Goods Not Liable for Confiscation u/s 111(m) Merely Due to Misclassification by Importer or Customs Broker: CESTAT [Read Order]

The Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that goods are not liable for confiscation under Section 111(m) of the Customs Act merely because of misclassification by the importer or CustomsBroker.

Three Aces Global Logistics Pvt. Ltd., a Customs House Agent, had filed Bills of Entry on behalf of Vanesa Cosmetics Pvt. Ltd. for import of “Actuator, Valve, Pocket Spray Bottle” used for scent sprays and similar toilet sprays during 2017-2020. The Directorate of Revenue Intelligence started investigation alleging wrong classification of imported goods and a show cause notice was issued to both the importer and the Customs Broker.

The adjudicating authority confirmed the differential customs duty demand against the importer and also imposed penalty on the Customs Broker under Section 112(a)(ii) of the Customs Act.

T. Chakrapani, Consultant, along with S. Shashank and Shiva, Advocates appearing for the appellant, argued that the dispute was only regarding classification of goods which is matter of opinion and penalty cannot be imposed for that reason. The counsel also argued that the Bills of Entry were physically examined earlier and goods were cleared based on the classification declared by the importer.

The appellant further pointed out that it acted only on the basis of documents and information given by the importer and there was no evidence to show any connivance in the alleged improper import.

M.K. Shukla, Authorised Representative appearing for the revenue, supported the impugned order and argued that the short payment of duty happened because of suppression of facts and wilful misstatement.

The bench comprising Justice Dilip Gupta (President) and P. Anjani Kumar (Technical Member) observed that Section 111(m) provides confiscation only in cases of misdeclaration of goods and not merely because of wrong classification. The tribunal explained that even if goods are misclassified or duty is wrongly self-assessed, the goods do not automatically become liable for confiscation.

It also pointed out that since the goods were not liable for confiscation under Section 111(m), penalty under Section 112(a)(ii) against the Customs Broker also cannot be sustained. The tribunal set aside the penalty and allowed the appeal.

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