No Customs Penalty for Misdeclaring Goods in Airway Bills: CESTAT sets aside ₹2L Penalty on Ajanta Pharma [Read Order]
The Tribunal found no contravention of the Customs Act where airway bills alone differed in description
Customs Penalty, Ajanta Pharma, No Customs Penalty
Customs Penalty, Ajanta Pharma, No Customs Penalty
The Mumbai Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) recently allowed an appeal filed by Ajanta Pharma Ltd. and set aside a penalty of ₹2,00,000 imposed under Section 117 of the Customs Act, 1962, holding that no contravention of the Customs Act was alleged or established where the purported mis-declaration appeared only in airway bills.
The appeal pertained to 43 export consignments of medicines used in the treatment of erectile dysfunction, that were shipped between September 11, 2018 and March 10, 2021.
While shipping bills, invoices and packing lists correctly described the goods, the airway bills described them as “medical apparatus”, which were flagged by the Department and treated to have been misdeclared under the Foreign Trade Policy and a notification issued by the Directorate General of Foreign Trade (DGFT), imposing a penalty.
N.D. George, appeared for the appellant and relied on the Supreme Court decision in Amrit Foods Vs.Commissioner of Central Excise, U.P. (2005) and argued that without specific notice of the exact nature of the alleged contravention a penalty could not be sustained
The Department, represented by Deputy Commissioner Dinesh Nanal, raised a case that the airway bills were mandatory export documents under paragraph 2.06(a) of Chapter 2 of the Foreign Trade Policy 2015-20 and any discrepancy of the goods with the description in airway bills amounted to mis-declaration and warranted penal action.
The bench of Dr. Suvendu Kumar Pati, Member (Judicial) observed that it is confined to penalties for contraventions of the Customs Act or for abetment thereof where no express penalty is provided elsewhere.
The Bench noted that the show-cause notice and the order-in-original alleged breach of the Foreign Trade Policy by the freight forwarder, and that that no provision of the Customs Act was either alleged to have been contravened by the exporter.
The Tribunal further observed that the Commissioner (Appeals) had invoked Section 50(3)(b) instead of the provision dealing with accuracy and correctness of information in the bill of export.
Accordingly, it was concluded that shipping bills and invoices contained correct descriptions and that the alleged discrepancy in airway bills did not amount to a contravention of provisions under the Customs Act in the absence of specific notice.
CESTAT thus allowed the appeal and set aside the penalty confirmed by the Commissioner (Appeals).
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