Supreme Court Clarifies Bombay HC Erred in Treating CESTAT’s Finding on Black Firing Guns as Misdeclaration Instead of Misclassification [Read Order]

In a recent judgment, the Supreme Court of India held that the Bombay High Court wrongly recorded that the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) had accepted the Commissioner’s finding that Bruce Logistics Private Limited advised an importer to mis-declare imported “Black Firing Guns” as “Metal Toy Guns.” The court explained that CESTAT had treated the issue as one of misclassification, not misdeclaration.

Bruce Logistics Pvt. Ltd., acting as a Customs Broker, was alleged to have suggested to the importer that the goods in question, described as “Black Firing Guns,” be declared under Customs Tariff Heading (CTH) 9503 as “Metal Toy Guns.”

The Commissioner of Customs held that the appellant had advised the importer to mis-declare the goods, so abetting violation of the Foreign Trade Policy and the Arms Act, 1959, read with the Arms Rules, 2016.

The Commissioner also found that the required DGFT licence and certificate under Condition No. 2 of the Import Policy were not produced, and accordingly revoked the Customs Broker licence.

The appellant challenged this order before CESTAT. The tribunal found that the only evidence against the broker was a statement by Shri Rajesh Kumar Goswami dated 19 June 2017, claiming the broker had suggested mis-declaration. This statement was later retracted before the Additional Chief Metropolitan Magistrate, with the claim that it was made under duress.

Your Ultimate Guide to India’s Latest Income Tax Laws, Click Here

The tribunal explained that as per the Supreme Court’s earlier ruling in K.I. Pavunny v. Asst. Collector (1997), a retracted confession cannot by itself form the basis of an adverse finding without other supporting evidence.

The tribunal also observed that Customs officers had physically examined the consignment, drawn samples, and after deliberation up to the Commissioner’s level, themselves classified the goods under CTH 9503 as “toy guns.” Hence, it treated the issue as misclassification, not misdeclaration.

The tribunal further explained that while the required import certificate under the policy was missing, Customs officers had not insisted on it, and so the revocation of the licence was too harsh a punishment

Before the Supreme Court, the appellant’s counsel argued that the Bombay High Court had incorrectly stated that CESTAT accepted the Commissioner’s finding of misdeclaration.

The bench comprising Justice Manoj Misra and Justice Ujjal Bhuyan agreed and observed that the High Court’s conclusion in paragraph 6 of its order was contrary to what CESTAT had actually held.

The Supreme Court clarified that CESTAT did not accept the finding of misdeclaration, but had treated the matter as one of misclassification. The appeal was disposed of with this clarification. All pending applications were also disposed of.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates