUR OF THE APPELLANT

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THIS CSTA, HAVING BEEN HEARD AND RESERVED FOR JUDGMENT ON 04.01.2023 COMING ON FOR PRONOUNCEMENT OF JUDGMENT, THIS DAY, P.S.DINESH KUMAR J, PRONOUNCED THE FOLLOWING:-

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JUDGMENT

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This appeal by the Revenue, directed against

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the orders dated December 11, 2018 in Final Order No. 21867-21868/2018 has been admitted to consider following questions of law:

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(i) Whether Tribunal had fallen in serious error for not having noticed the legal implication of the statutory regulation 11(d), 11(m), 11(n) of the CBLR, 2013?

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(ii) Whether the Tribunal was right in directing the appellant to examine the application of the respondent for renewal of license?

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Heard Shri. Amit Anand Deshpande, learned

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Standing Counsel for the Revenue. Though served, none appeared for the Respondent.

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Brief facts of the case are, respondent

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M/s Shri. Manjunatha Shipping Pvt. Ltd is a Customs House

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Agent License holder¹ issued on November 12, 1999 and valid up to October 16, 2014. On August 21, 2014, the Joint Commissioner, Bangalore submitted an Offence Report² stating that the respondent had involved in commission of the offence of illegal import of insecticides, namely, Nitenpyrum and Amitraz, along with importer M/s. Ashutosh Pharmalabs, Bangalore. The subject is covered under the Schedule of Insecticides Act, 1968. The respondent had misclassified the item under CTH 2804 without obtaining any valid registration and with an intent to evade payment of duty. In the Bills of Entry, only the chemical names of the goods were declared and the trade names, viz., Nitenpyrum and Amitraz, of the imported goods were not declared. Therefore, the consignments were seized by the Customs Officers.

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The Joint Commissioner vide Order dated

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September 10, 2014 suspended the license for violation of Rule 19(1) of the Customs Brokers Licensing Regulations,

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1 License No.R-37/99

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2 C.No. VIII/48/69/2014

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CSTA No.9/2019

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2013³ . The OIO⁴ confirmed the suspension and directed that

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the suspension shall continue until further orders. By a further OIO dated April 13, 2015, the Commissioner confirmed the evasion of customs duty and recorded that since the license had already expired, revocation was not ordered. By the said order, the security deposit was forfeited and penalty of Rs. 50,000/- was imposed. By the impugned order, CESTAT⁵ has set aside the forfeiture of security and imposition of penalty and directed the Revenue to examine the application seeking renewal of license in accordance with law.

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Shri. Amit Anand Deshpande, learned Standing Counsel for the Revenue submitted that:

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 the respondent had failed to comply with the requirements of Section 46 of the Customs Act, 1962 which mandatorily requires the importer/custom house agents to declare full, correct and accurate information concerning the

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3 ‘CBLR, 2013’ in the short

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4 Order-in-Original dated 10.09.2014

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5 Customs Excise and Service Tax Appellate Tribunal

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CSTA No.9/2019

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goods being imported in the appropriate columns while filing the Bill of Entry;

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the Tribunal has erred in overlooking the responsibility of the Customs Broker who had filed Bill of Entry for the import, to provide complete details of imported goods. The Agent has failed to give the correct description of goods and correct classification was not declared. The Tribunal has failed to record any finding with regard to the breach of CBLR, 2013 in the impugned Order;

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the respondent has colluded with the importer in mis-declaration and mis-classification of goods with an intent to evade the customs duty;

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the address declared by the respondent was wrong and the same was continued in contravention of Regulation 11(n) of the CBLR, 2013. The impugned Order is silent on this statutory regulation;

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CSTA No.9/2019

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the CESTAT has erred in recording that there is

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violation of principles of Natural Justice and the OIO has been passed without proper opportunity of hearing to the respondent.

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We have carefully considered the arguments advanced by Shri. Deshpande and perused the records.

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Undisputed facts of the case are, respondent is the

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holder of Customs House Agent License valid up to October 16, 2014. Respondent has filed a Bill of Entry in respect of Nitenpyrum and Amitraz on behalf of the importer M/s. Ashustosh Pharmalabs, Bangalore.

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In substance, Shri. Deshpande’s case is that the respondent has mis-declared and mis-classified the goods which is in violation of CBLR, 2013 with an intent to evade Customs duty. The goods were misclassified under CTH2804/CTH2921 instead classifying under CTH3808. Only the chemical names of the goods were declared and the trade names namely, Nitenpyrum and Amitraz were not declared.

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In para 2.3 of the OIO⁶ it is recorded that the MD⁷

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of respondent company has admitted in his statements dated

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August 19, 2014, that in the Bill of Entry dated August 11, 2014 goods were wrongly classified by them as ‘Oxygen other

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than Medical Grade’ whereas the goods imported were not oxygen or any other gas under the said heading and they were fully aware of the fact that the goods imported was a chemical. It is further recorded in OIO that the respondent did not disclose basic information like complete description of goods, common name and chemical name, specification, etc., in the Bill of Entry as required under CBEC⁸ Circular No. 35/2011 dated August 9, 2011. It is clear from the said findings recorded in the OIO that respondent had not exercised due diligence and mis-declared the nature of goods which lead to the evasion of duty. Thus, there is clear violation of CBLR, 2013.

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6 OIO No. BLR-CUSTM-000-COM-027-14-15

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7 Managing Director

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8 Central Board of Excise and Customs

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CSTA No.9/2019

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In the OIO it has recorded that on September 5,

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2014, an opportunity of personal hearing was given to the respondent. Therefore, the view taken by the CESTAT that there has been violation of principles of natural justice and that no opportunity of hearing was given to the respondent is perverse.

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It is not in dispute that the license was valid up to October 16, 2014 and it had expired when OIO was passed.

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The Commissioner has recorded that no application for renewal of the license was received from the Customs Broker. If this were to be the factual matrix, the direction issued by the CESTAT to consider the application is also perverse.

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In the light of above discussion, we are at one with

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the view taken by the Commissioner of Customs in the OIO.

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CSTA No.9/2019

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Hence, the following:

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ORDER

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(a) The appeal is allowed .

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(b) The substantial questions of law are answered in the favour of Revenue and against the Respondent.

No costs.

Sd/JUDGE

Sd/JUDGE

SPS

Commissioner of Customs v. Sri Manjunatha Shipping Pvt. Ltd.

Case brief

What is this about?

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Commissioner of Customs v. Sri Manjunatha Shipping Pvt. Ltd.

Case brief

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