Importer Cannot be Penalised for Incorrect Mention of Country of Origin in Bill of Entry: CESTAT sets aside Penalty under Customs Act [Read Order]

The Ahmedabad bench of Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) viewed that the importer cannot be penalised for incorrect mention of country of origin in bill of entry and set aside  the Penalty under Customs Act, 1962.

Rajkamal Industrial Pvt Ltd, the appellant challenged the order of 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 Commissioner (Appeals) further upheld that the appellant mis-declared the country of origin in the bills of entry.

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. Rajkamal Industrial Pvt Ltd and statements of CHA.

It was submitted that the revenue has wrongly classified the RPO under Chapter Heading 27079900 as the identical issue arose in the case of Shah Petroleum Ltd vs. Commissioner of Customs- 2017  wherein the Tribunal held that the RPO is not classifiable under Chapter Heading No 27079900 but the same is classifiable under 2713. The said judgment of the Tribunal was upheld by the Supreme Court also.

 The appellant M/s. Rajkamal imported consignments of RPO through two bills of entry whereas the Appellant M/s. Bagwan Petroleum imported consignments of RPO through four bills of entry. Each bill of entry contains 15 containers, each container contains 80 tonnes. The investigating authority separated 10 drums randomly from each container and drew the samples from each of 10 drums. It appears from the proceeding that Kandla Custom House Laboratory sent only three test reports in respect of appellant M/s. Rajkamal Industrial and four test reports in respect of M/s. Bagwan Petroleum.

As regard the issue of mis-declaration of Country of Origin, he submits that both the lower authorities  held that both the appellants have mis-declared the country of origin in the bills of entry as UAE whereas the goods were originated  from Iran. While recording the statements of the directors of the appellants stated that the supply was made from Dubai and therefore, they mentioned the country of origin as UAE. He submits that the appellant had no deliberate intention not to declare the correct country of  origin, the appellants declared country of origin based on documents received from the supplier.

The enhancement was made merely on the consent letters given by the directors of the appellant. The Tribunal viewed that merely on the basis of statements of director valuation cannot be enhanced. Therefore, the enhancement of the value is not sustainable in the facts of the present case.

A two member bench comprising Mr Ramesh Nair, Member ( Judicial ) and Mr Raju Member ( Technical ) held that for incorrect mention of country of origin, the importer cannot be penalized. Considering  overall facts and the fact of incorrect declaration, the bench viewed that if any misdeclaration regarding  country of origin in the Country of Origin Certificate, the appellant is not liable for any penalty or fine.

The CESTAT set aside the impugned order and allowed the appeal. Shri Hardik Modh & Shri Amit Laddha appeared for the Appellant and Shri Himanshu P Shrimali, Superintendent (AR) appeared for the Respondent. 

To Read the full text of the Order CLICK HERE

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